Government climbdown on welfare Bill marks third U-turn this month
Here, the PA news agency looks at three major policy changes this month.
– Welfare reforms
The Universal Credit and Personal Independence Payment Bill was put in motion to change who could qualify for certain disability and sickness benefits.
The package restricted eligibility for Pip, the main disability payment in England, and cut the health-related element of Universal Credit, in a bid to save £5 billion a year by 2030.
But a backbench rebellion of more than 120 Labour MPs forced Sir Keir into a U-turn.
In an attempt to appease those MPs, planned cuts will now only affect future applications for benefits, rather than existing claimants.
– Winter fuel payment
The Government scrapped winter fuel payments for pensioners who do not receive pension credits or other means-tested benefits just weeks after it came to power in July.
It was described as a 'necessary and responsible' move by Chancellor Rachel Reeves, who argued it would help fill the £22 billion fiscal black hole.
The Government said that changing the threshold for the payment would save £1.5 billion each year.
But at the start of this month, the Prime Minister announced that the Government would reinstate winter fuel payments for millions of pensioners.
The payment, worth up to £300, will be restored to the vast majority of pensioners who previously received it because anyone with an income of under £35,000 a year will now get the payment automatically.
The Government said the change will cost £1.25 billion.
– Grooming gangs
Sir Keir has also U-turned on holding a national inquiry into grooming gangs.
In January, the Prime Minister accused those calling for an inquiry of 'jumping on a far-right bandwagon' after tech entrepreneur Elon Musk criticised the UK for its lack of action on the issue.
But following the recommendations of a report by Baroness Louise Casey into the scale of group-based child sexual abuse, Sir Keir announced in June that there would be a full national statutory inquiry.
The Prime Minister had initially only promised five local inquiries in the most prevalent areas for grooming gangs.
Asked about the change, Sir Keir said: 'I've never said we should not look again at any issue.'
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Leader Live
39 minutes ago
- Leader Live
Welfare reforms strike ‘right balance' after U-turn, says Starmer
Speaking for the first time after Downing Street agreed a series of concessions on its welfare policy, the Prime Minister said the climbdown followed a 'constructive discussion' with Labour rebels. He told broadcasters on Friday: 'The most important thing is that we can make the reform we need. 'We talked to colleagues, who've made powerful representations, as a result of which we've got a package which I think will work, we can get it right. 'For me, getting that package adjusted in that way is the right thing to do, it means it's the right balance, it's common sense that we can now get on with it.' Earlier, Work and Pensions Secretary Liz Kendall said the party was in 'a good place' on welfare reform, after offering concessions to rebels late on Thursday. Some 126 Labour MPs had signed an amendment that would halt the Universal Credit and Personal Independence Payment Bill in its tracks when it faces its first Commons hurdle on Tuesday. Leading rebels now believe the concessions on offer, which include protecting personal independence payments (Pip) for all existing claimants, will be enough to win over a majority. However, the fallout threatens to cause lasting damage, as harder line rebels remain opposed to the legislation and some backbenchers have called for a reset of relations between Number 10 and the parliamentary party. But the reversal means Chancellor Rachel Reeves now faces a scramble to fill a potential hole in her budget this autumn, with the cuts now likely to save much less than the £4.8 billion the Government had expected. Economists at the Institute for Fiscal Studies and the Resolution Foundation have both suggested the changes could reduce that figure by up to £3 billion. But Downing Street has so far declined to set out its own figures for how much it now expects to save, or to say how the shortfall will be covered beyond insisting there would be no 'permanent' increase in borrowing and refusing to rule out tax rises. Facing questions about the climbdown on Friday, Ms Kendall denied suggestions she had found it 'difficult' to water down reforms she had so strenuously defended and said the concessions left the Bill in 'the right place'. 'We have listened to people, we have engaged with them,' she said. 