UK Chancellor Philip Hammond drops National Insurance hike in embarrassing Budget U-turn

While a review into the benefits of the self-employed is due to report later in the year the minister’s comments are the first sign that Hammond's tax hike itself could be reversed

But some MPs insist May ordered her chancellor to drop the plans, fearing that breaking the party's manifesto pledge to make "no increases in VAT, national insurance contributions or income tax", would do too much damage to the Conservatives' reputation.

The U.K.'s finance minister was forced on Wednesday to backtrack on his intention to raise national insurance contributions, which go to help pay for the country's health and welfare state, from self-employed workers after facing significant vocal opposition.

But during Prime Minister's Questions, Mr Corbyn said of the U-turn: "It seems to me like a government in a bit of chaos here - a Budget that unravelled in seven days".

He wrote: "There will be no increases in NICs rates in this Parliament".

Writing this morning, he said: "For the Prime Minister and me, it's not enough simply to stay within the letter of our tax lock law".

May's spokesman had said on Wednesday in the wake of the U-turn that the prime minister had full confidence in Hammond.

Philip Hammond has conceded defeat in the row over his Spring Budget plan to hike National Insurance Contributions (NICs) for millions of self-employed workers in the United Kingdom on Wednesday (15 March).

But Hammond unveiled plans to scrap class two NICs for self-employed workers from April 2018 and increase the main rate (class four) NICs by 9% to 10%, with an additional 1% hike in April 2019, saying it was a "small step" in the right direction. Ahead of Autumn Statement past year, the Prime Minister and I decided that, however hard the fiscal challenges we face, the tax-lock and spending ring-fence commitments we have made for this Parliament should be honoured in full. "And this Conservative government sets great store in the faith and trust of the British people". "The cost of the changes I am announcing today will be funded by measurers to be announced in the Autumn Budget".

Liberal Democrat leader Tim Farron, an advocate of Britain remaining in the European Union, questioned whether the chancellor would "now U-turn on another broken election commitment to keep us in the single market".

"I would like to hear from the chancellor reassurances that the £2bn promised for social care that was going to come from these tax increases is not going to be withdrawn", she told the BBC.

The SNP's Westminster leader Angus Robertson accused ministers of a "screeching, embarrassing U-turn" - while Labour's shadow chancellor John McDonnell tweeted that the chancellor's authority had been "shredded".

Stephen Herring, the Institute of Directors' head of taxation, said the National Insurance "saga can only be described as chaotic".

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