David Cameron has moved to shore up his Cabinet team after Iain Duncan Smith quit as Work and Pensions Secretary and launched an all-out attack on the “indefensible” Budget.
Stephen Crabb is to take over from Mr Duncan Smith, while Alun Cairns has been promoted to the role of Welsh Secretary.
In a brutal parting shot last night, Mr Duncan Smith complained that cuts to disabled benefits in George Osborne’s financial package were politically driven and the Chancellor had undermined the principle of “all in this together”.
In his resignation letter, Mr Duncan Smith wrote: “I have for some time and rather reluctantly come to believe that the latest changes to benefits to the disabled and the context in which they’ve been made are a compromise too far.
“While they are defensible in narrow terms, given the continuing deficit, they are not defensible in the way they were placed within a Budget that benefits higher earning taxpayers. They should have instead been part of a wider process to engage others in finding the best way to better focus resources on those most in need.
“I am unable to watch passively whilst certain policies are enacted in order to meet the fiscal self-imposed restraints that I believe are more and more perceived as distinctly political rather than in the national economic interest.”
Mr Duncan Smith has been at loggerheads with Mr Cameron and Mr Osborne over whether Britain should stay in the EU, joining a handful of other Cabinet ministers in calling for Brexit.
But his letter to the Prime Minister indicated that the row over cuts to the Personal Independence Payment (PIP) had been the last straw.
His announcement came hours after the Treasury signalled a humiliating climbdown over the plans to change PIP assessment criteria, which were expected to slash around £1.3bn a year off the cost.
Government sources said they wanted to kick the proposals - initially announced by the Department for Work and Pensions last week - “into the long grass” and were not “wedded” to the savings figures featured in the Budget.
Mr Osborne has also retreated on two other Budget issues that ran into strong opposition from Tory backbenchers - promising legislation next week to abolish the so-called “tampon tax” and ruling out higher VAT on solar panels and energy efficiency equipment.
In his letter responding to Mr Duncan Smith, Mr Cameron said he was “puzzled and disappointed” by the decision.
“I regret that you have chosen to step down from the Government at this moment,” he said.
“Together we designed the Personal Independence Payment to support the most vulnerable and to give disabled people more independence. We all agreed that the increased resources being spent on disabled people should be properly managed and focused on those who need it most.
“That is why we collectively agreed - you, No 10 and the Treasury - proposals which you and your department then announced a week ago. Today we agreed not to proceed with the policies in their current form and instead to work together to get these policies right over the coming months.
“In the light of this, I am puzzled and disappointed that you have chosen to resign.”
Labour leader Jeremy Corbyn and Liberal Democrat chief Tim Farron have demanded that Mr Osborne follow Mr Duncan Smith’s example and resign.
Downing Street said Guto Bebb would take Mr Cairns’ previous job as junior minister at the Wales Office and government whip, which was unpaid.
Mr Duncan Smith’s wife Betsy said he would not be making any further statement when she answered the door at his father-in-law’s house in Buckinghamshire on Saturday.
“He will not be making any further statement today, and will not be coming out for photographs,” she said.
Mr Crabb posted on Twitter: “A privilege to be appointed new Work & Pensions Secretary this morning. Looking forward to working with my new team.
“Thanks & very best wishes to the whole team @walesoffice for their support during my time as Welsh Sec.”
Mr Cairns said: “I am privileged to accept the role as Secretary of State for Wales and look forward to being a strong voice at the Cabinet table to make sure that economic growth is felt across all parts of Wales.”
Tory backbencher Stephen McPartland said he had “real problems” with the way Mr Duncan Smith implemented welfare reforms and the former minister had “lost his way”.
“I don’t always see eye-to-eye with the Treasury but it is disingenuous to blame them, when the problem was always in my experience at the very heart of the DWP,” Stevenage MP Mr McPartland wrote on his website.
“We now have a real opportunity to get these welfare reforms right and I am going to fight to ensure changes are for the benefit of those receiving welfare and helping them back into work with practical support.”
SNP leader Nicola Sturgeon posted on Twitter: “IDS resignation may be more about EU than his conscience - but he has struck a fatal blow to #PIP cuts and that’s a good thing.
“@David_Cameron must now reverse the #PIP cuts immediately. If even IDS won’t justify them, it’s time to admit how wrong they are.”
Ministers are braced for further fallout with Mr Duncan Smith due to appear on the BBC’s Andrew Marr show tomorrow.
Here is the resignation letter in full:
“I am incredibly proud of the welfare reforms that the Government has delivered over the last five years. Those reforms have helped to generate record rates of employment and in particular a substantial reduction in workless households.
“As you know, the advancement of social justice was my driving reason for becoming part of your ministerial team and I continue to be grateful to you for giving me the opportunity to serve.
“You have appointed good colleagues to my department who I have enjoyed working with. It has been a particular privilege to work with excellent civil servants and the outstanding Lord Freud and other ministers including my present team, throughout all of my time at the Department of Work and Pensions.
“I truly believe that we have made changes that will greatly improve the life chances of the most disadvantaged people in this country and increase their opportunities to thrive. A nation’s commitment to the least advantaged should include the provision of a generous safety-net but it should also include incentive structures and practical assistance programmes to help them live independently of the state.
“Together, we’ve made enormous strides towards building a system of social security that gets the balance right between state help and self help.
“Throughout these years, because of the perilous public finances we inherited from the last Labour administration, difficult cuts have been necessary. I have found some of these cuts easier to justify than others but aware of the economic situation and determined to be a team player I have accepted their necessity.
“You are aware that I believe the cuts would have been even fairer to younger families and people of working age if we had been willing to reduce some of the benefits given to better-off pensioners but I have attempted to work within the constraints that you and the Chancellor set.
“I have for some time and rather reluctantly come to believe that the latest changes to benefits to the disabled and the context in which they’ve been made are, a compromise too far. While they are defensible in narrow terms, given the continuing deficit, they are not defensible in the way they were placed within a Budget that benefits higher earning taxpayers. They should have instead been part of a wider process to engage others in finding the best way to better focus resources on those most in need.
“I am unable to watch passively whilst certain policies are enacted in order to meet the fiscal self imposed restraints that I believe are more and more perceived as distinctly political rather than in the national economic interest. Too often my team and I have been pressured in the immediate run up to a budget or fiscal event to deliver yet more reductions to the working age benefit bill.
“There has been too much emphasis on money saving exercises and not enough awareness from the Treasury, in particular, that the government’s vision of a new welfare-to-work system could not be repeatedly salami-sliced.
“It is therefore with enormous regret that I have decided to resign.
“You should be very proud of what this government has done on deficit reduction, corporate competitiveness, education reforms and devolution of power. I hope as the government goes forward you can look again, however, at the balance of the cuts you have insisted upon and wonder if enough has been done to ensure ‘we are all in this together’.”