Philip Hammond’s credibility as Chancellor has just taken a big blow. Under pressure from his own backbenchers, he has abandoned the proposed National Insurance increase for the self-employed. This means that he has U-turned on one of the central measures of his first Budget.
What makes this change particularly humiliating for Hammond is that he told Tory backbenchers last Wednesday night that they could defend this National Insurance increase confident in the knowledge that the government wouldn’t change tack. But now it has. From now on, Tory MPs will treat Hammond’s reassurances with scepticism.
The other problem for Hammond is that he made much of how he was making this change because of his deep concern about the erosion of the tax base. This climbdown shows that Hammond doesn’t have the political backing to deal with this problem. The row has also exposed tensions between Number 10 and 11. Lots of politics will now be seen through this prism.
A Chancellor’s credibility is one of his most precious assets. One wonders whether Hammond’s can ever recover from u-turning on one of the central measures of his first Budget.