A proposed hike in national insurance for self-employed people has sparked fierce Conservative infighting amid fears the Government could lose a vote in the Commons over the £145 million tax raid.
Tory MPs are arguing over who is to blame for the budget “shambles” with the Government facing an embarrassing U-turn on Chancellor Phillip Hammond’s pledge to increase national insurance contributions (NICs) for those who work for themselves and earn more than £16,250 a year.
With a working majority of just 17, if Tory rebels join a united opposition, the Government could lose a Commons vote after around 18 Conservative MPs publicly said they oppose the move – which they were reportedly not fully prepared for.
Mr Hammond briefed the Cabinet on the contents of his budget in advance – but insiders say he did not mention the increase in NICS contradicts an election pledge, leaving ministers caught on the hoof during interviews.
Almost 2.5 million self-employed workers will face a rise in their NICs averaging £240 a year, according to the Treasury.
A row erupted because the 2015 Tory manifesto pledged “We will not raise VAT, national insurance contributions or income tax”.
Guto Bebb, the junior minister for Wales who is also a whip, told BBC Radio Cymru: “I believe we should apologise. I will apologise to every voter in Wales that read the Conservative manifesto in the 2015 election.”
Mr Hammond was supposedly delivering a “safe” budget which was not expected to cause outrage – but the increase in NICS generated far worse headlines than MPs were told to expect.
Wednesday’s announcement was designed to make the system fairer, according to Mr Hammond, so that the UK’s growing army of self-employed will pay the same level of NICs as those who work for companies.
To give the self-employed something in mitigation, the Chancellor is considering extending maternity and paternity leave to the self-employed.
But Tory MPs are concerned the rise in NICs could be seen as an attack on the entrepreneurial class, who have historically been regarded as natural Conservative voters.
Addressing reporters in Brussels this week, Ms May gave the first hint of a possible climbdown when she said: “The Chancellor will be speaking, as will his ministers, to MPs, business people and others to listen to the concerns”.
Nigel Evans, the joint secretary of the Tory backbench 1922 committee, said: “I’ve got deep reservations about the bulldozer approach to an issue that is clearly growing – it needs precision engineering.
“Theresa May has given Philip Hammond the pause by which he can now reflect again on how to tackle the problem by not punishing our people.”
Mr Hammond reportedly put out a 2,000 word memo to MPs and aides detailing how they could defend the budget – but this also failed to mention that it broke a manifesto pledge – something politicians would expect to have advance warning of.
Since the Budget, a host of Tory MPs including Jacob Rees Mogg, Anne-Marie Trevelyan, Anna Soubry and Iain Duncan-Smith have echoed Mr Evans’ reservations.
Ms Trevelyan told Radio 4 she thought the proposal was a mistake on a par with George Osborne’s roundly-mocked “pasty tax” of 2012, which resulted in a U-turn.
MPs will debate the budget, including the proposals on national insurance, on Monday, with Nigel Evans due to meet the Prime Minister to outline backbenchers' concerns on the same day.