Humiliated Hammond defends tax U-turn as Theresa May is compared to a 'feeding seal'

Chancellor faces uncertain future in Number 11 after dropping National Insurance hike.

Spring Budget 2017: Winners and losersIBTimes UK

Embattled Chancellor Philip Hammond faced a grilling from MPs after he U-turned over his Spring Budget plan to raise National Insurance Contributions (NICs) for the self-employed on Wednesday (15 March).

Hammond, whose future in Number 11 now looks uncertain, argued that it was right to scrap the proposal to axe class two NICs and increase the main rate (class four) NICs by 2%.

That is because the Conservatives promised not to hike income tax, VAT or NICs in their 2015 general election manifesto. But Hammond did hint at making the move again in the future.

Advertisement

"There is a discrepancy here that will have to be addressed over time," the Chancellor said in the House of Commons.

Hammond also denied that Theresa May forced him to make the embarrassing climbdown amid a backbench revolt, whilst revealing that the decision was made between the two at 8:00 GMT before cabinet.

The admission came after Prime Minister's Questions (PMQs), where Labour leader Jeremy Corbyn failed to capitalise on the major gaffe. But his close ally and Shadow Chancellor John McDonnell did not waste his opportunity to attack Hammond.

"It is shocking and humiliating that the Chancellor has been forced to come here to reverse a key Budget decision announced less than a week ago," he said.

"If the Chancellor spent less time writing stale jokes for his speech and the prime minister [spent] less time guffawing like a feeding seal on those benches, we would have not been landed in this mess."

"This was a £2bn ($2.4bn) tax hike for many middle and low earners and it was a clear cut and cynical breaking of a promise of a manifesto.

"What was sickening though was that at the time that he was cutting taxes to the rich and corporations, large numbers of the self-employed people have been put through the mangle over the last week worried about how they would be able to cope with this tax increase. But today not a word of an apology."

Advertisement

The climb-down also comes as the start of divorce talks between the EU and UK loom, with the Article 50 bill passing through parliament on Monday evening and receiving Royal Assent on Thursday.

© Copyright 2017 IBTimes Co., Ltd. All Rights Reserved.