Chancellor Rishi Sunak has vowed to press ahead with a planned National Insurance rise, despite opposition to the tax hike from his senior cabinet colleague Jacob Rees-Mogg.
The Commons leader is understood to have spoken out against the rise at a cabinet meeting on Wednesday, arguing that it could not be justified amid the mounting cost of living crisis.
But Mr Sunak said on Thursday that ditching the 1.25 per cent tax rise – planned to help meet the cost of social care reforms and growing NHS backlog – would be irresponsible.
“I have enormous respect for all of my colleagues,” he told reporters when asked about Mr Rees-Mogg’s apparent revolt. “It’s always easy to duck difficult decisions, but I don’t think that’s the responsible thing to do.
The chancellor added: “I think people’s priorities are for us to invest in the NHS, to invest in social care. We need to make sure that those investments are funded sustainably, that’s what we’re doing.”
A cabinet insider told the Financial Times that Mr Rees-Mogg felt “finding the savings would be more frugal and responsible” than raising taxes.
Boris Johnson’s spokesman insisted on Thursday there were no plans to backtrack on the NI increase scheduled for April, and transport secretary Grant Shapps said the decision has already been made collectively as there is a “very good case” for the move to support health and social care.
The hike in national insurance will come after inflation hit 5.1 per cent, more than double the UK’s 2 per cent target. Households are set to suffer another blow in April as the energy price cap is expected to be raised.
Mr Sunak was also challenged on whether the government would bring forward new measures to help hard-pressed families worried about fuel bills.
The government is reportedly considering extending the warm homes discount – which is currently gives a £140 discount to around two million people eligible people – to more people.
“Of course I understand people’s anxiety and concerns about energy bills, in particular, that’s why we’ve put in place a series of ways to help people with energy bills,” Mr Sunak said. “There is support there for people.”
Hinting that discount payments could be extended, Mr Sunak said: “We’re always listening and making sure the policies we’ve got will support people in the way we want it to.”
Liberal Democrat leader Sir Ed Davey said the government should “more than double that [warm homes discount] to at least £300, but increase the eligibility to seven and a half million people, so many, many more people.”
Labour has called on the government to cut VAT on energy bills, with deputy leader Angela Rayner telling the Commons on Wednesday that “even the Tory backbenchers have finally accepted Labour’s call to cut VAT” on energy bills.
Some 20 Tory MPs and peers signed a letter in the Sunday Telegraph asking them to help consumers facing “fuel poverty” as gas and electricity payments continue to rocket.
The head of the Resolution Foundation think tank said that families would face a £1,200 hit by April “from soaring energy bills and tax rises”. Chief executive Torsten Bell said: “So large is this overnight cost-of-living catastrophe that it’s hard to see how the Government avoids stepping in.”
