15 Mar 2017

Philip Hammond’s National Insurance climbdown


On Monday, as Article 50 legislation cleared Parliament, we saw a demonstration of the weakness of the Tory “centre left” who wanted to soften Brexit.

Today, with the reverse of Philip Hammond’s National Insurance hikes, we saw the Tory pro-Brexit Right assert their strength (yet again).

You could argue there are some names who are in the wrong columns to support this as a comprehensive analysis of this week’s goings-on in Parliament. But the truth is that one WhatsApp Group of Tory MPs – they call themselves “the 2019” and boast of a potential strength of around 30 or so – managed not one amendment to the Article 50 Bill.

Another WhatsApp group – the European Research Group – can claim 60 or more potential supporters and quite a few scalps to which they have some claim to have just added yet another.

Philip Hammond Announces U-turn On National Insurance Budget Increase

One government source says that No. 10 did try to get the NICs changes taken out of the Budget last Monday with two days to go before Budget day. The Treasury came back saying that if No. 10 could find another way to raise £2bn they were welcome to dump the measure. Not surprisingly, No. 10 couldn’t muster that. Treasury sources say they don’t recognise that version of events.

No. 10 hated the headlines on Thursday morning from government-friendly newspapers and Theresa May, in Brussels, said there would be more detail and potential changes in the autumn.

Some of the steam seemed to be going out of the issue but the Sunday Times’ reports that Treasury sources were calling the No. 10 team “economically illiterate” infuriated some there.

Yesterday, No. 10 decided that the measure had to go and this morning, in a meeting with Philip Hammond, that was “agreed” between the two.

There’s been bold talk by Philip Hammond about the need for radical reform of the tax system. Theresa May has talked of great change that is needed post-Brexit.

Today’s reverse shows how difficult it will be to deliver anything in the next three years that has a significant price tag attached. Austerity measures are already making some departments squeal. The manifesto ring-fencing and tax promises, the “legacy” measures that some Treasury sources roll their eyes about, hem in the government on many fronts.

Though this episode will up the pressure to call an early election, Theresa May is said to remain convinced that it would add to business uncertainty. She didn’t enjoy just being caught red-handed breaking a David Cameron election pledge. She wouldn’t be mad keen to follow that up busting her own more recent promise that she wouldn’t call an early election.


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