National insurance delay appeases Tory rebels

Theresa May’s decision to delay a controversial national insurance rise for self-employed people appears to have partially quelled a rebellion by Conservative MPs, although Labour said ministers were “in disarray” over the issue.Downing Street insisted yesterday there would be no watering down of the proposal, while indicating it would be introduced alongside improved benefits for the self-employed.May was fully committed to the headline measure in Philip Hammond’s first budget, her spokesman said, adding that the chancellor and other ministers would be talking to MPs and businesses over the summer.Before the autumn the government would produce a paper setting out the national insurance changes, which will bring self-employed contributions into line with those paid by employed people. It would also look “potentially at what new rights could be given to people who are self-employed”.Asked if this meant the measures outlined by Hammond on Wednesday would remain, he said: “The prime minister was clear – we are bringing forwards legislation in the autumn in reference to the national insurance announcements that were made in the budget.”May had announced the delay on Thursday evening, after the number of Conservative MPs opposing the scheme climbed above the government’s working majority, amid pressure growing on the chancellor.Some Tory rebels had worried the proposal could be introduced as part of the current finance bill even though it does not come into force until April 2018.But the prime minister said on Thursday evening that the changes would be legislated on in the autumn, when Hammond presented the second budget of the year.“It won’t be part of the finance bill,” May told reporters at a European summit in Brussels. “That is always what happens with national insurance changes. Those elements will be brought forward in the autumn.”The delay will allow the government to publish a paper making the case for the changes; and will come after the publication of Matthew Taylor’s report on the changing nature of the labour market, which will consider the gig economy and self-employment.May defended the policy, saying it would make the tax system “simpler, fairer and more progressive”, and insisting it did not breach the Conservative manifesto pledge not to raise national insurance.The delay could be seen as something of an implied rebuke for Hammond.However, sources close to the chancellor insisted he was relaxed about the way that his budget had been received, saying he was not interested in climbing the political ladder, and was only motivated by making the tax system fairer.The partial climbdown was welcomed by some of the rebels. Ann-Marie Trevelyan, the Tory MP for Berwick-upon-Tweed, said the comments were reassuring. “It will provide a rounded perspective and everyone will have the chance to consider the impacts.”