George Osborne.
George Osborne. Darren Staples

Cameron and Osborne accused of dividing society

BRITISH Prime Minister David Cameron and Chancellor of the Exchequer George Osborne face the biggest challenge to their authority in six years of power as the Conservative Party descends into civil war over the resignation of Iain Duncan Smith.

The former Work and Pensions Secretary launched a cutting attack on the weekend against the Government's record, saying the PM and the Chancellor risked ''dividing society'' with their approach to public spending cuts.

In his first interview since resigning, Mr Duncan Smith accused opponents of a deliberate attempt to ''be-smirch'' him. This came after Pensions Minister Baroness Altmann claimed his decision to resign had been ''all about Europe''.

As a growing number of Conservative MPs lined up to support Mr Duncan Smith, Downing Street dug in, dismissing his claim that by seeking to cut welfare payments for the disabled, while giving higher earners a tax break, the party was at risk of losing its claim to be a "One Nation" government.

Speaking to the BBC's Andrew Marr Show, Mr Duncan Smith said he had been left ''isolated'' from key decisions before and after last week's budget.

He called the budget 'deeply unfair' and said the Government was 'in danger of drifting in a direction that divides society rather than unites it'.

"I'm not in the business of morality. I simply say that as far as I am concerned the risk is there," he said.

Mr Osborne is facing one of the most challenging weeks of his political career.

The $8.3 billion cuts to personal independence payments (PIPs) - that Mr Smith said sparked his resignation - have been shelved, leaving a gaping hole in the budget.