Politicians and entrepreneurs in Kent have breathed a sigh of relief after the Chancellor made an unexpected U-turn on plans to raise national insurance for the self-employed.

Philip Hammond wrote to MPs telling them he would not press ahead with the flagship policy Spring Budget less than a week after it was delivered.

He had planned to increase Class 4 National Insurance contributions from 9% to 10% next year and then to 11% by 2019 – set to cost most tradesman about £240 a year.

The Chancellor had justified the decision by saying the self-employed should contribute a fairer amount towards public services like the NHS.

The measure was expected to raise £2 billion by 2022, helping to fund a Budget pledge of the same amount for social care spending over the next three years.

However, he was accused of breaking a Tory manifesto promise not to raise national insurance contributions.

The U-turn attracted derision during Prime Minister’s Questions on Wednesday, with Labour leader Jeremy Corbyn calling for Theresa May to apologise for the uncertainty created for the 4.8 million self-employed people in the UK.

Alison Parmar, development manager for the Federation of Small Businesses in Kent, said: “We are delighted. The FSB responded robustly about this proposed plan and identified 37 challenges for the self-employed proving they are not on a level playing field with employees.

“This would have been another obstacle to small businesses starting up and it was against the government’s message that Britain is a good place to do business.

“We are pleased Mr Hammond has scrapped it. It was a bad idea in the first place.”

The decision was also welcomed by Tonbridge and Malling MP Tom Tugendhat, who criticised the measure last week.

He tweeted: “Delighted the govt is recognising the contribution of self-employed and the importance of a flexible employment system.”

Simon Warne, tax partner at Maidstone-based accountancy firm Crowe Clark Whitehill, said the government had been “caught off-guard by the backlash” over breaking its manifesto promise.

He said: “The challenge now facing the Chancellor is which taxes will he raise, or what will he cut, in order to make up the money that he won’t be collecting from the self-employed.

“One thing is for certain – it won’t be generated by increasing VAT or income tax, two other Conservative manifesto pledges.”