Chancellor Philip Hammond refuses to reverse National Insurance hike despite growing Tory rebellion

'We have made a decision here, to make the National Insurance system a little bit fairer', defiant Chancellor tells his backbenchers

Rob Merrick
Deputy Political Editor
Thursday 09 March 2017 10:02 GMT
Chancellor Philip Hammond, preparing to leave to deliver his Budget yesterday
Chancellor Philip Hammond, preparing to leave to deliver his Budget yesterday (AP)

Philip Hammond has refused to bow to demands from his own MPs for a U-turn on National Insurance hikes for millions of self-employed workers.

The Chancellor faced down protests from at least ten backbenchers, saying: “No Conservative likes to raise taxes of course – and of course I’m always prepared to listen to and talk to our backbenchers.

“But we have made a decision here, to make the National Insurance system a little bit fairer.”

Mr Hammond also sought to shift the argument from claims the increases will hit ‘white van man’ by pointing out “partners in large law firms” were being asked to pay a bit more.

“This is a basic question of fairness to the 85 per cent of the population who work and who get their National Insurance deducted every week from their pay packets,” he told BBC Radio 4's Today programme.

The defiance came despite howls of anger from all sections of the Conservative party and a likely Commons revolt which could yet defeat the measure.

The Budget announcement will see the nine per cent rate of Class 4 NI contributions go up to ten per cent in April 2018 and to 11 per cent a year later.

According to the Treasury, 1.6m self-employed people will pay £240 on average more every year – but no-one earning less than £16,200 will be worse off.

Earlier, Conservative backbencher Anne-Marie Trevelyan become the latest Tory MP to speak out against the change, arguing it was a clear breach of the 2015 party manifesto.

Ms Trevelyan suggested a revolt was already being planned, by bringing forward an amendment to the Finance Bill to strike out the increases.

“We need to halt this particular decision now,” she said. “I think we need to put this on hold so we can have a proper review

“Those who are out there working hard at their own risk – no-one is going to be pick up their holiday pay – they have got to be sure that a Conservative Government understands and backs them and doesn’t use them as a cash cow.”

John McDonnell tried to put Labour at the head of efforts to block the NI hikes, insisting a “large number of people don’t want to be in self-employment”.

“I hope a number of Conservative MPs will stand with us and say to the Chancellor ‘think again’”, the Shadow Chancellor said, adding: “We will be opposing this because it is wrong.”

Most damagingly for Mr Hammond, the 2015 Conservative manifesto explicitly ruled out rises in National Insurance, VAT and income tax during the lifetime of the current Parliament.

David Cameron took to the road, repeatedly promising to stand by the pledge – and contrasting it with the “jobs tax” which he claimed a Labour government was planning.

The Chancellor argued the pledge only applied to NI contributions paid by employers and employees – not to the Class 4 type levied on the self-employed.

This became clear when Parliament later passed a law to enact the manifesto commitment, he said.

The measure will only raise £145m a year in the short-term, but the Treasury fears it will lose billions in future unless it acts, as self-employment grows.

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