Government must do more on cost of living – ministeron January 28, 2022 at 6:39 am

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James Heappey says “people are feeling the squeeze” with many opposed to the planned National Insurance rise.

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The government needs to do “a lot more” to help people struggling with the cost of living, a minister has said, as some Tory MPs call for a rise in National Insurance to be delayed.

Defence Minister James Heappey said people were “feeling the squeeze” of rising prices and the government was in “listening mode”.

But he said the tax hike, to fund health and social care, was right.

No 10 says there are “no plans” to scrap the rise, which is due in April.

When asked about the increase on Thursday, Prime Minister Boris Johnson said: “We have to fund the Covid backlog, we have to fix social care.”

Under the plans, employees, employers and the self-employed will all pay 1.25p more in the pound for National Insurance (NI) from April 2022 for a year – after which the extra tax will be collected as a new Health and Social Care Levy.

The increase will see an employee on £20,000 a year pay an extra £130 in tax. Someone on £50,000 will pay £505 more.

People earning less than £9,564 a year, or £797 a month, don’t have to pay National Insurance and won’t have to pay the new levy.

Critics have said the increase will have a higher impact on the lower-paid and could contribute to inflation at a time when household budgets are under pressure.

‘Much needed money’

Asked on BBC One’s Question Time whether the NI rise should be delayed, Mr Heappey said “there are plenty of people on good salaries that are starting to worry about how they’re going to make ends meet” in the face of rising food and energy bills.

He said the government was seeking to address that “through intervention in energy market”, adding “we’re going to need to do a lot I think over the next few years to help people on this”.

Asked whether the rise in NI would be delayed, he acknowledged that “everybody in the room is against it… Everybody at home is feeling squeeze”.

He added: “You will have noticed that the top of government is in listening mode at the moment, but the cabinet took the decision.”

But he added he thought it was “the right decision to take given the point of it is to raise money that is much needed”.

On Thursday, Business Secretary Kwasi Kwarteng insisted there would be “no U-turn” on the NI increase, saying the government was committed to “funding the NHS, clearing the backlog of the NHS, and also funding social care” through the tax rise.

But Tory MP Robert Jenrick told BBC’s Newsnight “the chancellor should at least consider postponing the increase in National Insurance for one year”.

He said 2022 was “going to be an exceptionally hard year for many families across the country” and it “looks increasingly like a sensible thing for the government to do”.

Mel Stride, chair of the Treasury Select Committee, also told the programme he believed there was “wiggle room” in the public finances to allow for a delay in the increase due to lower than expected borrowing.

Mr Stride said the “money is there” and postponing the hike in National Insurance “would be a very good use of that headroom”.

But director of the think tank Reform, Charlotte Pickles, said that any government U-turn “raises questions about their commitment to solving the social care crisis”.

She added there was no guarantee that “if they cancel the National Insurance increase this year, that they would then put it back in place next year, a year out from a general election”.

The government says the changes are expected to raise £12bn a year, which will go initially towards easing pressure on the NHS .

A proportion will then be moved into social care system over the next three years.

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