After much pressure from the British people, the Chancellor
Philip Hammond rescinds from his controversial increase in National Insurance
for the self-employed which critics said was against the Tories manifesto.
The Chancellor’s resolve to back down was mainly as a result
of the colossal condemnation from within and outside his own backbenchers.
Almost immediately the announcement of the budget, the
Chancellor the public accused him of breaking the "tax-lock" pledge
made ahead of the 2015 election not to increase income tax, VAT or National
Insurance.
Hammond wrote a letter to MPs from his party where he
accepted the fact that it was "clear that compliance with the
'legislative' test of the Manifesto commitment is not adequate".
Adding also that: "In 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 Class 4 NIC measures set out in the Budget."
The reverse marks the third year in a row the Tories have
had to reverse key Budget measures - George Osborne was forced to drop Tax
Credit cuts in 2015 and disability cuts last year.
The purported increase was supposed to raise the £2bn he pledged
for social care, leaving the Chancellor with a blackhole to fill.
Amazingly, Theresa May, who had vigorously shielded the
increase, confirmed the reversal at the beginning of Prime Minister's
Questions.
This was apparently because she was accused of presiding
over "chaos" and a "budget that has unravelled in seven
days" by Labour leader Jeremy Corbyn. The SNP's Angus Robertson called it
a "screeching, embarrassing U-turn".
Labour's Yvette Cooper also speaking said: "The Prime
Minister has just done a £2bn Budget u-turn in the space of about a week.
"Last year the Government did a £4bn U-turn in the
space of five days.
"Is that why they want to abolish spring budgets?
Because they just keep ripping them up?"
On the other hand giving a statement to the Commons, Mr
Hammond maintained that he was right to address "the imbalance"
between taxes paid by the employed and the self-employed, adding that reducing
unfairness on tax treatment "remains the right thing to do".
While justifying the sudden U-turn, the Chancellor Theresa
May’s government had "listened to our colleagues, listened to the voices
of public opinion".
Lambasting the U-turn, shadow Chancellor John McDonnell said:
"This is chaos. It is shocking and humiliating."
Calling the initial plan as a "clear cut and
cynical" change that had put self-employed people "through the
mangle" and he attacked the U-turn as a blunder that necessitated an
apology, which has not been forthcoming.
On his part, Liberal Democrat leader Tim Farron said: "The
Conservatives have bodged every Budget since the election and have lost the
right to call themselves the party of business."
Meanwhile, rrespected economic think tank, the Institute for
Fiscal Studies, has supported the increases, which would have seen millions paying
£240 a year more.
Director Paul Johnson described the policy as "a modest
but welcome change designed to shore up the tax base and create a slightly less
unequal playing field between the self-employed and employees".
A number of Conservative MPs had been supporting the move
and appeared dismayed by the back tracking.
Ed Vaizey tweeted: "Blimey. I've been vigorously
defending it..."
The Chancellor then said he would set out how he will fund
the national insurance changes in full at the Autumn Budget.
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