General election: Boris Johnson blurts out Tory tax plans when challenged by worker during factory visit

Prime minister says point at which workers pay National Insurance will be raised to £9,500 in next year's budget, but gives no timetable for final rise to £12,500

One of the cornerstone pledges of the Conservative manifesto – an increase to £12,500 in the level at which workers start paying National Insurance – has unravelled within hours of Boris Johnson blurting it out during a factory visit in the North-East.

The prime minister claimed the increase from the current threshold of £8,632 would put an additional £500 a year in workers’ pockets.

But it later emerged that there was no timetable for the full increase, with a “first stage” hike in chancellor Sajid Javid's first budget in 2020 bringing it up only to £9,500.

Mr Johnson the higher figure would eventually be hit through later annual increases, but set no target date for the full rise to take effect. And there was confusion about Mr Johnson’s actual ambition, as he initially put the figure at £12,000 before amending it in later interviews.

Labour said the actual value of the initial rise, if it came next year, would be just £1.64 a week to those earning over £9,500 and 61p to people on Universal Credit.

The Institute for Fiscal Studies thinktank said the threshold was due to rise to £8,788 anyway due to its automatic inflation link, so a hike to £9,500 in 2020/21 would take an additional £712 of earnings out of the 12 per cent levy, at a saving to workers of £85 a year.

The change would cost the Treasury around £2 billion in 2020/21, said IFS research economist Xiaowei Xu, who said that without a timeframe for the later increase to £12,500 it was impossible to say how significant it was.

And she said: "If the intention is to help the lowest-paid, raising the NICs threshold is an extremely blunt instrument. Less than 10% of the total gains from raising NICs thresholds accrue to the poorest fifth of working households. The government could target low-earning families much more effectively by raising in-work benefits, which would deliver far higher benefits to the lowest-paid for a fraction of the cost."

Mr Johnson appeared to make the announcement inadvertently when he was challenged by energy worker Claire Cartlidge during a visit to a fabrication plant in Middlesbrough.

“When you say low tax, do you mean low tax for people like you or low tax for people like us?” she asked the prime minister during a question and answer session at Wilton Engineering.

Mr Johnson replied: “I mean low tax for people of the working people.

“If you look at what we are doing, we are going to be cutting national insurance up to £12,000, we are going to be making sure that we cut business rates for small businesses. We are cutting tax for working people.”

His comments appeared to take aides by surprise, and Conservative campaign HQ was initially unable to explain Mr Johnson’s plans.

The PM later said: “We think this is the moment to help people with the cost of living and to do more to help people on low incomes with the cost of living to put more money into their pockets.

“We have to do it in a way that is prudent, that is affordable, and we’ve been working on it for a while as you can imagine.

“We will initially go up to £9,500 in the first stage, but of course the plan is to go up to £12,000.”

Mr Johnson said the move to £9,500 would be “soon” in the next Parliament if the party wins the election and estimated the cost at about £2.1 billion in 2021.

“This will put around £500 into people’s pockets,” he told reporters. “It’s good for the economy, it stimulates consumption, it stimulates growth, but it also will help people with the cost of living.”

But Mr McDonnell responded: “Even after ten years of cruel cuts and despite creaking public services the Tories still think the answer to the challenges of our time is a tax cut of £1.64 a week, with those on Universal Credit getting about 60p.

“Meanwhile independent experts have said this will cost up to £11 billion so everyone who relies on public services and social security will be wondering whether they will be paying the price.

“The Tories are stuck in the 1980s while a Labour Government will tackle head-on the climate and human emergencies of our time.”

Mr Johnson initially suggested that a rise in NI thresholds was a priority during his successful bid for the Tory leadership earlier this year.

He floated it at a time when he was coming under fire for proposing an £8 billion tax break for the better-off through an increase from £40,000 to £80,000 in the threshold for the higher 40p rate of income tax.

This has since been shelved, along with a planned cut in corporation tax from 19p to 17p.

Mr Johnson’s arrival at the factory was greeted by a small demonstration of around a dozen people, who chanted: “Liar, liar, liar”.