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| Hammond: Budget National Insurance rise due to 'new challenges' | Hammond: Budget National Insurance rise due to 'new challenges' |
| (about 2 hours later) | |
| Chancellor Philip Hammond says National Insurance is being increased for self-employed workers because of "new challenges" the government faces. | Chancellor Philip Hammond says National Insurance is being increased for self-employed workers because of "new challenges" the government faces. |
| Mr Hammond is facing a backlash against the Budget announcement, which breaks a 2015 manifesto pledge on tax rises. | Mr Hammond is facing a backlash against the Budget announcement, which breaks a 2015 manifesto pledge on tax rises. |
| He insisted ministers had honoured a "broad commitment" not to raise taxes. | He insisted ministers had honoured a "broad commitment" not to raise taxes. |
| Labour urged the government to "think again" on the change, which will mean 1.6 million people paying £240 on average more every year. | Labour urged the government to "think again" on the change, which will mean 1.6 million people paying £240 on average more every year. |
| Shadow chancellor John McDonnell said his party could join forces with rebel Conservatives who say the increase does little to encourage enterprise and risk-taking. | Shadow chancellor John McDonnell said his party could join forces with rebel Conservatives who say the increase does little to encourage enterprise and risk-taking. |
| But Mr Hammond defended the move in an interview with BBC Radio 4's Today programme. | But Mr Hammond defended the move in an interview with BBC Radio 4's Today programme. |
| Asked about the Tories' pre-election pledges not to increase National Insurance, he said: "There was a broad commitment to lock taxes so there would be no tax increases. That's what we have done." | Asked about the Tories' pre-election pledges not to increase National Insurance, he said: "There was a broad commitment to lock taxes so there would be no tax increases. That's what we have done." |
| As chancellor, Mr Hammond said he was "working in an extremely constrained environment" where most taxes could not be increased and spending in many areas was ring-fenced. | As chancellor, Mr Hammond said he was "working in an extremely constrained environment" where most taxes could not be increased and spending in many areas was ring-fenced. |
| The government, he said, faced "some new challenges which we have to rise to". | The government, he said, faced "some new challenges which we have to rise to". |
| Referring to the extra £2bn committed to adult social care in the Budget, he said: "We have to pay for these things somehow." | Referring to the extra £2bn committed to adult social care in the Budget, he said: "We have to pay for these things somehow." |
| The government says self-employed people now have much the same pension and benefit rights as those in employment, so the disparity in National Insurance rates can no longer be justified. | The government says self-employed people now have much the same pension and benefit rights as those in employment, so the disparity in National Insurance rates can no longer be justified. |
| Mr Hammond added: "What I think we have done now is get the relationship between employed and self-employed National Insurance contributions into a fairer place." | Mr Hammond added: "What I think we have done now is get the relationship between employed and self-employed National Insurance contributions into a fairer place." |
| Some Conservative MPs have questioned the change, and Mr Hammond said that while he was "always prepared" to listen to backbench MPs: "We have made a decision here to make the National Insurance system a little bit fairer." | Some Conservative MPs have questioned the change, and Mr Hammond said that while he was "always prepared" to listen to backbench MPs: "We have made a decision here to make the National Insurance system a little bit fairer." |
| What is National Insurance? | |
| The Conservatives' last general election manifesto explicitly ruled out rises in National Insurance, VAT and income tax during the lifetime of the current Parliament | |
| During the campaign, the then-Prime Minister David Cameron continually repeated the commitment in public and contrasted it with the "jobs tax" which he said people could expect if they elected a Labour government. | During the campaign, the then-Prime Minister David Cameron continually repeated the commitment in public and contrasted it with the "jobs tax" which he said people could expect if they elected a Labour government. |
| 'Promises broken' | 'Promises broken' |
| In the wake of Philip Hammond's Budget announcement, ministers argued that legislation enshrining the manifesto commitment in law - approved by Parliament in 2015 - only referred to National Insurance contributions paid directly by employers and their employees. | In the wake of Philip Hammond's Budget announcement, ministers argued that legislation enshrining the manifesto commitment in law - approved by Parliament in 2015 - only referred to National Insurance contributions paid directly by employers and their employees. |
| Mr Hammond told BBC Breakfast that "no-one had objected" when this legislation made clear the "no increases" pledge did not include NI rates for the self-employed. | Mr Hammond told BBC Breakfast that "no-one had objected" when this legislation made clear the "no increases" pledge did not include NI rates for the self-employed. |
| Wednesday's changes would see the 9% rate of Class 4 National Insurance contributions currently paid by those self-employed people earning between £8,060 and £43,000 go up to 10% in April 2018 and to 11% in April 2019. | Wednesday's changes would see the 9% rate of Class 4 National Insurance contributions currently paid by those self-employed people earning between £8,060 and £43,000 go up to 10% in April 2018 and to 11% in April 2019. |
| Labour accused the government of "breaking their promises" and "clobbering" the self-employed while the Lib Dems and UKIP also criticised the move. | Labour accused the government of "breaking their promises" and "clobbering" the self-employed while the Lib Dems and UKIP also criticised the move. |
| Shadow chancellor John McDonnell told BBC Breakfast there was a "general sense of unfairness" and said he was "hoping that we'll be able to persuade the chancellor to back off from this". | Shadow chancellor John McDonnell told BBC Breakfast there was a "general sense of unfairness" and said he was "hoping that we'll be able to persuade the chancellor to back off from this". |
| He said: "Certainly the Labour Party will oppose this. I think other parties will as well. We may be able to persuade enough Conservative MPs to ask the chancellor now to think again." | He said: "Certainly the Labour Party will oppose this. I think other parties will as well. We may be able to persuade enough Conservative MPs to ask the chancellor now to think again." |
| Mr McDonnell said the policy would hit "middle and low earners in particular". | Mr McDonnell said the policy would hit "middle and low earners in particular". |
| There has also been a backlash from business with the Federation of Small Businesses saying it "undermined" the government's ambition for the UK to become the best place to start and grow a business. | There has also been a backlash from business with the Federation of Small Businesses saying it "undermined" the government's ambition for the UK to become the best place to start and grow a business. |
| MPs who are opposed to the National Insurance rise will have the chance to vote against it when legislation to make the change comes before the Commons. | |
| Sources said the government would include it in a bill making a separate National Insurance change which will help low-paid self employed people. | |
| In his first Budget, Mr Hammond also announced a £2bn cash injection for social care services in England, and £345m in help for firms hit by business rate rises across England. | In his first Budget, Mr Hammond also announced a £2bn cash injection for social care services in England, and £345m in help for firms hit by business rate rises across England. |
| Mr Hammond acknowledged the care system was under pressure with an ageing population, and said the new £2bn for services in England over the next three years would allow councils to "act now to commission new care packages". | Mr Hammond acknowledged the care system was under pressure with an ageing population, and said the new £2bn for services in England over the next three years would allow councils to "act now to commission new care packages". |
| He also said the government would set out the options for long-term funding of the social care system later in the year - although these would not include a "death tax". | He also said the government would set out the options for long-term funding of the social care system later in the year - although these would not include a "death tax". |
| Other key measures in the Budget included: | Other key measures in the Budget included: |