UK

Tories' Budget Bombshell To Hike National Insurance Unravels Overnight

It won't be as smooth sailing as Theresa May hoped.

09/03/2017 13:36 GMT | Updated 09/03/2017 16:34 GMT

Theresa May faces the prospect of her biggest Budget announcement being scrapped, after her pledge to hike National Insurance contributions unravelled overnight. 

The policy has riled many backbench Conservatives, as it breaks a key promise not to raise National Insurance made in the party’s 2015 general election manifesto.

But it could now face defeat by a cross-party effort by MPs, if Chancellor Philip Hammond does not U-turn first and scrap it from the Budget. 

JUSTIN TALLIS via Getty Images
Chancellor Philip Hammond announced the contributions hike in the Spring Budget, yesterday

Former Shadow Chancellor Chris Leslie tweeted on Thursday morning that the House of Commons Library had told him the Government would be forced to introduce National Insurance changes through “separate primary legislation” to the Budget.

A Commons source later confirmed to The Huffington Post UK this was true and ministers would not be able to use the annual Budget Bill - called the Finance Bill - to hike contributions.

Instead the rise would have to be introduced separately, making the prospect of MPs defeating it substantially greater.

Leslie told HuffPost UK: “If the Chancellor has to pilot special legislation to enact this National Insurance rise, the risk of rebellion on his own side must surely be very high.

“I would predict Philip Hammond reversing out of this blunder before we get to that stage.”

LEON NEAL via Getty Images
Leslie predicted Hammond would soon be 'reversing out of this blunder'

Many Tories have been openly critical of the measure which defied a 2015 election promise by the party not to increase National Insurance. 

MP Stephen McPartland said the hike would “tax those families who have taken on the risk of setting up their own small business, many of which employ apprentices and are the backbone of our economy”. 

While former leader Iain Duncan Smith said the measure would hit “people who choose an enterprise process” and hoped it would be reviewed in the Autumn Budget. 

Their criticism led the BBC’s Laura Kuenssberg to speculate that the National Insurance increase would be “easier to defeat” now. 

The pressure intensified as the Prime Minister’s spokesperson reportedly repeatedly refused to rule out the possibility the policy would be “reviewed”.  

The Times’ Sam Coates quoted a Government source saying the revelation was not a spanner in the works. They added that having the National Insurance increase in a separate bill would allow “more time for concerns to be put before [the] Chancellor.”

Hammond defended the policy in his media round this morning, saying it was a “basic question of fairness” as only the richest people would be paying any more.

“I’ve had to ask the self-employed to pay a little bit more National Insurance in order to make a fair contribution for the services that they receive from Government,” he said.