National Insurance rise must be scrapped! Rishi handed vote-winning masterplan to axe hike

Treasury chief grilled over National Insurance hike

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The well-regarded fellow of the Institute of Economic Affairs criticised the Chancellor for bunging in the NHS backlog and a plan to fix social care in one single tax. He said Mr Sunak should abandon his plan to whack up national insurance contributions by 1.25 percentage points in April and instead follow his blueprint to tackle the problem.

Mr Jessop, who formerly worked in the Treasury, said the NHS and social care must be treated in different ways.

He told “There’s two separate things here that you need to pay for.

“One is the backlog of NHS work and the other is the long-term reforms to social care. I think it’s reasonable to think of them separately.”

While he said a long term funding plan would be needed for social care, in the short run the money raised from the tax was set to purely go to the NHS.

He said national insurance increases could easily be delayed to a later date, saving Britons who are already grappling with a cost of living crisis.

“The NHS backlog is a sort of one-off cost of the pandemic, it’s in that sort of big cost of £300-400billion worth of money we’ve had to spend to keep the economy going.

“I don’t think anybody is suggesting you should instantly raise taxes by £300billion to pay those one-off costs. So if there’s a backlog of costs to be fixed, I think it would be perfectly reasonable to add that to long-term borrowing,” he said.

“It’s rather like if you needed to do emergency repairs to the roof of a block of flats.

“You tend to add that cost to the long-term service charge, you don’t expect everyone to pay that cost at once because it is a one-off cost.

“So, it would be perfectly reasonable to add it to borrowing.”

Shrugging off criticism from some who warn higher borrowing meanly pushes the debt further down the line, he said the economic situation meant the option makes sense.

He said: “Borrowing is actually lower than expected anyway.

“Another way of looking at it is you’ve had this growth dividend from the economy being stronger than expected, so borrowing has been a bit lower than expected, so you can afford to borrow a bit more and still be where you were and use than money to pay for the backlog of work.”

Mr Jessop blamed “fiscal head-banging” civil servants for overlooking the option of borrowing to tackle the problem.

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He accused them of whispering in Mr Sunak’s ear warning he had to start increasing taxes.

“I think the fiscal headbangers in the Treasury have got to him, they’ve said ‘look you need to start fixing the budget deficit now. And therefore you also need to be willing to raise taxes’,” he said.

“I think a lot of it is sending a signal of fiscal discipline and so on. But I don’t think that’s a great signal to send because the economy is only just getting back on its feet from Covid and it’s got these additional problems of the cost of living crisis.

“Even if you believe taxes need to rise in the longer term for social care or whatever else, now is too soon.

“My view is it would have been right to delay the increase in national insurance for a year.”

He said the move would save households money, winning them over on his plan to tackle the funding issue.

Mr Sunak last weekend wrote an article for a Sunday newspaper with Prime Minister Boris Johnson saying the tax rise was the “right plan”.

“We must clear the Covid backlogs, with our plan for health and social care – and now is the time to stick to that plan. We must go ahead with the health and care levy,” the pair said in the Sunday Times.

“It is progressive, in the sense that the burden falls most on those who can most afford it.

“Every single penny of that £39billion will go on these crucial objectives – including 9m more checks, scans and operations, and 50,000 more nurses, as well as boosting social care.”

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