Don't rehash raid on one-man bands, Hammond told
Today’s “unforgiving” climate for tiny traders such as PSCs makes it an inopportune time to rehash the botched NIC hike on others who work for themselves, the chancellor is told today.
Such workers, “who don’t have the luxuries of sick or holiday pay” and so are real “strivers,” would be deterred if the plan to raise self-employed NICs was brought back, says the FSB.
But before the general election, Mr Hammond reportedly said that the Tories would hold a Budget, should they be returned to office. This appears to be why the FSB is stepping in now.
“The last thing they [the self-employed] need is increased cost,” said federation national chair Mike Cherry, referring to the plan for a 2% rise in NICs.
“Clearly this is not the time to revisit [those] failed plans…it would act as a disincentive to business creation.”
The alert comes as the FSB’s confidence index showed a fall from +20 to +15 between April and June, representing the first worsening in the outlook since the EU referendum.
When asked about the threats they feel they face, small traders were most likely to raise the domestic economy, followed by demand, labour costs and then the tax burden.
The index also showed that operating costs for tiny businesses are now at their highest in four years. The inflated price tag of doing business has been confirmed by contractor body IPSE.
In fact, in responding to Q2 data from the Office of National Statistics, the body said May’s 2.7% rate -- the highest inflationary rate since April 2012 -- was “cause for concern”.
“It’s not just consumers who are feeling the pinch: these price increases will affect small businesses too,” said IPSE’s economic policy adviser Lorence Nye.
“IPSE’s Confidence Index shows that freelancers have been getting more and more concerned by rising input costs over the last 12 months.”
However, he said the advice was “not [to] panic just yet”. Elaborating, the economist said the Bank of England always expected inflation to reach around the current level, albeit just not yet.
“The increase has just come more quickly than they anticipated,” Nye said, referring to the bank’s end-of-year expectation.
“They’ve therefore said they won’t try to combat the inflation increase: both because the current level isn’t far off their target and because increasing interest rates at this point could actually do more damage to the economy.”
IPSE “strongly agrees” with the BoE’s assessment, and urged its monetary policy committee to “hold this position and continue providing clear guidance to businesses and households alike.”