Boris Johnson has faced new calls from his own lawmakers to postpone a planned 12 billion-pound increase in national insurance in April as he is under increasing pressure to step to the right to save his post as prime minister.
Johnson, who is holding a series of meetings with Tory MPs to try to strengthen his position after the Partygate scandal, has been urged to set a new course with lower taxes, less regulation and diluted environmental commitments.
On Thursday, Mel Stride, Tory chairman of the municipal finance committee, became the last senior figure in the party to call on Johnson to postpone the increase in national security by 1.25 percentage points.
Stride claims that as public loans in the UK were £ 13 billion lower than official estimates for the financial year to December, this will create a “specialist” to delay tax increases by one year.
“Given the cost of life pressure, I think now would be the time to make good use of this freedom of the head,” Stride told the Financial Times.
Downing Street said there were “no plans” to delay the tax increase, but declined to say it would continue in April.
Johnson, during a visit to Wales, seems to have defended the plan. “Every penny will go to make up for the Covid gap, as well as social welfare,” he said, adding: “This really needs to be sorted out.”
But while the prime minister has publicly defended the increase, there will be a political temptation to postpone it – gaining some credibility with his Conservative party’s low-tax critics – as he tries to quell the riot.
The Ministry of Finance vehemently opposes any delay in raising national security, arguing that public finances are extremely fragile and that additional tax revenues are needed to fund ongoing additional health and social care costs.
Paul Johnson, director of the Institute for Fiscal Research, said: “This is where an economy that is very medium-term is at odds with a policy that is very short-term.
He said that while public finances could withstand a one-year delay in introducing a 12 billion-pound tax increase, the money was needed in the medium term. “After we announce the increase for 2022, how credible will it be to announce a postponement until 2023, when you are one year closer to the elections?” He asked.
Insiders from the Treasury Department fear that any delay would effectively abandon the plan at a time when the cost of servicing Britain’s public debt is rising due to higher interest rates and inflation.
Rishi Sunak, the chancellor, forcibly argued last year that the additional costs of health and social care should be covered by higher taxes and that increasing loans to cover permanent new costs is unthinkable.
However, this has led to criticism from the Tory’s right that he is leading the highest levels of overall taxation since the 1950s – a dangerous image for a future contender for leadership.
A former minister told the FT that the pressure on Johnson and Sunak to postpone the tax increase was growing: “It is certainly a mixture, but any retreat will smell incompetent.”
In recent weeks, lawmakers have stepped up pressure on Johnson to lift the rise, said another former minister, adding: “Increasing national security is the policy that can be most easily postponed.
Another former minister said: “We generally tell the prime minister that this is not a good idea. The MP added that groups of backers had met with Johnson to express concerns about politics.
“I think we are finally starting to reach it,” he said. “There is a fiscal reserve to get rid of this deeply unpopular and unnecessary policy.
In addition to pressure to postpone the unpopular tax increase, Johnson was urged by the Tory right to abandon other policies and reconsider his team on Downing Street and a political operation.
Former Brexit minister Lord David Frost on Thursday backed a Daily Telegraph column calling for the destruction of “all neo-socialists, green fanatics and the awakened mob” on Downing Street.
Johnson is expected to publish a plan next week to use the Brexit opportunities for deregulation, a policy favored by the Tory right. A package of measures to mitigate growing energy bills is also being prepared.
Meanwhile, the long-awaited White Paper on Equalization is expected to be published next week, outlining a strategy to boost growth in the north, including former Labor red space seats represented by Tory MPs.