TORY TAX RETREAT AFTER JUST 24 HOURS

May steps in after furious MPs rebel over Budget blow to self-employed

THERESA May last night hit the pause button on Philip Hammond’s controversial tax raid on the self-employed as she tried to placate furious Tory MPs.

The Prime Minister moved to delay legislation on the £2 billion hike in National Insurance on solo workers until the autumn, after Tory whips warned her they ‘didn’t have the numbers’ to push the Budget measure through the Commons.

Speaking in Brussels, Mrs May tried to shore up her beleaguered Chancellor by defending the tax raid, which breaks the Tories’ manifesto pledge not to raise NI. She said the change made taxation ‘simpler, fairer and more progressive’.

The PM also insisted ministers had not broken the promise – which appeared four times in the manifesto and pledged there would be ‘no increases in VAT, National Insurance contributions or income tax’.

She bought time for a potential climbdown by delaying the legislation, which had been expected this spring, until the autumn, when Mr Hammond will have the chance to offer concessions in a second Budget. But the move is unlikely to calm Tory fury over the issue. Mrs May also ordered Mr Hammond to ‘listen to the concerns’ of

MPs and businesses, who have reacted with fury to the tax raid.

And she said the measures would be packaged together with new rights for the self-employed on things such as maternity pay, following a review this summer by Matthew Taylor, a former Downing Street adviser to Tony Blair.

The delay means the row will rumble on for months, ending any prospect of Mrs May calling a snap election.

Her intervention came after Tory MPs lined up to publicly condemn the NI hike. Mr Hammond, who was accused of ‘lying’ to the voters yesterday, insisted that he had not broken the small print of the manifesto pledge, as set out in ‘tax lock’ legislation after the election.

But, in a sign of the anger over the issue on Tory benches, one minister took the extraordinary step of offering a public apology for the broken promise. Wales Office minister Guto Bebb said: ‘I believe we should apologise. I will apologise to every voter in Wales that read the Conservative manifesto in the 2015 election.’

In an indication of the Government’s weakness on the issue, Downing Street refused to rebuke Mr Bebb.

Throughout the day, Tory MPs hit the airwaves to criticise Mr Hammond’s tax raid and warn they would vote against it.

Complex rules mean that changes to National Insurance cannot be handled by the normal Budget finance bill legislation, but require their own dedicated legislation. This means that the new law can be delayed. But it also makes it easier to oppose for Tory MPs who would baulk at voting down the Budget.

Tory rebels last night claimed they had more than 30 supporters – easily enough to overturn the Government’s majority.

Former Tory leader Iain Duncan Smith led calls for the Government to think again, saying: ‘I would like to see this kept under review.’

Others could barely contain their fury at a move that risks damaging the Tories’ credibility and reputation for backing Britain’s ‘strivers’.

Tory MP Anne Marie Morris said the changes ‘defy belief’, adding: ‘What did the Chancellor think he was doing?’

Stevenage MP Stephen McPartland said ‘On this issue, we need a U-turn, and we need one quickly. It affects ordinary working families who are taking a chance to get on. It cannot be allowed to proceed.’

Former Tory chairman Lord Tebbit described the move as a ‘dog’s dinner’.

The NI hike will raise £2billion over four years, costing 2.5million workers an average of £240 a year each.

Mrs May defended the changes, saying they had to be seen in the context of cuts to other elements of NI paid by the selfemployed, and the right to benefits, such as the state pension, on which they had previously lost out. She acknowledged the Government had made ‘difficult decisions’ in the Budget, but said they were needed to fund extra cash for social care and schools.

The Prime Minister added: ‘The decision on National Insurance was taken in the context of a rapidly changing labour market in which the number of people in selfemployment – often doing the same work as people employed more traditionally – is rising rapidly.’

She said the tax changes were necessary as a shift towards self-employment was ‘eroding the tax base” and making it harder to pay for public services ‘on which ordinary working families depend’.

‘This goes some way towards fixing that,’ she added.

The Government also faced a major backlash from business.

Chris Bryce, chief executive of the Association of Independent Professionals and the Self-Employed, said members felt ‘very angry’ with the Government.

He said: ‘This is a complete body blow to the flexible economy.’

‘We need a U-turn and we need one quickly’