Following market instability and to head off an anticipated rebellion within the ruling Conservative Party, the newly elected Liz Truss-led UK government on Monday did its first significant U-turn on its core platform of tax cuts by dropping a proposal to abolish the top rate for the wealthy.
The announcement in his mini-budget last month of a potential repeal of the 45-penny tax rate, which would apply to the highest tier of income taxpayers starting in April, was deemed by Chancellor Kwasi Kwarteng to have been a "huge distraction" from an otherwise sensible economic growth strategy.
It happened after several days of upheaval in the international financial markets caused by fears of high government borrowing costs and a decline in the pound value versus the dollar as the Bank of England stepped in to protect the nation's pension funds.
Before going on television to defend what the newly elected administration has labeled a screaming U-turn, Kwarteng tweeted, "We get it, and we have listened."
Following a tense leadership contest with Rishi Sunak, a British Indian former chancellor, Truss, who took over as prime minister last month, added: "The repeal of the 45pc tax has become a significant distraction from our aim to get Britain moving.
Our current focus is on creating a high-growth economy that will finance top-notch public services, raise salaries, and open up opportunities across the nation.
It happened the day after she insisted in a BBC interview on Sunday that her government was still committed to abolishing the top rate of tax for the highest earners, despite criticism from within her own party that she was sending the wrong message at a time when the majority of the country was dealing with a crisis in the cost of living and skyrocketing household expenses.
"On what was a powerful package, it had grown to be a major distraction. We simply engaged in conversation with and listened to people "In response to protracted questioning on Monday morning, Kwarteng told the BBC.
"The growth plan has our full attention. Since I have been in office for 12 years, the government has changed its views about a number of initiatives after hearing from the public, he claimed.
The Chancellor asserted that he did not consider the policy change to be serious enough to revaluate his own position in the Cabinet and that the government was still concentrating on his bold growth strategy, which is supported by lower taxes and aims to "put more money that people earn in their pockets."
The essential thing is that we've made the decision and can now fight for the growth plan, he added. "We can always discuss when we could've made the decision, but the main thing is that we've made the decision," he said.
It is seen as a major setback for Truss' strategy of positioning herself along the lines of former Conservative Prime Minister Margaret Thatcher, who famously declared at a Conservative Party conference 42 years ago that the "lady's not for turning" in reference to sticking with unpopular policy decisions.
By coincidence, the Truss-led administration's U-turn occurs as the Tories' annual party conference is getting underway in Birmingham and the new leader is about to deliver her maiden speech to the membership as Prime Minister. The decision to backtrack on a crucial component of her tax-cutting goal came as it appeared more probable that the policy would be approved by her own backbench MPs in Parliament and as the opposition Labour Party was moving quickly with a new tax proposal.