Martin Lewis discusses the National Insurance increase
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Prime Minister Boris Johnson is under massive pressure as he awaits the findings by the report from senior civil servant Sue Gray into lockdown-breaking parties in Downing Street during the Covid pandemic. This has been delayed as final checks are made with Government lawyers, with its publication expected on Monday. In April, employer and employee National Insurance contributions will jump by 1.25 percent to fund the Government’s vow to cap the cost of social care and deal with surging NHS backlogs.
But on Thursday, Mr Johnson again refused to commit himself to the increase – raising doubts over whether it will actually go ahead in April.
Tory MPs thinking of submitting letters of no confidence in the Prime Minister have insisted the national insurance rise must not happen when millions of people are struggling to cope with the cost of living.
A Government source told The Times that Mr Johnson is thinking about delaying the rise for a year, adding: “He’s wobbling, I think he would do anything to survive.”
But backtracking on the National Insurance rise would put him on a collision course with Rishi Sunak, who has insisted inflation means there is minimal headroom for the loosening of fiscal purse strings.
The Chancellor is said to believe it would be “fiscally irresponsible” to now follow through with the plans in April as this would result in yet more borrowing.
But another Government source told the newspaper: “It looks like [Johnson] is back-sliding because of the pressure he’s under on partygate.
“It has never been popular among the right of the party and it’s that group Boris is most worried about.
“The Treasury view is that Johnson should hold his nerve.”
There have not yet been any official talks about a possible delay in the increase, with one Government source adding: “It’s not a credible or responsible argument to say you can just borrow because of inflation and where interest rates have gone and are going to go.”
On Thursday, the Prime Minister commented on the principle of the health and social care levy, and said: “Every penny will go towards fixing the Covid backlogs and also social care.
“I think people do understand, I don’t think there’s a family in this country that hasn’t been affected by the Covid backlogs in one way or the other.”
But momentum has been growing from Tories to have the national insurance increase delayed – particularly as fears grow about the surging cost of living facing millions of people over the coming months.
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Mel Stride, Tory chairman of the Treasury select committee, said there was an “opportunity now to not go ahead with the national insurance rise in April, principally, firstly, because of the cost of living pressures that there are”.
He told World at One on BBC Radio 4: “Secondly, it is an inflationary measure in itself and that would have knock-on consequences for the servicing costs of the national debt, for example, so it would have a negative fiscal impact in that sense.”
The chairman of the Treasury select committee wants to see the increase pushed back a year, highlighting predictions that Mr Sunak would have some £13billion more to spend than forecast.
Mr Stride added: “That is almost exactly the same amount as the cost of not raising national insurance.
“He’s got that extra wiggle room, and I think in the short term, he can very credibly do that and it would be politically and economically sensible.”
Former Cabinet minister Sir John Redwood claimed there is now “plenty of momentum among MPs” to cancel the rise.
David Davis, who called on Mr Johnson to quit during last week’s Prime Minister’s Questions (PMQs), has also argued that better-than-expected borrowing forecasts means the increase could be “safely” cancelled.
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