Transcripts For BBCNEWS The Budget 20170308

Of frost around, mild in the west, cloud and outbreaks of rain and hail fog around. Quite a contrast is friday begins, the cloud and drizzly rain will win out. On friday things look very different, with plenty of cloud around, but it will feel very similar because it will still be mild. More unsettled at the weekend, we will bring these Weather Fronts across the uk but there are gaps in between and if you find yourself in a gap it will be drier and brighter for a time. The weekend starts mild but we will change the direction of bit. From the west of the uk, it will bring temperatures down by a couple of degrees by sunday. Not by much. Occasional sunshine, degrees by sunday. Not by much. Occasionalsunshine, occasional rain, feeling cooler by sunday. The top stories the Philip Hammond has increased National Insurance for Self Employed people in his first budget, leading to accusations he has broken a Manifesto Pledge not to raise taxes. The budget also included an extra £2 billion for the Social Care System in england as the chancellor said he was putting the economy on a solid footing. As we start our negotiations to exit the european union, this budget takes forward our plan to prepare britain for a brighter future. The labour Leaderjeremy Corbyn said the budget was built on unfairness and provided tax breaks for the few and Public Service cuts for the many. Utter complacency about the crisis facing our Public Services and complacent about the reality of daily life for millions of people in this country. In other news, Police Searching for missing airman Corrie Mckeague say they are confident his body will be found at a landfill site. The raf serviceman has not been seen since an night out in suffolk in september. The website wikileaks published thousands of pages of what it says are leaked cia files. The documents appear to reveal attempts to use Household Gadgets to eavesdrop on peoples conversations. We have been asking for your questions and suggestions on personal finance and the budget. We have got three experts here to answer your questions. Paul lewis, a financial journalist and presenter of bbc radio fours money box. Michelle mcgrade, a Finance Expert and chief Investment Officer at td direct investing. And anita monteith, tax manager at the institute of chartered accountants in england and wales. Lets take a closer look at some of the main Talking Points in Philip Hammonds first budget. He announced a 1 rise next year in National Insurance contributions for the Self Employed and another rise the following year. The move appears to contradict a conservative Manifesto Pledge at the last election. Mr hammond also announced an extra £2 billion for social care in england over the next three years, with £1 billion available straight away. There were also measures to soften the impact of the Business Rates re evaluation in england with £435 million for firms affected by increases, including a Hardship Fund for the worst hit as well as a £1000 discount for most pubs in england. There was a cut in the tax free Dividends Allowance for shareholders and directors of small private firms from £5,000 to £2000 from april next year. Mr hammond is also spending £100 million to place more gps in accident and Emergency Departments in england for next winter. And there was a change in Technical Education with the introduction of a new broad based t level qualification, as well as an extra £216 million in funding for schools. 0k, ok, lets begin. We are going to start with the first question which is from sheffield. One person from sheffield has texted us to say im a Nursery Director and we pay a big amount of money for our Business Rate every year, nearly £13,000. If our Business Rate could not be reduced in the future, we do not think we can stay in this business any longer. Is enough being done to support Small Businesses in this budget . Actually, yes, not enough is being done right now. But this is a controversy that has arisen because the new Business Rates have just been announced. What has come about is that it is really an unfair tax and it does not fit and is not fit for purpose today at all because Companies Need to be taxed on their reve nu es Companies Need to be taxed on their revenues rather than on the building that they are residing in. For example, this nursery, you could probably convert that to a couple of flats and the rates they would pay would be much less. This really needs to be thought through. There isa needs to be thought through. There is a fund that looks like something temporary while they really think through this whole situation because it has really hit the Small Businesses in a big way actually. But if the appeals process for dealing with any inaccuracies in terms of re evaluating these rates was quicker and speedier and timely, then the situation would not be quite as bad, would it . One thing that all businesses look for is some sort of consistency. People do not like shocks to stop they will budget from one year to the next and the Revaluation Exercise that has been long overdue i think a lot of people have found the sudden increase quite difficult to cope with, dont you think . They have been working this thing out for seven years. When they get the bill it will be seven years. Although in some parts of the country, particularly london and the south east and bristol, Business Rates will be going up, but there are parts of the country where they will be coming down. One lady said hers was coming down to zero which is good news for her. We have got this 300 million which will be for local council to allocate, to sort out the problems in