Chancellor faces pressure to back down over National Insurance hike

Philip Hammond is facing growing pressure to back down on a £2 billion National Insurance hike for the self-employed, as former work and pensions secretary Iain Duncan Smith added his voice to calls for a rethink of the move.

In a round of post-Budget broadcast interviews, the Chancellor insisted that the decision - along with a cut in tax-free dividend allowances which will also hit the self-employed - was “fair and appropriate”.

Phillip Hammond is coming under mounting pressure

Phillip Hammond is coming under mounting pressure

But with at least 10 Conservative backbenchers voicing misgivings about the Budget measure, Labour made clear that it hopes the threat of rebellion will force the Chancellor into a U-turn.

Mr Duncan Smith told Sky News he hoped the Chancellor would “reflect” on the decision in the period before the autumn Budget.

“I would like to see this kept under review ... I would like to see the ball kept in play,” he said.

“This doesn’t land until next year, so there is plenty of scope to look at how this actually affects them and to listen to business representatives.”

The change, which will cost 2.5 million self-employed people an average £240 a year, was savaged by normally Tory-supporting newspapers as a breach of a 2015 manifesto promise not to increase National Insurance contributions (NICs) for five years.

Describing the announcement as a “shocker”, shadow chancellor John McDonnell told BBC1’s Breakfast: “I’m hoping that we will be able to persuade the Chancellor to back off from this.

“Certainly the Labour Party will oppose this. I think other parties will as well. We may be able to persuade enough Conservative MPs to ask the Chancellor now to think again.”

And several Tories broke ranks to demand a rethink before the changes come into effect in April 2018.

Berwick MP Anne-Marie Trevelyan told the BBC Radio 4 Today programme that the Chancellor was “going in the wrong direction”.

With Prime Minister Theresa May’s working Commons majority of 17 making the Budget measures vulnerable to any backbench rebellion, former shadow chancellor Chris Leslie said Labour MPs were already in talks about a cross-party amendment to block the NICs hike.

Mr Leslie said he had been informed by the House of Commons Library that the change would require primary legislation.

Mr Hammond said he was “prepared to listen to backbenchers” on the issue, but insisted the move was designed “to make the National Insurance system a little bit fairer”.

Downing Street confirmed that the NICs change will require separate legislation, but a spokesman declined repeated requests to make clear whether the Government was willing to review its decision.

“The Prime Minister and Chancellor have agreed on this Budget,” said the spokesman.

“The point of this Budget, apart from addressing the issue of fairness, is to build for a brighter future for Britain.”