Boris Johnson hit by Cabinet split on tax hike and cost of living

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Boris Johnson hit by Cabinet split on tax hike and cost of living
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A Cabinet clash over the looming cost-of-living crisis exploded in public on Thursday with Transport Secretary Grant Shapps forced to defend a planned rise in National Insurance to tackle the NHS backlog and social care reforms.

Just hours after fellow Cabinet minister Jacob Rees-Mogg pushed for April’s 1.25-point rise to be shelved to ease the financial pain facing millions of families, Mr Shapps stressed the Government had made its decision on how to raise £12 billion more for the NHS and social care.

Emphasising the collective responsibility of decisions taken by Cabinet, Mr Shapps told BBC Radio 4’s Today programme: “We made the decision as a Government to look after those things and we have said how we are going to do it, which is a National Insurance increase.”

However, a number of Tory MPs are understood to support Mr Rees-Mogg’s intervention, including former Brexit Secretary David Davis and “red wall” MP Dehenna Davison, who told the Standard this morning that the rise in NI should be scrapped, raising the prospect of further backbench unrest for Boris Johnson.

Mr Shapps insisted: “There’s a very, very good case... for catching up with the backlog coronavirus has created in NHS operations and procedures and in solving a historic... rather unforgivable situation where, if you happen to come down with certain types of illnesses — particularly things like dementia — you can end up losing your home because long-term social care doesn’t look after you.”

A Whitehall source said that the public’s number one priority was tackling the backlog in NHS treatment, which will be partly funded by the NI rise which will then also be used to deal with the social care crisis.

The source added: “We think a targeted tax which sees those with the most pay the most is the right approach. We don’t think it’s right to cut public services to pay for it.”

But Tory MP Mr Davis said: “I think Jacob Rees-Mogg is right. They should cancel this because it’s self-defeating in terms of raising money. Most tax increases carry the risk of reducing growth. The net effect of this is going to be damaging to the economy.”

He urged Chancellor Rishi Sunak to spread the cost of dealing with the economic fallout from the Covid-19 pandemic over a much longer period to reduce the strains on the public finances. Ms Davison, one of the new intake of Conservative MPs elected in 2019 in areas which had typically voted Labour, added: “With a cost of living squeeze hitting people right across the country, the rise in National Insurance should be scrapped so we aren’t hitting working people in the pockets.”

The NI increase is due to come into force in April just as many households will experience a sharp rise in energy costs as the price cap on average bills rises from £1,277 to more than £1,800, according to analysts. Many Conservatives are uneasy about the manifesto busting tax rises announced last September, which have taken the UK’s tax burden to a level not seen since 1950.

Leader of the Commons Mr Rees-Mogg reportedly told his Cabinet colleagues yesterday that the cost of clearing the NHS backlog could come from finding savings in the Health Department rather than tax rises. But Mr Sunak is said to be determined to push ahead with the tax rises although the Treasury is considering other ways to help struggling families.

Business Secretary Kwasi Kwarteng is holding regular talks with energy firms as the Government tries to bring stability to the energy market.

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