Norman Lamont says lower NICs are only way to boost entrepreneurship while Tory rebellion emerges over ‘death tax’ plans

This article is more than 3 years old

This article is more than 3 years old

Philip Hammond has been accused of making a “rookie error” over his plans to raise national insurance contributions from self-employed workers, as the budget backlash from Conservative ranks continues.

There was intense backbench anger over plans to raise NICs in the face of a 2015 manifesto pledge that appeared to rule out the move in the wake of the spring budget. On Saturday, another rebellion emerged over apparent plans to increase probate fees for executing a will.

Philip Hammond's budget speech was light on changes – and jokes Read more

Nicknamed a “death tax” by backbenchers, the increase could see families pay thousands of pounds upfront to win the right to administer a will. The fee is currently fixed at £215, but changes detailed by the chancellor on Wednesday will see probate fees linked to the value of the estate and used as a revenue-raising tool for the courts service.

Jacob Rees-Mogg, a Tory backbencher and member of the Treasury select committee, criticised the proposals as a stealth tax on grieving families. He told the Daily Mail: “I do not think it right that the government should introduce stealth taxes. Probate charges should relate to the cost of the probate work, which is broadly irrelevant to the size of the estate.”

Fellow backbencher Oliver Colvile, the Tory MP for Plymouth, Sutton and Devonport, said: “I have real concerns about this. We absolutely do not need a death tax – which is what this sounds like.”

The changes were floated by the government last month as a means of boosting funding for HM Courts and Tribunals Service, which is currently working with a shortfall in funding of £1.2bn.



A spokesman for the Ministry of Justice said: “The government believes this is unsustainable meaning that the Ministry of Justice must look at other ways to raise income.”

Writing about the NIC rise in Saturday’s Daily Telegraph, the former Conservative chancellor Norman Lamont said: “My guess is that, in time, the chancellor’s tax raid on the self-employed will be seen as a rookie error. He is fortunate in having plenty of time to regain trust on tax before the next election.

“Above all the chancellor should not increase taxes again to finance extra discretionary public spending.”

The peer accused the chancellor of undoing decades of work to make the Conservative party known as the party of low taxation.

“Voters do not see any distinction between national insurance and taxation. Labour’s 1992 national insurance proposals set the dividing line between Labour and Conservative in the ensuing general election,” he said.

“We ran posters across the country of Labour’s tax double-whammy, a boxer’s one-two combo of more taxes and higher prices.”



Lord Lamont said that rather than soften the blow with boosted welfare protection for the self-employed, lower national insurance rates were the only means to boost entrepreneurship. “Doing otherwise goes against the entire grain of the Conservative policy since 1979,” he said.

Speaking on BBC Radio 4 on Saturday, Lamont said the real concern was that Hammond could keep appearing to punish the self-employed in future budgets.

“The real danger is that this continues,” he said. “He made clear that this gap in the taxation – national insurance for the self employed and the employed – he intends to eliminate, and he only did part of that.

“So the clear implication was that he would go on doing this – there is more to come in future budgets. He learned enough from the reaction to realise that would be impossible, that would be a profound error.

He said, however, that the Conservatives’ manifesto pledge ruling out national insurance increases was a mistake:

“You were ruling out absolutely everything, but that was the manifesto, so to put additional tax on the self-employed is [also] a mistake. He [Hammond] should drop it … the self-employed should pay lower NICs and have lower benefits.”

No 10 said Theresa May was fully committed to the chancellor’s national insurance rise. The prime minister said the 2% hike, which would see 2.5 million self-employed people pay an extra £240 a year on average, was fair, but suggested the introduction could be postponed until the autumn.

It emerged on Saturday that the chancellor asked Boris Johnson to defend the budget when it is debated by MPs on Monday. The foreign secretary will appear at the despatch box when discussions continue in the House of Commons, despite the issue not being within his department’s remit.

Sources said Johnson was one of the government’s best communicators and a solid parliamentary performer. Hammond made the request before he delivered the budget on Wednesday.