Prime minister forced to concede that black hole will not be filled by further cuts

David Cameron has been forced to concede that a £4.4bn black hole created by the U-turn over disability benefits will not be filled by further cuts to welfare as he fought to shore up his credibility following the shock resignation of Iain Duncan Smith.

The spending climbdown was announced on Monday by Stephen Crabb, the new work and pensions secretary, an hour after Cameron addressed the political crisis engulfing the Conservative party by offering his support to George Osborne and praise for the work of Duncan Smith.

Aiming to strike a conciliatory tone in the Commons, Cameron said Duncan Smith had “contributed an enormous amount to the work of this government” in his work campaigning for welfare reform, which he said had reduced child and pensioner poverty and inequality.

He added that “none of this would be possible if it weren’t for the actions” of his friend Osborne, although the chancellor was not present in the house. Labour MPs repeatedly asked why he had failed to turn up in the House of Commons to sit alongside the prime minister.

In the debate on the budget that followed Cameron’s remarks, Crabb said his department would drop controversial reforms to personal independence payments (PIP), a disability benefit, adding: “We have no further plans to make welfare savings beyond the very substantial savings legislated for by parliament two weeks ago”.



The statement appeared to indicate that the government was ruling out cuts to the welfare budget for the rest of the parliament, but the government clarified the remarks by stressing that there were no plans to fill the £4.4bn gap caused by dropping PIP reforms with further cuts in welfare spending.

Crabb also revealed that the government would review the level of its welfare cap in the autumn statement. But he added that “it is right that we monitor welfare spending carefully”, arguing that the principle of having “discipline” through a cap was right.

The beleaguered Osborne is due to appear in parliament on Tuesday to defend his work by taking the unusual step of speaking in the debate following last week’s controversial budget, which caused anger on his own backbenches and culminated in the resignation of Duncan Smith.



The former work and pensions secretary had accused Osborne and Cameron of protecting wealthy Tory voting pensioners at the expense of the working poor, while a number of backbench MPs were openly attacking his chancellorship.

Adding to the pressure on Osborne, Boris Johnson, now the frontrunner to become the next Conservative leader, told ITV’s Agenda he believed that the cuts to PIP were a mistake. He added: “I think I have already said very clearly that the government has decided collectively and quite rightly to take the PIP aspect of it [the budget] and try to sort it out.”

Osborne will hit back, and is due to tell MPs: “It is a budget of a compassionate, one-nation Conservative government determined to deliver both social justice and economic security. It’s a budget that puts the next generation first.”



He will also address Duncan Smith directly, claiming that he is sorry he chose to leave government. “[I] want to recognise his achievements in helping to make sure work pays, breaking the old cycles of welfare dependency and ensuring the most vulnerable in our society are protected,” he will say.

Bookmakers further lengthened Osborne’s chances of becoming Tory leader, with new odds being offered on how long he will last as chancellor.

David Davis, the senior Tory MP who ran against Cameron for the leadership in 2005, said Osborne’s hopes of becoming leader of the Conservatives if the prime minister quits in the near future have “sunk without a trace”.

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The Tory MP Karen Lumley released a letter that she and colleagues had sent to Osborne before the budget claiming the PIP cuts gave the impression of a “sustained attack on disabled benefits by the government” and could cause long-term damage to its reputation.

While the issue under debate is austerity and whether the government has gone too far in cutting benefits for the poor, the febrile mood on the Tory backbenches has been driven by the fight over Britain’s place in the EU, which is causing the biggest split in the party for two decades.

One cabinet minister told the Guardian that embarking on the referendum was like “pouring petrol” over the party and causing it to “go up in flames”. The minister said that some MPs simple “don’t like the prime minister and never will like him regardless of if he wins elections”.

The minister admitted that some politicians in the party wanted to launch a coup against Cameron on 24 June, the day after the referendum. They – and other MPs – said the most dangerous outcome for the prime minister would be a narrow victory for the Remain camp, which could make Brexit supporters feel “like we were robbed”.

Graham Brady, chair of the 1922 committee of Conservative backbenchers to whom MPs would write if they wanted to trigger a vote of no confidence in Cameron, called for calm. “We know that there are strong passions on both sides of the European debate and it is inevitable there will be tensions and at time the temperature may rise,” he told the Guardian.

“But it is important for the good of the party and credibility of the government that colleagues are careful to be respectful and courteous.”