Chancellor backtracks in budget u-turn over National Insurance contributions

By Scunthorpe Telegraph | Posted: 16 Mar 2017

Philip Hammond has backtracked over his planned budget increase in National Insurance Contributions (NICs) for the self-employed.

In a letter to Conservative MPs, the Chancellor said he would not proceed with the planned increase in Class 4 NICs which he announced just a week ago.

"There will be no increases in NICs rates in this Parliament," he said.

Mr Hammond had faced a furious backlash by Conservative backbenchers, who accused him of breaking a general election manifesto commitment not to put up NICs, income tax or VAT, while hitting traditional Tory supporters.

In his letter, ( above) the Chancellor said: "It is very important both to me and to the Prime Minister that we are compliant not just with the letter, but also the spirit of the commitments that were made.

"In the 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 measure set out in the Budget."

The Government was accused of being in "chaos" after Chancellor Philip Hammond committed a dramatic U-turn over his planned Budget hike in National Insurance Contributions (NICs) for the self-employed.

In a letter to Conservative MPs, the Chancellor said he would not proceed with the planned 2 per cent increase in Class 4 NICs which he announced just a week ago.

"There will be no increases in NICs rates in this Parliament," he said.

Chancellor Philip Hammond. Credit: PA

Labour leader Jeremy Corbyn said the climbdown on a measure intended to raise £2 billion over the coming years, had left "a black hole in the Budget" and said Prime Minister Theresa May should apologise to the country, telling the House of Commons: "It seems to me like a Government in a bit of chaos."

But Mrs May insisted the Budget announcement was "consistent" with the lock on tax rises put into legislation shortly after the general election, when the Conservative manifesto promised there would be no rises in National Insurance, VAT or income tax for the next five years.

Mr Hammond had faced a furious backlash by Conservative backbenchers, who accused him of breaking the manifesto pledge while hitting traditional Tory supporters.

In his letter, the Chancellor said: "It is very important both to me and to the Prime Minister that we are compliant not just with the letter, but also the spirit of the commitments that were made.

"In the 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 measure set out in the Budget."



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