Osborne to defend 'compassionate' Budget

George Osborne will insist he delivered a "compassionate" Budget despite the abandonment of cuts to disability benefits that have left his plans in disarray.

The Chancellor dismissed Iain Duncan Smith's claim that he was putting the better-off before the most vulnerable as he prepared to face MPs over how he will fill a "huge hole" in his calculations.

Reforms to Personal Independence Payments (PIP) had been due to save a total £4.4 billion from the welfare budget by 2020 as part of Mr Osborne's commitment to reducing benefits spending by £12 billion a year.

But in his first act as Mr Duncan Smith's replacement as Work and Pensions Secretary, Stephen Crabb confirmed they had been dropped and that there would be no further raid on welfare spending to plug the gap.

Mr Osborne - who faced accusations of hiding from the controversy when he sent a junior Treasury colleague to answer an urgent Commons question from Labour - is taking the unusual step of opening the final day of debate on the Budget.

It is believed to be the first time a chancellor has done so for two decades, when Ken Clarke occupied 11 Downing Street.

Mr Duncan Smith stormed out of the Government on Friday, complaining that he was again being forced to make cuts to the most vulnerable while Mr Osborne was handing tax cuts to the better-off, claiming it risked dividing the country.

It left Prime Minister David Cameron battling to heal the wounds of a weekend of in-fighting as he praised both men, but insisted he had not abandoned a "one nation" approach.

Mr Osborne is expected to express regret at the departure of Mr Duncan Smith but insist the poorest and most vulnerable had been "at the heart" of the package he set out on March 15.

"As Conservatives, we know that those who suffer most when Britain loses control of its public finances and the economy crashes aren't the best off but the poorest and the most vulnerable," he will say.

"That's what's informed all we have done over the last six years and was at the heart of the manifesto we were elected to deliver.

"I'm sorry Iain Duncan Smith chose to leave the Government last week, and 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. That's work this government will go on doing.

"We've listened to concerns and, as we made clear last week, we won't proceed with changes to the Personal Independence Payment (PIPs).

'But this Budget will lift 1.3 million of the lowest paid out of income tax, it will deliver improvements to our schools, help the least well-off to save, and support business and enterprise to create jobs and boost social mobility."

Mr Osborne, whose credentials as the next party leader have been damaged by the controversy, will say the Budget delivered on the Conservative manifesto commitment to "economic security, controlling public spending and lower taxes for working people and business".

"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."

Boris Johnson, one of his closest rivals in the fight to succeed Mr Cameron, welcomed the Government's recognition that the PIP reforms had been a "mistake".

But the Mayor of London criticised Mr Duncan Smith's resignation and said his fellow pro-Brexit campaigner was "totally and utterly" wrong to claim the Government was pursuing policies that risked dividing Britain.

"I don't think you can reasonably say this Government has lost touch with its mission to help all the people in this country or to be a one nation Conservative government. That is what some people are now saying and I totally and utterly reject that," he told ITV's The Agenda.

"The Government has decided collectively and quite rightly to take the PIP aspect ... and try to sort it out. It's obvious from what's happened that it's admitted that it was a mistake."

Labour leader Jeremy Corbyn said the decision to abandon the planned cut to PIPs had left an "enormous hole" in the Budget plans which have been criticised on several fronts.

The Government has also been forced to act to defuse backbench revolts on the so-called "tampon tax" and VAT on solar panels.

Mr Corbyn called on Mr Osborne to come to the House to explain why "for the first time in my memory in Parliament, a government's budget has fallen apart within two days of its delivery".

The Chancellor is not expected to bring forward alternative measures to meet the shortfall left by the cancellation of the cuts to PIPs until the Autumn Statement at the end of the year.

Some Tory Eurosecptic MPs had signalled they intended to vote with Labour in an attempt to embarrass the Government over the role of the European Union in setting VAT rates ahead of the referendum on June 23.

However the PM's official spokeswoman said EU leaders had now agreed that VAT could be scrapped on women's sanitary products while the amendment on solar panels simply confirmed the current position while consultations were ongoing.