Former Conservative Cabinet minister David Davis has called for the planned tax rise hitting national insurance contributions to be scrapped as a cost-of-living crisis looms, adding further pressure on the government.
National insurance contributions, which are paid by employers and workers, are scheduled to rise by 1.25 percentage points at the start of the new tax year in April, in a manifesto-breaking move to raise £12bn to increase NHS funding by Rishi Sunak and Boris Johnson.
However, the Conservative leadership is under intense pressure as it awaits the findings of an investigation into parties held at 10 Downing Street during national lockdowns, as well as the new allegations of Islamophobia levelled against the party by the former transport minister Nusrat Ghani.
Davis, who last week called in parliament for Johnson to resign, said the government should not follow through on the tax increase because of the financial pressure already facing households amid inflationary cost increases and the imminent increase in the energy price cap.
“It was a judgment made on, frankly, quite a lot of wrong data,” Davis said, speaking on Monday on BBC Radio 4’s Today programme. “They didn’t know at the time that by April we would have the highest inflation rate in 30 years, they didn’t know that interest rates would be going up, council tax would be going up, the fuel price is about to jump by £700 a year for the average family. Therefore they didn’t know quite what pressure there would be on ordinary people.”
Davis last week told Johnson that he should “in the name of God, go” because of the allegations about his attendance at parties – a reference to words said to Neville Chamberlain after a series of failures at the start of the second world war.
However, Davis’s comments on Monday reflected a more typical unease among Tory MPs for raising taxes. Davis argued that the tax increase might have a negative effect on growth and public finances if it diminished demand – but also acknowledged that cancelling the increase would be in “our own political interests as well as the national interest”.
Sunak has reportedly tried to distance himself from the tax increase, with the Mail on Sunday reporting that the chancellor referred to the national insurance rise as “the prime minister’s tax”. The Treasury, under the chancellor, has direct oversight of all tax increases.
The shadow chancellor, Rachel Reeves, said the report suggested a “whole new definition of tax dodging” while criticising her counterpart on Twitter.
“The entire cabinet would get behind stopping the planned national insurance rise,” she wrote. “But the chancellor and the prime minister remain adamant about their plan to heap the biggest tax burden in 70 years on working people.”