Is Rishi Sunak trying to distance himself from £12bn National Insurance increase? Chancellor pointedly refers to the hike as ‘the Prime Minister’s tax’
Tory MPs who have met Chancellor Rishi Sunak to call for action on the cost of living crisis have been ‘left with the impression’ that he is trying to distance himself from the hike in National Insurance that takes effect from April.
MPs met Mr Sunak last week to warn him that the 1.25 per cent rise will hammer families at a time when they are also being hit by sharp rises in energy bills, council tax, inflation and mortgage rates.
A source said: ‘Rishi referred to it as “the Prime Minister’s tax”, which seemed quite pointed, to put it mildly.
‘We were left with the impression that he didn’t want to be associated with it.’
The issue has been raised in particular by those ‘Red Wall’ Tory MPs in former Labour seats who fear they will be punished for the rise by voters at the next election.
The £12 billion tax grab, announced last year, was originally intended to help fund health and social care, but most of the money for the first three years will go toward clearing the post-Covid NHS backlog.
The revelation comes after our sister paper, the Daily Mail, launched a campaign to ‘spike the hike’ – or risk piling unsustainable pressure on struggling households.
Tory MPs who have met Chancellor Rishi Sunak (pictured on Thursday) to call for action on the cost of living crisis have been ‘left with the impression’ that he is trying to distance himself from the hike in National Insurance that takes effect from April
Negotiations between Boris Johnson and Mr Sunak over the creation of the new tax were fraught with tensions, with a source telling The Mail on Sunday at the time: ‘The Chancellor did not want to do this.
‘He doesn’t think we should be increasing taxes when people are struggling to get back on their feet, and particularly not when we said we wouldn’t.
‘So he has made sure he has played hardball over how the money is spent. After it comes into effect in April, it will have to cover a lot of the cost of sorting out the NHS. He is not going to just hand over endless amounts of money.’
Mr Sunak was joined by Foreign Secretary Liz Truss, Commons Leader Jacob Rees-Mogg and the then Brexit Minister Lord Frost in arguing in Cabinet against the levy, which they said would breach the party’s manifesto promise at the last election not to raise taxes and would damage the party’s reputation for economic prudence.
The tax was one of the main reasons for Lord Frost’s dramatic resignation last month, with him warning Mr Johnson that he needed to rediscover his enthusiasm for ‘free markets…and low taxes’ if he wanted to win the next election.
The National Insurance rise will cost a worker on a £30,000 salary around £255 over a year, rising to £505 for anyone earning £50,000 – at a time when energy bills are expected to soar by as much as 50 per cent and inflation is over five per cent. Petrol prices have risen by 28 per cent in a year.
Mr Johnson and Mr Sunak are now in talks about plans to alleviate the impact of the cost of living rise, including the possibility of a one-off £500 payment to every family to help with domestic bills.
A Government source said: ‘The NHS and social care levy is vital to ensure the NHS gets the funding it needs to clear the backlogs caused by the pandemic.
This Government is determined to achieve social care reform, something that has been dodged for too long. NICs is a progressive way to raise the money, with every individual contributing according to their means and the lowest paid protected.’
A Government spokesperson said: ‘We’ve taken decisive and historic action, with our Health and Social Care Levy due to raise around £13 billion a year for the NHS and social care.
‘It is a progressive tax with those earning more paying more. This will benefit people up and down the country, including by tackling the backlog that the pandemic has created on NHS operations and procedures, strengthening the adult social care system so that people do not have to bear the financial risks of catastrophic care costs themselves, and funding a three per cent pay rise for nurses.’
The Treasury said: ‘The NHS and Social Care Levy will ensure the NHS gets the funding needed to clear the backlog this year.’