Tax rise plan
Boris risking Tory backlash over plan to hike NICs
The Prime Minister wants to raise taxes to pay for social care
Boris Johnson is facing a backbench revolt over looming plans to increase National Insurance Contributions to help pay for an increased spending on social care.
Speculation over an NIC rise has been around for weeks and the Prime Minister could make an announcement as early as next week.
However, the proposal is causing a rift in the Tory party which pledged in its 2019 election manifesto that it would not raise taxes.
Downing Street will argue that the pandemic has changed the political and economic outlook substantially and that new circumstance demand new responses.
Mr Johnson is likely to soften any rise in NICs with a pledge to limit the amount individuals have to pay for support in old age and protect them from having to sell family homes to settle the bills.
But he is also facing a battle within Cabinet over what sort of hike to introduce. While the PM is proposing 1%, Chancellor Rishi Sunak wants 1.5%, and Health Secretary Sajid Javid says the costs involved require a 2% increase.
Five Cabinet ministers have said they will oppose any increase in the tax at all, according to The Times.
Federation of Small Businesses national chairman Mike Cherry, who recently called for a cut in NICs, said: “Breaking a manifesto promise by increasing NICs just at the moment when firms are struggling to get back on their feet would be devastating for small businesses and the local communities they serve.
“NICs act as a jobs tax, making it harder for small firms to provide opportunities and invest to improve productivity. If this hike happens, fewer jobs will be created by the UK’s small business community over the crucial months ahead.
“This regressive levy is yet another outgoing for small businesses and sole traders to worry about against a backdrop of spiralling input prices, supply chain disruption, a deepening late payment crisis, rent arrears, rates bills returning, skills shortages and emergency loan repayments.
UPDATE 6 SEPT: The SNP said plans to hike National Insurance will unfairly hammer young people, low paid workers and Scottish families.
As MPs return to the SNP’s Westminster leader Ian Blackford said “young people are getting an increasingly bad deal from the UK government” and being forced to shoulder the burden of regressive tax rises, £9,250 a year University tuition fees, skyrocketing house prices, poorer pension prospects, and increased costs for travel, dentistry, prescriptions and other charges.
He said this stood in stark contrast to the approach taken by the Scottish Government, which has funded social care provisions from current budgets, scrapped tuition fees, invested in affordable and social housing, and introduced a wide range of benefits to support young people from birth – including the Best Start Grant, the Scottish Child Payment, protecting the Education Maintenance Allowance, free bus travel for under 22s, free prescriptions and free dentistry.