BBC Radio 4

Rory Stewart, the Tory international development minister, has the tricky task of defending the government's reversal on National Insurance rises.

"It's really important that we're seen to listen," he tells the World at One. "I think that's better than ploughing ahead when people felt the spirit of the manifesto wasn't being respected."

The Chancellor still deserves some credit for trying to make NI tax fairer, he says. The system "has become increasingly a mess in the last 100 years".

Image source, Getty Images

The blood-letting was fierce in the House of Commons over Philip Hammond's volte-face on national insurance.

Yvette Cooper, Labour's former Treasury minister, joined in with: "The Prime Minister has just done a £2bn Budget U-turn in the space of about a week.

"Last year the Government did a £4bn U-turn in the space of five days.

"Is that why they want to abolish spring budgets? Because they just keep ripping them up?"

Image source, Getty Images

The British Chambers of Commerce agrees with the IoD that further-reaching reform of taxation is needed.

"The NICs rise, together with the cut to dividend tax-free allowances, was not viewed favourably by entrepreneurs, said Adam Marshall, British Chambers of Commerce director general. 

"So this move and pause for thought are welcome. 

"It would be far better to look at business and employment taxation in the round, to ensure that our tax system is competitive and equitable," he added.

Image source, AFP

In case you want a recap, the prime minister confirmed at PMQs a tax rise on self-employed workers won't go ahead. 

But she said that a consultation on employment would. "We will consider the government's overall approach to employment status and rights to tax and entitlements," she told MPs. 

Image source, Getty Images

Exactly one week ago, Chancellor Philip Hammond opened his first Budget with a joke that might end up biting him on the proverbial.

He said: "The Treasury has helpfully reminded me that I am not the first Chancellor to announce the 'last spring Budget'.

"Twenty four-years ago Norman Lamont also presented what was billed then as 'the last Spring Budget'.

"He reported on an economy that was growing faster than any other in the G7, and he committed to continued restraint in public spending.

"The then Prime Minister described it as the “right budget, at the right time, from the right Chancellor”.

"What they failed to remind me was…ten weeks later, he was sacked!

"So wish me luck!"

Here's a reminder of the manifesto pledge that Philip Hammond was accused of breaking in last week's Budget. 

Image source, Conservative Party

Kamal Ahmed
Economics editor

Beyond the political ramifications of Philip Hammond’s U-turn on the Budget tax rise for the self-employed, the Treasury now has a new problem.

The increase in the National Insurance rate was due to raise over £2bn by 2022.

Its reversal with no prospect of any replacement direct tax increases this parliament makes the government pledge to “balance the books” even more difficult to honour.

And makes the Autumn Budget a trickier prospect – it was heavily briefed last week that the National Insurance rise was to pay for spending commitments on social care and business rate support.

Income tax, national insurance contributions and VAT raise 65% of the government’s tax income.

If you pledge not to raise any of them, your room for manoeuvre is severely limited.

The body which represents the self-employed - the Association of Independent Professionals and the Self Employed (IPSE) - says it's "delighted" at the scrapping of the rise in NICs. 

"Two-and-a-half million hard working people will sleep easier tonight.Chris Bryce, IPSE chief executive said."

"We are delighted they have considered the detrimental effect imposing a tax rise on the self-employed population would have," he added.

“Tax for the self-employed is an incredibly complex issue and any policy needs to be carefully considered. IPSE looks forward to working with the Government to discuss how to make taxation of this group fairer while protecting Treasury receipts.”

Chancellor Philip Hammond's decision to scrap the National Insurance tax rise is "shambolic" and "chaotic", says Liberal Democrat leader Tim Farron.

The Conservative government "faces an official opposition of whom they're not afraid", he tells BBC News.

"That's why they made this rash decision in the first place. They thought they'd get away with it."

Theresa May faced repeated questions at PMQs about the government's u-turn on the National Insurance rise. 

But BBC political editor Laura Kuenssberg suggests it could have been worse...

George Osborne's former chief of staff, Rupert Harrison, points out that Theresa May's slim majority in parliament makes difficult tax decisions harder to pass.

Labour leader Jeremy Corbyn said the climbdown on NI changes had left "a black hole in the Budget" and said Prime Minister Theresa May should apologise to the country.

Mr Corbyn told the House of Commons: "It seems to me like a Government in a bit of chaos."