:00:13. > :00:17.The Philip Hammond has increased national insurance for self employed
:00:18. > :00:20.people in his first budget, leading to accusations he has broken a
:00:21. > :00:29.The budget also included an extra ?2 billion for the social care system
:00:30. > :00:31.in England as the Chancellor said he was putting the economy
:00:32. > :00:38.As we start our negotiations to exit the European Union, this budget
:00:39. > :00:46.takes forward our plan to prepare Britain for a brighter future.
:00:47. > :00:48.The Labour leader Jeremy Corbyn said the budget was built on unfairness
:00:49. > :00:52.and provided tax breaks for the few and public service cuts for the
:00:53. > :01:03.Utter complacency about the crisis facing our public services
:01:04. > :01:05.and complacent about the reality of daily life for millions
:01:06. > :01:14.In other news, police searching for missing airman Corrie McKeague
:01:15. > :01:17.say they are confident his body will be found at a landfill site.
:01:18. > :01:20.The RAF serviceman has not been seen since an night out
:01:21. > :01:25.The website WikiLeaks published thousands of pages of what it says
:01:26. > :01:29.The documents appear to reveal attempts to use household
:01:30. > :01:48.gadgets to eavesdrop on people's conversations.
:01:49. > :01:54.We have been asking for your questions and suggestions on
:01:55. > :01:58.We have got three experts here to answer your questions.
:01:59. > :02:01.Paul Lewis, a financial journalist and presenter
:02:02. > :02:05.Michelle McGrade, a finance expert and chief investment officer at TD
:02:06. > :02:09.And Anita Monteith, tax manager at the
:02:10. > :02:13.Institute of Chartered Accountants in England and Wales.
:02:14. > :02:16.Let's take a closer look at some of the main talking points
:02:17. > :02:21.He announced a 1% rise next year in National Insurance contributions
:02:22. > :02:23.for the self-employed and another rise the following year.
:02:24. > :02:26.The move appears to contradict a Conservative manifesto pledge
:02:27. > :02:31.Mr Hammond also announced an extra ?2 billion for social care
:02:32. > :02:34.in England over the next three years, with ?1 billion
:02:35. > :02:40.There were also measures to soften the impact of the business rates
:02:41. > :02:43.re-evaluation in England with ?435 million for firms
:02:44. > :02:45.affected by increases, including a hardship fund
:02:46. > :02:51.for the worst hit as well as a ?1000 discount for most pubs in England.
:02:52. > :02:55.There was a cut in the tax-free dividends allowance for shareholders
:02:56. > :02:59.and directors of small private firms from ?5,000 to ?2000
:03:00. > :03:04.Mr Hammond is also spending ?100 million to place more GPs
:03:05. > :03:07.in accident and emergency departments in England
:03:08. > :03:13.And there was a change in technical education with the introduction
:03:14. > :03:16.of a new broad-based T-Level qualification, as well as an extra
:03:17. > :03:30.OK, let's begin. We are going to start with the first question which
:03:31. > :03:35.One person from Sheffield has texted us to say: I'm a nursery director
:03:36. > :03:38.and we pay a big amount of money for our business rate every
:03:39. > :03:42.If our business rate could not be reduced in the future,
:03:43. > :03:44.we do not think we can stay in this business any longer.
:03:45. > :03:56.Is enough being done to support small businesses in this budget?
:03:57. > :04:03.Actually, yes, not enough is being done right now. But this is a
:04:04. > :04:09.controversy that has arisen because the new business rates have just
:04:10. > :04:15.been announced. What has come about is that it is really an unfair tax
:04:16. > :04:19.and it does not fit and is not fit for purpose today at all because
:04:20. > :04:27.companies need to be taxed on their revenues rather than on the building
:04:28. > :04:30.that they are residing in. For example, this nursery, you could
:04:31. > :04:35.probably convert that to a couple of flats and the rates they would pay
:04:36. > :04:41.would be much less. This really needs to be thought through. There
:04:42. > :04:46.is a fund that looks like something temporary while they really think
:04:47. > :04:51.through this whole situation because it has really hit the small
:04:52. > :04:56.businesses in a big way actually. But if the appeals process for
:04:57. > :05:00.dealing with any inaccuracies in terms of re-evaluating these rates
:05:01. > :05:06.was quicker and speedier and timely, then the situation would not be
:05:07. > :05:10.quite as bad, would it? One thing that all businesses look for is some
:05:11. > :05:16.sort of consistency. People do not like shocks to stop they will budget
:05:17. > :05:25.from one year to the next and the revaluation exercise that has been
:05:26. > :05:29.long overdue I think a lot of people have found the sudden increase quite
:05:30. > :05:36.difficult to cope with, don't you think? They have been working this
:05:37. > :05:41.thing out for seven years. When they get the bill it will be seven years.
