Government ‘committed to cutting taxes’ despite National Insurance hike

The Foreign Secretary has insisted the Government is “committed to cutting taxes” after the Prime Minister and Chancellor doubled down on plans to raise National Insurance.

Liz Truss said “taxes are never popular”, but significant amounts of money spent dealing with the Covid crisis “need to be paid back”.

Labour urged the Government to “rethink” the National Insurance rise, with shadow levelling up secretary Lisa Nandy warning “it’s just simply not possible for a lot of people to survive” if their tax burden grows.

The Prime Minister has been facing pressure from within his own party to scrap or at least delay the increase to win back support as he awaits the findings of Whitehall and police inquiries into claims of lockdown-busting parties held in Downing Street.

No 10 had still not received a copy of the highly anticipated Sue Gray report on Sunday morning.

Concerns about the Prime Minister’s decision to press on with the 1.25 percentage point rise, designed to tackle the Covid-induced NHS backlog and reform social care, were also raised by senior Tory MP Robert Halfon.

Speaking to Sky News’s Trevor Phillips On Sunday programme, he said the Government should “go back to the drawing board” and look at different ways to find money that is needed for the health service.

But Paul Johnson, director of the Institute for Fiscal Studies, said delaying or scrapping the National Insurance increase could throw up an issue of credibility with the public.

He argued that the tax hike is about trying to cover the “long-term ever-growing costs” of the NHS.

Mr Johnson told Times Radio: “Even if we hadn’t had a pandemic and even if the Government wasn’t doing anything about social care, they would still have needed a rise of something like this because spending on the NHS is just rising inexorably year on year on year.

“In a way, my view is that the pandemic has given them an excuse to smuggle in the rather big tax rise that they would have had to do in any case.”

Boris Johnson and Rishi Sunak put on a united front as they made a firm commitment to go ahead with the controversial National Insurance hike despite concern from some Tory MPs about the cost-of-living crisis.

Writing in The Sunday Times, the pair insisted that it is right to follow through on the “progressive” policy.

Ms Truss told Sky News that the Government is “committed to cutting taxes”.

She acknowledged on the BBC’s Sunday Morning programme that “taxes are never popular”, but said “significant” amounts of money spent coping with the pandemic must be repaid.

“As soon as possible, we want to be in a position to lower our tax rates, we want to drive economic growth, because ultimately that is what will make our country successful,” she said.

“But we do face a short-term issue, which is that we have spent significant amounts of money dealing with the Covid crisis that does need to be paid back.”

Ms Nandy urged the Government to “rethink” the National Insurance rise, adding Labour would “come forward with a much fairer taxation system”.

She told the BBC: “You can’t possibly hit people with more taxes at the moment. It’s just simply not possible for a lot of people to survive.

“The stories that I’m hearing from people across the country about the sacrifices they’re going to have to make are enormous.”

Asked if Labour would repeal the planned tax hike, she added: “We’re hoping that the Government won’t go ahead with it.

“Well, look – we wouldn’t bring it in in the first place, let me be absolutely clear with you if there was a Labour government today there would be no rise in National Insurance, people would not be facing the prospect of seeing their incomes squeezed even more.”

She added: “With a bit of luck this won’t come in at all, we’re going to be doing everything that we can over the next few weeks to try and appeal to Tory MPs’ consciences and try and persuade the Prime Minister to rethink.

“But if we can’t do that, what we’ll do is come forward with a much fairer taxation system that doesn’t hit working people the hardest.”

In April, National Insurance is due to rise by 1.25 percentage points for workers and employers.

From 2023, it is due to drop back to its current rate, with a 1.25% health and social care levy then applied to raise funds for improvements to care services.

With questions looming over the future of Mr Johnson’s premiership, Ms Truss stood by the Prime Minister, telling the BBC that he is “absolutely” the best person to lead the Conservative Party into the next general election.

Asked if she is tempted by the top job, she said: “There is no contest. There is no discussion.”

Ms Truss was later asked on Times Radio if she has spoken with anyone about running for the Tory leadership.

She replied: “No, is the answer … No, I haven’t. And I’m 100% focused on my role as Foreign Secretary.”

It comes as tensions remain high between Russia and Ukraine, with Mr Johnson expected to speak to President Vladimir Putin and travel to the troubled region early this week.