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Philip Hammond Has Broken The Tories' Manifesto Promise Not To Raise National Insurance

"This government is committed to its manifesto commitments," said a spokesperson for the chancellor when asked about the broken pledge.

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Justin Tallis / AFP / Getty Images

Philip Hammond, the chancellor of the exchequer, broke the Conservatives' 2015 election manifesto promise not to raise national insurance on Wednesday when he announced an increase in the level paid by self-employed people.

The Tories repeatedly promised "no increases in national insurance" during the 2015 campaign, and later introduced much-vaunted "tax lock" legislation which banned rises until May 2020.

But, delivering his first Budget on Wednesday, the chancellor announced a 2% increase in class 4 national insurance contributions for self-employed people, which the Treasury says will raise £145 million a year when other changes are taken into account.

National insurance is used to pay for state benefits such as pensions.

Hammond argued that this would close a loophole through which the self-employed – who include many high-earning self-employed people such as lawyers – pay less tax than people who work for companies. He said it was "unfair" that the self-employed paid less tax than the employed despite using public services in the same way.

Around 2.5 million people will be affected by the change, with 1.6 million paying more tax as a result. The chancellor's team said the move was justified because the self-employed now enjoy access to a state pension.

After the Budget speech, Hammond's spokesperson was asked repeatedly whether the decision meant the Conservatives had broken a manifesto promise.

The spokesperson said the government was "committed to its manifesto commitments", and suggested the manifesto was not an appropriate source for understanding the small print of the pledge.

The 2015 manifesto made no distinction between the different classes of contribution when it promised national insurance would not increase.

The tax lock legislation, the Treasury insisted, applied only to class 1 contributions paid by employed people, rather than class 4 contributions paid by the self-employed.

"The manifesto is not the place you should be looking," the spokesperson said. "You should be looking in legislation."

What our five year tax lock means for you.

But the move was immediately attacked by some Conservative MPs. On Twitter, Anna Soubry said would not be popular and could lead to Hammond's first U-turn.

@bbclaurak this could be 1st u turn .... this will not be popular & many will argue it's unfair

Tory MP John Redwood said he hoped "there might be some modification" to the proposed tax changes before they are implemented, and said a Conservative government shouldn't be "going out of our way to tax enterprise and success".

Redwood also warned that Donald Trump's proposals to cut taxes in the United States meant the UK needed to keep taxes low: "We need to make it is easy as possible to get into self-employment, and then it is as worthwhile as possible when people are successful."

Opposition politicians pointed out that the amount raised from changing the loophole was substantially less than the tax cuts offered to businesses, while also potentially hitting the self-employed.

Tax hike on self-employed will raise £600m in 2021. That year corporations will get a £2.6bn tax cut. Decisions, decisions. #Budget2017.

Labour will oppose the £2bn Tory tax on self employed low and middle earners. #Budget2017

However the left-leaning Resolution foundation, run by former Ed Miliband adviser Torsten Bell, produced analysis suggesting the tax rise would disproportionately hit the wealthiest households while leaving the poorest relatively unscathed.

Here's full distributional impact of National Insurance changes. Summary: average losses for the top half of the in…

The Conservatives introduced legislation in 2015 banning the government from increasing taxes and national insurance contributions, although this ban did not mention the type of national insurance payments made by self-employed. Class 1 contributions, paid by employees, still cannot be raised by law.

Hammond's spokesperson said they did not know whether it had always been the plan to allow tax rises on the self-employed. One of David Cameron's former advisers has said the tax ban pledge was made up "on the hoof" to fill media airtime during the election.

"It was probably the dumbest economic policy that anyone could make, but we kind of cooked it up on the hoof a couple of days before, because we had a hole in the grid and we needed to fill it," said Ameet Gill last year.

A spokesperson for Hammond said there are no further plans for any extra tax rises.

When the Labour government proposed increasing the rate of national insurance for all workers in the 2009 Budget, Hammond repeatedly campaigned against it. In one parliamentary debate he said it was "very clear that the increase in national insurance tax will have a negative impact on the capacity of the economy to create jobs" and insisted it would be "the stupidest tax of all, on jobs".

"If we win the general election, our number one priority will be to try to avoid Labour's new national insurance tax increases," Hammond said at the time.

Jim Waterson is a politics editor for BuzzFeed News and is based in London.

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