Boris under pressure to halt National Insurance tax hike

Boris Johnson has refused to backtrack on his plans to raise National Insurance for millions of workers, insisting the tax increase is crucial to tackle the NHS backlog and fix the social care crisis. “If you want to fund our fantastic NHS, we have to pay for it,” the PM said today. Although he also refused to guarantee that the hike would go ahead.
 
As inflation jumps to 5.4% and a cost of living crisis looms, calls are growing for the government to drop the 1.25 percentage-point rise in NI, which is set to come into force at the start of the new tax year in April. 
 
The timing of the uplift is less than perfect. The energy price cap is expected to rise in April to cope with skyrocketing wholesale gas prices, meaning household bills could increase by 50 per cent. And many local authorities are preparing to increase council tax by 5 per cent. 
 
If the government pushes ahead with the national insurance hike against this backdrop, it will “be heaping the biggest tax burden in 70 years on working people,” the shadow chancellor, Rachel Reeves, warned today. 
 
It’s not just Labour urging the government to scrap the policy. Former Brexit secretary David Davis has demanded the PM do a U-turn. A very different national picture has emerged since September, when plans to raise NI were announced, says Davis: “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.” 
 
The Treasury is unlikely to raise the £36 billion over the next three years it has forecast through this tax rise, Davis warns, since it would “hit the growth of the whole economy.” A string of other Tory politicians have echoed this sentiment, including in cabinet Liz Truss and Jacob Rees-Mogg.
 
The National Insurance hike was already a controversial policy when it was announced back in the Autumn, as it broke a Conservative manifesto pledge. During the 2019 general election, Johnson promised not to raise VAT, income tax or NI. 
 
Yet abandoning the policy won’t be an easy way out for the PM. The tax was brought in to reform social care – reforms the government has been accused of dodging for too long. It aims to tackle “catastrophic” care costs, and ensure that no one will have to pay over £86,000 of care costs over their lifetime and care will be fully funded by the state for those with less than £20,000 in assets. The revenue generated will also be devoted to cutting the record backlog on NHS waiting lists.
 
If the government refuses to U-turn on the NI, it will need to find alternative solutions to address the cost of living crisis. We are still waiting to hear what measures the chancellor Rishi Sunak will propose to ease the burden of soaring fuel bills. 
 
Sunak now appears to be distancing himself from the NI hike, pointedly referring to it over the weekend as “the Prime Minister’s tax”. Arguably a little rich, when the Treasury, under the chancellor, has direct oversight of all tax increases. Then again, it’s hardly surprising that a man with the role of PM in his sights would be keen to ensure this unpopular policy is not seen as part of his legacy.