Philip Hammond dumps National Insurance hike plan

Philip Hammond has been savaged over the 'omnNICshambles'

Philip Hammond has faced fierce criticism since the Budget

Wednesday, March 15, 2017

Philip Hammond has dropped his planned increase in National Insurance contributions.

It is reported that Mr Hammond has told MPs the NI hike for self-employed workers, announced in last week's Budget, will not go ahead.

The u-turn comes after fierce criticism of Mr Hammond's NI policy, which contradicts a tax-freeze pledge made in the Tories' 2015 manifesto.

In a letter outlining the decision, Mr Hammond says he has "decided not to proceed with the Class 4 NIC measures [which deal with self-employed individuals] set out in the Budget. There will be no increases in NICs rates [sic] in this Parliament.

"We will continue with the abolition of Class 2 NICs from April 2018. The cost of the changes I am announcing today will be funded by measures to be announced in the Autumn Budget."

The Chancellor insists that "it remains our judgement that the current differences in benefit entitlement [between autonomous and non-autonomous workers] no longer justify the scale of difference in the level of total NICs paid."

However, he says he and Theresa May made a commitment ahead of last year's Autumn Statement that the manifesto tax-lock pledge would be "honoured in full". While insisting the freeze only applied to Class 1 NI contributions, he says the new measure is "not adequate" in its compliance with the manifesto commitment.