their area. It is not a lot of money, but it is good news. If you stop being a Small Business by definition and go to a big business, you will not have arise. There is a special £1000 for pubs because they pay the tax partly oii pubs because they pay the tax partly on their turnover. I was talking to a public earlier who was very pleased. He is still facing a big rise, but it is not quite so big. This is our second query. And elliot mason asks will the rise in social care funding help to alleviate the strain on the nhs by a noticeable amount . Paul . I do not think so. Local Authorities Say to me that extra £2 billion will be swallowed up in the higher minimum wages they will have to pay to care workers. It is interesting, but it is not necessarily the answer. It only helps people who the local authority are paying for and that might help get a few more people out of hospitals. But for all the people who pay for themselves there is no change except a green paper, a discussion, another review, the third we have had in the last dozen years. It is a gesture rather than an answer. 1 billion will be straightaway, so that is something that at least local authorities can say, we can start to alleviate the situation. People who have immediate cash needs, adding £1 billion immediately means they can move on. But it is divided between hundreds of local authorities. Our next question. Our next question. One of the most talked about announcements in todays budget has been the reform to National Insurance contributions. The Conservative Manifesto said they wouldnt raise it, but the chancellor today said some Self Employed workers, those on class 4 rates, will find it go up to 10 and then 11 in april 2019. Well get some of your questions on National Insurance in a moment, but first Rita Chakrabarti has been speaking to three Small Business owners to see what they make of the plans. No need to worry about the sums when youre small, that is what mums are for. Charlotte and sarah are both Self Employed, and started their separate businesses after having children. Charlotte says the chancellors hike of National Insurance contributions for people like her is bad news. Its a bit sad. I think its affecting Kitchen Table businesses, you know, mums starting up after maternity leave. They dont get the same benefits you get as an employed person. If were sick or anything, were still working through, theres no one to take over. The chancellor says it is fair, this is bringing you up to the levels that other employees have to pay . I guess so. If i was working, i would be paying that level anyway. It is still slightly less than that. I cant feel too bad about it. Ruth also started out as Self Employed, but she now runs a larger business selling birthing pools, which has a turnover of £250,000 a year. The National Insurance increase will affect her. But that should be offset by cuts in Corporation Tax. The chancellor is taxing businesspeople on a personal level more. But hes sneaking in the Corporation Tax is going down. Overall, the question is where that balance lies. Overall, it sounds like youre going to be roughly. Same as we were, absolutely. Todays reforms to National Insurance contributions and previously announced changes means that there are winners and losers. Someone who is Self Employed, with average earnings of £12,700 will be £70 per year better off in 201920. For a Self Employed person earning an average of £17,300, theyll be £20 worse off. And a Self Employed Management Consultant on an average of over £51,000 will be £620 worse off per year. Theres not much sympathy down the road in keighley, at dobsons gaskets, a Family Business thats three generations old. Theyre all classed as employees here and so all taxed as pay as you earn. They say quite right too, to the chancellors changes. At the moment, theyre paying a lot less for very similar amounts of cover and help from the government. They still get the same State Pension now and they still have a lot more flexibility in their own lifestyle. You think its absolutely right and fair that the chancellors done this . Absolutely, yeah. Its is the way forward. There was blue sky over yorkshire today. But, as always on budget day, only for some. Our next question is about National Insurance and it comes from paul mccabe. He asks how does the rise in National Insurance contributions for the Self Employed bring parity, when employees have access to paid holiday and sickness pay . The way i look at it is if you are being paid an amount like the chancellor said, it does not matter how many weeks you have worked to earn that amount of money, you have earned the same amount of money. So if you have had six periods and days off and holiday, you are earning the same amount of money for the year. Soi same amount of money for the year. So i can see the fairness in that. I do understand Self Employed people feel as though they cannot take holidays because they are managing their own lifestyle, but that is one of the reasons why they are Self Employed and that is why it is attractive for a lot of people, and attractive for a lot of people, and a lot of women, to be Self Employed because they can have a flexible lifestyle. They can work when they wa nt lifestyle. They can work when they want and lifestyle. They can work when they wantand do lifestyle. They can work when they want and do the type of work they want, they will not be dictated to by an employer. I see it as kind of fair actorly. Does it feel fair to you, paul . Yes, ithink it is fair actorly. Does it feel fair to you, paul . Yes, i think it is fair andi you, paul . Yes, i think it is fair and i spoke to somebody who has been