Category Archives: welfare

You’re NICked…


First of all let me declare an interest : I spent the best part of the last 20 years of my working life as a self employed contractor in the IT industry. I’m also a chartered accountant so I was particularly interested in what the Chancellor had to say yesterday about National Insurance contributions.

There’s been a lot of nonsense spouted by various self employed people over yesterday’s announcement, not least of all by one particular blogger – whose blog I’m banned from accessing – that I read this morning (working well, that ban, isn’t it?) who simply doesn’t seem to understand the situation at all, frankly. However, in the interests of fairness, you can read his slant on all this here even if I’m not allowed to! (sic.)

What the Chancellor has done is to abolish Class 2 NICs and incorporate that saving into the Class 4 NIC. The Class 4 NIC has then been increased by 1% this year and a further 1% next year.

The bleat from the people who don’t like this seems to revolve around around their employment rights. The self employed have no employment rights, so the argument is irrelevant. The government provide the NHS and a state pension in return for NI. Here’s an important point : The State Pension has been changed so that self employed people now have the same pension rights as employees. They also have the same access to the NHS, so why should they pay less?

Even after these changes, the self employed still pay a lower NI contribution that employees whilst getting the same access to the NHS and the same pension rights. Employees pay 12% compared to the current Class 4 rate of 9%. Over £43,000 p.a. everyone pays 2%.

The net effect of the changes is that self employed people earning under £28,000 per annum will pay less NI. From £28,000 to £43,000 they will pay the same. Over £43,000 they will pay more.

This seems fair to me. Maternity rights, sick pay and paid holidays are not the responsibility of the government. When I worked as a self employed contractor, I earned more than I would have done as an employee. This was precisely because I had to earn enough to cover unpaid holidays, sickness, gaps between contracts and the like.

There is a class of people in this country and others who believe that things should be given to them as a right and that they shouldn’t have to contribute in order to get them. My fellow blogger’s rant calling the government ‘thieving scum’ and the taxman a ‘blood sucking leech’ shows a fundamentally bad attitude and is typical of the ‘something for nothing’ mentality. I won’t bother to argue the case with him because that would be like trying to teach a pig to sing.

The case for this change is clear. It’s about fairness. If you want the same rights, then you should pay the same contributions towards them. And, at the end of the day, nobody forces you to become self employed. It’s a choice for you as it was for me and I fail to see why there should be a financial incentive funded by employed people for you to do so…

HP sauce

Oh dear! It seems there a bit of a ding dong going on about the relationship between the elected House of Commons and the unelected House of Lords over this Tax Credit business…

Personally, I’m in favour of reviewing the so called tax credit system. It seems stupid to me that in order to encourage people to seek work, the government uses the welfare system to top up people’s wages if they earn under a stated amount. After all, if you can get money for sitting on your arse which is taken off you if you earn more, why not just sit on your arse for the same money?

Tax credits are, of course, a misnomer. They’re not part of the tax system, they’re part of the welfare system and the electorate put the Tory government in place based on a manifesto that undertook to reduce the cost of welfare. ‘Fair enough’ you might think were it not for the fact that Cameron went on TV before the election and stated unequivocally when pressed on the BBC that he would not be changing tax credits. This makes him at worst a liar and at best bloody stupid.

Osborne has buggered this up even further by not increasing the minimum wage at the same time as reducing tax credits – a move worth of the great stealth tax expert Gordon Brown himself! Nice try, but you shot yourself in the foot Gideon.

So the Lords has balked at blocking the move but has voted it should be delayed. The problem now is that instead of cutting welfare before increasing minimum wages, they’re proposing to increase the minimum wage before reducing welfare. Why the hell can’t these people simply employ common sense? It’s beyond me…

Really, you could see it coming. The Lords is flooded with Labour peers put there by Brown and Blair, and Lib Dem peers put there by Clegg as the price of keeping the coalition going. When you think about it, why the hell are we jumping up and down about the unelected bureaucrats in Brussels and then tolerating another set of unelected bureaucrats at home.

What will come out of this? Well, Osborne and Cameron are going to have to rethink and the Lords is going to come under increased pressure for reform.

The Lords has, in my view, had it’s day. It’s fundamentally undemocratic and deeply unrepresentative, There’s loads of Lib Dems in the Lords and practically none in the commons. It’s time it was replaced with an elected Senate and we did it properly…