PLANS to increase National Insurance levels for self-employed people – announced in the Budget last week – have been dramatically dropped.
Red-faced British Chancellor Philip Hammond faced a revolt from his own Tory backbenchers.
And self-employed Tory supporters warned they would not vote Conservative again if the increases came into force.
Now shamed Hammond announced today that the government will not proceed with the increases which were criticised for breaking a 2015 manifesto pledge.
In a letter to Tory MPs, he said: “There will be no increases in… rates in this Parliament.”
During Prime Minister’s Questions, Labour leaders Jeremy Corbyn made political capital out of the decision, saying the U-turn showed a government “in chaos”.
The British Chancellor is to make a statement in the House of Commons this afternoon on his volte face.
Mr Hammond had faced a backlash by Conservative backbenchers last week, who accused him of breaking a general election manifesto commitment not to put up National Insurance, income tax or VAT.
In his letter explaining his change of heart, 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.”
Mr Hammond’s Budget announcement would have increased Class 4 NICs from 9% to 10% in April 2018, and to 11% in 2019, to bring it closer to the 12% currently paid by employees.
He said “most commentators” believed the “sharp increase” in self-employment over the last few years had in part been “driven by differences in tax treatment”.