Philip Hammond has dramatically scrapped his rise in National Insurance Contributions for the self-employed just a week after the Budget.
The Chancellor in a letter to Conservative MPs said that while he believed the rise in Class 4 NICs was within the constraints set out in the UK Government's tax-lock legislation of 2015, its compliance with the legislative test of the manifesto commitment, which said the Tories would not raise NICs, was "not adequate".
"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 with the Class 4 NICs measures in the Budget. There will be no increases in NICs this Parliament," he said.
The cost of the changes, £2 billion over four years, will be funded by measures in the Autumn Budget, the Chancellor added.
The U-turn is a huge embarrassment not only for Mr Hammond in his first Budget but also Prime Minister Theresa May and will open them up to a charge of incompetence from the Opposition.
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