Rishi Sunak accused of blocking Brexit progress by standing in the way of Article 16

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Rishi Sunak - Stefan Rousseau-WPA Pool/Getty Images
Rishi Sunak - Stefan Rousseau-WPA Pool/Getty Images

Rishi Sunak has been accused of blocking plans to invoke Article 16 by allies of the Prime Minister, who say he is a “nominal Brexiteer” who has stalled progress on the Northern Ireland Protocol.

The claims come amid rising tensions over the Chancellor’s proposed 1.25 percentage point rise in National Insurance contributions (NICs) as Boris Johnson’s premiership continues to hang by a thread pending the publication of Sue Gray’s “partygate” report.

On Thursday night, sources close to Mr Sunak were forced to deny reports that he had passed off the proposed £12 billion Health and Social Care levy as “the Prime Minister’s tax”, before insisting: “He is delivering on Brexit as Chancellor”, in response to suggestions that he has been “captured” by the “remainer” Treasury.

During a visit to North Wales, Mr Johnson defended the increase, saying: “Every penny will go towards fixing the Covid backlogs and also social care. I think that’s the right thing to do.”

On Monday, he refused eight times to confirm whether the policy would be implemented.

With Mr Sunak the 6/4 favourite to replace Mr Johnson if there is a leadership contest, the Chancellor has found himself at the centre of an increasingly bitter briefing war.

One key Johnson ally said: “Rishi pushed the NI [National Insurance] increase, whatever he says. Boris told me at the time that the Treasury insisted.

“The other thing is that he has been fighting hard to stop invoking Article 16, which has delayed sorting Northern Ireland. Rishi has fought to stop any action that would ‘upset the EU on trade’. He is a nominal Brexiteer and completely captured by the Treasury.”

A spokesman for the Chancellor dismissed the claims, saying: “He would not have been part of a Cabinet that signed up to the Northern Ireland Protocol if he didn’t believe in it. He fully and firmly believes in Brexit and he’s delivering on that as Chancellor.”

A government source told The Times the Prime Minister was considering delaying the NI rise for a year as "red meat" for Right-wing Tory MPs.

"He's wobbling, I think he would do anything to survive," the source said.

The Treasury is increasingly alarmed by the suggestion, sources told The Guardian, with one frontbencher claiming Mr Sunak may be forced to resign if Mr Johnson overrules him on the tax.

The row erupted as Mr Johnson was warned he would face his own “Black Wednesday” if he pressed ahead with the NICs rise, which will cost the average worker an extra £255 a year.

The Institute for Fiscal Studies this week questioned the timing of the proposed levy – ahead of a looming cost-of-living crisis – pointing out that lower-than-expected borrowing means that there is fiscal headroom to move it to next year.

Consumers are expected to start feeling the pinch from April, when the NIC rise kicks in, along with an increase in the energy price cap which threatens to send bills soaring by 50 per cent.

Boris Johnson could face his ‘Black Wednesday moment’

Former ministers from the Sir John Major era have claimed that Mr Johnson is heading for a disaster similar in scale to Britain’s exit from the European Exchange Rate Mechanism (ERM) in 1992. The crisis resulted in the Tories suffering a landslide defeat to New Labour at the 1997 general election.

David Davis, who served as a Europe minister in the Major government, warned: “The thing I am really worried about is that we have another ERM moment. It would be like Black Wednesday or Black April.”

Echoing his concerns, Sir John Redwood, who was promoted to the Cabinet following the ERM crisis, said: “It has all the hallmarks of a disaster about it.”

On Thursday, Mel Stride, the Conservative chairman of the Treasury select committee, said it was his “personal view” that there was an “opportunity now to not go ahead with the national insurance rise in April… because of the cost of living pressures that there are”.

Suggesting it should be delayed by a year, he warned that as an inflationary measure, it would have knock-on consequences for the servicing costs of the national debt.

He predicted that the Chancellor would be able to hit his fiscal target for 2022-23 even without the additional money from an NIC bump, as Mr Sunak has “more headroom – about £13 billion” than forecast.

However, a source close to the Chancellor on Thursday night pointed out that debt interest payments reached their highest ever December level of £8.1 billion last month owing to recent rises in inflation, adding: “Total debt interest in 2021 was £21 billion higher than 2020.”

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