Philip Hammond insists national insurance increase doesn't break tax freeze manifesto pledge

Philip Hammond - credit Kirsty Wigglesworth/AP

Philip Hammond has insisted he did not break a Conservative manifesto promise when he increased National Insurance for self-employed people, claiming “circumstances have moved on” since 2015. 

The Tory election document declared that there would be “no increases in VAT, National Insurance contributions or Income Tax” for the next Parliament.

The Chancellor announced yesterday that the rate of National Insurance Contributions (NICs) for the self-employed would go up from 9 per cent to 10 per cent next year and 11 per cent in 2019.

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The move has been criticised by some Conservative MPs and Hammond has been accused of breaking the manifesto pledge.

But speaking this morning, Hammond pointed to the legislation that put in statute the “tax lock” which referred only to Class 1 NICs – those paid by employers and employees – rather than the Class 4 NICs which he hiked yesterday.

He insisted the Government at the time had “made it clear” that the freeze applied only to Class One NICs.

“We dealt with this issue back in 2015 when we legislated for the tax locks that we talked about during the election campaign,” he told ITV’s Good Morning Britain.

“We introduced them into Parliament, we debated them then, we had a proper discussion about what the extent of these locks and ring-fences were and we put it all into legislation and that is behind us.

“What I had to address yesterday was the challenge of financing our National Health Service, financing social care and investing skills in Britain’s future. Those are the things that we have to look at now.

“Britain’s circumstances have moved on: we’re now facing the challenge of leaving the European Union, of building a global Britain to exploit the opportunities in the future that this country can enjoy and we need to invest to do that and I’ve had to ask the self-employed to pay a little bit more in National insurance in order to make a fair contribution for the services that they receive from Government.”

During his round of media interviews, Hammond declined two opportunities to say categorically that there would be no U-turn on the policy, however.

The Tories had claimed in 2015 that Ed Miliband’s Labour party would “clobber” workers with increases on National Insurance.

Several Tory backbenchers have already expressed concern about the policy, putting in doubt whether the Government has a majority for increase.

Anne-Marie Trevelyan said the move “goes against the whole essence of what Conservatives believe in” and called for it to be “put on hold”, while Andrew Murrison sought reassurance that it would not whack “white van man and white van woman”.

Several other Conservative MPs have also expressed unhappiness about the plan.

Shadow Chancellor John McDonnell has pledged to oppose the “unfair” rise, which he branded the “sole traders tax”.

“Philip Hammond has used his first Budget to claw £2 billion in tax on those self-employed who are on low and middle incomes. But he continued to boast about the £70 billion worth of tax giveaways at the top announced by his predecessor," he said.