Downing Street denies support for Powerhouse is waning, as opposition to National Insurance reforms grows

Chancellor Philip HammondChancellor Philip Hammond
Chancellor Philip Hammond
Downing Street has denied accusations that the Prime Minister's support for the Northern Powerhouse agenda is waning, amid claims that the lack of targeted measures in the Budget shows the Government is 'turning its back' on the region.

The rebuttal from Number 10 comes as the Government faces growing pressure to review plans to increase taxes on the self-employed, with rumours of a possible rebellion if the proposals are put to a vote in the Commons.

It also follows a warning from the influential economic think tank, the IFS, that Britain faces an “unprecedented” 15 years without a pay rise and at least another eight years of austerity as the Chancellor seeks to balance the books.

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Responding to Wednesday’s Budget, the organisation went on to welcome controversial moves to increase National Insurance rates, but slammed the Government for its “foolish” pledge not to raise any “major taxes”.

Philip Hammond’s decision to increase class 4 National Insurance Contributions (NICs) for self-employed workers dominated debate in Westminster today, as at least a dozen Tory MPs came forward to condemn the measures.

Critics included the former pension Secretary Iain Duncan Smith, who called for the issue to be kept under review, and the Broxtowe MP Anna Soubry who suggested the Government could end up doing a U-turn on the policy.

Quizzed by journalists, a Downing Street spokesman repeatedly refused to rule-out the possibility of a review, but maintained the reforms would “address an unfairness that has existed for some time”.

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Mr Hammond also continued to defend his changes, insisting that it will result in the self-employed making a “fair contribution” to public services.

The policy received further support from the IFS, with director Paul Johnson describing it as a “modest but welcome change” that would “create a slightly less unequal playing field between the self employed and employees”.

Mr Johnson also suggested the Chancellor was “wise” to commit to keeping borrowing down, stating it “makes sense” to give himself some extra headroom “given the uncertainty over economic outcomes over the next few years”.

However, he was highly critical of the party’s decision to rule out any increases to “major taxes” in its 2015 manifesto, labelling the now-broken promise on NICs “foolish”.

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And he warned that ongoing efforts to drive down the deficit will likely mean “a third parliament of austerity”, while weak growth forecasts mean British workers face an “unprecedented” 15 years without a pay rise.

The Budget has also drawn fresh criticism from Labour, after a House of Commons Library report revealed women will bear the brunt of 86 per cent of Government efficiency measures between 2010-2020.

Commenting on the findings, Shadow Equalities Secretary Sarah Champion, called on ministers to explain how they intend to reverse “this disproportionate impact”.

Meanwhile, Shadow Cabinet Office Minister Jon Trickett attacked the lack of detailed initiatives to support the development of the Northern Powerhouse agenda.

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In stark contrast to predecessor George Osborne, Philip Hammond’s Budget contained just one reference to the Northern Powerhouse, and a single region-specific fund of £90m for road upgrades.

Mr Trickett claimed this “lack of action” was a sign of the Government “turnings [its] back” on the North.

“It looks like the Chancellor would rather everyone forgot the promises they’ve made on what his predecessor called the Northern Powerhouse,” he said.

But the suggestion that Theresa May’s support for the powerhouse – or the wider devolution agenda – is crumbling was fiercely denied by Downing Street.

Responding to a question from the Yorkshire Post, a spokesman pointed to a comment piece Mrs May wrote for the paper last year, which he argued “sets out very clearly our ambitions for that region”.