The Conservative Party would make great strides towards abolishing National Insurance over the next five years if re-elected, a Treasury minister has said.
The Exchequer Secretary to the Treasury, Gareth Davies, told The Telegraph he was confident the Government could make “significant” progress in scrapping the levy on work.
Mr Davies refrained from committing to a specific time frame, but suggested that this would happen in the next Parliament were the Government to remain in power.
The minister also attacked Labour’s plans to significantly strengthen workers’ rights, warning that many employees preferred the flexibility of zero-hour contracts and suggested unemployment would rise.
The issue of workers’ rights is set to become one of the biggest dividing lines between the two parties in the general election, as tight public finances have forced both Sir Keir Starmer and Rishi Sunak to refrain from making imminent costly pledges.
Labour have claimed that the Conservatives’ plans to abolish National Insurance, which raised £70.7bn from workers in the 12 months to March, would eventually cost around £46bn a year.
Yet Mr Davies insisted abolishing the tax paid by employees was feasible.
Mr Davies said: “We intend to make some significant progress in the next Parliament if we are reelected. If you just look at [the past] six months we have cut it back 33pc, so it is possible to achieve.”
It comes after Chancellor Jeremy Hunt last month announced his ambition to abandon the levy, while admitting that income tax would potentially have rise to make up for it.
The Government’s chances of securing another term in Parliament appear exceedingly slim however. The latest polling from YouGov puts its support at levels similar to when Liz Truss was in power at 21pc.
Reform is meanwhile polling at its strongest-ever figure, at 16pc of the vote share.
If its trajectory since late last year continues, it could plausibly become the second-largest party in the general election.
Mr Davies said the Government would only take further steps towards scrapping National Insurance when “the conditions are appropriate”.
But he added that with “clear sailing” and provided there was not another pandemic or new war, it was “certainly” possible to make progress.
Mr Davies said: “We have planned to make great progress in the next parliament if we’re fortunate enough to win the election.”
Government ministers have given differing impressions of how urgent or realistic they see abandoning the tax.
Work and Pensions Secretary Mel Stride suggested after the Budget that it was an “aspiration” rather than a plan.
However both the Chancellor and the Prime Minister have said they are committed to it.
Mr Davies admitted completely abolishing National Insurance was “a long-term ambition” to remove the “unfairness” of double taxation on work.
He was careful to emphasise that the Government would not seek to do so through borrowing after Labour said the policy “will cost more than Liz Truss’ mini-Budget”.
Mr Davies said: “You cannot do this overnight obviously. You need to do it when the fiscal position allows you do to so, so you are not borrowing to do it. Then it does not hurt the overall economic stability for the country.”
Speaking from a bakery in Notting Hill to mark a number of tax changes announced in the Budget taking effect in April, the Exchequer Secretary defended the use of zero-hour contracts.
Labour’s deputy leader, Angela Rayner, has pledged to end the practice within Labour’s first 100 days in power.
The party also plans to significantly strengthen protections for workers from day one, with employer groups warning it make it impossible to have probation periods in contracts.
Mr Davies claimed the Labour Party had left office every time with higher unemployment, adding that “policies like this proposed by Angela Rayner illustrate how that can happen”.
Mr Davies said: “My view from all of the engagement I have had is that zero-hour contracts are used by employees because they are providing them flexibility in how they work. Talk to businesses as well, they would argue that there already are significant protections for their staff.”
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