The deputy prime minister has defended the planned rise in national insurance contributions in April, despite criticism from senior backbenchers.
Dominic Raab, the deputy prime minister, told media: “I would much rather that we didn’t have to do it, but given the pandemic and the walloping of the public finances, we do.”
The increase in contributions, agreed last year to help fund health and social care costs, have been widely criticised as a regressive tax that would hit people of working age disproportionally. It will mean a 1.25 percentage point rise in personal NIC.
Raab said he did not want to “duck, as successive governments and prime ministers have, the issue of social care, and we are making sure that we deal with the ageing population and the dementia challenges we face”.
He added: “We are the first government, and this is the first prime minister, that has grasped that nettle.” It has been suggested that Rishi Sunak is trying to distance himself from the tax. A source told The Mail on Sunday that in a meeting with MPs last week to discuss the cost-of-living increase the chancellor described the rise as “the prime minister’s tax”.
“We were left with the impression that he didn’t want to be associated with it,” the source said.
A former cabinet member joined calls for the increase in NIC to be abandoned. Robert Jenrick, the former secretary of state for housing, communities and local government, wrote in The Sunday Telegraph that postponing the rise would show that “the government’s conservative instincts remain”.
Jenrick, who was dismissed in a reshuffle last September, argued that delaying or cancelling the rise would be the quickest way to ease pressures on household budgets, given the expected rise in expenses such as energy bills.
He also wrote that “national insurance penalises work by disincentivising people to take on more hours or get promoted” and that scrapping the rise would therefore be a “sensible move”.
Last night a minister told the Daily Mail that the entire cabinet would back cancelling the national insurance rise. “We need to have a clear recovery from Covid before we start working out what we want to do about the fiscal balance. The ball is very firmly in the chancellor’s court,” the source said.
Sunak has strongly rejected any suggestion that the national insurance increase should be postponed or scrapped. “You can’t conjure money out of thin air,” one Treasury source told The Sunday Telegraph.
A government source said: “The NHS and social care levy will be brought in to ensure the NHS gets the funding it needs this year to clear the waiting lists caused by the pandemic.
“Beyond that it will pay for the prime minister’s long-term social care reform plan. The alternative is cutting large sums of spending elsewhere.”