Has the Chancellor got it wrong on self-employment?

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As we emerge from this period of crisis, the nature of the political debate has subtly shifted. We’re no longer thinking about how to get through the next days and weeks, but about what we’ve learned during this time of trial.

The Covid-19 pandemic has yielded a thousand stories - from the heartbreaking tales of businesses gone to the wall, to the extraordinary heroism of Captain Sir Tom Moore, all the way to the resilience of the tech sector that has shown us glimpses of an accelerating future.

But as a vast and imaginative furlough scheme was unfolded - at a pace and with an efficiency which Finito World applauds - there have been those who have fallen through the cracks. That this was inevitable during a time of such upheaval doesn’t make the matter any less something from which we should learn.

One of these was the self-employed, who have been the sacrificial lambs of Covid-19. Consider, for instance, that you had taken the entrepreneurial step of moving to sole trader status during the tax year 2018-2019. You’d have qualified for no government support, but by a quirk of HMRC’s rules, found yourself liable to pay 150 per cent of tax for the next two years. All that would have been payable by 31st January.

Now imagine that you’ve made that move, but you’re also a parent. The services which you’re paying for - chief among them, education - would have been closed for the majority of the year.

With kids out of school, the selfemployed, lacking the structure of an employment relationship, found themselves especially vulnerable to productivity issues. The income of the self-employed rises and falls according to daily output in a way which isn’t true for people in regular jobs.

The government has made some of the right noises. In early February, Boris Johnson sent a well-meaning letter to all parents, praising their work in picking up the slack. In a time of unparalleled - and justifiedgovernment largesse, it was not uncommon in the first part of 2021 to hear parents wonder, only half-jokingly, when their own tax rebate was coming.

Noting the anomaly, the Chancellor Rishi Sunak moved to take into account the tax return filings made in 20192020 to expand the help offered to the self-employed. This was admirable, but it was accompanied by noises that at some point the self-employed National Insurance contribution would rise from the current 9 per cent to 12 per cent in line with those in employment.

This is short-sighted. Without pension contributions, or reliable pay checks, the self-employed take on a greater degree of risk. They’re by nature entrepreneurial - the sort of people the Conservatives are meant to admire. Self-employed parents are believers in the importance of the family unit - another important plank of Conservative thought. This isn’t just about self-employed fathers, but mothers too. The leading charity Pregnant Then Screwed was set up to fight against the discrimination women face during pregnancy and after having children. The organisation recently took the government to court, to challenge the Self-Employment Income Support Scheme.

The basis of their argument is that the calculation of the grant does not exempt periods of maternity leave when calculating average earnings, leaving around 69,200 women affected. When questioned, the Chancellor compared taking maternity leave to taking a sabbatical or ill-health. The charity lost its challenge in February 2021 and is seeking grounds for appeal.

Rishi Sunak’s style of delivery is always impressive. He is surely right to speak plainly to the electorate about the condition of the public finances. But when the government looks at how the cost of borrowing will be borne going forwards it will be importantboth politically and morally - for recent history to be understood.

The truth is that the complex realities of family life are not sufficiently explored by the leading think tanksa fact in itself symptomatic of an issue which has fallen through the cracks.

Mark Morrin, Principal Research Consultant at Respublica, says:

“For years the self-employed have been encouraged to go that way, but when the crisis came they were ignored.” He adds that this gap speaks to the fact that the Conservatives ’used to be entrepreneurial under Thatcher,’ but that now “the Red Wall Tories don’t look at the world that way. You might not admire Hungary and Poland for obvious reasons, but they have more sophisticated approaches to family policy.”

Morrin’s right - the Chancellor needs to look at the nuance of this before saddling the next generation of entrepreneurs with an impossible burden.

Every time there’s a US general election, we read a thousand election specials about what may happen, but in the lead-up to the result the commentary can be so much wasted paper.

In this edition Finito World has looked in depth at the Biden administration, its personalities, its underlying philosophy and early moves, in a special report that we hope will will give students looking for placements with a US-UK nexus food for thought.

It’s the right time to be thinking transatlantically. With Donald Trump having left the White House, it’s worth reminding oneself that Democratic administrations tend to be good for the economy. The unemployment rate has historically fallen under the left, while tending to increase when the White House has been under Republican control. Under Barack Obama and Bill Clinton, unemployment fell by 3.1 per cent in each instance; under George W. Bush it rose, after the 2007-8 recession, by 3.6 per cent. Trump also presided over a 1.6 per cent increase in joblessness.

Of course there are anomalies. Ronald Reagan who held office from 1980 until 1988, did create jobs, although there are still some who would argue that, in being responsible for the deregulation on Wall Street which caused the recession under Bush, some portion of the job losses in the late 2000s need to be chalked up to his column.

Within those startling statistics, there are other stories - about youth unemployment, and especially youth unemployment among minorities.

Zoltan Hajnal and Jeremy Horowitz in an important study found: “Across 35 years of Republican presidencies, black unemployment went up a net of 13.7 percentage points. Across 22 years with Democrats, the black unemployment rate fell 7.9 points.”

With Kamala Harris in position, the stage is set both statistically, and in terms of the optics, for a more diverse workforce.

According to the US Bureau for Labor Statistics, there is currently an increase in demand for hires in computer and peripheral equipment manufacturing, residential building construction, and pharmaceuticals. Biden’s $1.9 trillion Covid relief package will go some way towards supporting job opportunities for graduates in the hard-hit aviation and hospitality sectors. These last years the language of the world has been protectionist - and that’s something that’s been to some extent caused by the current UK prime minister. But Boris Johnson is a chameleon, and as skilled a pivoter as they come. Born in America, and with an instinctive feel for Washington dating from his time as Mayor of London, we can feel sure that he will want to encourage ties between the two countries.

“Two nations divided by a common language,” wrote Sir Winston Churchill in relation to the two countries. This last year we’ve been two nations divided by a common virus - but another thing the two nations have in common is the pace of our vaccination programmes. Dust off those CVs and send them across the Atlantic. The special relationship is about to be rebooted.

Why so retiring?

The recent news that judges will now face mandatory retirement at 75 and not at 70 is welcome. Announcing the move, The Rt Hon Robert Buckland QC MP, Lord Chancellor and Secretary of State for Justice said: “Our judges, magistrates and coroners are world-renowned for their excellence, expertise and independence. It is right we hold on to them and do not cut off careers unnecessarily.”

For this issue, Finito World spoke to the former Court of Appeal judge Sir Rupert Jackson - an evergreen retiree as alert as a man half his age. Here was a lawyer who had accumulated enormous wisdom over a long career, who now makes his living as an arbitrator and in writing volumes of history.

One can understand that the UK system has been designed to avoid the slightly morbid spectacle we’ve seen on a number of occasions with the Supreme Court in the US, whereby the world watches ghoulishly as Supreme Court justices, who really are at retirement age, cling to their seats, often until death deprives them of their position. But there have been mutterings for a long time that in this era of rising life expectancy, 70 is too young an age to leave the bench.

This middle ground is to be applaudedbut with a President of the United States at the age of 78, it might be wondered whether mandatory retirement itself is outmoded. And it’s not just a problem in the judiciary. We have just been through a pandemic during which we rightly sought to preserve the lives of our elderly. In so doing, we implicitly declared their value to us.

But we don’t take full advantage of their wisdom. Forced retirement remains a lively issue which has been litigated both at Oxbridge universities, and at the major accountancy firms. As we move forward into the next chapter -the pandemic mercifully in our rear-view mirror - let us not forget what the grey-haired have to teach and offer us. They deserve the dignity of work as much as anyone else.

Briefings (Continued)

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