:05:42. > :05:44.Although in some parts of the country, particularly London and the
:05:45. > :05:48.South East and Bristol, business rates will be going up, but there
:05:49. > :05:53.are parts of the country where they will be coming down. One lady said
:05:54. > :05:59.hers was coming down to zero which is good news for her. We have got
:06:00. > :06:02.this 300 million which will be for local council to allocate, to sort
:06:03. > :06:08.out the problems in their area. It is not a lot of money, but it is
:06:09. > :06:12.good news. If you stop being a small business by definition and go to a
:06:13. > :06:17.big business, you will not have arise. There is a special ?1000 for
:06:18. > :06:23.pubs because they pay the tax partly on their turnover. I was talking to
:06:24. > :06:28.a public earlier who was very pleased. He is still facing a big
:06:29. > :06:32.rise, but it is not quite so big. This is our second query.
:06:33. > :06:35.And Elliot Mason asks: Will the rise in social care funding
:06:36. > :06:39.help to alleviate the strain on the NHS by a noticeable amount?
:06:40. > :06:49.Paul? I do not think so. Local authorities say to me that extra ?2
:06:50. > :06:54.billion will be swallowed up in the higher minimum wages they will have
:06:55. > :06:58.to pay to care workers. It is interesting, but it is not
:06:59. > :07:01.necessarily the answer. It only helps people who the local authority
:07:02. > :07:07.are paying for and that might help get a few more people out of
:07:08. > :07:12.hospitals. But for all the people who pay for themselves there is no
:07:13. > :07:16.change except a green paper, a discussion, another review, the
:07:17. > :07:22.third we have had in the last dozen years. It is a gesture rather than
:07:23. > :07:27.an answer. 1 billion will be straightaway, so that is something
:07:28. > :07:32.that at least local authorities can say, we can start to alleviate the
:07:33. > :07:40.situation. People who have immediate cash needs, adding ?1 billion
:07:41. > :07:45.immediately means they can move on. But it is divided between hundreds
:07:46. > :07:46.of local authorities. Our next question.
:07:47. > :07:50.One of the most talked about announcements in today's
:07:51. > :07:52.Budget has been the reform to National Insurance contributions.
:07:53. > :07:54.The Conservative manifesto said they wouldn't raise it,
:07:55. > :07:56.but the Chancellor today said some self-employed workers,
:07:57. > :07:59.those on Class 4 rates, will find it go up to 10% and then
:08:00. > :08:06.We'll get some of your questions on National Insurance in a moment,
:08:07. > :08:08.but first Rita Chakrabarti has been speaking to three small
:08:09. > :08:11.business owners to see what they make of the plans.
:08:12. > :08:14.No need to worry about the sums when you're small,
:08:15. > :08:18.Charlotte and Sarah are both self-employed,
:08:19. > :08:21.and started their separate businesses after having children.
:08:22. > :08:24.Charlotte says the Chancellor's hike of national insurance contributions
:08:25. > :08:32.I think it's affecting kitchen table businesses,
:08:33. > :08:36.you know, mums starting up after maternity leave.
:08:37. > :08:39.They don't get the same benefits you get as an employed person.
:08:40. > :08:43.If we're sick or anything, we're still working through,
:08:44. > :08:48.The Chancellor says it is fair, this is bringing you up
:08:49. > :08:50.to the levels that other employees have to pay?
:08:51. > :08:54.If I was working, I would be paying that level anyway.
:08:55. > :08:59.Ruth also started out as self-employed, but she now runs
:09:00. > :09:02.a larger business selling birthing pools, which has a turnover
:09:03. > :09:07.The national insurance increase will affect her.
:09:08. > :09:11.But that should be offset by cuts in corporation tax.
:09:12. > :09:15.The Chancellor is taxing businesspeople on a
:09:16. > :09:21.But he's sneaking in the corporation tax is going down.
:09:22. > :09:25.Overall, the question is where that balance lies.
:09:26. > :09:28.Overall, it sounds like you're going to be roughly...
