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Theresa May's Budget blues reach EU summit in Brussels

The Tory rebellion over the NI hike shows the domestic front is as perilous as the Brexit one for the PM, says Sky's Faisal Islam.

Theresa May backed Mr Hammond as she faced journalists in Brussels
Image: The PM faced questions over the Budget during her press confernce in Brussels
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The Prime Minister put in a staunch defence of her Chancellor in Brussels.

She defended the principle and the fairness of . She also defended the Chancellor's explanation of how this was not a clear breach of the 2015 Conservative manifesto.

Legislation bringing the much-derided "tax lock" into law was passed in autumn 2015, and it specified the lock or ceiling only applied to Class 1 employee contributions.

I asked Mrs May if the "ordinary working people" she says she wants to defend as the defining principle of her premiership would really have expected this after a manifesto that five times promised no rise.

The PM said the pledge was "very clearly related to Class 1 National Insurance, and that covers 85% of people".

She was much comforted by the that this was a justifiable tax reform rooted in simplification.

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May backs controversial tax rise plan

It is also worth noting that shows that when framed as a measure that sees the self-employed pay the same as the employed, the move is popular with the public.

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But the fiscal wonks have no votes in Parliament, and there, around 20 Tory rebels wait, with some Government ministers even saying they will apologise for the perception of breaking the manifesto.

Because among the 2,5 million self-employed workers impacted there are many, many Tory voters. And a broken pledge is a broken pledge. Ask the Lib Dems.

Furthermore, National Insurance changes require primary legislation, to be passed through both Houses of Parliament. Majorities are far from assured.

So instead of a climbdown, Mrs May backed the principle but announced a pause for breath, while the Treasury listens to backbenchers and an independent review on self-employment is published.

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Hammond: 'We have to deal with the challenges we face now'

A full package of self-employment tax reforms will then be published and the National Insurance legislation will come to Parliament in autumn.

A Prime Minister who appeared commanding after the can rather quickly see her mortality and the thinness of her majority. Gone is the talk of an early election. Perils lie in many places.

It may simply be that this is a Prime Minister with an extraordinary amount on her plate. The domestic front is no less perilous than the Brexit one.