Confidence of entrepreneurs hit despite about-turn on NICs

Chloe Hall speaking at an event
'Increases in NICs would have forced me to abandon plans to export,' says Chloe Hall, founder of Bumble and Bloom Media

Despite welcoming the Chancellor’s U-turn on NICs, these business owners feel less confident in the Government's pro-enterprise rhetoric.

Chancellor Philip Hammond has had a rough week. First he invoked the wrath of the enterprise community (never a good idea), by proposing increases in National Insurance Contributions (NICs) for self-employed workers. Days later he has reversed the proposal, after finding it at odds with public opinion and his own party.

But even with this about-turn, entrepreneurs who might once have considered the government to be pro-enterprise have found their confidence wavering.

The proposed NIC hike nearly led Chloe Hall, a 26-year-old entrepreneur based in North Shields, near Newcastle, to halt plans for exporting services and a full-time hire in the next 12 months.

“I’ve just returned from my first international trade mission to Copenhagen with the Government's Department of International Trade, to look into exporting,” she says. “But increases in NICs would have forced me to abandon plans to export, because I wouldn't have been able to utilise profits that I've carefully set aside.”

The NIC rises would have eaten into Ms Hall’s business development war chest, but she would have also had to cut back on the work that her marketing consultancy, Bumble and Bloom Media, offers to 10 digital freelancers.

“The Government's reneging on its manifesto was so unfair and poorly thought through,” she explains. “There's so little funding available, such as grant funding, [to help new businesses] with research or training. It felt like a final nail in the coffin.”

I had to go through a period of self-employment to test my business planLucy Hutchings Hunt, Systemyzed

Justin O'Sullivan, owner of Storage Equipment Experts, an Enfield-based small business that specialises in warehouse rack inspections, still has concerns about the Government’s attitude to entrepreneurs, U-turn or not.

“Any punitive tax measure for the self employed, who have taken the leap to go alone, is anti-enterprise and demoralising,” he says. “I’m glad about the reversal, but I’m frustrated about its flip-flopping.”

Mr O’Sullivan thinks that the original announcement was indicative of the Government’s lack of understanding of the self-employed and the challenges that they face: “As a self employed person and small business owner, I work extremely hard. A seven-day working week is not uncommon.

"I always try to make decisions that benefit clients; it’s sad that the Government is so bad at making decisions that benefit small businesses.”

Lucy Hutchings Hunt, who started her small York-based digital design company, Systemyzed, as a self-employed sole trader, decided to establish her enterprise as a limited company last year.

“It’s good that Philip Hammond has reneged on [the NICs rises], but he should never have announced it in the first place,“ she says. “The Government should be doing everything it possibly can to support self-employed people – the motivated sort who just want to get take the initiative and do a good day’s work in return for a fair wage.

“I had to go through a period of self-employment to test my business plan, and now I’ve turned my enterprise into a limited company with a member of staff who’s PAYE.”

Ms Hutchings Hunt believes that the Chancellor is punishing the wrong people in an attempt to solve a wider issue: rising self-employment and the resultant falling revenues for The Treasury. Increasingly, she argues, a lack of secure roles at large companies, and the poorly-met flexible working needs of mothers and carers, is forcing people towards self-employment.

Despite being pleased by the U-turn, she remains upset by plans to more than halve the dividend tax allowance for company owners from £5,000 to £2,000. “The Government seems to want people to be enterprising, but there are no real signs of how it's making that attractive in reality,” she says.

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