THE cost of living crisis gripping UK families and businesses will unnecessarily deepen unless the government scraps its planned national insurance contributions rise, it has been claimed.
Accountant Paul Hornby, the managing director of JF Hornby and Co, is calling on Whitehall to carry out an urgent review of the measures set to be introduced in April.
He believes they will place needless pressure on companies and their employees as many struggle to mitigate the spiralling costs linked with soaring inflation.
Paul said: “It is clear as day that we are in the middle of a cost of living crisis that is only set to deepen, with no signs of inflation being curtailed and the price of the most basic things increasing seemingly by the day.
“The government must take action, and an immediate reversal of the planned national insurance increase is one way of doing this.
“It will hit businesses hard and will also affect the majority of people in employment. The timing wasn’t ideal when the move was announced and the implementation looks set to be so out of touch it will beggar belief.
“The government has performed a host of embarrassing u-turns over the last couple of years. Scrapping this increase would actually be a reversal welcomed by many.”
Despite mounting disapproval, ministers have decided to push ahead with the so-called health and social care levy in April.
The 1.25 percentage point rise in national insurance is predicted by the Treasury to raise £12 billion per year to help tackle the Covid-induced NHS backlog and reform social care in the long term.
But there is a real impact of rising living costs in the here and now, according to stark figures released by the New Economics Foundation (NEF).
It has estimated that 23.4 million people will be short of funds to meet the “acceptable standard of living” by April, by an average of £8,600 per year.
This represents more than a third (34%) of the population, the think tank said, and means nearly half (48%) of children will be part of households “unable to provide them a decent standard of living”.
Separately, the Office for National Statistics (ONS) has revealed that with rising prices taken into account, as measured by Consumer Prices Index (CPI), regular pay fell by 1.6% year-on-year in the three months to January.
This marked the steepest decline in real pay since the September to November quarter in 2013.
It comes as average earnings, excluding bonuses, rose by 3.8% in the latest quarter, up from 3.7% previously, but failed to keep up with rampant price hikes as inflation hit a near 30-year high of 5.5% in January.
There are fears the strain on household finances will become more acute as experts predict inflation will rise to nearly 9% as Russia’s invasion of Ukraine exacerbates already rocketing levels.
Paul said: “Scrapping the national insurance rise will not solve the mounting cost of living crisis. But it will make a difference and should be at the forefront of the Chancellor of the Exchequer’s mind.”