The budget

I agree Azie. If you've been paying Class 2 contributions, you should be OK.

Some of the comments under the article are just downright ignorant. They just don't understand how NICs work and they have a stereotypical view of the self-employed as wide boys accepting cash in hand and avoiding tax/NICs.

My retirement age is 66, so I have four years to go. I tried so hard to find 'proper' work when I lost my teaching job, but just couldn't find anything, which is why I became self-employed.

I will have 46 years of NICs by the time I retire, but some of them don't count, because I was paying into occupational pension schemes. It's impossible for me to accrue a full pension, but I know I won't be eligible for any Pension Credit either, so it's all up to me.

I'm not pleading dire poverty, but I will just about manage, with no holidays or luxuries. I have to pay rent, which is a real bummer.

I really resent implications that I haven't 'earned' my pension, because I damned well have and I'm not impressed by having to pay such a big percentage of my earnings at this stage of my life and at such short notice.

When the new state pension was announced, it wasn't made clear that people who had paid into occupational pensions would be penalised, so that's been a blow too.

It really gets me that the unemployed and sta-at-homemothers can earn pension credits, so in theory could get a higher state pension than I will. Anybody registered for self-employment (even earning a few hundred a year) can't get pension credits, even if they have young children, which is totally unfair. They will have to pay Class 3 contributions.

Daphnedill thank you very much for clarifying that. It's something that doesn't seem to have been reported and had passed me by during the budget reports. I too earn around £6500 though it varies. This is quite shocking. I have no confidence in saying 'I get my state pension next year' because it may well be snatched away (who knows with the Tories in power) but it looks as though I'll just get under the wire. Not much comfort to others though.
The gig economy is people working supposedly self employed but actually just forced into it by employers or to escape the horrors imposed on job seekers by the DWP?
What really shocked me was the comments under that article, people saying why should someone who hasn't paid in enough get a full pension without taking into account life circumstances, changes which make it impossible for people to catch up in time (like so many 1950 women) and the sheer callous disregard for others which I see all around these days and find chilling.

Azie I've explained this before, but you've probably missed it.

Here we go:

There are 4 classes of NICs.

Class 1: paid by employees.Currently 12% and employers pay an additional 13%.

Class 2: paid by all self-employed earning over about £5,900. Those earning below that amount can pay Class 2 voluntarily. Cost £280pa flat rate and entitles people to state pension.

Class 3: voluntary. Paid by people with gaps on record for state pension. Cost depends on years from retirement.In my case, they're £770pa.

Class 4: paid by self-employed earning over £8060pa in addition to Class 2. Currently 9%.

Osborne had already announced that Class 2 contributions would be abolished from 2018. Many people hoped that Hammond would backtrack on the abolition, because the worst paid self-employed lose out big time. That's what the article is about.

Here's how they lose out:

Anybody earning below £8060 can pay Class 2 contributions @ £280pa. From 2018, they don't have to pay anything BUT they lose credits towards their state pension,if they don't. For each year they don't pay,they will lose just over £4 a week (at current rates).

Their only option if they want to maintain their state pension record is to pay Class 3 contributions. I'm in that situation. My income from self-employment varies, but it's about £6,500pa and my NICs will increase from £280 to £770pa, which is a big increase on very low earnings.

Hope that's clear. I spent the best part of two days contacting all sorts of organisations and MPs. It was on Radio 4's Moneybox and I might be the 'Guardian reader' in the article. The Institute of Fiscal Studies, the Resolution Foundation, The Chartered Institute of Taxation, the Low Incomes Tax Reform Group and the Labour MP Jess Phillips have all acknowledged there's a problem which had been overlooked. They are now lobbying Hammond to announce a change in the Autumn budget.

IMPORTANT This has nothing to do with the increases Hammond announced in the budget. The changes would have been a progressive measure, which would have meant only the wealthier self-employed paid more. Unfortunately, Hammond gave in to pressure from the Tory media and back benchers wanting to protect their wealthier voters. Labour's response was appalling.Clearly McDonnell didn't have a clue what he was talking about and tried to score points by accusing the Tories of breaking their manifesto pledge.

The budget announcement would have done nothing to stop people from cheating the system by claiming to be self-employed when they're not. There is a report due in the Summer called the "Taylor Report" which hopefully will address some of the problems caused by the gig economy.

