Hammond still on the rack

Ministers warn the Chancellor ‘anti-Tory’ self-employed tax rise MUST be diluted

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’

tHIS has been a truly dismal week for public trust in politics and politicians. It began badly, with another attempt by the unelected Lords, spearheaded by that preening popinjay Michael Heseltine, to thwart the people’s will over Brexit.

Here, it emerged that the SNP’s 2014 claim that oil revenue was a bonus for the economy was utterly deceitful. In fact, wildly optimistic figures for oil were hardwired into the party’s calculations for its economic base.

And then yet more serious questions about Finance Secretary Derek Mackay’s competence arose when his figures for Scottish income tax were shown to be a terrifying £2.8billion out.

And of course there was the Budget, in which Chancellor Philip Hammond cheerfully tore up one tory election pledge after another, laughing and joking as he heaped punishment on the strivers, savers and self-reliant risk-takers who make up the backbone of Britain – the very people his party had vowed to champion.

It was less than two years ago when the Conservatives went to the polls on a promise, spelled out four times in their manifesto: ‘We will not raise VAt, National Insurance contributions or Income tax.’

In that now discredited, apparently worthless document, there was no suggestion the pledge referred only to Class 1 NICs (how many voters even knew there were four classes?)

Yet this was the devious excuse offered after the Chancellor increased the rate for Class 4, costing 2.5million self-employed workers some £240 a year each – almost eight times the 60p-a-week ‘average’ he so disingenuously cited.

Not content with this betrayal of his party’s core supporters, he slashed the taxfree allowance on dividends from £5,000 to £2,000. thus, he hammered family-owned businesses, freelance workers and every saver with stock market investments of more than £50,000.

Meanwhile, tax rises and changes to compensation payments are likely to add £75 a year to car insurance premiums. Mr Hammond’s taxes are not just unConservative. By discouraging saving, investing, taking out insurance and looking after families, they actively undermine the very behaviour governments should encourage.

And now it emerges the Chancellor has another £700million trick up his sleeve. Complex changes in already baffling tax rules mean some shops and newsagents will see their VAt more than quadruple, while self-employed service-providers will also be hard hit.

So bang goes another pledge that helped sweep the tories to power in 2015. Indeed, all parties seem to see manifestos merely as vote-winning exercises, to be forgotten once an election is won.

David Cameron is right about one thing. It is indeed ‘stupidity’ to break manifesto pledges. But then look who’s talking! He was the PM who shredded almost every core promise he made in 2010, from cutting migration to below 100,000 to scrapping the Human Rights Act.

Meanwhile, his shameless sidekick George Osborne is becoming a veritable tony Blair, stuffing his boots with banknotes on the strength of contacts and experience gained in public office.

He even tried to bury news of his one-daya-week, £650,000 job for a US investment company by sneaking it out on Budget Day. No wonder politicians are held in growing contempt.

One of theresa May’s great strengths is that she is seen as trustworthy and straight. to preserve that reputation, she must bring her party into line – and remind her MPs who elected them.