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Rishi Sunak has tried to distance himself from the looming National Insurance tax rise after calling it the "the Prime Minister's tax".
In September last year it was announced that National Insurance contributions would rise by 1.25 percent from April to pay for health and social care service.
Since the announcement, the Chancellor has come under increasing pressure from Tory peers to backtrack on the planned tax rises after inflation hit its highest level since the early 1990s. The Government has already broken key manifesto pledges not to raise income tax, National Insurance or VAT and broken the triple lock that protected increases in the state pension.
However, Tory MPs who have met with Mr Sunak over the cost of living crisis have been “left with the impression” that he is trying to distance himself from the National Insurance increase. One source told the Mail on Sunday: “Rishi referred to it as ‘the Prime Minister's tax’, which seemed quite pointed, to put it mildly.
“We were left with the impression that he didn't want to be associated with it.”
The issue of the tax increase has been raised in particular by Red Wall Tory MPs who are concerned that they will be punished for the rise by voters at the next election.
Negotiations between Boris Johnson and Mr Sunak over the creation of the new tax were fraught with tensions, with a source telling The Mail on Sunday at the time: “The Chancellor did not want to do this. He doesn't think we should be increasing taxes when people are struggling to get back on their feet, and particularly not when we said we wouldn't.”
“So he has made sure he has played hardball over how the money is spent. After it comes into effect in April, it will have to cover a lot of the cost of sorting out the NHS. He is not going to just hand over endless amounts of money.”
The National Insurance rise will cost a worker on a £30,000 salary around £255 over a year, rising to £505 for anyone earning £50,000.
Waiting for Sue Gray's report
It comes after Mr Sunak last week declined to confirm his unequivocal backing for Mr Johnson, exiting a broadcast interview as he was questioned about his support.
Mr Sunak called for patience while Sue Gray completes a Whitehall investigation into allegations of lockdown rule-breaking parties at Downing Street. The Chancellor said that he "of course" believed the Prime Minister's account about a drinks event that took place in the Number 10 garden at the height of the first Covid lockdown in May 2020.
Asked whether Mr Johnson should resign if he lied to Parliament about the matter, Mr Sunak said he would not discuss "hypotheticals", but added: "The ministerial code is clear on these matters." The code states that ministers who "knowingly mislead Parliament will be expected to offer their resignation".
Talk of a leadership contest for the conservatives has been swirling, with Mr Sunak set to be the favourite. Bookmaker Coral makes Mr Johnson firmly odds on, at 2-7, to leave his position as Prime Minister during 2022, with Mr Sunak the firm favourite to be the next Prime Minister, at 11-8.
Despite Tory MPs clamouring for the tax rise to be scrapped, a Government source told The Telegraph on Sunday: “We’re sticking to our guns. Social care reform is something we wanted to tackle and has been dodged for a very long time.
“Our view is the NHS and social care levy is the best way to achieve this [reform] and to clear the backlogs post-Covid.
“NICs is a progressive way to do that, because every person contributes according to their means and the lowest paid are protected.”
Amid increasing concerns about the cost of living, Labour last night repeated calls for VAT on energy bills to be cut as the party warned that people were “trapped in hardship”.
An analysis of Department for Work and Pensions figures by the party found the number of disabled people living in poverty is currently 3.8 million, increasing from 2.6 million in 2010 when the Conservative Party came to power.
Anneliese Dodds, the shadow women and equalities secretary, warned the cost of living crisis "has seen poverty explode" and she called on the Government to adopt Labour calls to cut VAT on energy bills.
Ms Dodds said: "The Conservatives' cost of living crisis has seen poverty explode, with a million more disabled people now trapped in hardship since they took office.
"Instead of taking action to help them, the Tories slashed Universal Credit, cut £70 million in disability benefits, and voted against Labour's measure to reduce energy bills.
"Labour's contract with the British people will ensure disabled people are treated with respect, and our fully-costed energy plan would see those most in need getting up to £600 off their energy bills."
Labour claims the "overall rate of disability poverty" now stands at 27%, growing by a fifth since 2010.
A DWP spokesman said: "We recognise living with a long-term illness or disability can impact on living costs. That's why we've made extra financial support available to those with disabilities, or those who care for them, through Personal Independence Payment (PIP), Employment Support Allowance (ESA) and Carer's Allowance.
"We are also taking more than £4.2 billion worth of action to help people with the cost of living, and providing extra support to the most vulnerable."