Downing Street was resisting calls to scrap the National Insurance hike despite a Cabinet rift over concerns it will heap further pressure on households struggling with the soaring cost of living.
No 10 insisted on Thursday there were no plans to backtrack on the increase of 1.25 percentage points scheduled for April despite Commons Leader Jacob Rees-Mogg arguing to the Cabinet it should be axed.
Transport Secretary Grant Shapps said the decision has already been made collectively as there is a “very good case” for the move to support the backlog in the NHS from coronavirus and overhaul social care.
A significant number of Tory MPs oppose the hike being imposed in April, as does Labour, and Lord Frost resigned from the Cabinet citing high taxation as one of his major concerns.
It was understood Mr Rees-Mogg told Chancellor Rishi Sunak at Wednesday’s Cabinet meeting that the increase should be scrapped to stem the cost of living crisis engulfing the Government as inflation and energy bills rise.
The Prime Minister’s official spokesman suggested the hike would not be scrapped, telling journalists: “There are no plans to do that, no.
“The Cabinet collectively agree with that approach and recognise the priority of the public in ensuring our NHS has the funding it needs to tackle the backlog, which has been exacerbated by Covid.”
Mr Shapps declined to comment on the specifics of discussions in Cabinet but argued that the decision had already been done and dusted.
“We’ve made our decisions. We have a collective responsibility,” he told BBC Radio 4’s Today programme.
“There’s a very, very good case, I think everybody will agree, for both catching up with the backlog coronavirus has created in NHS operations and procedures and for solving a historic, rather unforgivable situation where if you happen to come down with certain types of illnesses, particularly things like dementia, you can end up losing your home because social care doesn’t look after you.
“We made the decision as a Government to look after those things and we set out how we’ll do it, which is a National Insurance increase.”
Mr Rees-Mogg did not deny calling for the increase to be scrapped when appearing in the Commons for Business Questions.
Shadow Commons leader Thangam Debbonaire had asked him: “Perhaps he turns out to be more socialist than he has hitherto let on. Given that, according to the Financial Times, he is now asking his own Government to scrap the National Insurance tax rise, something we have been calling for since it was announced…
“I wonder – is he about to cross the floor? There is space.”
Mr Rees-Mogg replied: “She thinks that I may be converted to her way of thinking. I think this is wishful thinking, it has to be said, because as her question went on and on it became clearer and clearer that not only is she now referring to taxpayers’ money – a good Tory principle, we always call it taxpayers’ money because we recognise there is no money from anywhere else – but also she is becoming Eurosceptic.
“She has become a staunch Brexiteer because the only way our socialist friends can advocate cutting VAT on fuel is by having left the European Union. If we were still in the megalithic state that she used to so campaign for… we would not be able to cut VAT on fuel.”
The head of the Resolution Foundation think tank said last month 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.”