Boris Johnson is “wobbling” over plans to increase national insurance after Tory MPs warned that the rise must be delayed as a condition of their support.
The prime minister refused yesterday to commit himself to the 1.25 percentage point increase for employers and employees from April. It is the seventh time in four days that he has declined to say that the rise will go ahead.
MPs who are considering putting in letters of no confidence in Johnson have repeatedly told him that the rise must not proceed when people are struggling to cope with the cost of living. A government source said Johnson was considering delaying the rise for a year as “red meat” for his critics on the Tory right. “He’s wobbling, I think he would do anything to survive,” they said.
The report by Sue Gray, a senior civil servant, into lockdown-breaking parties in Downing Street has been delayed as final checks are made with government lawyers. Publication could come today but is expected on Monday.
Abandoning the rise would provoke a row with Rishi Sunak, the chancellor, who has insisted that inflation means there is little headroom for fiscal loosening. Sunak is said to believe that it would be “fiscally irresponsible” to change course because the result would be more borrowing. “It looks like [Johnson] is back-sliding because of the pressure he’s under on partygate,” another government source said. “It has never been popular among the right of the party and it’s that group Boris is most worried about. The Treasury view is that Johnson should hold his nerve.”
So far there have been no official discussions about a delay and one government source said: “It’s not a credible or responsible argument to say you can just borrow because of inflation and where interest rates have gone and are going to go.”
Yesterday Johnson defended the principle of the health and social care levy, which he announced in September. “Every penny will go towards fixing the Covid backlogs and also social care,” he said. “I think people do understand, 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.”
Mel Stride, Tory chairman of the Treasury select committee, told World at One on BBC Radio 4 that there was 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, pointing to estimates that Sunak would have about £13 billion more in the coffers than forecast. “That is . . . almost exactly the same amount as the cost of not raising national insurance,” Stride said. “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.”
Sir John Redwood, a former cabinet minister, said there was now “plenty of momentum among MPs” to cancel the rise. David Davis, another former cabinet minister, who called on Johnson to quit last week, also argued that better-than-expected borrowing forecasts meant that we could “safely cancel the national insurance increase”.
Concerns over Gray’s report have led to paralysis in government. Sunak and Johnson were due to meet this week to discuss plans to tackle soaring energy bills but talks have not taken place.