Budget 2017: Hammond's National Insurance hike under heavy attack
Philip Hammond has been accused of jeopardising new business start-ups with a hike in National Insurance contributions (NICs) for the self-employed.
The Federation of Small Businesses (FSB) said that the increase amounted to a £1bn-a-year grab on people who set up new companies, while Labour said he had breached a Conservative manifesto pledge not to put up NICs.
FSB chairman Mike Cherry said it would simply drive up costs, undermining the government's aim of encouraging entrepreneurs to grow their businesses in the UK.
"The National Insurance rise should be seen for what it is - a £1bn tax hike on those who set themselves up in business," he said. "This undermines the government's own mission for the UK to be the best place to start and grow a business, and it drives up the cost of doing business."
However, Stephen Herring, the head of taxation at the Institute of Directors, said that while Mr Hammond would take "a lot of political pain", he was right to start creating a "level playing field" for employees and the self-employed. Treasury figures showed the increase in so-called Class 4 contributions from 9% to 11% over two years, would raise an additional £2bn over two years.
However, when the abolition of Class 2 contributions announced by his predecessor George Osborne is taken into account, the net increase in revenues for the Exchequer is £145m a year.