Theresa May moves to quell Tory rebellion over tax rise

The Prime Minister addressing reporters in the Belgian capital yesterday
In Brussels

Theresa May has made a desperate bid to avoid a major Conservative rebellion following the Government’s attempt to hike National Insurance contributions (NICs). The Prime Minister signalled that the tax rise hitting 2.5 million workers could still be mitigated, as she sought to see off a damaging clash with Tory backbenchers who fear the policy looks like a clear breach of a key election pledge.

While she continued to stand by the NICs rise on Thursday in Brussels, her defence also saw her point to broader policy reviews that may bring forward new protections for the self-employed workers affected and highlight a legislative process that gives MPs a chance to propose changes to the policy. In the 24 hours since Chancellor Philip Hammond announced the reform, Conservatives have taken to the airwaves to nervously question the move and raised concerns more forcefully with Ms May in private.

With party unity critical ahead of crucial votes in the Commons next week, Ms May’s firefighting appeared to have bought her time with backbenchers saying it was a “sensible” way to approach their concerns, while others are still unhappy with her defence of the policy, saying it looks like “smoke and mirrors”. Addressing reporters, Ms May 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 simpler, to make it fairer and to make it more progressive.”

The Conservative 2015 election manifesto clearly stated four times the Tories would not increase NICs once in power, in a move that may have helped convince millions to vote for the party. Deflecting questions over whether the move breaks the promise, Ms May repeated her defence of the policy – that legislation published after the election made clear that only employed, and not self-employed workers, would be protected.

“The legislation was clear that it was honouring our manifesto commitment in our 2015 manifesto, and no amendments or concerns were raised at the time,” she told reporters. Ms May also pointed out that money raised from the move would provide greater funding for technical education, free schools and social care that MPs had also wanted.

The Prime Minister noted that the NICs rise would be not be passed through Parliament in the usually untouchable Finance Bill, but in separate legislation in the autumn. She also highlighted a review taking place by Matthew Taylor, chief executive of the Royal Society of Arts, into employment practices and said the Government would bring out a separate paper over the summer explaining the NICs changes. Ms May added: “The Chancellor will be speaking, as will his ministers, to MPs, business people and others to listen to the concerns.”

The move to change rates for some 2.5 million class four NICs payers would see those hit having to pay an extra £240 a year, though the Government said an accompanying move to abolish the class two category would reduce the number of people losing out to 1.6m and that no one earning less than £16,200 will be worse off.

Nonetheless, it sent a shockwave along the Tory back benches with a string of MPs appearing on TV and radio to question whether the hike was hitting “our people” – entrepreneurs and small business owners. Moreover they feared claiming a manifesto commitment had not been breached because the policy’s small print had been published after the election, would anger voters affected. London Tory MP Bob Blackman told The Independent: “Going on the legislation that we put through after the election… looks like smoke and mirrors.”

He said he would be lobbying the Government to find a way of bringing employed and self-employed workers’ NICs into line without increasing NICs on entrepreneurs and people starting their own businesses. Another Tory MP said: “She needs party loyalty because there’s some very big votes next week, she’s done this tonight because it needs resolving before the Budget and Brexit votes that are coming.” Another Conservative said: “You just don’t go messing with election manifesto pledges when the atmosphere is as febrile as it is at the moment.”

Dominic Raab MP was among those who raised concerns earlier in the day. After Ms May’s press conference he said: “This was a sensible way to make sure we look carefully at the impact, and treat both self-employed and other workers fairly.” Fellow Tory Andrew Bridgen said: “I think she’s done enough to placate backbenchers. I’m pleased the Prime Minister is taking on people’s concerns. It’s going to have its own bill, there will be two reviews.” He said that if the reviews threw up problems with the proposed change he would expect it to be stopped.