SPIKE THE TAX HIKE

scrapped. They have been inundated with calls from members concerned that the 1.25 percentage point rise in national insurance contributions would damage the economy and stop firms taking on staff. In a string of developments last night:

■ The IoD business group launched a campaign to ‘scrap the jobs tax’, accompanied by a petition;

■ The BCC urged Mr Johnson to commit to no further costs on business for the remainder of this parliament;

■ Tory former chancellor George Osborne said the hike was coming at a time when ‘real incomes are shrinking’;

■ The Commons Treasury committee warned the increase would worsen inflation and had been rushed through with no regard for family finances;

■ It emerged that the PM will acknowledge ‘serious mistakes’ over Partygate as he battles to keep his job;

■ The Government was said to be ‘paralysed’ as the wait for Miss Gray’s report dragged on for another day;

■ Leaked emails appeared to contradict Mr Johnson’s claim that he did not intervene to order an animal rescue from Afghanistan.

‘Being squeezed by rising wages’

Supposed to help fund health and social care, the £12billion tax grab takes effect from April. However, there are concerns that most of the money will be spent on the NHS treatment backlog and that it will come in just as families face rocketing energy and council tax bills.

On Tuesday, the Mail revealed that Lord Frost, the PM’s former Brexit chief, had added his support to calls for the hike to be scrapped. Some Cabinet ministers have insisted that the rise will still go ahead even though the PM appeared to leave the door ajar for a rethink in a television interview.

Official figures this week suggested the Government now had ‘headroom’ to cancel the tax increase after borrowing around £13billion less than expected.

It was claimed that the PM was ‘receptive’ to pleas from MPs and had left them believing he would embark on a ‘massive gear shift’ to tackle the cost of living crisis.

Commons leader Jacob Rees-Mogg cast doubt over Cabinet support for the policy last night, telling the BBC: ‘I am very pleased you are talking about the cost of living – that is where the Government needs to be putting its energy ... but taxation is a matter for the Chancellor.’

Since the national insurance increase was announced in September energy prices have rocketed and inflation has risen to its highest level in three decades.

On top of that, many experts predict that interest rates will rise significantly in the coming months – adding hundreds of pounds to mortgage repayments. The tax grab will cost someone on a £30,000 salary around £255 a year and £505 for those on £50,000. But it also costs businesses because employers have to pay the levy on wages.

Kitty Ussher of the IoD said: ‘This will make the cost of living crisis worse by reducing take-home pay. It’s a tax on jobs, causing businesses to employ less people. It will hurt companies the hardest that have suffered most recently like leisure and hospitality.

‘Businesses will have to pay regardless of whether they are profitable, increasing their costs and pushing up the prices they charge, making inflation even worse. We want to see this tax rise scrapped.

‘Frankly, there’s enough for business leaders to be worrying about in the wider economy at the moment without adding this into the mix.’

The BCC’s Shevaun Haviland said: ‘Our members are telling us they are being squeezed by rising wages due to fierce competition for staff, and that the incoming NI increase will compound this at the worst possible time. If this tax increase is not postponed, we will see a stranglehold put on the economic recovery just when it needs to be powering up. Firms need to be given a chance to come up for air.’

Quizzed on the issue, Mr Johnson’s spokesman replied: ‘We need to responsibly fund how we tackle the backlog and how we deal with the challenge of social care.’

SMALL and medium-sized businesses are the engine room of growth in Britain.

In the most difficult of circumstances they slogged on through the pandemic – keeping hundreds of thousands in work.

So when the British Chambers of Commerce and the Institute of Directors warn Boris Johnson that the impending national insurance hike will be an economic disaster, he cannot ignore them.

The tax rise not only risks puncturing the jobs miracle, the Treasury committee says it will worsen inflation, creating extra financial hardship for families already floundering under the cost of living crisis.

Now Tory backbenchers have told the Prime Minister to delay the hike in return for their support over Partygate. He should gratefully grab this lifeline they’ve thrown.

If he needs another reason, the importance of not strangling the economic recovery was illustrated yesterday by a glorious vote of confidence in Brexit Britain.

Forget the apocalyptic Project Fear forecasts that quitting the EU would see major firms up sticks and move to Europe.

Instead, Bentley announced plans to build its first electric car here. On top of that, US bank Citigroup is set to spend £100million on its Square Mile HQ.

The PM should spike the ruinous tax hike. He steered the economy masterfully through the pandemic. It would be madness to undo all the good work now.