Chancellor u-turn: Self employed will not be hit by tax hike

Chancellor Philip Hammond conducted a major budget u-turn over plans for a hike in National Insurance Contribution for the self-employed.

He was accused of being in 'chaos' by Labour leader Jeremy Corbyn after telling Conservative MPs he would not proceed with the planned 2% increase in Class 4 NICs which he announced just a week ago in a letter..

'There will be no increases in NICs rates in this Parliament,' he said.

Labour leader Jeremy Corbyn said the climbdown on a measure intended to raise £2 billion over the coming years, had left 'a black hole in the Budget' and said Prime Minister Theresa May should apologise to the country, telling the House of Commons: 'It seems to me like a Government in a bit of chaos.'

But Mrs May insisted the Budget announcement was 'consistent' with the lock on tax rises put into legislation shortly after the general election, when the Conservative manifesto promised there would be no rises in National Insurance, VAT or income tax for the next five years.

Mr Hammond had faced a furious backlash by Conservative backbenchers, who accused him of breaking the manifesto pledge while hitting traditional Tory supporters.

In his letter, the Chancellor said: 'It is very important both to me and to the Prime Minister that we are compliant not just with the letter, but also the spirit of the commitments that were made.

'In the light of what has emerged as a clear view among colleagues and a significant section of the public, I have decided not to proceed with the Class 4 NIC measure set out in the Budget.'