On 21 March 1991, Michael Heseltine announced the government’s plans for a new system of local government finance to replace the deeply unpopular community charge, or “poll tax”. The announcement, mocked as a humiliating U-turn by critics of the government, marked the abandonment of one of Margaret Thatcher’s most contentious policies.

The poll tax, a flat-rate levy on every adult regardless of income, had provoked mass protests, calls for non-payment and riots, and was a key factor in Thatcher’s removal from office in 1990. The scheme meant, in the words of Conservative minister Nicholas Ridley, that a “duke [could] pay more than a dustman”.

Thatcher defended her doomed policy on the commons on 1 March 1990. She argued the community charge was a “very much fairer system than domestic rates which preceded it”, whereby “a single person in one house paid the same rates as four or five people in the next-door house.”

John Major, who entered office as prime minister in November 1990, quickly set about reversing the policy. Major appointed Heseltine, his main opponent in the 1990 Tory leadership contest and longstanding critic of Thatcher, to manage the U-turn.

Major pledged to review the deeply unpopular community charge during the 1990 campaign, endearing himself to some of Thatcher’s critics.

Heseltine, the new environment secretary, criticised the poll tax in parliament prior to its implementation. However, he abstained during divisions on the Local Government Finance Bill rather than directly voting against – as the former prime minister, Edward Heath, did.

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Heseltine outlined the new system in a statement to the House of Commons on 21 March 1991. The new system, he said, would be based on “two essential elements”: property value and the number of adults living in the paying household.

Properties were to be placed into a “band” based on their capital value, with discounts for single-person households and rebates “to protect people on low incomes from making a disproportionate contribution to local taxation”.

The environment secretary added: “In spite of the comprehensive system of income-related rebates, and the reduction scheme we devised, the public have not been persuaded that the community charge is fair.

“The new tax should reflect people’s ability to pay, be easy to collect and be seen to be fair.”

The statement came after Norman Lamont, the chancellor, announced a VAT rise from 15% to 17.5% to fund a £140 reduction in the community charge.

Bryan Gould, the shadow environment secretary, ridiculed Heseltine’s new policy as representing “the most complete capitulation, the most startling U-turn and most shameless abandonment of consistency and principle in modern political history.”

Gould added: “The former prime minister [Margaret Thatcher] who cannot bear to be present, was famously not for turning. The secretary of state and his new prime minister have not only turned ; they have been through a revolving door.

“May we be assured that the new prime minister will not complain tomorrow that he has once again been bounced by this latest leak by the secretary of state of his own proposals?”

The Labour frontbencher condemned Heseltine for having failed to offer “a single word of contrition or apology.”

He called for a “formal apology to the people of Britain for 12 years of arrogance, to local government for unprecedented chaos, and to millions of people who have been driven to despair by shattered services and unfair and ever rising bills?”

Alan Beith, the Liberal Democrat Treasury spokesman, said the government was leaping “out of the frying pan into the fire’” with its new proposals.

Labour MP David Blunkett dismissed the new scheme as a “hybrid donkey tax which stands on sand and is kept alive by being fed carrots.”

Conservative MP John Biffen suggested that the U-turn was entirely justified. “Is my right honourable friend aware that when a flagship becomes a navigational hazard the best thing to do is to scupper?”, he asked.

“I congratulate my right honourable friend on the professional way in which he has set about that job.”

Nicholas Ridley, seen as the architect of the poll tax, suggested that if the £4.25 billion used to slash bills by £140 had instead been put into “improving the rebate system”, the community charge would have become acceptable in two years.

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The Local Government Finance Act, which repealed large sections of the Local Government Finance Act 1988, received royal assent on 6 March 1992.

The Labour Party’s manifesto in 1992 argued that, while Thatcher was gone, the “arrogance remains which brought us the poll tax, centralisation in Britain and isolation in Europe.”

Despite such attacks, the Conservative Party and John Major returned to office at the 1992 general election upon winning a surprise majority.

The current council tax system was implemented in 1993.