Johnson has won his tax battle in Westminster... but he could lose the war as public unrest stirs

The PM’S masterful tactics may have led to a pyrrhic victory as grassroots Tories express growing discontent

‘The carrot of ministerial jobs and stick of immediate sackings saw Tory MPS and ministers swallow their concerns’

‘If a Prime Minister rips up manifesto promises and inverts arguments he has made for decades, will voters really trust him next time around?’

It was Monday morning in Downing Street and Boris Johnson was on the ropes. “You’re betraying your voters,” an aide snapped at the Prime Minister, acting out the vitriol that was sure to be coming his way the following day. “You’ve broken your manifesto.”

Such war-gaming between Mr Johnson and his inner circle is not uncommon before big announcements. But for this one, everyone knew the stakes were high.

On Tuesday, “the boss”, as advisers call him, was about to hit the Conservative base and voters at large with a double whammy of manifesto breaches and a whopping tax increase.

In return, a £36billion spending spree was coming that it was hoped would bring down NHS waiting lists, fund a new social care system and – all going well – rob Labour of its biggest electoral strength.

Taking in the attack lines his team were sending his way, the Prime Minister threw back his own rebuttal: “Covid wasn’t in the manifesto!”

The line, according to one person in the room, was instinctive and of Mr Johnson’s own making. It would form the centrepiece of his defence to accusations of betrayal this week.

At the heart of the Prime Minister’s huge political gamble was a belief that voters would temporarily suspend their political allegiances and ideologies because of the pandemic.

Covid was such a one-off, the argument went, that Tories would happily nod along as their party leader ripped up their low-tax, low-spend philosophy to fund the NHS.

No 10’s calculation certainly proved right in Westminster, where the carrot of ministerial jobs and stick of immediate sackings saw Tory MPS and ministers swallow their concerns.

But as the week draws to a close, the correctness of that thinking for the wider country remains very much in doubt. Opinion polls show voters split or even narrowly against the tax increase. Letters of indignation have been flooding into newspapers. Conservative association chairmen are voicing dissent.

Above it all hangs a key question: if a Prime Minister rips up manifesto promises and inverts arguments he has made for decades, will voters really trust him next time around?

The genesis of this week’s roll of the political dice can be traced back years – or even decades. For 15 years, prime ministers of both parties have tried to find a solution to the social care lottery that sees the unlucky face exorbitant care bills, only to balk at the political reality. Gordon Brown dropped plans dubbed a “wealth tax” by critics; David Cameron put his proposals into law but never enacted them; Theresa May’s attempt to outline a new policy during the 2017 election selfdestructed.

Boris Johnson took a novel approach: to promise he had a “clear plan” for fixing the social care crisis as he became leader in July 2019 without spelling out any details. Since then, there have been intermittent discussions inside the Government about what to do, but first

Brexit then Covid got in the way.

But come this spring, with the pandemic easing, it was time to focus on social care.

There were two big questions. What policy could you put in place that would help those facing crippling costs? And how on Earth do you fund it?

The big decisions on both were made early, according to multiple people directly involved in discussions.

The “cap and floor” system designed by Sir Andrew Dilnot, once the director of the Institute for Fiscal Studies, for the Cameron government immediately drew Mr Johnson’s eye.

The cap limited the costs someone could rack up on social care before the state started paying. The floor named the total assets someone could have, below which some state help with bills would kick in.

That system had the advantage of already being on the statute book thanks to Mr Cameron. The model had also been rigorously tested and had a degree of understanding from the public, both limiting the political risk.

Pretty quickly in Downing Street the debate moved to the figures, with acceptance it was the right way forward. Detailed modelling was soon commissioned.

The broad approach to raising money was also fixed early. Rishi Sunak, the Chancellor, is to his bones a fiscal conservative – or so his team often tells reporters – and thus wary about raising taxes.

During the spring, Treasury figures were happy privately to point out the huge costs that Mr Johnson’s cap-andfloor proposal would bring, insisting the money could not come from borrowing.

Mr Sunak eventually sat down with his trusted officials to discuss his options, realising that the money would have to be raised somehow.

“We went through it thoroughly with officials, discussing the pros and cons of each tax rise,” said one Treasury insider who was involved.

Income tax was deemed politically tricky. Cuts to pensions relief would not raise the sums needed. A newly created tax was complicated and would take years to implement.

National

Insurance, it was soon agreed, offered the best path. It was paid by employers as well as employees

– spreading the burden – and historically had a link to healthcare.

“There’s no perfect way to do a tax rise and there is no perfect tax,” the Treasury insider recalled. But if the money had to be found, National Insurance was the way to do it.

There was, however, a snag. The December 2019 Tory election manifesto had explicitly ruled out a rise in the rate of National Insurance.

Mr Johnson had even issued his own “read my lips” promise on LBC radio, echoing former US President George Bush’s famous election declaration that came back to bite him once he raised taxes.

As the policy developed in the summer and into autumn, there was confidence inside the Government that the manifesto hurdle could be overcome when needed, with deft communications.

The big reveal was meant to happen in July before Parliament’s summer recess, to coincide with Mr Johnson’s second anniversary in No 10, but was dropped when the Prime Minister had to self-isolate after being “pinged”. Instead, it was rescheduled for the first full week of September.

