Labour MP indicates support for NICs increase as Prime Minister defends plans

Chancellor Philip Hammond
Chancellor Philip Hammond
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Downing Street has insisted Theresa May remains “fully committed” to reforming National Insurance for the self-employed, as Labour MPs indicate they could “get behind” changes if workers are given further benefits in return.

In what has been described as a “partial U-turn” by Labour, the Prime Minister has stated that she and the Chancellor will listen to concerns raised by Conservative MPs about the £2 billion hike in taxes, and there will be no vote on the policy until the autumn.

The assurances follow a fierce backlash from the Tory backbenches to the proposals, which were first unveiled by Philip Hammond in his budget on Wednesday. Responding to Mrs May’s announcement, Labour Shadow Cabinet members accused the Government of being in “disarray”. – but the Leeds MP Rachel Reeves indicated her party could support the reforms if the Chancellor is willing to extend maternity, paternity and sickness benefits to the self-employed.

It has been reported that as many as 18 Tory MPs are prepared to rebel against the Government if plans for a 2 percent increase in class 4 National Insurance contributions (NICs) go through in their current form. Critics of the tax hike include the former leader Iain Duncan Smith, and the Berwick MP Anne-Marie Trevelyan.

Addressing a press conference on Thursday, Mrs May insisted that the policy was “fair”, when considered in the light of the abolition of the separate class 2 payments as well as improvements to the benefits received by self-employed people. She said: “This is a change that leaves lower-paid self-employed workers better off; it’s accompanied by more rights and protections for self-employed workers and it reforms the system of National Insurance... to make it more progressive.”

It is understood the Government will publish a paper detailing plans to extend employment benefits to the self-employed in the summer. Asked whether Mrs May would use the summer to listen to MPs’ concerns, her official spokesman said:”The Prime Minister has said that the Chancellor and his ministers will be talking to MPs and businesses over the summer. The Prime Minister talks to MPs all the time.”

Pressed on whether the new paper was likely to include concessions, the spokesman replied: “What you are going to get ... is a paper which ... looks at potentially what new rights could be given to people who are self-employed.”