Keep a tight grip on Openreach

AT LAST, BT and Ofcom have reached a deal for the telecoms giant to separate its Openreach division into a separate company – albeit one still owned by the parent BT group. In theory, this will mean the part of BT that provides broadband connections (including for rival companies such as Sky or TalkTalk) will not be run so closely by BT.

But it is not a complete split and critics argue that it is inevitable that BT will have a continuing indirect influence over Openreach. They may well be right and Ofcom is going to have to keep a close eye on how this split works in practice.

But while this half-hearted deal is not the ideal solution, it is the best one to fit the realities. Splitting off Openreach into a fully separate business would have faced complex hurdles, not least how to separate the vast (and hugely in deficit) BT pension fund. And pushing Openreach through a sale process, which could last months, is not the best idea if what is needed right now is faster roll-out of broadband.

This outcome is the one most likely to deliver what really matters – a more accountable and effective Openreach.

THERE were good reasons for the Chancellor’s National Insurance raid on the selfemployed. But that does not make it the right decision. What it does do is help build the case for scrapping National Insurance altogether, rolling it into a single simpler income tax system.

Hammond acted to raise NI on the self-employed because it threatened to undermine tax revenues, as the Treasury reaps lower tax income from these workers. He is right to recognise the problem, but he acted too hastily. A major study of selfemployment – the Taylor Review – is due to report later this year.

Faced with a backbench rebellion, the Government has now said the decision on the NI changes will not be put to a vote of MPs until after the Taylor review reports. But why on earth the Chancellor would act before that report is complete is baffling. Short and medium-term solutions will be needed to raise taxation from the self-employed but hopefully without squeezing those on modest incomes.

However, in the long run National Insurance has surely had its day. To all practical purposes it is simply another tax on earnings. It is not in any sense set aside to pay for pensions or benefits, it simply rolls into the Treasury coffers alongside everything else. Its major contribution to British life is to add to bureaucracy and provide Chancellors with a sneaky way to raise money.