Then, this month, negotiations ramped up. From the outside, it was widely assumed only the “trio” of Cabinet ministers and their teams were holding talks: Mr Johnson, Mr Sunak, and Sajid Javid, the Health Secretary.

But in truth, a fourth negotiating partner was at the table: the leadership of the NHS. And it was their demands that proved the biggest complicating factor in the final week as preparations were made for the announcement.

“The NHS is always one of the toughest organisations to negotiate with,” admitted one government figure familiar with the talks. “It was the case under Simon Stevens [the former NHS chief executive]. Under Amanda Pritchard [the new chief executive], it is similar.”

By this point, the package initially for social care had morphed into an Nhs-plus-social-care move. Rising NHS waiting times had spooked

the Tories – 5.5 million people were already waiting for NHS care because of Covid backlogs, with warnings that figure could hit

13 million by the end of the year.

In what government figures saw as a deliberate pressure campaign, representatives of NHS trusts went public with demands for £10 billion a year more to be pumped into the health service as negotiations heated up.

In the end, they pretty much won; getting the vast chunk of the “£36billion over three years” package.

Then, suddenly, last Friday, news of what was coming became public as The Daily Telegraph published details of the plan. Over last weekend there were intense talks, complicated by the key ministers being spread across Europe.

Mr Johnson was at Balmoral, making calls in between conversations with the Queen. Mr Javid was trying to keep abreast of talks while meeting G20 health ministers in Rome’s ornate Capitoline Museums. Mr Sunak was dialling in from his home in North Yorkshire.

For advisers hammering out the fine print, things were no less intense. Dan Rosenfield, Mr Johnson’s chief of staff, kept having to take calls while attending a bar mitzvah. Treasury officials were up until 2am on Saturday working on the package.

The leaks meant the backlash from Tory MPS had already begun, so late concessions were agreed to head off their key criticism: that raising National Insurance would see the young forking out for rich pensioners.

A dividend tax rise was included in the final package. So, too, was making working pensioners pay the 1.25p National Insurance rise, a late decision that broke with the status quo.

The pensions triple lock would also be abandoned, meaning retirees would lose out on an abnormal 8 per cent rise to their state pension in line with average earnings, replaced by a “double lock” of rises by 2.5 per cent or inflation, whichever was higher. It was another broken manifesto promise.

Come Monday, and Mr Johnson’s private war-gaming with advisers, there was focus on Parliament. Two key questions remained: how to get Cabinet support for the move and how to get MPS to vote for it?

The first proved easy. Cabinet government as it was understood in the past has been eroded under Mr Johnson – decisions, not least on Covid restrictions, are often presented to the Cabinet on the day public announcements are due as a fait accompli, moments before the press are briefed.

The same was true with social care. Few Cabinet ministers had been told what was coming before their meeting on Tuesday morning.

Downing Street was gleeful at the lack of push back. Business Secretary Kwasi Kwarteng, Justice Secretary Robert Buckland, Home Secretary Priti Patel – none raised a word in protest, reporters were told.

Three Cabinet ministers did offer criticism about the tax rise behind closed doors: Jacob Rees-mogg, Lord Frost and Liz Truss, the International Trade Secretary who put up the most resistance before a chastising from Mr Sunak. But none of them quit.

Squaring MPS proved equally easy. Mr Sunak told them to be “loyal” to the Prime Minister at a Monday night meeting of the 1922 Tory backbench committee. The Prime Minister claimed to still believe in low taxes in a second such meeting on Wednesday.

All the while, Government whips were privately warning them that a vote against Mr Johnson’s proposal would be taken as a vote of no confidence in his leadership. And the possibility of an imminent reshuffle – and with it a ministerial job – was deliberately kept open by No10.

In the end, just five Tory MPS voted against the tax rise on Wednesday night. A few dozen more abstained. Mr Johnson had won.

The vote reflected the Prime Minister’s position of immense political strength. He has a Commons majority of more than 80. He has been ahead in the polls all year, with Labour floundering under Sir Keir Starmer. He has more than two years until the next general election.

“This man is a god,” one sycophantic Cabinet minister told BBC’S Newsnight, clearly seeing a policy and political coup. “He could sell ice to Eskimos.”

But will the victory prove pyrrhic? There are signs it could. Multiple opinion polls have shown the public evenly split or sometimes against the tax rise – despite polling for months beforehand indicating that the public would back it by a ratio of two-to-one.

Letters of complaint have been streaming into The Telegraph from readers, hundreds more than the average day. Tory chairman of associations in Cabinet minister’s seats have publicly voiced their disquiet at the abandonment of Tory values.

Even some of those around the Cabinet table remain deeply concerned. One, commenting on an article headlined “we have just witnessed the PM sound the death knell for conservatism”, said they agreed with every word.

In a single week, Mr Johnson has broken two manifesto promises and pushed the tax burden to its highest point in 70 years, waved away claims of betrayal of Tory values and bounced his Cabinet and MPS into support.

Will the public follow, too? Time will tell. But No 10 will not have missed a poll published by Yougov on Thursday night. The Tory vote share had sunk to its lowest point in 20 months and there was a new party

in the lead: Labour.