Johnson to push ahead with National Insurance hike as cost of living rises

Boris Johnson announced the raise in September, breaking a Tory manifesto pledge not to raise the tax to find £12billion a year to clear NHS backlogs and overhaul social care.

It is due to take effect from April, costing someone earning £25,000 around £190 more per year, and someone earning £50,000 an additional £500.

With inflation expected to touch 7 per cent this spring, and energy prices set to surge by around 50%, many Tory MPs fear the NICs rise will lead to a voter backlash.

Commons leader Jacob Rees-Mogg has called for it to be abandoned, while Chancellor Rishi Sunak was reported at the weekend to call it pointedly “the Prime Minister’s tax”.

Mr Davis, who last week urged the PM to quit over the partygate scandal, told BBC Radio 4 the NICs rise would remove about 10% of the disposable income of “ordinary families”.

He also said the hike was “economically unwise” as it created a “disincentive to work”, would “penalise employers” and “hit the growth of the whole economy”, meaning it would be unlikely to raise the £36bn forecast by the Treasury over the next three years.

He said: “It was a judgment made on, frankly, quite a lot of wrong data. 

“They didn’t know at the time that by April we would have the highest inflation rate in 30 years, they didn’t know that interest rates would be going up, council tax would be going up, the fuel price is about to jump by £700 a year for the average family. 

“Therefore they didn’t know quite what pressure there would be on ordinary people.”

Despite more and more of his MPs nervous about the NICs rise, Mr Johnson today suggested he would carry on with the plan.

“If you want to fund our fantastic NHS, we have to pay for it,” he said on a vist to a hospital in Milton Keynes when asked if the rise would go ahead.

“The NHS has done an amazing job but it has been under terrible strain.

“Listen to what I’m saying: We’ve got to put that money in. We’ve got to make that investment in our NHS.

“What I’m telling people is, if you want to fund our fantastic NHS, we have to pay for it – and this Government is determined to do so.”

No 10 also said the Prime Minister was committed to the national insurance rise in April.

His official spokesman said: “This levy is first and foremost to deal with tackling the massive backlog which we have seen caused by this global pandemic.

“It then seeks to address the long-standing problem [of] fixing our social care system, which unfairly penalises a small minority and of course, it also helps fund a pay rise for NHS staff which the public massively want to see.

“So this is the right approach to tackle this long-standing problem.”

Asked about reports that the whole Cabinet would back a move to delay the rise, he said: “Cabinet took a collective decision to take this action, to put money into our NHS, to tackle the backlogs, to resolve the long-standing problem of social care and to fund a pay rise for nurses. The Cabinet stands behind that decision.”

Education Secretary Nadhim Zahawi said the NICs rise was “the right thing to do” after a failure by multiple governments to get to grips with social care.

He told BBC Radio 4: “On the national insurance, the £36 billion is necessary because successive governments… of every colour have not dealt with this.

“It is really important to remember that the highest earners, the 14% who earn the most are paying 50% – they are paying half of that contribution, and the lowest earners, 6.1 million of the lowest earners pay nothing, so it is as progressive as we can make it to deal with a problem that breaks many an individual in their old age.

“So it is really important to just focus on why we are doing this, why I think it is the right thing to do, because it will finally create a system of adult social care that is sustainable and deliverable without breaking families.”

Asked if the move could “shock” the economy and prevent the tax rise from raising the predicted sums, Mr Zahawi replied: “I think the Treasury have done the work on this and it is the right thing to do. We will of course make sure we review any policy we introduce – if it is not working, then we will look at it.

"I absolutely believe it is the right thing to do.”

The SNP said the UK government was so distracted by scandal it was failing to tackle the cost of living crisis and demanded an “emergency financial package” for families.

Glasgow East MP David Linden said Tory cuts, regressive tax hikes and the soaring cost of Brexit were squeezing household budgets and pushing millions into poverty.

Ahead of an opposition day debate at Westminster, the SNP Shadow Work and Pensions said the UK Government’s own policies have left families demonstrably worse off.

He said: "The UK government is so caught up in scandal, and distracted by sleaze, that it is failing in its basic duty to protect people from the worsening Tory cost of living crisis.

"Tory MPs must finally show Boris Johnson the door so they can turn their attention to delivering the support that families urgently need and reversing the rising poverty on their watch.

"Twelve years of Tory cuts, regressive tax hikes and the soaring cost of Brexit have squeezed household budgets and pushed people into poverty. The Tory government cannot escape the fact that it has left families worse off and is failing to reverse the damage it has caused.

"Under Boris Johnson, the UK has the worst levels of poverty and inequality in north west Europe and the highest in-work poverty this century. That's not a record to be proud of.

"The UK government must finally introduce an emergency package to boost household incomes - reversing the Tory cuts to Universal Credit, matching the Scottish Child Payment UK-wide, delivering a low income energy payment, introducing a real living wage and raising sick pay.

"Tory ministers are making the case for independence by imposing cuts and failing to use reserved powers to tackle poverty. Independence is the only way to keep Scotland safe and the only way to secure the full powers required to eradicate poverty and build a fairer future."