Tory backlash grows over national insurance rise as Rishi Sunak faces pressure to axe tax hike 

Rishi Sunak was last night facing a backlash from Tory MPs over plans to hike taxes despite the cost-of-living crisis.

Backbenchers warned the Chancellor the 1.25 per cent national insurance rise coming into force in April would worsen the pressures on family finances.

They urged Mr Sunak to reverse the hike after Jacob Rees-Mogg called for it to be scrapped during a Cabinet meeting this week.

The Commons leader reportedly said the national insurance contributions (NICs) rise – to fund the NHS and social care – cannot be justified while families face soaring costs.

Households are being hit by rising inflation and heating bills, and the energy price cap – which sets the maximum charge for 15million customers on standard variable tariffs – is set to be raised in April.

Tory MPs and business chiefs yesterday echoed Mr Rees-Mogg’s comments and urged the Chancellor to reverse the tax hike. But Mr Sunak stood by the plan, saying: ‘It’s always easy to duck difficult decisions but I don’t think that’s the responsible thing to do.’

Craig Mackinlay, of the Net Zero Scrutiny Group of Tory MPs, said it was ‘not too late’ for the Chancellor to change his mind.

He added: ‘With the cost-of-living crisis even more acute today on the back of a big increase in energy bills, to further the pressure on households with a national insurance rise will simply add to family and inflationary pressures.’

Tory MP Andrew Bridgen said the Chancellor would come under ‘increasing pressure’ to scrap the NICs rise. He suggested the Tories could suffer at the local election in May if the Government does not act.

Labour, meanwhile, accused the Conservatives of trapping the country in a ‘high tax, low growth cycle’. Shadow Chief Secretary to the Treasury Pat McFadden said: ‘The Tories’ national insurance rise along with other tax hikes is leaving working people with the biggest tax burden in 70 years.

‘They are trapping us in a high tax, low growth cycle which we must break out of. Ministers could ease the burden right now by cutting VAT on home energy bills.’

The Federation of Small Businesses also urged the Chancellor to scrap the tax hike. Mike Cherry, its national chairman, said: ‘Firms paying thousands extra in energy costs shouldn’t be made to hand over even more to the taxman – just to keep employing their staff.’

Baroness Altmann, a former pensions minister, said the NICs hike was a ‘separate unfairness’ to the energy rise but urged the Government to reverse the planned increase regardless.

Adam Scorer, chief executive of fuel poverty charity National Energy Action, urged the Government to first extend provisions such as the Warm Home Discount Scheme and Winter Fuel Payment – which take money off people’s energy bills.

Last night, it was claimed that more than 1million people are set to be dragged into the higher rate tax band by 2026. The Treasury’s plan to freeze income tax thresholds – which comes at a time of rapid wage and price inflation – will push more than 1.2million workers’ earnings above the 40p threshold in the next four years, according to analysis by the House of Commons Library.