Boris Johnson today risked fuelling the Tory mutiny over Partygate and heaped cost-of-living pain on millions of Britons by vowing the £12billion national insurance hike will go ahead.
In a pointed show of unity after weeks of behind-the-scenes wrangling, the PM and Rishi Sunak killed off hopes that the eye-watering increase would be delayed or axed altogether.
They insisted in a joint article that the 1.25 percentage point bump to fund the NHS and social care reforms is the ‘right plan’ and it will go ahead in April.
But in a nod to the scale of anger among Conservative MPs, Mr Johnson and the Chancellor felt the need to stress they are ‘tax-cutting Thatcherites’ by instinct.
The decision to rule out a U-turn suggests that Mr Johnson is feeling more confident in his position as polls show glimmers of a Tory recovery.
There had been claims he was ‘wobbling’ and a rethink could form part of so-called ‘Operation Save Big Dog’ – the desperate effort to prevent a coup bid by MPs over Downing Street lockdown breaches and other rows.
Boris Johnson and Rishi Sunak set themselves on a collision course with Tory MPs and business leaders after defying calls to delay a controversial £12 billion National Insurance hike
The decision to rule out a U-turn suggests that Mr Johnson is feeling more confident in his position as polls show glimmers of a Tory recovery
The latest public finance figures show that government borrowing is running £13billion below forecasts this year – suggesting that Mr Sunak has some headroom to push back the levy
Mr Johnson and Mr Sunak were forced into the rare step of a joint declaration after the Daily Mail and Mail on Sunday led calls for the tax hike to be ditched.
In their article for the Sunday Times, Mr Johnson and Mr Sunak wrote: ‘We must go ahead with the health and social care levy.’
The pair said they are ‘Thatcherites’ who believe in ‘sound money’, rather than a ‘magic money tree’.
‘We are tax-cutting Conservatives. We believe people are the best judges of how to spend their money,’ the ministers said.
‘We want to get through this phase and get on with our agenda, taking advantage of our post- Brexit freedoms to turn the UK into the enterprise centre of the world.
‘We want lighter, better, simpler regulation, especially in those new technologies where the UK excels.
‘We are Thatcherites, in the sense that we believe in sound money. There is no magic money tree.’
But there was an immediate backlash from Tories.
Former Cabinet Minister John Redwood branded it a huge mistake with people already facing a big hit from their gas and electricity bills in a few weeks’ time.
Mr Redwood pointed out that the tax rise breached a clear Tory manifesto pledge and said the PM and Chancellor ‘will find that the party is extremely angry about it’. But he signalled that the fight against the tax hike would go on, calling on the PM to ‘cancel it immediately’.
Senior Tory colleague Robert Halfon said: ‘If they want to raise money for the NHS – which I agree with – we should be taxing millionaires, not millions of workers.’
He told BBC Breakfast: ‘All I can do as an MP, a backbench MP, is just to urge the Government to think again.’
He added: ‘I hope that the Government make cost of living the number one priority.’
The former minister reiterated calls for the Government to look at different ways to raise the money that the rise is forecast to produce, such as a ‘windfall tax on big business’.
Mr Halfon said he was not ‘agitating against the Prime Minister’ and would ‘certainly’ not be handing in a letter of no confidence to the 1922 Committee chairman Sir Graham Brady.
‘I just want the Government to go back to being the Government that was elected in 2019 and put cutting the cost of living first and foremost, and helping struggling families across the country,’ he said.
The NI tax hike vow comes as household energy bills are expected to rise by nearly 50 per cent from April, with industry experts predicting that the average annual cost will rise from the current level of £1,277 to £1,897.
The latest public finance figures show that government borrowing is running £13billion below forecasts this year – suggesting that Mr Sunak has some headroom to push back the levy.
But supporters point out that if it does not come in this year it will be even more difficult to implement closer to a general election.
Mike Cherry – national chairman of the Federation of Small Businesses, said: ‘This regressive tax hike will hit lower earners and struggling community small businesses the hardest, leaving less cash in people’s pockets to spur our recovery.’
Only last week, the Prime Minister was said to be ‘wobbling’ on the tax hike as part of a desperate bid to placate Right-wing Tories.
Mr Sunak has insisted that more revenue needs to be raised to fund the NHS and social care reforms, although there are claims he has privately described the NI move as ‘the PM’s tax’.
Former Cabinet Minister John Redwood branded it a huge mistake with people already facing a big hit from their gas and electricity bills in a few weeks’ time
The 1.25 percentage point rise in NI, for both employers and employees, was one of the main factors behind the shock resignation of Brexit Minister Lord Frost last month.
Despite Mr Sunak’s private concerns, the move will be chalked up as a victory for the Chancellor, who has insisted that inflation leaves little headroom for fiscal loosening.
The consumer price index measure of inflation rose to 5.4 per cent in December, the highest rate since records began in 1997, according to the Office for National Statistics.
The Chancellor is said to believe that it would be ‘fiscally irresponsible’ to change course because the result would be more borrowing.
Reports last night said that plans to cut VAT on fuel have been ditched too, in what will be interpreted by MPs as a second win for the Chancellor.