Tynwald has voted to support a major U-turn on the minimum wage - after Chief Minister Alfred Cannan told members: ‘How much more do you think businesses can take?’

Employers had warned that the original planned hike to 9.9% would have led to job losses, reduced hours and firms closing.

Tynwald’s decision to reduce the increase to 5% was the culmination of a dramatic week for Manx politics which saw the sacking of two government Ministers and the Chief Minister pledging a new direction for government in its final months before the general election.

Julie Edge (Onchan) had tabled a motion calling for a two-phase increase in the minimum wage, with a 5% rise in April followed by 4.9% in November.

But Mr Cannan tabled an amendment to bring in a single 5% rise from April, together with the promise of ‘substantial’ increases to personal tax allowances in the Budget.

The motion as amended was carried by 18 votes to six in the House and Keys and by five votes to two in the Legislative Council.

Among those MHKs who voted against were the two sacked cabinet members, the now former Treasury Minister Dr Alex Allinson and ex-Infrastructure Minister Dr Michelle Haywood.

Mover of the motion Julie Edge described the proposed 9.9% hike as a ‘red flag risk’ which could have caused real contraction to employment.

She warned that a policy that led to job losses, reduced hours, fewer school leaver roles and price rises that ‘swallow up’ any pay uplift wouldn’t help low paid workers.

It would actually just change the form of hardship, she said, and requiring government to write large cheques as subsidies to soften the impact would shift the burden onto every single taxpayer.

Ms Edge said: ‘I will put it plainly - caring about low-paid workers includes caring about whether they still have a job and pay for that job.’

Mr Cannan said: ‘The burden of implementation has been left to the private sector - a burden that has meant we have asked them to increase wages in their businesses by more than 40% and are now facing a further rise that mean wages will increase by more than 60% in less than five years.

‘How much more do you think business can take - how much more can the economy take? The answer is not much at all.’

The Chief Minister sounded almost angry as he asked: ‘How many business sector representatives do we need to appeal to this court to slow down? How many letters, phone calls and discussions are we going to ignore before we understand the implications of what we are asking businesses to do?’

He said there had been ‘countless’ correspondence from businesses from across the island and he had spoken to farmers, shopkeepers, café owners, plumbers, electricians and CEOs and heard their stories of the price increases they had to bring about to stay afloat, of reduced hours and staff fearful of losing their jobs.

Mr Cannan said if the alternative was to spend £5m to £10 on increasing personal allowances than ‘so be it’ - and it would save £20m on support schemes.

Speaker Juan Watterson called for a one-month adjournment, saying there were a ‘lot of ifs, buts and maybes’ with the government amendment.

But Mr Cannan dismissed that as a ‘smoke screen that has been thrown up today by the Speaker and by the left’.

Rob Mercer MLC criticised the U-turn which he said risked ‘pulling the lever on a trap door that drops people into permanent dependency on state support’.

‘A tax cut that you do not qualify for does not help you to pay the rent or put food on your family’s table,’ he said.

‘Raising personal allowances is not targeted support for the low paid. It is a broad fiscal measure that benefits middle and higher earners most.’

Lawrie Hooper (Ramsey) accused the government of ‘completely, utterly, royally ballsing this up’.

He said 4,000 of the island’s lowest earners would see no benefit from a personal allowance increase.

‘What’s being proposed here is saying MHKs and people that earn what we earn will get a tax break, but people earning £12,000 a year will not. That is sickening,’ he said.

The adjournment motion failed by 16 votes to eight in the Keys and by four to three in LegCo.

Kate Lord-Brennan (Glenfaba and Peel) read a letter from the Minimum Wage Committee, which is backing the 5% rate and had had welcomed a return to an ‘evidence-based framework’.