Tory chancellor Philip Hammond has shown that the Tories are for turning.
Just one week after raising national insurance contributions (NICs) in the Budget, Hammond was forced into a U-turn yesterday, Wednesday.
He had planned to raise NICs for the “self-employed” from 9p in the pound to 10p in 2018 and 11p in 2019. This came along with a slew of attacks on working class people’s benefits that will come into force this April.
Hammond said yesterday, “In light of what has emerged as a clear view among colleagues and a significant section of the public I have decided not to proceed”. But he defended the policy in a letter to Tory MPs, claiming it would have made taxation more progressive.
The reality is more complex.
Hammond’s rise would have hit anyone self-employed on more than £16,250, meaning it would have included some low and middle income people.
But the bulk of the burden would have fallen on higher income self-employed people, such as accountants and lawyers. Those on more than £50,000 would have paid around £600 more in tax a year.
At the moment rich people find it an advantage to declare themselves as self-employed.
Yesterday’s climbdown has shown the Tories can be forced onto the defensive—and into retreat
And as Hammond was forced to admit yesterday, his change avoided the real National Insurance scandal—bogus self-employment. Bosses in industries such as construction and retail often classify their workers as “self-employed” to get around paying NICs for them.
Hammond’s U-turn shows the type of pressure the Tories can come under. But what spurred this particular climb down?
Right wing Tory MPs and newspapers such as the Sun and the Daily Mail slammed Hammond’s plan as an attack on “white van man”.
Meanwhile, attacks such as cuts to working tax credits will go through without a whimper in parliament.
People on very low incomes will face life-changing benefit cuts and the Tories will gleefully vote them through.
The Tories are under pressure as Brexit becomes more real, more complex and more divisive for their supporters.
They also face the new challenge of demands for a new Scottish independence referendum. Yesterday’s climbdown has shown they can be forced onto the defensive—and into retreat.
It’s time for the trade union leaders to realise that our side can win.