The National Insurance rise is due to go ahead on April 6 “no ifs, no buts”, No10 said -costing £140 a year for the poorest half of families and more than £700 a year for the richest half
April’s hike in National Insurance WILL go ahead, Downing Street declared today despite Boris Johnson reportedly “wobbling” over it.
Sources claimed the embattled Prime Minister could delay the tax rise amid a cost of living crisis – and to dampen Tory challenges to his leadership.
Tory MPs have demanded the 1.25-point rise is axed and could use the threat of a no-confidence vote to win over the PM.
A government source told The Times a U-turn could be “red meat” for Tory right-wingers, adding: “He’s wobbling, I think he would do anything to survive.”
But scrapping the rise would provoke a bitter row with Chancellor Rishi Sunak, who announced the rise at great political cost.
And today Downing Street said it would go ahead “no ifs, no buts”. Asked to guarantee there would be no U-turn, the PM’s deputy spokesman added: “As I said, we’re introducing it in April”.
Asked if the PM was “wobbly” the deputy spokesman said: “No, the Prime Minister and Chancellor are fully committed to introducing the Health and Social Care Levy in April.
“We’ve spoken before about why we are doing that, in order to give the NHS the funds it needs to tackle the backlog that has built up… and tackling the long-term issue of social care.
“We are committed to introducing that in April.”
Treasury aides told The Guardian the PM had not even raised the prospect of cancelling the tax hike with the Chancellor.
Technology minister Chris Philp today denied any knowledge of a delay, telling Sky News: “No, the plan is to proceed as intended.
“We all, I think, acknowledge that the NHS needs extra money to recover from the pandemic – this delivers that funding increase, so it is the right thing to do.”
But a source told the Guardian: “He’s shown enough leg now to make people stick with him on the right.
“Whether he actually does it or not will depend on whether he thinks he needs to do it to win the vote.”
Staff will pay 13.25% on what they earn above £797-a-month from April 6 – up from 12% now – in a bid to raise £12bn a year for NHS and social care.
At the same time, April will see the start of a four-year freeze on income tax thresholds. The 20p band will start at £12,570 and 40p band at £50,270.
Combined, the Resolution Foundation says these will leave the average household £600 a year worse off, or 1.4% of their disposable income, in 2022/23.
The RF says households on median income will lose roughly £300 a year of disposable income due to the National Insurance rise alone. For the poorest half of households it is £140 a year, while for the wealthiest it is £730.
While the National Insurance rise will hit wealthier families the hardest, it comes at the same time as an energy bills hike that will hammer the poor.
Boris Johnson has been in talks with his Chancellor about help for families with April’s energy bills rise – which will be announced on February 7.
An announcement on help with bills has been reportedly pushed back due to the crisis engulfing Downing Street.
Defence Minister James Heappey backed the National Insurance rise but said “the top of the government is in listening mode at the moment”.
He told BBC Question Time: “I know and it’s the same for all of us that prices are rising quickly. There is a challenge to how we make ends meet.
“Certainly I think we’re going to need to do a lot over the next few years to help people with this.”
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Senior Tory Rob Halfon told BBC Radio 4’s Today programme: “We are going to have a cost-of-living crisis next year.
“It is not just going to suddenly magic away.
“People are struggling at the moment because of everything that has happened … with Covid, because of energy bills.
“If we borrow, we are just deferring taxation.
“What I think the Government should do is look at it again and look at how to raise that £12 billion, and whether or not it is possible to have windfall taxes on businesses, possibly to increase capital gains tax, to raise the funds that are needed, but we need a cost-of-living package in general.
“I would like to see the £4 billion they have saved from cutting overseas aid… to use that to cut taxes for the lower paid as well, and also to do something on the green levies which we know amount to roughly 25% of our energy bills.
“If they introduced a green escalator going downwards because the international energy price is so high, it could make a huge significant difference to people’s energy bills as they go up by many hundreds of pounds from April onwards.”
Speaking to broadcasters on a visit to Forge Market in Glasgow, Sir Keir said: “The Prime Minister needs to act on this. We’ve got a very serious issue here with everybody facing prices going up – whether that’s fuel, energy bills at home, inflation going up to something like 6%, the worst it’s been since the John Major years – and at that very moment, Boris Johnson and his Government want to impose a tax hike on people in April.
“It was the wrong thing to do and we argued strongly it shouldn’t have happened. So I’m glad if anybody is reconsidering this, but it should never have happened in the first place.”
Shadow chancellor Rachel Reeves said the National Insurance rise was “the wrong tax at the wrong time”.
She said: “I think you have to explain where every pound is going to come from, and that is why I think it is right to ask those who can pay a bit more and to ask those with the broadest shoulders to make the contribution.
“This is the wrong tax at the wrong time. It is a tax on ordinary working people and on jobs.
“There are people who could afford to pay a bit more tax. I think that is the right approach.”
Shadow Business Secretary Jonathan Reynolds accused the PM of trying to dupe the public by raising the funds through National Insurance.
“It’s playing the public for fools and I think they’re onto it,” he said.