Ministers are engaged in bitter recriminations amid allegations Philip Hammond failed to tell colleagues his Budget would smash a Tory manifesto pledge.
The Chancellor has been accused of leaving out the problem with his National Insurance hike on millions of people when he briefed the Cabinet before delivering the package.
The controversial move sparked an immediate backlash with Conservative MPs among those queuing up to complain that the move will alienate blue-collar workers who do not enjoy the same benefits as those in salaried jobs.
Philip Hammond has been heavily criticised over his Budget package which included a tax raid on millions of self-employed workers
Allies of Theresa May, pictured at a Brussels summit last week, are said to have questioned whether Mr Hammond’s political instincts are strong enough
It has also caused tensions between the Treasury and Downing Street, with allies of Theresa May questioning whether Mr Hammond’s political instincts are strong enough for the crucial job.
The 2015 Tory manifesto included a clear commitment that the party would not ‘raise VAT, National Insurance Contributions or Income Tax’.
Ministers have been ridiculed for trying to argue that the pledge was not in fact broken because they did not change the main Class 1 rate of NI – even though the Class 4 rate is going up by 2p over the coming years.
Mrs May has now instructed the Chancellor to delay legislation on the £2billion National Insurance rise for solo workers until the autumn.
But some ministers have privately warned the climbdown is not enough and the policy will have to be significantly changed.
According to the Sunday Telegraph, Mr Hammond’s hour-long briefing to Cabinet colleagues failed to mention that the NI rise appeared to breach a Tory election promise.
Brexit Secretary David Davis and Foreign Secretary Boris Johnson both refused to say today whether Mr Hammond had referred to the potential issue.
Mr Johnson also dodged questions about whether the rise would go ahead as set out by the Chancellor.
‘The Chancellor has made it very clear that we have got to deal.. with unfairness in the system,’ he told ITV’s Peston programme.
‘We will come forward later in the year with the provisions to enact what the Chancellor has set out in the Budget.’
Treasury sources have hit back by blaming demands from No10 for spending to protect Mrs May’s ‘just about managing’ families.
‘If No10 has got all these projects to spend money here, there and everywhere then you have to raise it from somewhere,’ a Treasury source said.
Almost 2.5million self-employed people face a National Insurance rise of £240 on average, according to Treasury figures.
There are deep concerns among MPs about the potential damage from the attack on the self-employed – seen as traditional Tory voters. Tomorrow night, the executive of the Tory 1922 committee will see the Prime Minister in Parliament and urge her to abandon the tax rise.
On Thursday at least 18 Tory MPs expressed concerns about the tax raid, although Mrs May’s intervention has brought the temperature of the revolt down.
MP Tom Tugendhat said: ‘I’m very pleased that the Prime Minister has said that she’s going to look at this over the coming months.’
Brexit Secretary David Davis declined to say this morning whether Mr Hammond had mentioned the clash between his Budget and the Tory manifesto to Cabinet
Boris Johnson dodged direct questions about whether the rise to NI would go ahead as set out by the Chancellor
However, fellow Tory Neil Carmichael called for much more to be done, suggesting that the National Insurance rises should be introduced more gradually.
Conservative MP Bob Blackman said he would consider rebelling if the tax hike is not cancelled, adding that simply giving the self-employed more benefits in exchange for higher tax was like ‘making them employees of the state’.
Concerns were also eased somewhat by a post-Budget poll showing the Tories had opened up a massive 19-point advantage overLabour.
The gap was the biggest recorded by polling firm YouGov for eight years – and the biggest for the Tories in government since 1987.
It would deliver a staggering 130-strong majority for Theresa May in the Commons if replicated at a general election.