Interesting link durhamjen. There have been so many books and articles about growing inequality in the UK and the dire social effects this produces but the Tories would rather look the other way and promote policies which attack the most vulnerable, the least able to defend themselves. It's horrible.

Interesting looking course daphnedill. I studied economics and economic history many years ago, it looks as though the course would be a good update.

I am still struggling with the implications of this article:

www.theguardian.com/money/2017/mar/18/national-insurance-self-employed-400pc-more-contributions

It appears that the government has relented very little over NI contributions for the self employed (the latter being one of the avenues that allows many businesses to avoid employing people legally and paying tax and NI on their behalf).

I don't pretend to understand more than the basics, although I'm trying hard to understand more. It's because so few people understand that the few who do, are making squillions. Unfortunately, politicians either don't understand or deliberately keep people ignorant.

Great link dj, which explains what's happening in layperson's language. It was all so predictable and preventable.

I want to understand the relationship between economics and politics,which is why I'm doing a course on FutureLearn www.futurelearn.com/courses/politics-of-economics

Sorry, meant to say to their rich friends.

blogs.lse.ac.uk/politicsandpolicy/poverty-jobs-johnes/

In the meantime, this is what is happening in the real world, while the Tories give tax cuts in the budget.

The government clearly made no plans for a Leave vote because they assumed the result of the Referendum would be Remain. I thought this had been admitted though that admission is now list in all the spin.
Great explanation of basic economics *Daphnedill). It annoys me too when people debate the economy as though it's a household. The economics of world trade and the money markets are now too complex for most people to understand so we've had a simplistic backlash led by crowd pleasers like Farage and Trump.

I read today that 100bn has been put aside to pay for Brexit!

Did the government put aside money for the process of leaving. If not the were the heck do they think it is going to come from?

I wonder whom the Brexiteers would like installed as Chancellor.

It is not a kind thing to put that question in our minds dd.

Hammond is now getting flak for allegedly denying the Foreign Office and Trade Department enough money for Brexit. I think the knives are out.

His jokes when he delivered the budget didn't do him any favours.

I wonder whom the Brexiteers would like installed as Chancellor.

It makes me very angry that Brexit is going to cost so much. People were warned, but it was all dismissed as Project Fear and what do experts know? Hammond is in a very difficult position, because the amount of uncertainty makes planning difficult. Nevertheless, it's clear that he's not about to go after the wealthier for a greater contribution.

Oh I agree dd. It used to greatly irritate me when Mrs T compared the county with a household (and even then a household I the 1950s from what I could see).

However, Mr H did say he wanted to balance this one and now he is down on the 'in' side so, although I am sure we could all give hem advice on that I am more interested in what he may do.

The thing is though, Gracegran is that a budget doesn't have to be balanced to work. It's a myth that the national budget is like a household.

The trick is to keep money moving and to make sure that the money is distributed fairly evenly, so that people have not only enough for basics, but disposable income, some of which is reclaimed as tax and some is used to buy goods and services provided by others, which provides jobs and so the circle continues.

UK productivity per capita is low compared with other developed countries. The country desperately needs investment, but those holding the wealth won't invest in manufacturing and infrastructure, when they can make more from property and shares.

The market is failing to provide the whole population with basic needs, which is why the government has to intervene. With low interest rates,now is a great time for the government to borrow. (That's a very simplistic explanation.)

Unfortunately, we've had chancellors (and shadow chancellors) who do think that the economy is like a household budget and the public thinks so too.

There was some money in the budget for social care, but councils are expected to raise the balance from council tax.

Council tax is a regressive tax, because it's capped for the most valuable houses and people pay different rates in different areas. Some of the very poorest areas (eg some parts of Merseyside) pay more than places such as Westminster and Chelsea, where the needs are much lower.

Google "Surrey County Council sweetheart deal".

Yes! Yes! Yes!

All my badgering the media and MPs seems to be getting somewhere! (I'm sure I wasn't the only one to have kicked up a stink, but it's good to know somebody listens...sometimes.)

www.theguardian.com/money/2017/mar/18/national-insurance-self-employed-400pc-more-contributions#img-1

Now for some action, Mr Hammond!

The person who borrowed most was Osborne, who now has another job but will still be MP.

The £2 billion for care, Gracesgran, is to be given over three years. But saying giving £1 billion this year does not sound so good, particularly when they have taken £4.6 billion away from the care budget since 2010.

You are right about the Conservatives not liking it dd. The old idea of Conservatives (rather than the capitalists we have had of late) would believe in education.

