Chancellor announces U-turn on NI tax rises

The Tories u-turn on a key Budget measure for a third year in a row as the Chancellor scraps a tax rise for the self-employed



The Chancellor has scrapped plans to increase National Insurance for millions of self-employed people, admitting it breached a central Tory manifesto promise.

Less than a week after delivering his first Budget, Philip Hammond climbed down on one of his most significant measures.

His decision to increase National Insurance by 2% sparked an angry backlash, including from his own backbenches.

In the immediate aftermath of the Budget, Mr Hammond was accused of breaking the "tax-lock" pledge made ahead of the 2015 election not to increase income tax, VAT or National Insurance.

In a letter to Conservative MPs on Wednesday, Mr Hammond admitted it was "clear that compliance with the 'legislative' test of the Manifesto commitment is not adequate".

He added: "In light of what has emerged as a clear view among colleagues and a significant section of the public, I have decided not to proceed with Class 4 NIC measures set out in the Budget."

The reverse marks the third year in a row the Tories have had to reverse key Budget measures - George Osborne was forced to drop Tax Credit cuts in 2015 and disability cuts last year.

The increase was supposed to raise the £2bn Mr Hammond pledged for social care, leaving the Chancellor with a blackhole to fill.

Theresa May, who had robustly defended the increase, confirmed the reversal at the beginning of Prime Minister's Questions.

She was accused of presiding over "chaos" and a "budget that has unravelled in seven days" by Labour leader Jeremy Corbyn. The SNP's Angus Robertson called it a "screeching, embarrassing U-turn".

Labour's Yvette Cooper said: "The Prime Minister has just done a £2bn Budget u-turn in the space of about a week.

"Last year the Government did a £4bn U-turn in the space of five days.

"Is that why they want to abolish spring budgets? Because they just keep ripping them up?"

Blasting the U-turn, shadow Chancellor John McDonnell said: "This is chaos. It is shocking and humiliating."

He called the initial plan as a "clear cut and cynical" move that had put self-employed people "through the mangle" and he attacked the U-turn as a blunder that demanded an apology, which has not been forthcoming.

Liberal Democrat leader Tim Farron said: "The Conservatives have bodged every Budget since the election and have lost the right to call themselves the party of business."

A number of Conservative MPs had been supporting the move and appeared dismayed by the back tracking.

Ed Vaizey tweeted: "Blimey. I've been vigorously defending it..."

Rather a wasted budget wasn't it? I seriously question this man's abilities.

I question is this to make him or Labour look good but in my mind they are all game players .

I don't see how he can remain Chancellor when Theresa May overrules the central pillar of his budget?