National Insurance: Why the rumblings of an all-out Tory rebellion are growing louder

It was the moment when months of secret talks about how to fund a new deal for social care finally blew up in the public, prompting a furious reaction from Conservative MPs and party grandees.

The Telegraph, along with other newspapers, splashed their front pages last Friday with the news that Boris Johnson was finally about to set out his long-promised plan to overhaul social care.

MPs had been waiting for the plan since Mr Johnson announced on the steps of 10 Downing Street in July 2019 that he had a “clear plan” for social care.

However, they were alarmed by the details of the talks between Mr Johnson, his Chancellor Rishi Sunak and Sajid Javid, the Health Secretary – an increase in National Insurance to pay for a new NHS and Social Care Levy that broke a key pledge in the 2019 general election manifesto.

One Cabinet minister described it as “a tax raid on supermarket workers and nurses so the children of Surrey homeowners can receive bigger inheritances”.

That came after Sir John Major, the former Tory Prime Minister, said increasing national insurance was a “regressive” way to raise money, and urged the Government to increase taxes for all to fund social care.

It emerged over the weekend that up to half of the Cabinet were against the plans, although only Jacob Rees-Mogg, the Leader of the House of Commons, spoke out, using a newspaper column to republish a famous quote by former president George HW Bush: “Read my lips: no new taxes” and adding that “voters remembered those words after President Bush had forgotten them”.

Former chancellors raise concerns

And in Monday’s Telegraph, three former Tory Chancellors (usually governed by an unofficial agreement not to criticise the incumbent in 11 Downing St) broke cover.

Philip Hammond, Ken Clarke and Norman Lamont added their voices to the disquiet, saying it would unfairly hit young workers, leave wealthier pensioners unscathed or could lead to a voter backlash.

By the time MPs returned to the House of Commons after their summer break, the beginnings of a rebellion were starting to take shape.

Perhaps in a bid to keep a lid on any further criticism, Number 10 made clear that Mr Johnson’s diary was free on Thursday, in an unspoken threat that a ministerial reshuffle could be imminent.

Yet around half a dozen Tory MPs – including normally placid Conservatives such as Mark Garnier, a former international trade minister – were already making clear that they were uncomfortable with the plans.

Former minister and Tory MP Jake Berry told the BBC that the rise would disproportionately affect working people “on lower wages than many others in the country”, who would end up “paying tax to support people to keep hold of their houses in other parts of the country where house prices may be much higher”.

Robert Halfon, chairman of the education select committee, and a former deputy chairman of the party, added that “it’s going to hit the low paid, then I think that would cause me huge worries”.

text: Tory attacks on National Insurance: who said what© Provided by The Telegraph Tory attacks on National Insurance: who said what

Cash will go to NHS first

MPs were also spooked by a suggestion that the cash raised from the new NHS and Social Care Levy will initially help to clear the operations backlog in NHS hospitals before starting to fund social care at a later stage.

Some pointed to how Labour plans to increase spending in the NHS early in Tony Blair’s second term as prime minister barely dented performance levels.

One Tory MP said he feared the “NHS empire” was like a “cash addict” which would just swallow the increased spending with little improvement in performance, as it did under Labour.

James Frayne, a founding partner at public policy research agency Public First, warned on The Telegraph’s website: “The problem will come when billions in new revenue have been raised but the system has got no better. The Government needs to be confident the system is ready for the cash injection.”

Conservative MPs have also been irked about Mr Javid’s involvement, as he was behind allowing councils to add two per cent to council tax bills to pay for local social care in 2016 when he was Housing Secretary.

Outside of the walls of Parliament, normally Tory-friendly lobby groups such as the TaxPayers’ Alliance were gearing up for a fight over any increase in National Insurance.

Lobby journalists were sent a briefing by the Alliance in which it reminded them how Mr Johnson had himself said in the Commons in 2002 that “national insurance increases are regressive”.

The strength of the backlash appears to have unsettled the Treasury, with one Tory MP telling The Telegraph Mr Sunak was annoyed about the lack of consultation over the plans. Another Treasury source said officials had been alarmed about how much money had been wasted during the pandemic.

Polling support for tax rise

Allies of Mr Johnson were pointing to the widespread support for an increase in National Insurance to pay for social care in polling.

Polls by Ipsos Mori and YouGov over the summer found two thirds of the public support the idea of a one per cent National Insurance rise to pay for social care reform.

MPs worry that the voters being polled do not readily understand that the increase would be paid by everyone, not just a well-off minority.

The question is whether any of the backbench concerns will amount to anything. Options open to Tory MPs include forcing a non-binding vote in the Commons on the issue or amending any legislation to ensure it is ring fenced to be spent only on social care.

Voting down a Finance Bill (if the plans are included in a future Budget) was risky as historically such a move has been seen as a vote of no confidence in the Government.

Rebellions in the Commons

The two previous biggest rebellions under the Johnson premiership failed to overhaul the Government’s 84-strong working majority.

The biggest, in January, saw dozens of senior Conservative MPs join a rebellion against the Prime Minister in an attempt to block the Government from signing trade deals with countries accused of genocide. MPs voted to remove the amendment from the bill by 319 votes to 308, giving Mr Johnson a majority of just 11.

In July, the Government won a Commons vote with a majority of 35 over cutting spending on overseas aid from 0.7 per cent of GDP to just 0.5 per cent, despite a rebellion in which 25 Conservatives joined Labour in opposing it.

Number 10 has released the first part of the plan, when Mr Johnson unveiled an extra £5.4 billion over the next six months to support its response to Covid-19.

The Prime Minister said: “This funding will go straight to the frontline, to provide more patients with the treatments they need but aren’t getting quickly enough.”

Next will come the plan for social care. Fiscal hawks such as Priti Patel, the Home Secretary, have made clear that they will form their view when they see the detail.

Mr Sunak and Mr Johnson were due at a “welcome back” reception of the 1922 Committee on Monday, where they were expected to try to calm nerves among jumpy backbenchers.

Manifesto contradiction

But, for some of them, the row has crystallised a contradiction at the heart of the 2019 manifesto which commits the Tories both to “levelling up” by spending heavily in poorer areas, and not increasing taxes, like National Insurance.

One normally loyal senior Tory MP said: “This is the first skirmish in a long war; we have a Conservative Government that is addicted to spending money.”

text: Conservative low tax pledges© Provided by The Telegraph Conservative low tax pledges

And a former Cabinet minister was despairing about the direction of travel in Mr Johnson’s Government. “Can you name a single Conservative policy at the moment? This is going to blow up,” he said on Monday night.

Last night, Mr Sunak urged Tory MPs to show loyalty to the Prime Minister. He told hundreds of Conservative MPs at the 1922 Committee’s annual reception: “I like all of you, take our lead from the Prime Minister. The leader of our party and the country. We owe him our support and loyalty.

“It’s fair to say that we’ve got a tough autumn ahead. That doesn’t mean there won’t be disagreements, there always are, but we should never lose sight of the central fact that we are a team.”

Mr Johnson made a joke at expense of Cabinet Office minister Michael Gove, saying: “We opened up our nightclubs and then sent our ministers out to enjoy them.”

Source: Telegraph.co.uk

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