Kemi Badenoch has accused the government of producing a Budget to “milk the private sector” as she stepped up her party’s criticism of the rise in National Insurance (NI) paid by employers.
The Conservative leader also used her second appearance at Prime Minister’s Questions to ask how the government would help local councils deal with the knock-on impact of the NI increase, particularly as it relates to higher social care costs.
Sir Keir Starmer said the Conservatives wanted the extra investment for schools and the NHS announced in the Budget, but did not know how they would pay for it.
“The magic money tree is back,” he told MPs.
The NI rise, announced by Chancellor Rachel Reeves in her Budget last month, will see the tax employers pay on employees’ earnings rise from 13.8% to 15% from April 2025.
At the same time, the payment threshold will be lowered from £9,100 to £5,000 a year.
Reeves said the changes would raise £25bn a year and were necessary to put the public finances on a “firm footing”.
The NHS and the rest of the public sector will be shielded from the rise, but GP practices, run as businesses while delivering NHS services, will be impacted.
Liberal Democrat leader Sir Ed Davey asked the prime minister if he would exempt GPs and health care providers from the rise.
Sir Keir said the government would ensure GPs “have got the resources we need” and that funding arrangements would be set out “later this year”.
Badenoch said the tax rise would see councils having to pay more for social care provision and asked if the government was considering lifting a cap on council tax to fill what she claimed was a £2.4bn hole in local government finances.
The prime minister said the Budget had included £600m to deal with “the pressures of adult social care”.
On the council tax cap – which prevents local councils with social care duties from increasing tax by more than 5% without a local referendum – Sir Keir said Badenoch “knows what the arrangements are”.
The prime minister’s spokesperson later said the council tax cap would not change.
In recent years, more and more local councils have struggled to balance their books and last year Nottingham, Birmingham and Woking declared what in effect amounted to bankruptcy.
Some councils have been urging the government to lift the cap to help them cover their costs.
The Conservative leader used her final question to accuse Labour of having “nothing to offer except platitudes”.
“Their ideological budget was designed to milk the private sector and hope nobody would notice.”
She said his “tax mess” had led to cabinet ministers “queuing up for public sector bailouts”.
The prime minister said the Conservatives had produced “fourteen years of low growth” and Liz Truss’ “mini Budget”.
“Now she wants to give me advice on running the economy? No thank you very much.”