THERE was confusion over what the government wants to do with the national insurance contributions (NICs) of Britain’s 4 million self-employed workers yesterday.
Chancellor Philip Hammond has come in for fierce criticism over the proposal to increase the Class 4 NICs by two per cent over two years, announced during Wednesday’s budget.
If passed, it would mean the Tories have broken their own manifesto commitment to not push up National Insurance.
Despite the furore, much of it coming from his own backbenchers, Hammond has shown no sign of budging.
His boss, however, has indicated that there could be some movement.
Theresa May said the government would be pushing the proposal back to the autumn and suggested the Treasury would “listen” to the rebelling MPs.
Labour called that a partial u-turn.
“What we will do this summer is publish a paper which will explain the full effects of the changes,” Theresa May said at a press conference in Brussels on Thursday night.
That paper, she added, would contain details about the reforms “along with some changes we plan to make on rights and protections for self-employed workers, including on issues like pension rights and parental rights and maternity pay”.
The Prime Minister added: “The Chancellor will be speaking, as will his ministers, to MPs, business people and others to listen to the concerns.”
Defending the move, she said: “The decision on National Insurance was taken in the context of a rapidly changing labour market in which the number of people in self-employment — often doing the same work as people employed more traditionally — is rising rapidly.” She said that the shift towards self-employment was “eroding the tax base” and making it harder to pay for public services. “This goes some way towards fixing that,” she said.
Yesterday, though, Downing Street insisted the Prime Minister was still fully behind the proposal.
As the internal strife showed no signs of abating, friends of Hammond started suggesting this was some sort of plot to have him ousted from 11 Downing Street.
The current Chancellor backed Remain in the EU referendum and has reportedly clashed with the more prominent Brexiteers in cabinet.
At one point last autumn there were rumours he was about to stand down, rather than be the Chancellor forced to take the UK out of the single market.
One former Tory minister told The Telegraph anger over the NICs raise was synthetic: “Part of the strategy is for the hard Brexiteers [to unite] – [people like] IDS.
“It is a ‘get Philip Hammond who is going to f*** Brexit’, as opposed to a genuine outrage.
“They are hunting as a pack – they have decided it is an issue that they can use to weaken Philip or do him over.”
Around 30 Tory MPs have signalled they will rebel against the measure, meaning it has little chance of progressing if Labour, the SNP and the Liberal Democrats also vote against.
In one candid moment, former Prime Minister David Cameron was seen at the unveiling of a new war memorial in Whitehall, telling Defence Secretary Michael Fallon that Hammond had acted stupidly.
ITV footage showed the former prime minister looking angry, and apparently saying: ‘Breaking a manifesto promise is stupidity.’
One Tory rebel said the measure was “on life support if it is not dead yet.”
Meanwhile, Scottish Labour’s Westminster spokesperson Ian Murray criticised Scots Tory leader Ruth Davidson for going “into hiding over the budget and the Tory broken promise on tax.”
“Since the global financial crash, growing numbers of Scots have become self-employed as insecure work has increased. There are tens of thousands more women self-employed now than there were a decade ago,” he said. “It is clear from Theresa May’s belated decision to delay the changes that they weren’t properly thought through. She should do the right thing and scrap these tax rises for low and middle-income earners.”
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