:09:29. > :09:33.Today's reforms to National Insurance contributions
:09:34. > :09:36.and previously announced changes means that there are
:09:37. > :09:43.Someone who is self-employed, with average earnings of ?12,700
:09:44. > :09:47.will be ?70 per year better off in 2019-20.
:09:48. > :09:51.For a self-employed person earning an average of ?17,300,
:09:52. > :09:56.And a self-employed management consultant on an average of over
:09:57. > :10:02.?51,000 will be ?620 worse off per year.
:10:03. > :10:05.There's not much sympathy down the road in Keighley,
:10:06. > :10:07.at Dobson's Gaskets, a family business that's
:10:08. > :10:12.They're all classed as employees here and so all taxed
:10:13. > :10:17.They say quite right too, to the Chancellor's changes.
:10:18. > :10:20.At the moment, they're paying a lot less for very similar
:10:21. > :10:23.amounts of cover and help from the Government.
:10:24. > :10:26.They still get the same state pension now and they still
:10:27. > :10:29.have a lot more flexibility in their own lifestyle.
:10:30. > :10:31.You think it's absolutely right and fair that the
:10:32. > :10:37.There was blue sky over Yorkshire today.
:10:38. > :10:51.But, as always on Budget Day, only for some.
:10:52. > :10:53.Our next question is about National Insurance and it
:10:54. > :10:56.He asks: How does the rise in national Insurance Contributions
:10:57. > :10:59.for the self-employed bring parity, when employees have access to paid
:11:00. > :11:11.The way I look at it is if you are being paid an amount like the
:11:12. > :11:16.Chancellor said, it does not matter how many weeks you have worked to
:11:17. > :11:21.earn that amount of money, you have earned the same amount of money. So
:11:22. > :11:27.if you have had six periods and days off and holiday, you are earning the
:11:28. > :11:34.same amount of money for the year. So I can see the fairness in that. I
:11:35. > :11:39.do understand self-employed people feel as though they cannot take
:11:40. > :11:44.holidays because they are managing their own lifestyle, but that is one
:11:45. > :11:48.of the reasons why they are self-employed and that is why it is
:11:49. > :11:52.attractive for a lot of people, and a lot of women, to be self-employed
:11:53. > :11:56.because they can have a flexible lifestyle. They can work when they
:11:57. > :12:01.want and do the type of work they want, they will not be dictated to
:12:02. > :12:07.by an employer. I see it as kind of fair actorly. Does it feel fair to
:12:08. > :12:12.you, Paul? Yes, I think it is fair and I spoke to somebody who has been
:12:13. > :12:17.self-employed for a long time. The point is you now get the same state
:12:18. > :12:21.pension. National insurance menu pays for the state pension.
:12:22. > :12:26.Self-employed people off and got less and now they get the same. So
:12:27. > :12:32.it does seem fair. The point about sick pay and holidays, holidays is
:12:33. > :12:38.how you manage your business. But I think sick pay and maternity pay,
:12:39. > :12:43.paternity pay, that is paid for two national insurance and self-employed
:12:44. > :12:47.people do not get those things. The Chancellor has said he will look at
:12:48. > :12:53.that. My prediction is by 2018 there will be some concession so people
:12:54. > :13:00.will get certainly parental benefits by that time. Sick pay I am not so
:13:01. > :13:03.sure. I think it is fair and eventually it will probably go up to
:13:04. > :13:11.12%. There is another 1% to go before that announcement. But the
:13:12. > :13:19.amount of money it will bring in, ?145 million, that is a drop in the
:13:20. > :13:23.ocean. If you take this change alongside the dividend allowance, we
:13:24. > :13:28.will be looking at ?1.5 billion per year within a couple of years. It is
:13:29. > :13:34.very important to put this in the context of other work that has been
:13:35. > :13:39.going on. You look at the whole package around employment and
:13:40. > :13:44.self-employment. We have tax rules and law rules and they are
:13:45. > :13:48.different. We are expecting in June to hear from Matthew Taylor who has
:13:49. > :13:52.been looking into this, but in the UK we have never had a discussion
:13:53. > :13:55.about whether that should be a difference between the national
:13:56. > :14:01.insurance you play as an employee and the national insurance as a
:14:02. > :14:04.self-employed. We need to have that debate and if we think there should
:14:05. > :14:11.be a difference we need to decide what that should be. And wide. The
:14:12. > :14:17.numbers of self-employed are going up. Dramatically. Some of them pay
:14:18. > :14:23.less because the flat rate class two is being scrapped in 2018. That is
:14:24. > :14:30.?145 a year. They will not pay that any more. If you do not earn enough
:14:31. > :14:37.to pay as much in the extra 11%, you will do better. I did not check the
:14:38. > :14:42.Chancellor's figure, but at about ?16,000 per year you will pay more,
:14:43. > :14:47.below that you will pay the same or less. That is worth saying. A lot of
:14:48. > :14:50.people who start off in self-employment earn very little.
