Boris Johnson has defended the planned national insurance rise after reports suggested disgruntled Tory MPs want it scrapped as a condition for their continued support for the Prime Minister.
A host of senior Conservatives, along with businesses, have called for the proposed increase of 1.25 percentage point to be scrapped in the face of cost of living pressures, with inflation at a 30-year high and the energy price cap due to lift in the spring.
The Daily Mail reported that wavering rebels have been urging Mr Johnson to scrap the planned hike to win back their support over his handling of the Downing Street partygate allegations.
But the Prime Minister said the tax rise is “absolutely vital” if the NHS backlog caused by the coronavirus pandemic is to be tackled.
In April, national insurance will rise by 1.25 percentage points for workers and employers.
From 2023, it is due to drop back to its current rate, with a 1.25% health and social care levy then applied to raise funds for improvements to care services.
Speaking to broadcasters during a visit to North Wales on Thursday, Mr Johnson said: “Let me just tell you… why it’s so important that we raise the funding to cope with the Covid backlogs, the damage that Covid has done to… particularly to our NHS.
“Every penny will go towards fixing the Covid backlogs and also social care, the two things are connected.”
Asked if the rise will go ahead as planned, he said it is “absolutely vital”, adding: “I think people do understand.
“Look, 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.
“We had to spend over £400 billion keeping the British economy going during the lockdowns, we’ve got now to move forward, we’ve got to fix the Covid backlogs, we’ve got to sort out social care. I think that’s the right thing to do.”
No 10 repeated its mantra on the issue when questioned by reporters, with the Prime Minister’s official spokesman saying the Government has “no plans” to change course on the tax increase.
Mr Johnson’s defence of the policy comes after MPs on the Treasury Committee warned, in a report released on Thursday, that the rise in employer national insurance contributions would contribute to a rise in inflation.
Mel Stride, the Conservative chair of the committee, told BBC Radio 4’s World At One programme it is his “personal view” that there is 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 continued: “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 former Treasury minister said he would like to see the rise delayed by a year.
He predicted the Chancellor would be able to hit his fiscal target for 2022/23 even without the additional money from a national insurance bump, as Rishi Sunak has “more headroom – about £13 billion” than forecast.
Mr Stride said: “That is, coincidentally, 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 to do so.”
Among the Tories to have criticised the hike are former Brexit minister Lord Frost and veteran figure David Davis, while Commons Leader Jacob Rees-Mogg is understood to have called for the move to be abandoned.
Business leaders have also stepped up calls to delay the increase after a survey of 700 companies by the British Chambers of Commerce revealed the private sector had being hard hit by Plan B Covid measures introduced to slow the spread of the Omicron variant.