Moderate Conservative backbenchers have rallied behind Philip Hammond and said Theresa May should have done more to defend his plan to increase national insurance contributions for the self-employed.
The chancellor ditched his plan put forward in the budget on 8 March after a public backlash from some Tories and private concerns among cabinet ministers. But other backbenchers criticised the prime minister’s treatment of Hammond.
“It’s a very shabby and completely unnecessary way to treat people,” said one. Another cited critical briefings against the chancellor in the media, saying: “It shows how vengeful she is. It doesn’t help anyone for relations between No 10 and No 11 to be poor.”
The Treasury insisted the climbdown was a collective decision, made jointly by Hammond and May, but the chancellor has borne the brunt of the blame and some in Downing Street claim he lacks political nous.
Another government source said May had ordered Hammond to drop the policy, under pressure from cabinet ministers unhappy about having to defend it. “A lot of the cabinet had expressed their concerns to the PM,” the source said. “He was given no choice - but she had no choice either, really.
“I think Hammond’s weakened; I think he will go quiet now for some considerable period of time.”
No 10 and No 11 were aware in advance of the risk that the policy change breached a manifesto pledge, but they believed the details of the “tax lock” legislation passed in the autumn of 2015, which only mentioned Class 4 national insurance, discharged the promise.
Several MPs told the Guardian they blamed the ferocity of the outcry about the measure on pro-Brexit Tories, who are concerned that Hammond is too pessimistic about the economic risks of leaving the European Union and hope to see his influence diminished.
One former cabinet minister from David Cameron’s government said the Conservatives were locked in “a battle for the future of our party” and warned that May was ceding too much ground to the Eurosceptic wing.
Hammond’s was the strongest voice within cabinet for Britain remaining in the customs union and the single market after leaving the EU, but both plans were dropped in May’s Lancaster House speech in January.
Alistair Burt, a former minister and remain campaigner, sparred over the issue on Twitter with Steve Baker, convener of the powerful European Research Group that comprises pro-Brexit backbenchers.
Seizing on reports that one minister had welcomed Hammond’s humiliation as good for the cause of Brexit, Burt tweeted: “They never, ever stop. Not even after they have won a referendum. Until they have driven this country into the ground.”
Baker insisted: “I have every reason to think such sentiments are rare and isolated.”
With Brexit talks about to start, other MPs raised the issue of whether the government’s abrupt U-turn would undermine confidence in May’s firmness of purpose.
Treasury sources insisted it was business as usual for the chancellor on Thursday and he hosted a visit from the US Treasury secretary, Steven Mnuchin.
Hammond’s climbdown came in a tumultuous week, with May’s government rocked by the demands by Scotland’s first minister, Nicola Sturgeon, for a fresh independence referendum, as well as the deepening election expenses crisis.
The government has also faced criticism against plans to change the basis of schools funding, with former chancellor George Osborne among those joining the rebellion.
The prime minister sought to seize back control of the agenda on Thursday by setting out the first details of what she called her “Plan for Britain”. Its website was launched with a tweet from the official Downing Street account, though not without hiccups – the main website was initially unavailable and the tweet was hastily deleted.
When it was resurrected, the site carried a video message from May explaining her ideas for a successful post-Brexit Britain: “Last summer’s vote was not just an instruction to leave the EU, it was an instruction to change the way our whole country works, and the people for whom it works, for ever.”
Other sections included a page citing May’s main objectives for a Brexit deal, plus some information about the departure process, including a warning that leaving without a deal was a possibility that must be planned for.