:14:51. > :14:55.A question now from Tony Humphreys, who says: I am a software developer.
:14:56. > :14:58.I would love to start contracting, but I am hindered by IR35.
:14:59. > :15:09.What is that? I was really hoping this would not come to me. It is the
:15:10. > :15:19.number of a press release that was issued in the 1990s. Back in 1999.
:15:20. > :15:24.Anita is going to take over. It was the Inland Revenue, now HMRC. What
:15:25. > :15:30.this did was to look at people who were arguing that they were
:15:31. > :15:35.self-employed by simply putting a contract of self employment in place
:15:36. > :15:41.between them and the person they did work for, when actually they were
:15:42. > :15:44.really employees. They would leave work on Friday as an employee and
:15:45. > :15:48.they would come back with this new, shiny contract and say I am
:15:49. > :15:53.self-employed and pay less tax, on a Monday. The employer loved it
:15:54. > :16:01.because they did not have to pay sick pay or holiday pay or anything
:16:02. > :16:05.else and they can take them on. They loved it as well. The national
:16:06. > :16:11.insurance was a big one. The comments I have been getting today
:16:12. > :16:15.is people who want to be contractors find it very difficult, but as a
:16:16. > :16:20.self-employed person they have these advantages, but employers demand it.
:16:21. > :16:26.Some would like to be employees, but they cannot be because employers say
:16:27. > :16:30.you are self-employed, even though they are turning up at the same
:16:31. > :16:35.office at the same time every day, behaving and acting like an
:16:36. > :16:45.employee. That has to be looked at as part of this. I cannot answer the
:16:46. > :16:48.question directly. I do not know whether it will change very much.
:16:49. > :16:49.The whole thing is being looked at and I think slowly we will see a
:16:50. > :16:57.change. At the end of last week contractors can use to determine
:16:58. > :17:02.whether the contract they are working under is employment or
:17:03. > :17:06.self-employment. We are looking namely at people who have
:17:07. > :17:11.incorporated as a 1-person company and I then working for somebody
:17:12. > :17:14.through the umbrella of a company. We have a few more questions.
:17:15. > :17:17.Terence O'Neil also wants to know about the state of the economy.
:17:18. > :17:19.He asks: "What use is 2% growth if the currency
:17:20. > :17:30.I would like to ask him what he would think if growth was 0% and we
:17:31. > :17:35.had inflation. Growth is a good thing. Let's talk about the growth
:17:36. > :17:41.first of all. We are expecting growth in this country and we are
:17:42. > :17:46.also expecting growth in the world. Just about everywhere in the world
:17:47. > :17:51.we are seeing a pick-up on economic activity and that has to be a
:17:52. > :17:56.tailwind for us in the UK. With sterling falling, a lot of our
:17:57. > :18:05.exporters are doing very well, thank you very much, from that because our
:18:06. > :18:08.goods cost less overseas. If the companies overseas are spending more
:18:09. > :18:15.and buying more of our goods, it is a good thing. But on the other hand
:18:16. > :18:21.with sterling falling it does mean that our goods, mainly clothing and
:18:22. > :18:26.food, will cost a bit more and it is true it will have a bit of a
:18:27. > :18:34.knock-on effect. We think that wages probably are not going to go up as
:18:35. > :18:39.much as people would like. They will not keep pace with inflation?
:18:40. > :18:44.Possibly not. We have got to enrolment coming in as well and a
:18:45. > :18:50.lot of employers are using that as a reason for not increasing wages so
:18:51. > :18:56.far this year. But on productivity, if the Chancellor is right and we
:18:57. > :19:01.get productivity gains through his measures and through just growth as
:19:02. > :19:08.well, then that is good for our economy and it should offset some of
:19:09. > :19:09.this fall in sterling. We will see on that one.
:19:10. > :19:13.Our next question comes from Martha, has messaged us to say:
:19:14. > :19:17.What amendments will be put in place in regards to the benefit system?
:19:18. > :19:22.Will it still be financially better to live off benefits and not work?
