Boris Johnson could delay plans to increase national insurance by 12 billion. pounds in April, a minister has hinted as pressure grew on the British prime minister to move to the right to save his job.
Johnson, who has held a series of meetings with Tory MPs to try to strengthen his position in the wake of the “Partygate” scandal, is being urged to set a new course with lower taxes, less regulation and diluted environmental commitments. .
Tory MPs and some cabinet ministers are calling on Johnson to postpone the introduction of the national insurance increase, which will hit in April, just as the energy price ceiling is expected to rise from £ 1,277 to almost £ 2,000.
On Thursday night, Defense Secretary James Heappey acknowledged on BBC Question Time that “everyone in the room” was against the tax increase, and he left the door open for a U-turn.
“You will have noticed that the top of the government is in a state of listening at the moment, but the government made the decision,” he said.
Signs that the government is wavering over the issue have grown in recent days, with Downing Street repeatedly refusing to confirm that the increase in national insurance would continue in April, only that there were “no plans” to change the schedule .
On Thursday, Mel Stride, Tory chairman of the Commons Treasury Committee, became the latest senior figure in the party to call on Johnson to postpone the 1.25 percentage point increase.
Stride claimed that since UK public loans were £ 13bn. lower than the official forecasts for the financial year to December, this would create a “main place” to delay the tax increase by one year.
“Given the pressure on the cost of living, I think now would be the time to use that headroom,” Stride told the Financial Times.
Johnson, on a visit to Wales, appeared to be defending the plan. “Every penny will go to correcting the Covid backlog and also social care,” he said, adding, “It needs to be fixed.”
But even if the Prime Minister publicly defends the increase, a delay in it would win some credit from his low-tax-supporting critics of the Conservative Party as he tries to curb a revolt.
The Ministry of Finance strongly opposes any delay, arguing that public finances are extremely fragile and that the extra tax revenue is needed to fund permanent extra spending on health and social care.
Paul Johnson, director of the Institute for Fiscal Studies, said: “This is where the economy, which is largely about the medium term, falls into the policy, which is largely about the short term.”
He said that although public finances could withstand a one-year delay in the introduction of the 12 billion tax increase. pounds, the money was needed in the medium term. “After announcing the increase for 2022, how credible will it be to announce a delay until 2023, when you are a year closer to the election?” he asked.
Financial insiders fear that any delay will equate to an effective abandonment of the plan at a time when the cost of servicing UK public debt is rising due to higher interest rates and inflation.
Chancellor Rishi Sunak strongly argued last year that the extra spending on health and social care should be covered by higher taxes and that increased borrowing to cover permanent new spending was unthinkable.
However, this has led to criticism from the Tory right wing that he has presided over the highest levels of overall taxation since the 1950s – a dangerous image for a potential leadership candidate.
In recent weeks, lawmakers have stepped up pressure on Johnson to scrap the increase. A former minister said: “The increase in social security is the policy that could be most easily shelved.”
Aside from pressure to shelve the unpopular tax increase, Johnson is being urged by the Tory right to drop other policies and revise his Downing Street team and political operation.
Former Brexit minister Lord David Frost on Thursday supported a Daily Telegraph column calling for the killing of “all neo-socialists, green fanatics and pro-awakened audiences” in Downing Street.
Johnson is expected next week to announce a plan to take advantage of “Brexit opportunities” for deregulation – a policy favored by the Tory right. A package of measures to mitigate rising energy bills is also being prepared.
Meanwhile, a long-awaited White Paper on leveling up, which aims to set out a strategy to boost growth in the north, including former Labor “red wall” seats represented by Tory MPs, is due to be published next week.