Finance

Theresa May is humiliated at PMQs after Philip Hammond SCRAPS the hike to National Insurance for the self employed at the heart of his Budget

Theresa May was forced into admitting a humiliating U-turn at PMQs today after her Chancellor dropped the National Insurance hike at the heart of his Budget.

The Prime Minister insisted the reform, which seeks to equalise National Insurance for the employed and self employed, was right.

But facing a revolt of up to 100 Tory MPs Mrs May admitted: ‘We will not bring forward any increases to National Insurance Contributions in this Parliament.’

Labour leader Jeremy Corbyn mocked the Prime Minister for leaving a ‘black hole’ in the Budget and claimed the Government was in ‘chaos’.

After delivering his Budget a week ago, Mr Hammond was accused of lying and breaching the Tory manifesto by placing the £2billion tax raid at the heart of his Budget.

The screeching U-turn is hugely embarrassing to the Chancellor, who previously held a reputation in Westminster as a safe pair of hands but who may now face questions about his future.

Theresa May was forced into admitting a humiliating U-turn at PMQs today (pictured) after her Chancellor U-turned on the National Insurance hike at the heart of his Budget Philip Hammond, pictured at No 10 yesterday, had confirmed a huge u-turn on his first Budget and confirmed he will cancel hikes to national insurance on the self employed.

Mr Hammond had wanted to increase class 4 National Insurance paid by the self employed from 9 per cent to 11 per cent over the next two years.

At PMQs, Mrs May told MPs that legislation on the Tory ‘tax lock’ quietly passed last year was intended to meet the manifesto commitment.

The Chancellor said today he still believed the intention of his plan was correct but admitted it was not compatible with the manifesto promise to freeze national insurance.

In a letter, Mr Hammond today told Tory MPs: ‘The measures I announced in the Budget sought to reflect more fairly the difference in entitlement in the contributions made by the self-employed and address the challenge of sustainability in the tax base.

‘The Government continues to believe that this is the right approach.

‘In light of the debate over the last few days it is clear that compliance with the ”legislative” test of the manifesto commitment is not adequate.

‘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 the Class 4 NIC measures set out in the Budget.

‘There will be no increases in NICs rates in this Parliament.’

The Chancellor will address MPs later to explain his U-turn to Parliament.

Mr Hammond can expect to be bombarded with questions from Labour on how he will fill the gaping hole in the Budget red book.

Mrs May was forced to defend the screeching U-turn at PMQs today while her Chancellor sat next to her on the front bench Mr Hammond presented his first Budget last Wednesday and today’s U-turn leaves a huge black hole at the centre of his plans

The Budget scorecard said it the measure was worth £495million a year by 2022 and it was one of just two significant money raisers in the Budget.

Shadow health secretary Jon Ashworth said: ‘So if NICs rise now not happening where is the £2billion for social care coming from?’

Mrs May defended the changes in a press conference on Thursday but did stall the reforms arrival in Parliament until the autumn.

Ministers had insisted that because the self employed now receive much more benefit from the state, it was time for them to pay the same National Insurance as those in regular employment.

Loyal Tory MPs have spent a week defending the measure.

Loyal Tory MPs have been defending the measure for the past week and the latest twist will irritate MPs. Former minister Ed Vaizey quipped ‘blimey Shadow health secretary Jon Ashworth said: ‘So if NICs rise now not happening where is the £2 billion for social care coming from?’

Former Minister Ed Vaizey quipped on Twitter: ‘Blimey. I’ve been vigorously defending it…’

Tory MP Anne-Marie Trevelyan revealed the scale of the revolt in a Mail on Sunday column.

She said: ‘Self-employed people are part of the backbone of our economy. They drive growth and innovation. I firmly believe the Conservative Party should continue to encourage them, rather than increase their tax burden.

‘The increase in Class 4 National Insurance Contributions announced by the Chancellor in his Budget last week did not just concern me because I believe it is wrong in principle.

‘It is also a clear breach of a promise we made in our manifesto not to increase VAT, income tax or National Insurance.’

As the row escalated last week, even a Government minister called for an apology.

Guto Bebb, the junior Wales Office minister, said: ‘I will apologise to every voter in Wales that read the Conservative manifesto in the 2015 election.’

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