Anyone who has been in business knows all too well the risks and uncertainties that come with it. Running a business, or working for yourself, often means taking a chance and putting your family’s livelihood on the line.
That is why it is vital that we as politicians do all we can to support those entrepreneurs who do take a risk. From farmers to florists to financial services, investment in our public services is underpinned by the growth and prosperity of our industries.
Since 2010, we have seen a steady growth of new companies in the UK. In 2010, there were 235,000, and in 2015, that figure stood at 383,000. The number of businesses opening their doors now outstrips the number closing them by the largest margin since records began. During 2016 over 9,000 new companies were formed in Berkshire, around 1,500 of these in West Berkshire.
Conservatives have been, and always will be, on the side of enterprise. In 2010 Corporation Tax was at 28%, and it will fall to 17% by 2020. This will be the lowest rate among major advanced economies and sends a clear signal that this country is open for business.
This is good news for businesses of all sizes, but equally welcome will be news on business rates. I have long campaigned for reform to the ratings system and the latest revaluation exposed flaws in how the system works. The Chancellor is right to commit to a review before the next round of valuations and I hope he and Sajid Javid look long and hard at how the Valuation Office Agency works.
But reviews take time, and small businesses also need practical help now. The Chancellor gave welcome support for the smallest businesses, for pubs, and for local authorities to use their discretion to help the most affected in their area. This will be welcome news for the riding schools in my constituency facing a 356% increase in their rates bills. The decision to freeze fuel duty for the eighth year running is particularly welcome for rural businesses in constituencies like mine, and worth £130 a year for the average driver.
However, working practices today are different, and our tax system needs to reflect this. The growth in the number of people who are self-employed is testament to the enterprising spirit of this country. But the lower National Insurance Contributions (NICs) that they pay is placing a heavier burden on those workers that are employed, to fund public services such as the NHS. And so, in my view, it would seem right and fair that the rate of Class 4 NICs paid by the self-employed is brought closer to the rate of Class 1 NICs paid by employees. As the Chancellor has now announced, this is going to be subject to review, along with ways to improve rights and protections for self-employed workers, including on issues like parental rights and maternity pay. Significant changes have already been made. The self-employed can now access the new State Pension, worth £1,800 a year more, and we are abolishing Class 2 National Insurance Contributions.
The lowest paid have rightly been prioritised in this Budget. The decision to increase the Personal Allowance to £11,500 will take 1.3 million low earners out of tax altogether. Taking all of these changes together, self-employed people with profits less than £32,900 would not have paid more.
More than 60% of people would actually have gained from the proposed changes to National Insurance. Almost half of the revenue raised is from the top 20% of earners, which is absolutely fair. Of course those with the broadest shoulders should always bear the heaviest burden. It is why a single adult working 35 hours a week on the National Living Wage will be over £1,000 better off by 2020. It is why the top 1% of earners in this country now pay 27% of its income tax.
Budgets are always controversial but for all the noise about NICs the totality of the measures have benefitted workers and businesses both across Britain and here in West Berkshire.
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