Reuters LONDON (Reuters) — British finance minister Philip Hammond announced a tax policy U-turn on Wednesday, scrapping a planned rise in an employment levy announced in a budget just a week ago following criticism that the measure breached his party election promises.
The reversal came after a threatened revolt by lawmakers in Prime Minister Theresa May’s Conservative Party and outrage in many British newspapers over the planned change, which drowned out the message Hammond had wanted to send with his budget about his plans to steer Britain’s economy through the Brexit process.
The episode underlines how slim May’s majority in Parliament is as she prepares for complex negotiations to leave the European Union, during which she will need lawmakers to approve several major pieces of legislation.
“In light of what has emerged as a clear view among colleagues and a significant section of the public I have decided not to proceed with the Class 4 NIC measures set out in the budget,” Hammond said in a letter to Conservative lawmakers, referring to the tax known as National Insurance. “It is very important to me and to the prime minister that we are compliant not just with the letter, but also the spirit, of the commitments that were made.”
The increase, which targeted self-employed workers, had been due to take effect from April next year.