Self Employed for a long time. The point is you now get the same State Pension. National insurance menu pays for the State Pension. Self employed people off and got less and now they get the same. So it does seem fair. The point about sick pay and holidays, holidays is how you manage your business. But i think sick pay and maternity pay, paternity pay, that is paid for two National Insurance and Self Employed people do not get those things. The chancellor has said he will look at that. My prediction is by 2018 there will be some concession so people will be some concession so people will get certainly parental benefits by that time. Sick pay i am not so sure. Ithink by that time. Sick pay i am not so sure. I think it is fair and eventually it will probably go up to 1296. Eventually it will probably go up to 12 . There is another 1 to go before that announcement. But the amount of money it will bring in, £145 million, that is a drop in the ocean. If you take this change alongside the dividend allowance, we will be looking at £1. 5 billion per year within a couple of years. It is very important to put this in the context of other work that has been going on. You look at the whole package around employment and self employment. We have tax rules and law rules and they are different. We are expecting injune to hear from Matthew Taylor who has been looking into this, but in the uk we have never had a discussion about whether that should be a difference between the National Insurance you play as an employee and the National Insurance as a Self Employed. We need to have that debate and if we think there should bea debate and if we think there should be a difference we need to decide what that should be. And wide. The numbers of Self Employed are going up. Dramatically. Some of them pay less because the flat rate class two is being scrapped in 2018. That is £145 a year. They will not pay that any more. If you do not earn enough to pay as much in the extra 11 , you will do better. I did not check the chancellors figure, but at about £16,000 per year you will pay more, below that you will pay the same or less. That is worth saying. A lot of people who start off in self employment earn very little. They will do better after this. A question now from tony humphreys, who says i am a software developer. I would love to start contracting, but i am hindered by ir35. Will it be watered down . What is that . I was really hoping this would not come to me. It is the numberofa this would not come to me. It is the number of a Press Release that was issued in the 1990s. Back in 1999. Anita is going to take over. Issued in the 1990s. Back in 1999. Anita is going to take ovenfi issued in the 1990s. Back in 1999. Anita is going to take over. It was the inland revenue, now hmrc. What this did was to look at people who we re this did was to look at people who were arguing that they were Self Employed by simply putting a contract Self Employed by simply putting a co nt ra ct of Self Employed by simply putting a contract of self employment in place between them and the person they did work for, when actually they were really employees. They would leave work on friday as an employee and they would come back with this new, shiny contract and say i am Self Employed and pay less tax, on a monday. The employer loved it because they did not have to pay sick pay or holiday pay or anything else and they can take them on. They loved it as well. The National Insurance was a big one. The comments i have been getting today is people who want to be contractors find it very difficult, but as a Self Employed person they have these advantages, but employers demand it. Some would like to be employees, but they cannot be because employers say you are Self Employed, even though they are turning up at the same office at the same time every day, behaving and acting like an employee. That has to be looked at as part of this. I cannot answer the question directly. I do not know whether it will change very much. The whole thing is being looked at and i think slowly we will see a change. At the end of last week contractors can use to determine whether the contract they are working under is employment or self employment. We are looking namely at people who have incorporated as a i Person Company andi incorporated as a i Person Company and i then working for somebody through the umbrella of a company. We have a few more questions. Terence oneil also wants to know about the state of the economy. He asks what use is 2 growth if the currency is devalued by 15 . I would like to ask him what he would think if growth was 0 and we had inflation. Growth is a good thing. Lets talk about the growth first of all. We are expecting growth in this country and we are also expecting growth in the world. Just about everywhere in the world we are seeing a pick up on Economic Activity and that has to be a tailwind for us in the uk. With Sterling Falling, a lot of our exporters are doing very well, thank you very much, from that because our goods cost less overseas. If the Companies Overseas are spending more and buying more of our goods, it is and buying more of our goods, it is a good thing. But on the other hand with Sterling Falling it does mean that our goods, mainly clothing and food, will cost a bit more and it is true it will have a bit of a knock on effect. We think that wages probably are not going to go up as much as people would like. They will not keep pace with inflation . Possibly not. We have got to enrolment coming in as well and a lot of employers are using that as a reason for not increasing wages so far this year. But on productivity, if the chancellor is right and