Sir John Redwood said the fiscal headroom meant the Government could “cancel the NI rise, cancel VAT on domestic fuel, cancel VAT on green products and give a bit back on fuel duty”.
He added: “That headroom doesn’t include the additional revenues that you are going to get now, because clearly oil and gas prices are going through the roof in a way that had not been forecast.”
Peter Bone, the MP for Wellingborough, said: “I am absolutely against the increase in NI. It’s a tax on jobs. It should not be something a Conservative Chancellor should be doing. There is an enormous amount of room because the forecast from the Treasury at the time of the Budget was hopelessly pessimistic. There’s no basis for it all, and it should be scrapped.”
However, two members of the Treasury select committee said they supported lifting the thresholds for those paying NICs on the lowest incomes. One, Kevin Hollinrake, the Tory MP for Thirsk, said he backed the measure, which could come alongside a windfall tax on large oil and gas companies.
Extending the 12.5 per cent VAT rate for restaurants and pubs for another 12 months would cost the Treasury £330 million net for a year. Hospitality industry sources said the Treasury had been “non-committal” in talks but “keen to understand the impact on pricing and inflation”.
With a trebling in energy costs, a 30 per cent rise in ingredients and 20 per cent VAT from April, Hospitality UK has projected an 11 per cent price rise for consumers, with a consequent knock-on effect on inflation.
One government source told The Telegraph that Treasury officials are “certainly considering” delaying the increase in VAT, possibly by six months or a year. The idea was being pushed by ministers in the Business, Energy and Industrial Strategy, who had been receiving representations from the hospitality sector.
Therese Coffey, the Work and Pensions Secretary, on Monday night confirmed that the triple lock for state pensions will be reinstated from April next year, which could see a six per cent rise for pensioners. The lock means pensions rise by whichever is the highest – 2.5 percent, inflation or average earnings.
