Rishi Sunak has hit back at anti-tax Tory Jacob Rees-Mogg after the Commons leader launched a personal revolt against Boris Johnson over a rise in National Insurance.
The right-winger had called for this April’s 1.25-point hike to be ditched in a Cabinet discussion yesterday - that was leaked within hours.
According to reports, he argued the rise could not be stomached at the same time as energy bills rise on April 1.
Yet Chancellor Rishi Sunak - who is looking at “mitigations” for hardest-hit Brits like extending the Warm Home Discount - argued against Mr Rees-Mogg.
It is thought he said without the tax rise, the £12.5bn to tackle NHS backlogs this year - and social care - would have to be grabbed from somewhere else.
Mr Rees-Mogg also said the government should sack civil servants to save money and “questioned the productivity” of those working from home, The Times reported.
By choosing to focus on the tax rise, rather than direct help for energy bills, Mr Rees-Mogg is focusing on a change that would help wealthier earners more.
But after reports of the discussion emerged, the Chancellor hit back on Thursday by publicly defending the tax hike.
He said: "And if you take a step back and look at why we're in this situation, it's because we're facing an unprecedented level of backlogs in the NHS, and we as a government don't think it's acceptable.
"We don't want families to be waiting years and years to get the treatment they need. We want investment in more doctors, more nurses, more operations.
"We're also doing the thing that governments before us have not done and that is to finally fix social care.
"And look it's always easy to duck difficult decisions but I don't think that's the responsible thing to do.
"I think people's priorities are for us to invest in the NHS, to invest in social care, and we need to make sure that those investments are funded sustainably.
"That's what we're doing and now we've got to get on and deliver that change for people."
According to the Resolution Foundation, the NICs rise will cost the poorest households just over 0.4% of their disposable income, and the wealthiest around 1.5%.
By comparison, a £600 predicted jump in energy bills would mean they take up 12% of the poorest families’ disposable incomes, up from 8.5%. For the richest families, the figure will be just 4%.
Yet Mr Rees-Mogg’s complaint brings months of Tory grumblings about Boris Johnson’s manifesto-busting tax hike into focus.
Lord Frost resigned as Brexit minister last month saying he was “concerned about the current direction of travel” and Britain must be a “low-tax” nation.
Boris Johnson is said to have decided “something must be done” about rising energy bills before Ofgem announces new price cap details on February 7.
Estimates suggest the average annual energy bill - which rose by £139 in October - could go up by £600 in April due to soaring gas prices and tension with Russia.
Ministers have reportedly not ruled out a bailout for energy firms but are thought to be keener on arranging bank loans or other indirect help.
Boris Johnson has rebuffed calls to cut the 5% VAT rate on energy bills, despite pledging Britain could do that after Brexit, because it wouldn’t be targeted only at the poorest.
The Mirror is backing Labour ’s call to scrap VAT on bills in a move that could shave £100 off April’s hike.
Reports suggest the Warm Home Discount could be raised from £140 to £150 a year and extended to an extra 800,000 homes. But time is running out as it runs to March.
A government spokesperson said: ”Ministers are working with the regulator and suppliers to explore potential mitigations so we can protect consumers from high energy costs.”
Yet sources rebuffed the idea of a February 7 hard deadline - and Downing Street suggested on Wednesday that there are not any imminent plans to help.
The Prime Minister's official spokesman said: "I'm not aware of any further changes at the moment, but obviously we keep it under review, we are listening to those most affected."
At PMQs yesterday, Labour's deputy leader Angela Rayner warned there was an “iceberg right ahead” for families who will be £1,200 worse off on average in April.
Ms Rayner said "serious solutions" were needed to stop people "falling into poverty or debt" as a result of inflation.
Resolution Foundation chief executive Torsten Bell said: "So large is this overnight cost-of-living catastrophe that it's hard to see how the Government avoids stepping in."
Justina Miltienyte, energy policy expert at Uswitch.com, said: “With predictions of a near £2,000 price cap on the way, many households could be faced with the stark choice of heating or eating if action is not taken to support them in the coming months.
“A 5% VAT cut on energy bills was never going to be enough to offset a predicted 50% price cap increase, but it’s alarming that the Government has seemingly scrapped the idea so hastily without an alternative, at a time when consumers are bracing themselves for a catastrophic bill hike.”
Transport Secretary Grant Shapps suggested the Government will stick by a rise to National Insurance despite Mr Rees-Mogg’s protest.
Declining to comment on the specifics of discussions in Cabinet, where Mr Rees-Mogg made the call, Mr Shapps told BBC Radio 4's Today programme: "We've made our decisions. We have a collective responsibility.
"There's a very, very good case, I think everybody will agree, for both catching up with the backlog coronavirus has created in NHS operations and procedures and for solving a historic, rather unforgivable situation where, if you happen to come down with certain types of illnesses, particularly things like dementia, you can end up losing your home because social care doesn't look after you.
"We made the decision as a Government to look after those things and we set out how we'll do it, which is a National Insurance increase."
