Hammond warns of tax rise

Chancellor speaks of ‘difficult decisions’ in Budget, with self-employed expected to bear the brunt

TAX is set to rise as the Government takes “difficult decisions” ahead of Brexit, Philip Hammond is expected to say today in his first full Budget.

The Chancellor will say that he wants to balance the books to help build the foundations of a “stronger and fairer” Britain outside the European Union. He is likely to announce higher taxes on the self-employed while also pushing ahead with his predecessor George Osborne’s plans to target buy-to-let landlords.

The move is likely to anger some Conservative MPs who hoped that Mr Hammond would seek to emulate Donald Trump by slashing taxes on businesses and the middle class to help boost the economy during Brexit.

Ministers have already been forced to back down and offer compensation for small companies hit by forthcoming increases in business rates following a Tory backlash.

The Chancellor will deliver an “upbeat” assessment of Britain’s prospects as he announces that the economy has defied forecasts and grown at a significantly faster rate than expected.

However, he will say that such strength is “built on resilience” as he rejects calls to use extra money from the upturn in growth to fund giveaways.

Significant spending in the Budget – expected to include £1.3 billion for social care and relief for those worst affected by rising business rates – will be funded by austerity and tax rises elsewhere.

There will also be measures to help those “still feeling the pinch” almost a decade on from the financial crash as the Government “will do everything it can to help ordinary working families to get on”.

Mr Hammond will outline plans to improve schools and training to equip young people for the “jobs of tomorrow”.

The Institute for Fiscal Studies, the economic forecaster, has warned that the amount of tax paid in the UK is poised to reach the highest level in 30 years. The Chancellor is expected to announce a rise in National Insurance rates for the approximately 5 million people who are self-employed, which could be worth as much as £1 billion, to bring them closer to the level paid by those in salaried jobs.

The measure could see the rate in- crease from 9 per cent to 12 per cent. The Resolution Foundation, a think tank, said that higher earners were likely to be the “biggest losers” and face paying £1,000 more in tax.

The Chancellor is also thought likely to increase alcohol duty, but has ruled out further action against diesel drivers despite concerns about dangerous pollutants released by diesel vehicles.

Government departments have already been ordered to find savings of up to 6 per cent ahead of Brexit.

The directive came as the OECD, the economic think tank, yesterday

THE Conservative leader of Surrey County Council told colleagues he secured a “gentleman’s agreement” with the Government over funding for social care, a secret recording appears to show.

David Hodge told other council members he had had a conversation with Sajid Javid, the Communities Secretary, in a car outside Downing Street.

According to a tape obtained by the BBC, Mr Hodge told colleagues at a meeting on February 7 that Mr Javid then spoke to the Chancellor about Surrey’s call for extra money, in a bid to prevent the council from holding a referendum to raise local tax rates.

The Communities Secretary report- ed back from the meeting with Philip Hammond “some things which they could say, and some things which they couldn’t say”.

The referendum, which would have called on voters to back an increase of 15 per cent, could have been politically embarrassing for the Government because Surrey is a Conservative council in a wealthy area.

The secret recording was released after both Mr Hodge and Theresa May, the Prime Minister, denied that a sweetheart deal was made between ministers and the council.

In the most recently leaked information, Mr Hodge can apparently be heard telling colleagues of a “series of conversations” where he was “looking for assurances, looking for clarification, looking for help basically on how we could stop the referendum”.

He added that an agreement had been reached for the council to withdraw the referendum and hinted at a funding review that could see more money for social care provision.

On the tape Mr Hodge can be heard to say: “There may come a time that if what I call gentleman’s agreements, that the Conservative Party often does, are not honoured, we will have to revisit this in nine months’ or a year’s time.”

A government spokesman said: “As we have repeatedly made clear, there was no special deal for Surrey County Council and they will not receive any extra funding that would not otherwise be provided or offered to other councils. To imply the opposite is simply untrue.”