Tory MPs: We can make Boris spike the tax hike

After PM once again refuses to ditch NI rise...

SENIOR Tories last night claimed they can convince the Prime Minister to delay the rise in national insurance.

It comes despite Chancellor Rishi Sunak allegedly piling pressure on Boris Johnson to not U-turn on the planned hike.

The Tory MPs have urged Mr Sunak to consider a ‘compromise’ plan, in which the NI increase on employers would go ahead as planned – but the rise affecting workers would be ‘paused’.

The plan is part of a wider package to tackle the cost of living crisis. The Institute for Fiscal Studies (IFS) yesterday said the move would raise £5billion of the £12billion pencilled in by the Treasury, while easing the pressure on millions of workers on low and middle incomes, who otherwise face a 1.25 percentage point rise in national insurance in April.

Helen Miller, deputy director of the IFS, said that if ministers want to do as much as they can to alleviate the cost of living crisis, and opt to rethink the NI rise, then ‘at least with the employee part of it [being paused], it will directly be felt by people because it will directly reduce their tax bills’.

‘Whereas if you cut employer tax, some of it will indirectly help employees because their wages will be higher than they otherwise would have been,’ she told the Daily Mail.

‘But part of it will just help employers who will have higher profits. So in that sense, in the short run, the employee cuts will more directly help individuals.’

No 10 and the Treasury yesterday declined to comment on suggestions that Mr Sunak had put his foot down over the issue during talks on the cost of living crisis.

Conservative MPs last night stepped up calls for the Government to back the Mail’s Spike The Hike campaign.

Tory grandee Sir John Redwood said recent figures on the public finances showed the Treasury had the money to scrap the tax rise.

‘They don’t need the money – the Treasury are just terrible.

‘At the time of the budget, they solemnly said they needed £12billion extra – but now they’re £60billion better off. We need to ease the squeeze. They’re going to slow the economy too much – alongside the treble hit of council tax, national insurance and energy bills, there’s going to be a bigger deficit.’

Former Cabinet minister David Jones said: ‘There is headroom to deal with the £12billion funding gap. It is just another tax – and it’s the last thing a Conservative government should be doing. I feel like I am expressing a view that most Conservative MPs have.’

Mel Stride, chairman of the Commons Treasury committee, said it would be a ‘mistake’ to press ahead with the rise – and said Mr Sunak had the money to delay it for a year. He added: ‘There’s more wiggle room to play with. And my view would be that for one year only, given the cost of living pressures, it would be prudent to set that extra firepower, that extra headroom, towards not going ahead with those national insurance rises.’

But Downing Street tried to play down the chances of a national insurance U-turn yesterday.

After days of speculation, in which the Prime Minister repeatedly refused to rule out halting the change, No10 insisted that the tax rise would go ahead in April as planned.

A spokesman for the PM denied reports he was ‘wobbling’ over the hike, which will worsen the cost of living crisis for millions.

‘The Prime Minister and Chancellor are fully committed to introducing the health and social care levy in April,’ he said.

Asked if it would go ahead as planned ‘no ifs, no buts’, the spokesman replied: ‘Yes.’

No 10 said the increase was essential to fund measures to clear the NHS waiting list and, in time, tackle the social care crisis.

But senior Tories predicted it could still be scrapped as Mr Johnson tries to secure support from MPs at a time when he is facing a potential leadership challenge over the Partygate scandal. One former minister said: ‘The Chancellor is obviously trying to assert his authority over the issue. But Boris is in a hole and if he feels he needs to do it to save his skin, then he’ll do it whatever Rishi says.’

Torsten Bell, chief executive of the Resolution Foundation thinktank, yesterday said the Treasury was ‘looking increasingly unlikely to get its tax rise’.

Mr Bell said some form of tax rise was needed to pay for increased health and social care spending in the coming years.

But he added: ‘Does it have to happen now? No. Given wider pressures on family income and consumption, the economics point to doing it next year but the politics may mean it’s now or never.’

The Federation of Small Businesses last night warned that the tax rise would deal a significant blow to the economy if the Treasury forces it through.

The organisation said that future wage rises were likely to be lower by a total of £5billion as employers are forced to pass on costs.

It said the move would also push up unemployment as firms are forced to let staff go.