I hope Philip Hammond is thick-skinned. Today’s headlines have been bruising for the chancellor, with some commentators labelling his tax rise on the self-employed as an attack on middle Britain, and even aspiration itself. I’m pleased that self-employment is at the top of the political agenda at last. Self-employment is, after all, behind the biggest change in our labour market since the financial crisis, accounting for nearly half of all employment growth since 2008. But this growing self-employed army has come at a cost. As their ranks have swelled, their pay has gone down.

The shameless Tories have betrayed the self-employed – and themselves | John Harris Read more

Self-employed people now earn, on average, just 60% of median earnings – compared with 70% a decade ago. This fall has led to a big problem for government revenues. TUC research published last month showed that the growth of low-paid self-employment is costing the Treasury more than £2bn a year. The chancellor’s response yesterday was to announce a blanket tax increase for most self-employed people. This will certainly have an impact, but something bigger is about to hit self-employed workers.

The planned changes to universal credit are set to clobber the self-employed even harder than other working people. Hidden away in the small print of this month’s Office for Budget Responsibility report is a table showing the impact of a “minimum income floor”. The floor means self-employed people have to earn a certain amount before qualifying for any support. It is set to save the exchequer – and thus cost the self-employed – £400m in 2018-19, rising to a thumping £1.5bn by 2021-22. But these changes in national insurance rates and universal credit don’t do anything to tackle the two main problems that 21st-century self-employment is causing for workers and the public finances.

Self-employed people don’t enjoy the same protections that everyone should expect in their working life. The chancellor mentioned fairness a few times in his budget speech. But it can’t be fair that self-employed people pay into a system that doesn’t give them basic rights. The budget mentions a “review” of parental rights for the self-employed. This is good news. At a minimum, we’d expect to see better rights to maternity and paternity pay, and there’s no reason why those changes couldn’t be implemented before next April. There’s also sick pay. Are we really happy with a situation in which almost 5 million people face a choice of going to work ill or not getting paid?

And then there’s the problem of how to crack down on the bad employers using bogus self-employment to avoid their responsibilities. On this, the chancellor has clearly missed a trick. This budget is leaving in place a huge tax advantage for employers to claim that workers are self-employed. If they take on someone as an employee, they pay nearly 14% in national insurance. If they contract them as self-employed, they pay absolutely nothing. Because of this, unscrupulous employers are forcing workers into bogus self-employment.

'This is grossly unfair': self-employed readers react to NICs increase Read more

It’s common sense that a driver following instructions via an app is not self-employed. The same goes for plumbers, cleaners and bike couriers who wear a company’s uniform and work to the company’s hours. Think of the hairdressers, warehouse workers and construction workers who are forced into self-employment by their employers for tax purposes. They could miss out on the minimum wage, holiday pay, job security and family-friendly rights. Many of them will now see their tax bills rise under the chancellor’s plan.

Official predictions have picked up on this. The Office for Budget Responsibility expects the number of self-employed people to keep rising, costing the exchequer £1bn a year by 2021-22. As it points out, most of this cost is coming from the fact that employers are saving millions by taking on people as self-employed. This is a growing problem, and the chancellor is clearly aware of it. The challenge won’t simply be to keep talking about the problem, but to act on it.