National Insurance: Minister says government sticking to increase after Jacob Rees-Mogg calls for U-turn

The government is sticking by its decision to increase National Insurance contributions despite Tory disquiet about the impact on taxpayers amid concerns about the rising cost of living, a minister has told Sky News.

Grant Shapps defended the “difficult” but “worthwhile” move in the wake of cabinet colleague Jacob Rees-Mogg calling for it to be scrapped at a meeting of Boris Johnson‘s top team on Wednesday.

Sky News understands that the Commons leader told Chancellor Rishi Sunak the increase should not go ahead in April in order to alleviate the strain on people’s finances as inflation and energy bills rise.

Mr Rees-Mogg also said that savings should be found elsewhere in Whitehall.

Government ‘absolutely committed’ to policy

A source said there was a “frank discussion about taxation, the cost of living and the public finances” at Wednesday’s Cabinet meeting.

The 1.25 percentage point increase is being introduced to raise funds to tackle the backlog in NHS care and to pay for the government’s reforms to social care.

“There are no plans to do that, no,” the PM’s spokesman said when asked by journalists on Thursday if the rise will be delayed.

“The cabinet collectively agree with that approach and recognise the priority of the public in ensuring our NHS has the funding it needs to tackle the backlog, which has been exacerbated by COVID.”

And Mr Shapps, the transport secretary, reiterated this when he spoke to Sky News.

“We are absolutely committed to doing two things,” he said.

“One, catching up with the backlog in the NHS and that is why we have this National Insurance increase for specifically that purpose, and two, sorting out the long term issue of social care where people lose their homes if they have specific types of illnesses, for example dementia.

“We are absolutely committed to making those changes, it’s an historic change that I think will bring a lot of security to families up and down the country so we will certainly be doing that.”

Asked about reports of a cabinet split on the issue, Mr Sunak said: “It’s always easy to duck difficult decisions but I don’t think that’s the responsible thing to do.

“I think people’s priorities are for us to invest in the NHS, to invest in social care.

“We need to make sure that those investments are funded sustainably, that’s what we are doing, and now we have got to get on and deliver that change for people.”

Labour warns of ‘disaster for thousands of families’

On Wednesday, Labour’s deputy leader Angela Rayner accused the prime minister and chancellor of presiding over “economic mismanagement, low growth and neglect of our public services”.

“And their resolution to fix this? Whacking more taxes on working people,” she told the Commons during PMQs.

“Combine the tax rise with soaring energy prices and the average family faces a hit of £1,200 – this is an iceberg right ahead, so will he finally stop and change course… or will he plough on to what will be a disaster for thousands of families?”

The Resolution Foundation think tank said last month that families would face a £1,200 hit by April “from soaring energy bills and tax rises”.

Sky’s deputy political editor Sam Coates reports the government is set to announce new measures to help with rising energy bills within the next month.

Ministers have concluded that “something needs to be done” on energy bills ahead of a 1 April rise, although they have not yet determined what form this assistance will take.