Well, that was quick. In his letter responding to Iain Duncan Smith's resignation, the Prime Minister has this to say:-
"We collectively agreed - you, No10 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."
It was the disability benefit cuts that triggered the IDS resignation (or, rather, their being used in the Budget to help finance cuts to the higher rate of tax). The £1.3 billion cut was stated as a fact in the Budget, and the money banked. Then it was downgraded to a "suggestion" by Nicky Morgan on Question Time last night. From this letter, it would seem that the Prime Minister has now abandoned the idea - as IDS told him he should have done a few weeks ago. (He had hoped to have a consultation that would last until the summer, and would impress upon the Prime Minister the folly of all this).
For the last two weeks, IDS has been arguing that disability benefit needed reform (the new system was going badly wrong, and claims were surging) but that this had to be treated with the utmost sensitivity. When Tony Blair got this wrong, disabled people chained themselves to the railings of parliament. Blair, who had been all up for "thinking the unthinkable," then gave up on welfare reform. IDS wanted a consultation but, above all, insisted that changes to disability benefits should not be part of the the Budget. He didn't want this seen as part of a quid pro quo.
But the Treasury disagreed, and wanted to start banking expected savings from lower increases in disability benefits - linking them to tax cuts in press reports a week ago, and then formally doing so in the Budget this week. With predictable (and predicted) results. It was a mess, like the tax credit mess. But this time, it was not a mess that IDS was not willing to help No10 clear up.
What's more, the disability reform even seemed set to be defeated in the House of Commons as so many Tory MPs kicked up a fuss. So new Tory MPs like Johnny Mercer would have killed these cuts, even if IDS had not resigned. Which shows the abject failure in communicating this reform: as the below graph shows, disability benefits are rising. Cameron wanted to limit their rise to 40pc rather than 50pc, but general inability to communicate policy (an endemic problem in No10 and No11) means they couldn't persuade their own party, let alone the country.
At least George Osborne is learning from his various Budget omishambles, and seems to have learnt to drop an unpopular policy quickly. It is, after all, a good night to bury bad news.