What they now need to get their heads round is how an economy works. They kept telling us they were a safe pair of hands - but when they get someone who actually seems to understand you need to take enough in to pay for what is going out in the shape of Hammond and his promise to make this budget balance they don't like the consequences.

I was fairly sure that the was £2bn in the budget for care dd. Perhaps I was wrong. Social care is, indeed, provided by councils but isn't some sent from the government?

Why the dig at Labour, daphne?
It was the Tory backbench revolt that made them change their minds.
It was the fact that they had broken a manifesto promise, not the economics of it.
It's the Tory incompetents who made that promise, then broke it.
Why shouldn't Labour attack them for breaking a promise?

The reason the backbenchers are complaining about education funding is because the leafy shire areas have been hit. Yes, they should complain, but it's a fair bet that they won't make a fuss about inner cities, etc. What's the betting Conservative councils will get some kind of sweetheart deal like Surrey did for social care?

The school leaving age was raised to 18 without any extra funding. FE colleges have already seen savage cuts and now school sixth forms are being hit. Conservatives don't like it.

Hammond's hands are tied over extra funding after this budget. He couldn't even raise a small amount through a progressive rise in NICs, so he won't be able to raise income tax. He'll have to cut something.

Social care tax is being raised by local councils, not central government. I've just received my council tax bill, which includes a 3% social care levy. On the same day, I received a notification that my gas and electricity bill is likely to rise by £200+ next year. On top of the NICs rise of £470pa, I despair.

PS. Anybody seen a spare £350,000 a week anywhere?

This was no more, but importantly no less, than the backbenchers flexing their muscles. It was a fair change; it did not tax those earning little more indeed the gains were at the bottom.

Hammond promised this would be a balanced budget and now has lost £2bn from the plus side - where will he now get this or will be take something off the minus side? The £2bn for care perhaps.

Now we have the backbenchers asking for changes in the education funding. This would be a good thing in my view as long as they actually increase the amount and don't take off the poorest areas to please the leafy suburbs. However, with a rising number of pupils cutting the same cake a different way will not help.

Perhaps Conservatives are beginning, at long last, to realise you must either tax or borrow to pay for a fairer society - which May declared she wanted - particularly when the gap between rich and poor is now so obscene. Few would like to see more borrowing. All those Osborne tax cuts are coming home to roust.

I don't understand why people who claim to care about the poorest, support a U-turn which makes the poorest even poorer. Bonkers! It's no wonder that the public sees Labour as economically incompetent.

"*Changes to National Insurance contributions for the self-employed*

As expected the Government announced further changes to National Insurance contributions (NIC) for the self-employed from 6 April 2018. These are additional to changes previously announced, which are also due to take effect in the 2018/19 tax year, such as the abolition of Class 2 NIC.

The new proposals mean that the rate of Class 4 NIC will increase from its current level of 9%: firstly, there will be an increase of 1% from 6 April 2018 (up to 10%), and secondly a further 1% increase from 6 April 2019 (up to 11%). This is intended to align the amount of NIC the self-employed pay with the rate paid by employed workers, and to reflect the fact that there is now little difference in the contributory benefit entitlement of self-employed and employed NIC.

The announcement may have surprised some, given the Government’s 2015 election ‘tax lock’ promise, not to raise the rate of certain key taxes for the duration of the current Parliament to 2020. However, the legislation implementing that promise only included Class 1 employees’ NIC and not Class 2 or Class 4 NIC paid by the self-employed.

According to the Treasury only the self-employed with profits above £16,250 will pay additional NIC. However, some self-employed workers with very low profits are poised to lose out on their benefits entitlement, due to the simultaneous abolition of Class 2 NIC. So, on the one hand, those with low profits will have a saving, but those who currently contribute towards their state pension by opting to pay Class 2 NIC, despite having profits below the Small Profits Threshold, will have to pay voluntary Class 3 NIC, which at £14.25 per week (for 2017/18 tax) is more than five times what they are paying now."

www.litrg.org.uk/latest-news/news/170309-%E2%80%98first-and-last%E2%80%99-spring-budget

Doesn't matter about the rest. It's the government manifesto that matters; they are the ones whose manifesto needs to stand, not any of the other parties.

www.theguardian.com/commentisfree/2017/mar/16/hammond-may-mistake-minister-backbenchers

" The government hadn't read their own manifesto. "

Have any of 'them'?