Hammond on rack
Ministers warn the Chancellor ‘anti-Tory’ self-employed tax rise MUST be diluted
PHILIP Hammond is facing Cabinet pressure to substantially soften the impact of his controversial tax rise for the self-employed.
Theresa May has instructed the Chancellor to delay legislation on the £2billion National Insurance rise for solo workers until the autumn, as she pledged to listen to critics.
But one Government source said that this climbdown was not enough and the outcry had been so great that the policy will have to be significantly changed.
Some Cabinet ministers have privately been highly critical of the tax raid, suggesting that raising NI on entrepreneurs is not a ‘true Conservative’ measure. They have even called for the tax to be equalised by cutting it for employees rather than raising it for the self-employed.
The source said: ‘The Treasury will say the policy is the policy. That’s fine until the policy changes. The backlash against the policy will lead to it being changed or softened.’
Backbench MPs also kept up the pressure, with one calling for the way the increase is being implemented to be softened, so that fewer people are hit with such large rises. Another warned he would still be prepared to vote against the plan unless the rise is scrapped.
Downing Street and the Treasury both insisted last night that the Government remains committed to the National Insurance increase, which was announced in the Budget, even though it breaks a clear pledge in the 2015 Tory election manifesto.
They argued the increase is fair, saying the focus was on providing the self-employed with further benefits such as maternity rights to make up for the tax rise.
But one Government source suggested last night that this may not be enough to please some members of the Cabinet.
The source said Mrs May’s delay was a ‘good holding line’, but added: ‘This is going to have to change substantially. There is an issue about the disparity between NI rates for employees and the selfemployed – but the best Tory response would have been to reduce the rate for employees.
‘Conservative MPs are getting letters about this right, left and centre, so something substantial will have to be done.’
The source added: ‘ That could mean softening the blow by offering entitlements on annual leave or sick pay, or it could mean something else. What is certain is that this won’t exist in the same form that it exists now.
‘A true Conservative way of addressing inequality is to lower another rate and make up the money elsewhere.’
On Thursday at least 18 Tory MPs expressed concerns about the tax raid, but yesterday some of the potential rebels said they welcomed Mrs May’s intervention.
MP Tom Tugendhat said: ‘ I’m very pleased that the Prime Minister has said that she’s going to look at this over the coming months.’
However, fellow Tory Neil Carmichael called for much more to be done, suggesting that the National Insurance rises should be introduced more gradually.
Conservative MP Bob Blackman said he would consider rebelling if the tax hike is not cancelled, adding that simply giving the selfemployed more benefits in exchange for higher tax was like ‘ making them employees of the state’.
Last night the Treasury denied reports of a rift with No 10 over the National Insurance U-turn.
Downing Street insisted the Prime Minister remains ‘fully committed’ to reforming National Insurance.
Asked if Mrs May would use the summer to listen to MPs’ concerns, her official spokesman said: ‘ The Prime Minister has said that the Chancellor and his ministers will be talking to MPs and businesses over the summer. The Prime Minister talks to MPs all the time.’
‘Something will have to be done’