U-Turn on NIC Measure

On 8 March, Philip Hammond presented his Budget and caused controversy by announcing an increase in national insurance contributions for self employed individuals.

In addition to many protests from self employed individuals, and the public alike, many Tory MPs also objected to the increase on the basis that it breached the spirit of the Tory 2015 manifesto.

Seven days after the Budget, the “U-turn” was announced where Hammond commented “in light of what has emerged as a clear view among colleagues and a significant section of the public, I have decided not to proceed with the Class 4 NIC measure set out in the Budget.


Previous other Budget U-turns have included the following:

  • The so-called “pasty tax” was announced by George Osborne in 2012 to simplify the VAT treatment on hot snacks. A string of announcements shortly followed where the proposal was reversed.

  • In 2007, Gordon Brown announced a 10% income tax rate which was also subsequently abolished shortly afterwards.

The term “U-turn” was made famous by former Prime Minister Margaret Thatcher who was determined to stick to tough economic policies despite calls for a U-turn from within the Tory party. Thatcher famously announced the following at the 1980 Tory conference “to those waiting with bated breath for that favourite media catchphrase, the U-turn, I have only one thing to say: you turn if you want to. The lady’s not the turning!”

National Insurance Rates

For individuals that are employed, the rate of national insurance is currently 12% on earnings between £8,061 and £43,000 per annum and 2% on earnings above £43,000.

For self employed individuals, the NIC rate is 9% on earnings between £8,061 and £43,000 and 2% on earnings above £43,000.

Hammond had announced that the 9% would increase to 10% in April 2018 and further rise to 11% in April 2019.

This was planned to raise over £2billion and the U-turn has now blown a £2billion hole in the nation’s books.

It is yet to be announced where the shortfall will come from – but it is inevitable that further tax increases will be targeted in other areas instead.

U-Turns and Football

U-turns are not restricted to politicians.

Wayne Rooney joined the youth team of Everton at the age of 9 and made his professional debut in 2002 aged 16. During his two seasons in the Everton senior team, he famously branded the t-shirt logo “once a blue – always a blue” seemingly declaring that he would be at Goodison Park permanently. By 2004, he submitted a transfer request and was sold to Manchester United.

During 2015, there was much speculation surrounding Fabian Delph regarding a potential move from Aston Villa. This led to Delph making the public announcement “I will not be leaving Aston Villa despite interest from Manchester City. I am happy to captain Aston Villa and am only looking to the future.” Six days later, he was sold to Manchester City.

U-turns – whether in politics or football – provoke controversy and criticism alike. Despite this, it is unlikely that the above will be the last U-turns we will see

Article written by Declan McCusker