latest news :Philip Hammond ditches national insurance rise for self-employed

Chancellor performs U-turn on much-criticised budget tax grab, accepting that it breached wording of Tory manifesto

The chancellor, Philip Hammond, who was criticised by Tory backbenchers over the national insurance rise. Photograph: Dinendra Haria/Rex/Shutterstoc
Wednesday 15 March 2017 12.27 GMT First published on Wednesday 15 March 2017 11.49 GMTPhilip Hammond has dropped plans to increase national insurance contributions (NICs) for the self-employed, conceding that it breached the wording of the Conservatives’ manifesto.

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In his letter, he underlined that rationale, saying: “The measures I announced in the budget sought to reflect more fairly the differences in entitlement in the contributions made by the self-employed and addresses the challenge of sustainability of the tax base. The government continues to believe that this is the right approach.”
The Treasury defended the measure last week as not breaching the detail of the “tax lock” legislation introduced after the 2015 general election to implement the Conservatives’ manifesto pledge not to increase national insurance rates.
But in his letter, Hammond conceded that the move did not comply with “the spirit” of the manifesto pledge. “It is very important both to me and the prime minister that we are compliant not just with the letter, but also the spirit, of the commitments that were made,” he said.
The measure was due to raise £645m a year by 2019-20, to help fund new schools and social care. Hammond will now face questions about how he will make his budget plans add up. In his letter to Andrew Tyrie, the Tory chairman of the Treasury select committee, he said he would announce how the extra funds would be raised in the autumn statement.
Rachel Reeves, the former shadow work and pensions secretary, who sits on the Treasury select committee, accused the government of an “extraordinary U-turn after a shoddy announcement”.
She said Hammond “now needs to show where the £2bn shortfall is going to be made up”.