U-turn over Budget plan to increase National Insurance

U-turn over Budget plan to increase National Insurance

Plans to increase National Insurance levels for self-employed people - announced in the Budget last week - have been dropped.

Chancellor Philip Hammond has said 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."

Labour's Jeremy Corbyn said the U-turn showed a government "in chaos".

Mr Hammond had faced a backlash by Conservative backbenchers, 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.

But during Prime Minister's Questions, Mr Corbyn said of the U-turn: "It seems to me like a government in a bit of chaos here - a Budget that unravelled in seven days."

He said the government should "apologise" for the stress the announcement had caused Britain's 4.8m self-employed.

BBC assistant political editor Norman Smith said the proposal suggested "a lack of political sophistication", with Mr Hammond not realising the storm his announcement would provoke.



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