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Hammond defends 'fair' £240 National Insurance hike for self-employed - and denies breaking manifesto pledge

Chancellor Philip Hammond has defended plans for a two per cent rise in National Insurance for self-employed workers - arguing it makes the system more "fair".

It came as backbench Conservatives warned of a potential backlash and opposition members accused the government of going back on a key manifesto pledge from the 2015 general election not to raise income tax or National Insurance contributuons.

Speaking to ITV News, he said had to make changes to face the "challenges" in social care and the health service, particularly with the potential economic ramifications of Brexit looming.

We have to have a tax system that is fair, and it's right that we ask people to contribute appropriately for the benefits that they're receiving from the state - access to the National Health Service, access to state pensions - available now on the same basis as the employed.

And they have to be prepared to pay a little more.

– Philip Hammond

It comes after he appeared on ITV's Good Morning Britain, where he denied breaking the manifesto promise.

He insisted the pledge had been focused on the main Class 1 rate of NICs paid by employers and employees - and rejected the suggestion that it amounted to a stealthy breaking of the promise by "hiding behind the detail".

The rise - set to add £240 a year to the payments of some 2.5 million self-employed people - has sparked concern among those who fear it will hit traditional Tory supporters.

Speaking after Philip Hammond's speech in the Commons, a series of Conservative MPs rose to urge him to exercise caution, warning the move could hurt the "white van man".

Among them was former minister Andrew Murrison, MP for South West Wiltshire, who said electricians, plumbers and plasterers could be among those hardest hit.

"This party on this side always has been, I hope always will be, the party that supports white van man," he said.

Backbencher Tom Tugendhat, Tonbridge, Edenbridge and Malling MP, called for a "re-think", while North East Somerset MP Jacob Rees-Mogg said the Chancellor should be "very cautious" and asked him to look again at the whole issue of National Insurance and income tax.

Chancellor Philip Hammond Credit: PA

The Federation of Small Businesses has also roundly condemned the rise, which would see contributions increase from nine per cent to 11 per cent over the next two years, bringing in an extra £2 billion for the Treasury.

[This] should be seen for what it is – a £1 billion tax hike on those who set themselves up in business. This undermines the government’s own mission for the UK to be the best place to start and grow a business, and it drives up the cost of doing business.

Future growth of the UK’s 4.8 million-strong self-employed population is now at risk.

Increasing this tax burden... is the wrong way to go.

– Mike Cherry, Federation of Small Businesses chairman

Labour, meanwhile, said the rise was a clear breach of David Cameron's 2015 manifesto pledge that there would be no increases in income tax, VAT or National Insurance contributions (NICs).

However, ministers on Thursday rejected calls for a re-think, as the Treasury insisted the overall impact on the self-employed would be relatively small.

The department said that, taken together with a previously-announced decision to abolish Class 2 NICs, the amount raised would be just £145m a year - the equivalent of 60p a week for 1.6 million self-employed people.

Speaking to BBC2's Newsnight, Treasury Chief Secretary David Gauke said the measure would restore "fairness" to the National Insurance system.

"I think people understand the fairness point," he said.

"At a time when - unlike what has happened in the past - essentially the benefits that the self-employed receive for their contributions are largely the same as employed people do, it is wrong that employed people pay a lot more in National Insurance contributions."

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