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Chancellor will listen to concerns over 'fair' National Insurance hike, says May

Theresa May said the Chancellor will listen to concerns raised by Tory MPs about the Budget's controversial National Insurance hike, but defended the change as "fair".

As the Prime Minister and Philip Hammond faced a backlash over the plans, Mrs May said they would not be voted on by MPs until the autumn - after a paper setting out the full effects of the changes for self-employed workers is published.

A number of Tories have voiced concerns about the £2 billion hit on the self-employed announced by Mr Hammond, with one minister saying the Government should apologise for breaking an election manifesto commitment not to increase National Insurance.

Mrs May acknowledged the Budget had meant "difficult decisions" but insisted it was vital to close the gap between the amount of tax paid by the self-employed and those in "traditional" employment.

At a press conference in Brussels, Mrs May said the package of measures would ease the tax burden on low-paid self-employed workers and provide additional rights and protections.

The main rate of Class 4 National Insurance Contributions (NICs) will increase from 9% to 10% in April 2018, and to 11% in April 2019.

Mrs May said the rise in people in self-employment risked eroding the tax base, leaving public services short of funding.

But she said that along with the tax rise, there was also the decision to abolish Class 2 NICs and the promise of extra rights for self-employed workers, with a paper this summer spelling out the full details of the reforms.

"People will be able to look at the Government paper when we produce it, showing all our changes and take a judgment in the round," she said.

"Of course the Chancellor will be speaking, as will his ministers, to MPs, business people and others to listen to the concerns.

"But 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 if fairer and to make it more progressive."

The Conservative manifesto in 2015 promised there would be no increase in National Insurance.

Ministers - including Mrs May and the Chancellor - have stressed that the legislation for that manifesto promise only extended to employees' NICs.

But whip and Wales Office minister Guto Bebb told BBC Radio Cymru: "I believe we should apologise."

With reports of up to 20 Tories concerned about the Budget measure, Labour made clear that it hopes to force a U-turn in the face of the threat to Mrs May's narrow 17-seat Commons majority.

Shadow chancellor John McDonnell said the announcement that the vote would not take place until autumn signalled a "partial U-turn".

He said: " The fact the Prime Minister won't fully support her own Chancellor's Budget measure, and has been forced by Labour to row back on it just 24 hours after he delivered his speech in Parliament, shows the level of disarray that exists at the top of government."

Mr McDonnell said the Prime Minister should "show some leadership, rather than this partial U-turn, and just scrap these tax rises for low and middle earners altogether".

Liberal Democrat leader Tim Farron suggested the Prime Minister was concerned about the impact the row would have on Tory chances in May's elections.

"Kicking the can down the road for a few weeks shows that the Conservatives are still planning to hit hard-working self-employed people but that they haven't the courage to say so this side of the local elections," he said.

Despite the political controversy, Mr Hammond's move received support from leading economic commentators.

The Resolution Foundation think tank - which campaigns for low-income workers - hailed the NICs rise as "welcome and progressive", while the influential Institute for Fiscal Studies (IFS) said it would go only a "small fraction" of the way to redressing an imbalance in the tax system in favour of the self-employed.

Rather than criticising Mr Hammond, IFS director Paul Johnson said it was "foolish" of David Cameron to make his election promise not to raise them.

Instead, both organisations highlighted "dreadful" prospects for earnings, with the Resolution Foundation saying workers were suffering the slowest period of pay growth since the time of the Napoleonic Wars 210 years ago.

The chairman of a Government-commissioned review of modern employment practices, RSA chief executive Matthew Taylor, described the 2% increase in Class 4 NICs as "progressive (and) economically rational", with the bulk of the burden falling on wealthier self-employed people.

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