Kwasi Kwarteng and Liz Truss are dealing with the fallout after they abandoned their plan to abolish the top rate of income tax for the highest earners.
Kwarteng said the policy, announced in his mini-budget on 23 September, to axe the 45% rate on earnings over £150,000 had become a “terrible distraction” amid widespread criticism.
A number of Tory MPs had gone public with their opposition to the plans, with rebels branding them “politically tin-eared”.
However the chancellor and PM are pressing on with other tax cutting measures announced last week – which still benefit higher earners.
Analysis by the Resolution Foundation think tank reveals the richest 5% of British households are still set to gain £3,500 on average next year.
This is almost 40 times more than the £90 cash gain for the poorest households.
“Despite today’s U-turn, the richest 5% of households still stand to gain far more than the entire bottom half of the income distribution combined," said Lalitha Try, researcher at the Resolution Foundation.
“The welcome decision this morning to scrap the abolition of the 45p tax rate has made the chancellor’s package of tax cuts less focused on the very richest households.
"But the top are still the main winners, and the scale of spending cuts required to pay for them is largely unaffected."
Watch: Liz Truss and Kwasi Kwarteng U-turn on scrapping 45p tax rate
The think tank's chief executive, Torsten Bell, called Kwarteng’s mini-budget “the biggest unforced economic policy error of my lifetime”, after the value of the pound plunged against the dollar, forcing the Bank of England to pump in £65bn in an attempt to halt the market slide.
The Resolution Foundation found that scrapping the abolition of the 45p tax rate removes 62% of the cash gains going to the richest 5% of households, and 54% of the gains going to the richest 10%.
Another think thank, the Institute for Fiscal Studies (IFS), pointed out that the planned axing of the 45p rate was the "smallest part" of the mini-budget, representing about £2bn out of £45bn in cuts.
Its director, Paul Johnson, tweeted: “From a fiscal point of view, important to remember cut to 45p rate was just about smallest part of the mini-budget.
“What was a £45bn tax cutting package is now a £43bn package. This U-turn has, in itself, essentially no effect on fiscal sustainability.”
He added: “The chancellor still has a lot of work to do if he is to display a credible commitment to fiscal sustainability.
“Unless he also U-turns on some of his other, much larger tax announcements, he will have no option but to consider cuts to public spending: to social security, investment projects, or public services."
Following the announcement of his U-turn, Kwarteng refused to rule out a return to austerity measures in order to fund his controversial tax cuts.
On Sunday, Truss was criticised for appearing to shift the blame on to Kwarteng, suggesting it was his idea to ditch the 45p rate.
While Downing Street insists she has full confidence in the chancellor, the pair are in for a rocky ride at the Conservative Party conference in Birmingham this week.
Former cabinet minister Michael Gove suggested Truss had bitten off more than she could chew with the plan for scrapping the 45p rate.
Gove told Times Radio: "I think she’s recognised, as we all do in politics, that if you bite off just that little bit more than you can chew, then the right thing to do is to extract the gobstopper as it were, and then get on with the job.
As turbulence goes, it has been a pretty hairy 24 hours.”
Watch: Labour says government a 'total mess' after tax cut U-turn