Tory Treasury committee chairman calls on ministers to scrap National Insurance hike

A senior Conservative MP has called for the government to delay the proposed National Insurance hike amid rising cost of living pressures

Mel Stride, who chairs the influential Commons Treasury Select Committee, told Sky News that “for a period of one year, the increase should be jettisoned” as the economy is managing better than the Office for Budget Responsibility had predicted it would.

Mr Stride warned Treasury ministers to be mindful that “cost of living pressures are very prevalent” and said shelving plans to hike National Insurance payments in April would be “one way of helping to address some of that”.

Earlier this week, Downing Street said Boris Johnson remains “committed” to the proposed rise.

The prime minister’s official spokesperson told reporters Mr Johnson believes the proposal is the “right approach” to “tackling the massive backlog” facing the NHS and to “address the long-standing problem of fixing our social care system”.

Asked whether reports that members of Mr Johnson’s cabinet will back a move to delay the rise are accurate, the PM’s spokesperson added: “Cabinet took a collective decision to take this action, to put money into our NHS, to tackle the backlogs, to resolve the long-standing problem of social care and to fund a pay rise for nurses. The cabinet stands behind that decision.”

In September, the PM announced that National Insurance contributions will rise by 1.25% to pay for the social care system in England in a bid to end the “unpredictable and catastrophic costs” faced by many.

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A social care package, which the prime minister has called “the biggest catch-up programme” in the NHS’s history, will be funded through a new, UK-wide 1.25% health and social care levy from April 2022.

The decision to put up contributions broke the Conservative Party’s 2019 election manifesto pledge.

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The 1.25 percentage point increase is predicted to raise about £36bn which, in the early years, will mainly be used to tackle the NHS backlog.

What is the PM’s plan for social care?

The PM’s plan to overhaul the social care sector includes:

• A government pledge to invest £36bn over the next three years to help the NHS recover from the pandemic

• Investment in reforming the social care sector

• A promise that from October 2023, nobody will pay more than £86,000 for their social care – regardless of their assets

• That the government will fully cover the cost of care for those with assets under £20,000, and contribute to the cost of care for those with assets of between £20,000 and £100,000

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Concerns about hike amid cost of living crisis

The plan was signed off by ministers at a cabinet meeting four months ago, but now it is understood that some ministers are calling for it to be halted as household bills continue to soar.

Mr Stride made clear to Sky News he was expressing his own views and not those of the committee he chairs.

Asked if he thought the proposed rise should go ahead in April, he told Sky News’ deputy political editor Sam Coates: “I don’t, actually – because I think the chancellor has had some recent news which has given him a bit more space to manoeuvre in the short term.

“So, I think for a period of one year, that increase should be jettisoned.

“And the increased space that he’s got of course is that the economy is doing better than the OBR – the Office for Budget Responsibility – was projecting back at the time of the budget by about the same amount that he would lose by not having that increase.

“And of course, cost of living pressures are very prevalent, it is going to be very difficult for a lot of people this year – and this will be one way of helping to address some of that.”

Mr Stride added that “given the circumstances at the moment and the kind of pressures there are out for people”, delaying the rise “would be the right thing to do”.

MPs pressure government to scrap cut

Other members of the PM’s own party, including former cabinet minister David Davis, have called for the hike to be scrapped amid the ongoing cost of living crisis.

And Brexit minister Lord Frost quit his role at the tail end of last year in protest at government tax increases.

Speaking to reporters on Monday, Mr Johnson said the “terrible strain” the coronavirus pandemic has put on the health service means the National Insurance hike is essential, but did not explicitly say the rise would take place in April.

Pushed on whether the proposal should be halted, the prime minister vowed to tackle the cost of living crisis by helping “getting people into work”.

Labour has regularly voiced its opposition to the National insurance Increase, with leader Sir Keir Starmer pledging to take a different approach if elected to Downing Street.

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