Budget  

Chancellor's stand-up routine turns nasty

Chancellor's stand-up routine turns nasty

Viewers of the purported last Spring Budget would be forgiven in thinking they had tuned into the latest iteration of Live from the Apollo.

Chancellor of the Exchequer Philip Hammond offered a generous serving of comedy to the formal proceedings – often at the expense of his Right Honourable gentle-people.

The uncertainty over Britain’s economic growth following the vote for Brexit is no laughing matter, and the Budget was billed to present a bullish outlook as the government finalises preparations before triggering the formal process of leaving the EU.

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The Budget was touted to unveil plans to tackle the issue of adult social and long-term care – which has become more prevalent, with increasing pressure on existing provisions due to an ageing population.

It did not disappoint. Mr Hammond announced an additional £2bn of grant funding to local authorities in England over the next three years – half of which will be made available in the next tax year (2017/18).

However, arguably the more attention-grabbing announcement was on the launch of a green paper on social care funding. The move has been criticised by former pensions minister Sir Steve Webb who said it will prolong the “decade of dithering” on social care.

Plans to introduce a lifetime cap on care costs in England to £72,000 was scheduled to come into effect in April last year following the recommendations of the Dilnot commission in 2011, but has been deferred until 2020.

Sir Webb said: “We have had 20 years of reviews and commissions. What was needed was political courage to implement a system which protects all families from potentially huge care costs and stimulates a market in care insurance for those who want greater security. The government should commit now to implement the Dilnot proposals without further delay.”

Another listen-to-me moment centred on higher-paid self-employed workers who will pay, on average, 60p a week more in Nics by 2021/22.

He said class 4 Nics – applicable to self-employed individuals with profits of £8,060 or more a year – will go up from 9 per cent to 10 per cent in April 2018, then to 11 per cent in April 2019 on income up to the higher rate threshold of £45,000.

The rationale behind the move, according to the Chancellor, is to address a difference in Nics between those in employment and the self-employed.

He said an employee earning £32,000 will, between the individual and their employer, incur £6,170 of Nics, whereas a self-employed person earning the equivalent amount will pay just £2,300.

Keith Street, vice-chairman of group lending at The Northview Group, warned that the rise will have an impact on the ability of self-employed individuals to secure a mortgage.

However, Tom Costelloe, mortgage adviser at London-based Independent James, said this reaction is somewhat overblown. He said: “The increase in Nics is going to affect the income level of self-employed individuals and will in turn impact affordability, but not by very much.

“Lenders view self-employed people in a much more positive light than they have done in the past.”