we get Productivity Gains through his measures and through just growth as well, then that is good for our economy and it should offset some of this fall in sterling. We will see on that one. We will see on that one. Our next question comes from martha, has messaged us to say what amendments will be put in place in regards to the Benefit System . Will it still be financially better to live off benefits and not work . Im not sure about that last bit, sorry, martha. What changes do you see coming . We have two systems running in parallel. We have got the old tax Credit System and the new universal Credit System. Both of those systems are designed to make it advantageous to go out and work. It is to supplement the needs of people who are on low incomes. The problem with the switchover from the tax Credit System to the universal Credit System is that it has proven much more difficult to get the it right and perhaps was anticipated in the first place. I think it will Ta Ke The First place. I think it will take another four or five years because the Big Switchover will happen from one system to the other. We have at the same time a new project to make tax digital which will make every business in the uk have to submit digital records. With all of that new it needing to feed into the same system. It will be a big mess. It will be a big challenge for everyone. You are rolling your eyes. Challenge is one thing, mess is another. There are very few people know who are better off on benefits. The jobseekers allowance is £71 a week. If you want to live on that, stay unemployed and leave the job to someone else in my view. I think martha is wrong about that. There will be no more changes in benefits, Philip Hammond has made that quite clear. The changes will happen. He made it slightly better to work on universal credit, lets not go into it, but he announced that today. But the austerity measures, the cuts for disabled people and single parents, they will carry on. People and single parents, they will carry on. On to savings now, and robert has sent this question in. He says what is the government doing to encourage people to save . We have now got so many different forms of acers i have lost count. I have to mention the Savings Allowa Nce have to mention the Savings Allowance we still have if you are lucky to find somebody to give you enough interest to make use of it. We we re enough interest to make use of it. We were talking earlier about the absence lisa. It is a new lifetime isa. You can pay 2. 2 over three years and you put in £2000 and after the end of three years you will have about an extra £200. The rate was announced today. It is good news for people who want to put away £3000 over three years. They must guarantee that. We must they are earning in a month and put in a little bit all the time. The last question, how much longer can we borrow . If you want certainty, you will end to the uk government. There are Oil Rich States who want a guaranteed return for maybe 20 years. They want to know exactly what will come back for their pensions plans. There is no shortage. But the odd thing i noticed today is that the interest on the debt that the government owes its 50 billion a year. Thats 50 billion is exactly what the government will borrow next year. So we are borrowing 50 billion to pay the interest on our 1. 7 trillion. If we we re a the interest on our 1. 7 trillion. If we were a household, that would be bad. We could use that Interest Payment for other things to pay for things like social care etc. We do wa nt things like social care etc. We do want that Borrowing Level to come down, but as paul said the uk is a safe bet and if we are growing the way we say we are growing, it is even safer. I think we are doing well, we are bringing the deficit down each year, but we have got to get rid of it. The debt is going up every year. Austerity is probably another eight or nine years. At least. It has been great having you in. Many thanks for the questions. And for more reaction to the budget you can go to the website. You will find live updates and full analysis from all our reporters. Many thanks again to everybody here and to you for watching. Letsjoin nick miller for watching. Letsjoin nick miller for all the weather. We have the highest temperatures overnight. We have cloud and damp and drizzly weather inside of england and there is some fog around some of the coasts. It is a different story in the northern part of the uk. There are showers overnight spreading through scotland. We still have some of those showers in scotland as we start the day tomorrow, but gradually they become confined to the far north and the northern isles. Some damp and drizzly weather in the Channel Islands and in south it is a variable cloud and sunny spells. Double figures in temperatures, maybe as high as 16 in the south of england. Wherever you are it is very pleasant with sunshine. Some sunshine over the weekend at times, but there will be spells of wet weather moving through. Staying fairly mild and a little bit cooler by the time we get to sunday. Hello, im philippa thomas, this is outside source. Islamic state militants disguised as doctors have attacked a Military Hospital in kabul, leaving more than 30 people dead. Translation when he fired only i felt down on the ground. But doctor shot my colleague. Somehow i escaped using the backpacks that. The back exit. The us says all options are on the table to deal with north korea and will not consider entering into negotiations the countrys leader. This is not a national. Rational person. At least 19 teenage girls have died in a blaze at a Childrens Home and what other. And as the world