Brexit Budget binned as Osborne is deposed
An ‘emergency’ Budget to shore up Britain’s financial position in light of the vote for Brexit will now not go ahead.
Philip Hammond, the new chancellor of the exchequer, made the announcement as he replaced George Osborne who had promised the Budget if Britain voted to leave the EU.
Dubbed the ‘punishment’ Budget by critics of Mr Osborne as it was expected to unleash billions in spending cuts and tax rises, Mr Hammond’s veto came after Theresa May also ruled it out, shortly after replacing David Cameron as prime minister.
The announcement by the pair means it is ‘business as usual’ for contractors and other micro-businesses, who could have been on the sharp end of Mr Osborne’s Brexit Budget, which was due to contain £15billion in tax rises.
Since being reportedly fired by Mrs May in what has been her most ruthless act since she took over Number 10 Downing Street, Mr Osborne has made no mention about the fiscal package he vowed.
A statement he posted on Twitter after losing his chancellorship (and not being redeployed as he is understood to have wanted), said only that “others will judge” if he succeeded in leaving the economy “in a better state than I found it.”
His online statement also offered his replacement Mr Hammond and Mrs May, who deposed him, his "full support" -- as a backbencher -- in the “big challenge that lies ahead.”
The subtext is that the new PM wanted to distance herself from the ‘austerity’ chancellor who was inextricably linked to both David Cameron and the failed EU ‘Remain’ campaign.
“There is no plan for an emergency budget”, Mr Hammond told ITV’s This Morning programme, dismissing Mr Osborne’s plan and not mentioning his contractor-friendly pledge to cut corporation tax to 15 per cent.
Mr Hammond added: “There will be an Autumn Statement in the normal way and then there will be a Budget in the normal way.”
Responses from the contractor sector have been generally positive, whether they relate to Mr Osborne’s removal (he introduced the much-disliked dividends tax), or Mr Hammond’s appointment (his non-political career was largely with SMEs).
“Let’s hope he does a better job than Osborne”, one LinkedIn user said of Mr Hammond. “[He should] close down all [those] umbrella companies who state they employ people but don’t pay them [properly].”
The Association of Independent Professionals and the Self-Employed (IPSE) is also hopeful about Mr Hammond, who worked in manufacturing, property, oil and gas as well as consultancy before joining politics.
“His first goal as chancellor should be restoring business confidence,” IPSE said. “His confirmation that there will be no Brexit Budget is a good start, as the nation needs stability at this point.”
Whether Mr Hammond pays much attention to umbrella companies remains to be seen but Carolyn Walsh, a director of payroll provider CWC Solutions, says a reprieve is unlikely.
“As [Treasury minister] David Gauke was one of the few MPs to not lose his job in May's reshuffle last week, I'd say that umbrella companies will remain a focus,” she said.
For being workers who execute temporary contracts but who are permanently employed, such brolly contractors will be less familiar to Mr Hammond (a former company director of a medical equipment manufacturer), than PSCs or sole traders.
“We worked with Mr Hammond when the Conservatives were in opposition and found him to be someone with a full understanding of self-employment,” IPSE said.
The association also welcomed the appointment of Greg Clark MP as business minister.
“The Department for Business, Innovation and Skills made good progress in making it easier for the self-employed to run their companies,” said IPSE’s Simon McVicker.
“Mr Clark must now continue this work by supporting the flexible labour market – working with the chancellor and following up on the recommendations of the Deane Review on self-employment.”
As to which of the policy-makers -- Mr Clark; Mr Hammond, Mr Gauke or Mrs May, will win the business community’s ‘vote,’ unshackling its smallest members should make them the favorite.
“Complete an audit of all business regulation, whether domestic or from Brussels,” urged the Institute of Directors, addressing Tory leadership-hopefuls on the eve of Mrs May’s coronation.
“Unnecessary bureaucracy makes firms less productive, less agile and less able to take new business opportunities. We are going to need companies to be as dynamic as possible to ensure the UK can succeed in this new reality.”