UK PM May's Government Shows First Sign of Disunity Over Tax Shambles

UK Prime Minister Theresa May's government - riding high in the polls, but enjoying only a slim majority in the House of Commons - has shown the first sign of cabinet splits after a U-turn on tax reforms just seven days after her Chancellor, Philip Hammond, announced them.

Theresa May is already facing calls to hold a snap election in order to shore up her majority and give her a personal mandate, as she took over from previous Prime Minister David Cameron, who was elected in 2015, but resigned in 2016, after the EU Brexit referendum.

Britain's outgoing Prime Minister, David Cameron with his wife Samantha, waves in front of number 10 Downing Street, on his last day in office as Prime Minister, in central London, Britain July 13, 2016.

© REUTERS / Peter Nicholls

She is facing the toughest political situation facing any British prime minister in 50 years — negotiating Britain's exit from the EU and its new relationship with the remaining 27 member states. Politically, she needs to show resolve and purpose and in need of cabinet solidarity.

David Cameron (2L), Theresa May (C) and Philip Hammond (2R)

© AFP 2023 / Leon Neal

However, Chancellor Philip Hammond announced in his budget that the main rate of National Insurance contributions (NICs) for the self-employed will increase to 10% in April 2018 and to 11% in April 2019. This brought an immediate backlash from all parties and — from within his own party and cabinet.

Manifesto Pledge

The announcement went against the party's 2015 manifesto on which the party was elected and such a policy U-turn — many said — was to renege on its promise at a general election. He was forced to withdraw the MIC rise in parliament, March 15 — just a week after making it.

Here it is. My first (and last) Spring Budget #Budget2017 pic.twitter.com/BZCj8QK6PF

— Philip Hammond (@PHammondMP) 8 March 2017

​Hammond admitted in parliament, March 15, that he had only heard that it was a manifesto pledge not to raise NICs, when he was told by a journalist.

"On the question of who first raised the issue of the manifesto, I think, to give credit where credit is due, that it was Laura Kuenssberg on the BBC shortly after my comments in the Budget speech," he told the Commons.

Many MPs expressed surprise that Hammond had not read the manifesto, or thought to check his budget against the manifesto before delivering the news. There was also surprise that Hammond and May — who had to sign off the budget — had completely misjudged the mood of their own party, parliament and the country.

There has always been a difficult standoff between prime minister and chancellors in Britain, but at such a critical time in UK politics — with a possible Scottish independence referendum rearing its ugly head again, deadlock in Northern Ireland and crucial Brexit talks on the way — the breakdown between May and Hammond is all the more surprising.