When Iain Duncan Smith talked about his resignation with David Cameron on Friday night, a long telephone conversation ensued. The Tory leader had been half-prepared for this. People at Number 10 had been muttering for some time that one of the most prominent Brexiters was looking for a reason to resign. In the course of their conversation, the prime minister, anticipating how much mayhem it would unleash in an already febrile Tory party, sought to persuade the other man to hold off until they had a chance to talk face to face. It demonstrates the complete collapse of trust between them that the work and pensions secretary regarded the prime minister’s suggestion not as a sincere offer to try to find a compromise but as a malicious trap.

Iain Duncan Smith resigns from cabinet over disability cuts Read more

As IDS saw things, he was already being set up as the fall guy for the storm over cuts to disability payments and the ensuing rebellion by Tory backbenchers that was forcing the government into a humiliating rapid retreat. This was unjust, in his view, because he had several times warned the chancellor not to include the review of personal independence payments in his budget calculations and had sat in fuming silence on budget morning when George Osborne briefed the cabinet that he would be making specific reference to PIPs in his speech to the Commons that afternoon. “The whole might of government was being put out there to besmirch me,” IDS complained to his friends. The prime minister’s plea for him to delay resigning was just a way of trying to play him, he concluded. Number 10 and the Treasury would use the time to ramp up the briefing against him. So quit he did and in a most sensational fashion.

He got his retaliation in first by issuing a two-page resignation letter that is laced with venom. The principal and undisguised target is George Osborne, who is the subject of a full-frontal assault not just about this specific cut but about the chancellor’s entire modus operandi. He could no longer “watch passively”, writes IDS while “certain policies… are more and more perceived as distinctly political rather than in the national economic interest”. He calls it “not defensible” to announce cuts to disability payments in a budget that also eased the taxes on the more affluent. He goes on to suggest that “we are all in this together”, the government’s mantra over the past six years, is essentially a lie. This is not a novel line of attack on David Cameron and George Osborne, but it is an excoriating one when it comes from the pen of a man who has sat with them in cabinet for six years.

'A compromise too far': Iain Duncan Smith's resignation letter in full Read more

Even before IDS detonated, the chancellor was already under multifronted attack and his latest effort was drawing unfriendly comparisons with his disastrous “omnishambles” budget of 2012. It was coolly received by Tory MPs on the day. Even when he announced measures that were designed to be crowd-pleasers for the right of the party, his MPs received him sullenly, because more than half of them are on the opposite side of the titanic civil war over Europe. Barely had the chancellor sat down than independent experts were ridiculing the budget arithmetic as accountancy tricks and the government was backpedalling on the disability cuts in the face of a Tory rebellion.

So the IDS resignation is a poison dart shot into the chancellor’s flank at a time when he is already badly exposed. It is also an implicit and sustained attack on David Cameron for backing his chancellor in the many internal arguments that have raged between George Osborne and IDS. In his letter responding to the resignation, the prime minister calls himself “puzzled and disappointed”. That is code for saying “this man is mad”. Number 10 has been trying to contain the damage by briefing that the former work and pensions secretary is a ludicrous figure with an ulterior motive. The line from Downing Street is that it was absurd for IDS to resign in protest against a policy that his department had designed, he had defended and that was going to be softened anyway. On the face of it, there is indeed something highly weird about quitting over a cut that the government had started to retreat from.

To make sense of this, we first have to remember that, like most resignations, this is not really a sudden bolt from the blue, but a culmination of feuding within the government that has been going on for a very long time. Mr Duncan Smith and Mr Osborne started to fall out almost from the moment they came into government. The chancellor has long regarded IDS as basically a bit dim and his ambition to reform welfare by introducing a universal credit as a disaster on stilts. Nor was the chancellor terribly cautious about concealing his view that IDS was a liability. For his part, IDS conceived welfare reform as a moral mission, not simply a way to save money and disadvantage opponents. He loathed the way the chancellor framed arguments about benefits as “strivers versus shirkers”. He felt his great legacy project was being undermined by constant salami slicing of welfare whenever the Treasury couldn’t get its numbers to add up. As he writes: “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.”

Many on the left are making the point – and powerful point it is – that is a bit rich for IDS to quit now and present himself as the moral conscience of his party. He spent six years not resigning over welfare cuts and then quits over a welfare cut that may not actually happen.

So why now? At least in part, because it brought to a head a long-running and profound argument about the shape of the welfare state. In the many internal rows on the subject, IDS argued that too much of the pain of austerity was being inflicted on the working-age poor, while pensioner benefits were treated as sacrosanct even when perks such as the free TV licence and winter fuel payments went to wealthy oldsters. Both in terms of social justice and intergenerational fairness, he had right on his side in these arguments, but he was constantly on the losing end of them. His principal enemy was the prime minister, because David Cameron has refused to countenance taking away any pensioner goodies for fear of losing the support of silver voters. During the coalition years, Mr Duncan Smith had a useful ally in Nick Clegg when it came to resisting the most aggressive Treasury demands. Deprived of that support since last year’s election, IDS has been more lonely in his struggles. He came very close to quitting last autumn when George Obsorne made his attempt – subsequently aborted under pressure – to slash tax credits.

In the days building up to his resignation, IDS had come to regret that he had agreed even to contemplate cuts in the disability benefit. That explains the otherwise strange line in his letter that they were “a compromise too far”. He means a compromise too far on his part. Regret turned to fury when the budget backfired and the chancellor’s men tried to divert all the blame in his direction. “That was the final straw,” IDS told one friend. It was this combusting cocktail of both personal feud and policy difference that triggered this resignation.

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Number 10 says it is all really about Europe. Mr Duncan Smith is adamant that it has nothing to do with the referendum. To some extent, it has to be, because nothing happens in the Tory party at the moment that is not entangled with the referendum campaign and the intense passions that it has unleashed. IDS was one of the six ministers attending cabinet who declared for Brexit. One of the little ironies of his resignation is that he played a key role in persuading David Cameron that the prime minister should suspend collective responsibility for the referendum so that Brexiter ministers could campaign for Out while remaining in the cabinet. Since campaigning began, IDS has been the most aggressive voice in the Out gang. He recently accused Number 10 of publishing a “dodgy dossier” about the risks of leaving the EU and complained that they were using “smears” and “bullying”. Deploying that sort of language about the prime minister has infuriated people inside Number 10. Supposing the referendum is won for In, it looked highly improbable that there would still be a seat in the cabinet for IDS. So I do think there was an element of jumping before being pushed about this resignation. Better to go out with a bang now than with a whimper at the end of June.

Back in the day when Iain Duncan Smith was a struggling chief of the fractious Tory tribe and a young David Cameron and a younger George Osborne used to help him prepare for prime minister’s questions, some Conservative MPs had a nickname for their leader. IDS, they gloomily joked, stood for In Deep Shit. Now he has tipped the prime minister and the chancellor into the sticky stuff. By ending his own cabinet career in such an explosive fashion, he surely hopes to hasten the day when their careers are also terminated.