British prime minister David Cameron and his deputy, George Osborne, suffered their biggest setback yet in their efforts to keep the Tory right on board when Iain Duncan Smith stepped down as work and pensions secretary on Friday.

The outgoing minister accused Osborne, the chancellor of the exchequer and a prospective future Conservative Party leader, of forcing through £4 billion in cuts to disability benefits over the parliament against his will.

Worse, he criticized the cuts within the context of tax relief for high earners, playing into left-wing stereotypes of Conservative callousness that Cameron and Osborne have tried for years to rectify.

Possibly worse yet, Duncan Smith is one of the right’s leading advocates for a British exit from the European Union. His resignation increases the risk that divisions within the Conservative Party over whether or not to stay in the EU will reach such heights in June, when a referendum is due, that it would destabilize the government.

Center ground

Last year, the Conservatives won back their first parliamentary majority in twenty years, allowing them to end an alliance with the centrist Liberal Democrats.

Cameron and Osborne have since resisted calls to lurch to the right, insisting that the party must occupy the center ground of British politics; a center ground Labour has vacated under the leadership of Jeremy Corbyn.

Osborne outflanked the left by introducing a £9 hourly minimum wage and raising the income tax threshold, taking the lowest paid out of tax altogether. Duncan Smith cheered on both measures (literally).

But Osborne also introduced another £35 billion in welfare savings after winning the election last year that are bound to affect many at the bottom of the wage scale.

Crisis

The Financial Times calls Friday’s resignation perhaps the biggest crisis of Osborne’s chancellorship.

Not only has his budget led to the resignation of a senior cabinet minister — Mr Duncan Smith is a former Tory leader respected for his commitment to social justice — the chancellor’s motivation has also been called into question.

The BBC’s Laura Kuenssberg similarly argues that it suggests the government’s mantra that “we are all in this together” is false.

Duncan Smith’s resignation “undermines not just these particular reforms but the whole budget,” she writes.

The Telegraph, a right-wing newspaper, calls it a “watershed moment” for Cameron’s administration.

The Tory civil war has come to the surface, with welfare policy, austerity and Europe as the battlegrounds.

Even if the cuts that were a bridge too far for Duncan Smith are misguided, The Telegraph argues that Osborne is on the right side of the bigger argument, which is that “Britain needs to be a dynamic, low-tax economy to create the wealth that pays for the welfare budget.”

But the paper laments that neither he nor Cameron has made that case well lately.