:19:23. > :19:32.I'm not sure about that last bit, sorry, Martha. What changes do you
:19:33. > :19:37.see coming? We have two systems running in parallel. We have got the
:19:38. > :19:41.old tax credit system and the new Universal Credit system. Both of
:19:42. > :19:50.it advantageous to go out and work. it advantageous to go out and work.
:19:51. > :19:55.It is to supplement the needs of people who are on low incomes. The
:19:56. > :20:00.problem with the switchover from the tax credit system to the Universal
:20:01. > :20:05.Credit system is that it has proven much more difficult to get the IT
:20:06. > :20:11.right and perhaps was anticipated in the first place. I think it will
:20:12. > :20:16.take another four or five years because the big switchover will
:20:17. > :20:22.happen from one system to the other. We have at the same time a new
:20:23. > :20:29.project to make tax digital which will make every business in the UK
:20:30. > :20:34.have to submit digital records. With all of that new IT needing to feed
:20:35. > :20:40.into the same system... It will be a big mess. It will be a big challenge
:20:41. > :20:47.for everyone. You are rolling your eyes. Challenge is one thing, mess
:20:48. > :20:51.is another. There are very few people know who are better off on
:20:52. > :20:57.benefits. The jobseeker's allowance is ?71 a week. If you want to live
:20:58. > :21:03.on that, stay unemployed and leave the job to someone else in my view.
:21:04. > :21:07.I think Martha is wrong about that. There will be no more changes in
:21:08. > :21:11.benefits, Philip Hammond has made that quite clear. The changes will
:21:12. > :21:18.happen. He made it slightly better to work on Universal Credit, let's
:21:19. > :21:22.not go into it, but he announced that today. But the austerity
:21:23. > :21:24.measures, the cuts for disabled people and single parents, they will
:21:25. > :21:28.people and single parents, they will carry on.
:21:29. > :21:34.On to savings now, and Robert has sent this question in.
:21:35. > :21:41.He says: What is the government doing to encourage people to save?
:21:42. > :21:50.We have now got so many different forms of Acers I have lost count. I
:21:51. > :21:53.have to mention the savings allowance we still have if you are
:21:54. > :21:55.lucky to find somebody to give you enough interest to make use of it.
:21:56. > :22:23.We were talking earlier about the absence LISA. It is a new lifetime
:22:24. > :22:27.ISA. You can pay 2.2% over three years and you put in ?2000 and after
:22:28. > :22:33.the end of three years you will have about an extra ?200. The rate was
:22:34. > :22:37.announced today. It is good news for people who want to put away ?3000
:22:38. > :23:15.over three years. They must guarantee that. We must
:23:16. > :23:25.they are earning in a month and put in a little bit all the time.
:23:26. > :23:32.The last question, how much longer can we borrow? If you want
:23:33. > :23:37.certainty, you will end to the UK Government. There are oil-rich
:23:38. > :23:43.states who want a guaranteed return for maybe 20 years. They want to
:23:44. > :23:49.know exactly what will come back for their pensions plans. There is no
:23:50. > :23:54.shortage. But the odd thing I noticed today is that the interest
:23:55. > :23:59.on the debt that the government owes its 50 billion a year. That's 50
:24:00. > :24:03.billion is exactly what the government will borrow next year. So
:24:04. > :24:08.we are borrowing 50 billion to pay the interest on our 1.7 trillion. If
:24:09. > :24:14.we were a household, that would be bad. We could use that interest
:24:15. > :24:20.payment for other things to pay for things like social care etc. We do
:24:21. > :24:25.want that borrowing level to come down, but as Paul said the UK is a
:24:26. > :24:31.safe bet and if we are growing the way we say we are growing, it is
:24:32. > :24:34.even safer. I think we are doing well, we are bringing the deficit
:24:35. > :24:40.down each year, but we have got to get rid of it. The debt is going up
:24:41. > :24:45.every year. Austerity is probably another eight or nine years. At
:24:46. > :24:54.least. It has been great having you in. Many thanks for the questions.
:24:55. > :24:59.And for more reaction to the budget you can go to the website. You will
:25:00. > :25:05.find live updates and full analysis from all our reporters. Many thanks
:25:06. > :25:06.again to everybody here and to you for watching. Let's join Nick Miller
:25:07. > :25:18.for all the weather. We have the highest temperatures
:25:19. > :25:19.overnight. We have cloud and damp and drizzly weather inside