Liberal Democrats call on Chancellor to stop unfair National Insurance rise

Bedford Borough Liberal Democrats are calling on Chancellor Rishi Sunak to reverse his decision to raise National Insurance ahead of the Spring Statement this week. The unfair tax rise will hit thousands of workers in Bedford Borough who are already struggling through the Conservatives' cost of living crisis, with inflation set to hit 8% later this year and the country facing its highest tax burden in 70 years.

Portfolio Holder for Finance Councillor Michael Headley said "The Chancellor must go back on this decision. Now is not the time to be hitting workers and businesses with this unfair tax rise when so many are already worried about the rising cost of living. We are facing the biggest squeeze on living standards in decades, this is not the time to be raising a regressive tax.

"A rise in National insurance is particularly unfair as higher paid workers pay a lower percentage of their wages than lower paid workers. Most people pay National Insurance at 12%, but on earnings above £50,270 the rate drops to 2%! So higher earners pay much less as a proportion of their income."

Research has also revealed that nearly 125,000 more workers will be dragged into paying National Insurance next year. This is because the minimum threshold above which you pay National Insurance is set to rise by just 3.1% in April to £9,880 (which is based on September's inflation figure before energy bills began to rocket). April's inflation rate is forecasted to be 7.25%, which means that the minimum income threshold should actually be £10,244. The result of this is that 125,000 more workers will have to pay £2.4 billion in National Insurance compared with if the threshold was raised by the actual inflation figure.

Councillor Headley added "It is not just workers that will be forced to pay a greater amount of National Insurance, businesses will also be significantly impacted. The past two years have been so difficult for small businesses and now the government wants to hit them with a tax bombshell when they are already struggling to stay afloat.

"It is rubbing salt in the wound of the government's broken promise not to raise National Insurance. Rishi Sunak must cancel the tax hike, and offer families and businesses a lifeline by slashing VAT instead."