Chancellor backs down on Budget NIC rises

The rise in national insurance contributions for the self employed announced in last week's Budget has been cancelled, the Chancellor, Philip Hammond, revealed today.

In a letter to Conservative MPs ahead of a statement to the House of Commons, Mr Hammond conceded that although the 2015 legislation imposing rate ceilings only applied to class 1 (employer and employee) contributions, "in light of the debate over the last few days it is clear that compliance with the 'legislative' test of the manifesto commitment is not adequate".

Critics, many from within the party, had founded on the apparently unqualified comments in the 2015 Conservative manifesto that national insurance rates would not be increased during the present Parliament.

Mr Hammond restated that "There will be no increases in NICs rates in this Parliament." He continued: "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 consultation already announced for the summer, looking at the diffence in parental benefits between employed and self employed people, will be widened to look at other areas of difference in treatment.