Treasury staff believe Boris Johnson may be about to scrap – or delay – the national insurance rise as he fights for the support of wavering Conservative MPs.
The Mail has revealed that several Tory MPs asked the Prime Minister for a reconsideration of his rise in meetings over Partygate.
Yesterday, it was revealed that Treasury officials believe Johnson may have changed his mind.
It is believed that they became increasingly concerned at No10’s refusal to end the debate on whether April’s tax hike could be halted.
The PM denied eight times in television interviews on Tuesday that it was possible to confirm its continuation.
Yesterday’s Mail reported that several Tory MPs urged Prime Minister David Cameron to reconsider the rise of the Partygate scandal during his meetings.
Yesterday, he repeated the same pattern when he stressed that extra funds were needed for NHS. However, a spokesperson for NHS refused to confirm whether the 1.25 percent increase would be implemented in the next three months.
Meanwhile, his spokesman refused to guarantee it would take effect on schedule, saying only that there were ‘no plans’ to cancel it.
As it is known, no formal discussions have taken place between Rishi and Sunak on the matter.
While any attempt to slow the rise of Tory backbenchers would be a delight, it could also spark a major row between No10-No11.
After Johnson was warned by the Chancellor that the public could not afford a large spending increase for the NHS and other social services, the tax hike was reached in September.
Mel Stride, former Treasury minister and now Chairman of the Commons Treasury Committee supported yesterday’s calls for its postponement.
He suggested that the ‘stars had aligned’ for ministers to delay the rise to help ease a cost-of-living crisis facing millions of families.
According to reports, there has been no formal discussion between Rishi Sunak and the Prime Minister on this issue. However, any effort to defer the rise would be a delight for Tory backbenchers but it would also spark a massive row between No10-No11
Mr Stride said it was clear that Mr Sunak had the ‘extra wriggle room’ to afford a ‘politically and economically sensible’ delay.
His comments were echoed by Paul Johnson, head of the Institute For Fiscal Studies think-tank, who said the rise ‘didn’t need to happen this year’.
Recent calls for a rethink of the rise have been led by senior Tory MPs and campaigners, as well as business leaders.
After the Daily Mail’s last-week spotlight on the issue, this campaign is gaining significant momentum.
The Government said the Health and Social Care Levy would raise £12billion annually for social care and clear the NHS backlog. Since then, prices for energy have rocketed and inflation has reached its highest level in over 30 years. Inflation is also at an all-time high. And interest rates will continue to rise.
Campaigners who fear it will hit stretched household finances are joining the Daily Mail’s campaign to Spike The Tax Hike.
A business backlash grew last night as industry leaders warned the rise would be ‘the final nail in the coffin’ for many firms. The campaign was supported by trade bodies representing pubs, farmers, contractors, recruiters and convenience stores, just a few days after being launched by the Institute of Directors as well as British Chambers of Commerce.
The Tory MPs also press the PM to reconsider his rise in light of Partygate, which is paralysing Government.
One minister admitted the PM might ditch the rise if it could save his job, adding: ‘Pressure is certainly growing. I suppose if he felt it was the “big thing” that would save him, the PM probably would.’
Mr Stride said the Government had ‘an opportunity to not go ahead’, describing it as an ‘inflationary measure in itself’ that would have ‘knock-on consequences for the servicing costs of the national debt, so it would have a negative fiscal impact’.
He added: ‘Given that £13billion more is available than forecast in October, and that money could be used to exactly cover the cost of not going ahead with the NI rise, the stars have aligned in a way that makes that possible.’
Paul Johnson said the Government should consider another tax to raise the revenue, adding: ‘National insurance is only paid by workers and employers, so those who get income from invested wealth, occupational pensions and those who are relatively wealthy won’t be paying at all. We’d have been much better off, from an economic point of view, if something like income tax had been used.’
Tory Sir John Redwood said: ‘The Treasury has found more money down the sofa than the national insurance raise would yield.’
A Government spokesman said: ‘We’ve supported businesses throughout the pandemic through our nearly £400billion package of support. It’s right that employers, who benefit from a healthy workforce, contribute to the levy.’