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U-turns if u want to: big backtracks in finance

A look at other infamous U-turns after Philip Hammond scrapped plans to hike national insurance contributions for the self-employed.

by Charles Walmsley on Mar 16, 2017 at 09:12

Some are for turning

Margaret Thatcher's quote about U-turns may be one of the most famous in UK political history.

However that hasn't stopped many of her successors from going back on their promises. Nor has it dissuaded companies from changing their mind.

After current chancellor Philip Hammond went back on his pledge to raise national insurance contributions (NICs) for the self-employed, we looked at some of those who have quickly gone back on themselves.

NICe one Phil

Let's start with the most recent politician to fall into the U-turn trap: Philip Hammond.

The chancellor announced in his Budget last week that self-employed people would have seen their NICs rise from 9% to 10% from April 2018. This was set to rise to 11% in April 2019.

As the saying goes, a week is a long time in politics!

Hammond has now backtracked after receiving criticism from the press for breaking the Conservative manifesto promise not to raise income tax or national insurance. Clearly the Daily Star's 'Rob the Builder' headline did its job.

No annuities for sale here

The second-hand annuity market was due to be one of previous chancellor George Osborne's pension legacies.

Under the plans, people would have been able to sell their annuities on an open market in order to take advantage of Osborne's other great retirement policy: the pension freedoms.

Who could object to that? Well, just about everyone in pensions it turned out. Following consultations from the Treasury and the FCA, and confirmation from major pensions player Hargreaves Lansdown that it would not take part in the market, Hammond's Treasury pulled the plans last year.

The IDS of March

During his time as chancellor Osborne showed he was just as capable of turning back on himself as Hammond.

In his final Budget in March 2016 Osborne announced plans to cut £4 billion from personal independent payments for disabled people.

Having spent the previous five years chipping away at welfare bills, his proved to be the straw that broke the camel's back as MPs from inside the Conservative party rebelled over the changes and the chancellor decided to U-turn.

Who was the ringleader of these champions of disabled people? None other than work and pensions secretary Iain Duncan Smith, who bravely resigned over the cuts, after working for just six years in a role which oversaw the introduction of many severe cuts to the welfare budget.

Who trusts experts?

The Bank of England took quite a hit after the Brexit vote, as the end of the world didn't happen and the UK's economy actually performed okay, despite the predictions of economists.

Even its own experts ended up reversing the rather gloomy immediate post-referendum August prediction.

In the Bank's November Inflation Report it increased its 2017 economic growth forecast to 1.4%, up from 0.8% three months earlier. The Bank also raised its forecast for GDP growth in 2016 by 0.2% to 2.2%.

FCA faces back on banks

It won't come as a surprise to know that financial regulators have made U-turns in the past.

You can read about 10 of them made before 2014 here, but there are more recent examples.

Most famously, the Financial Conduct Authority turned back on its plans to publish a report into the conduct of UK retail banks at the end of 2015.

Of course the regulator itself claimed it was not a U-turn because it had still conducted the work, but decided it would not need to be published to everyone.

BoJo backs up

Boris Johnson was definitely the frontrunner for the Conservative leadership race when David Cameron stepped down last June.

In fact, many believed he only supported the Leave campaign to gain support for an eventual leadership bid.

It came as some surprise then when he decided not to run, citing the challenges of unwinding 40 years of complicated rules and legislation.

'I must tell you, my friends, you who have waited faithfully for the punch line of this speech, that having consulted colleagues, and in view of the circumstances in parliament I have concluded that person cannot be me,' he said.

Many speculated the real reason might have been something to do with fellow Leave campaigner Michael Gove also running for leadership.

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