'I think we're in a good place now, alongside the huge investments we are putting in to create the jobs that people need in every part of the country… but also to make sure there's employment support for those who can work and protections for those who can't.' The Government has also left the door open to further reform down the line, with Ms Kendall saying there need to be 'changes in the future' to ensure 'people who can work do'. The Government's original package had restricted eligibility for Pip, the main disability payment in England, as well as cutting the health-related element of universal credit. Existing recipients were to be given a 13-week phase-out period of financial support in an earlier move that was seen as a bid to head off opposition. Now, the changes to Pip will be implemented in November 2026 and apply to new claimants only while all existing recipients of the health element of universal credit will have their incomes protected in real terms. The concessions on Pip alone protect some 370,000 people currently receiving the allowance who were set to lose out following reassessment. The changes represent a major climbdown for the Prime Minister, just days after he insisted to reporters he would 'press on' with the cuts, arguing there was a 'moral case' for them. Dame Meg Hillier, one of the leading rebel voices, hailed the concessions as 'a good deal' involving 'massive changes' to protect vulnerable people and involve disabled people in the design of future reforms. She said: 'It's encouraging that we have reached what I believe is a workable compromise that will protect disabled people and support people back into work while ensuring the welfare system can be meaningfully reformed.' But not all the rebels have been satisfied with the changes, with several suggesting they would create a 'two-tier system' and raising questions about who would be classified as a new claimant after November 2026. One told the PA news agency that discontent and low morale among the backbenches would 'continue to fester' without a 'wider reset' of relations between Number 10 and the Parliamentary Labour Party. Another accused decision-makers in Government of operating as an 'exclusive club' and showing 'disregard' for both its MPs and experts outside Westminster, while some claimed Dame Meg had failed to include other backbenchers in her negotiations. Conservative leader Kemi Badenoch criticised the U-turn, saying the Government's failure to make 'minor savings' on welfare showed they were unable to deal with major issues. Liberal Democrat work and pensions spokesman Steve Darling said his party would continue opposing the Bill, saying the proposed cuts would still 'cause immense damage to some of the most vulnerable'. There was mixed reaction among charities to the prospect of concessions. Learning disability charity Mencap said the news would be a 'huge relief to thousands of people living in fear of what the future holds'. But the MS Society urged rebels to hold firm and block the Bill, insisting any Government offer to water down the reforms would amount to 'kicking the can down the road and delaying an inevitable disaster'.
Leader Live
40 minutes ago
- Leader Live
What does the UK spend on welfare – and how much will it rise?
Here, the PA news agency looks at the latest figures and projections for social security and welfare expenditure. – How much does the UK spend in total? The Government is forecast to have spent £313.0 billion on welfare in 2024/25, according to the Office for Budget Responsibility (OBR). This is the equivalent of 10.9% of UK GDP (gross domestic product, or the total value of the economy). The OBR forecasts annual spending on welfare to reach £373.4 billion in 2029/30. This is up £60.4 billion on the figure for 2024/25 – an increase of nearly a fifth. Welfare spending as a proportion of GDP is forecast to fall slightly to 10.8%, however. – What takes up the biggest share of the welfare budget? Spending on pensioners. Some £150.7 billion was spent on pensioners in 2024/25, accounting for nearly half (48%) of the total welfare budget. Besides the state pension, this spending also includes pensioner housing benefit, pension credit and the winter fuel payment. Spending on pensioners is forecast to reach £181.8 billion by 2029/30, but this would still be just under half (49%) of the full welfare budget. – How does the rest of the welfare budget break down? The next largest chunk of spending goes on Universal Credit, which made up 28% of the 2024/25 budget (£87.8 billion). It was followed by disability benefits at 13% (£41.4 billion) and child benefit at 4% (£13.3 billion), with other types of spending – including social security in Northern Ireland – accounting for 6% (£19.9 billion). – Is spending set to increase for all types of welfare? No. The child benefit budget is forecast to remain largely flat, at £13.6 billion in 2029/30, compared with £13.3 billion in 2024/25. By contrast, spending on disability benefits is forecast to jump to £56.3 billion by 2029/30, up from £41.4 billion in 2024/25. Spending on Universal Credit will reach £99.0 billion, up from £87.8 billion. – Why is welfare spending rising? The OBR identifies two main drivers of the increase. The first is higher spending on pensioners. This is because of the UK's ageing population and the 'triple lock', which guarantees pensions will rise each year by whichever is highest: the annual rate of inflation, average growth in earnings, or 2.5%. Of the forecast £60.4 billion extra spending on welfare in 2029/30, pensioners are responsible for just over half of the amount, at £31.3 billion (51%). The second factor identified by the OBR as driving an increase in welfare spending is the rise in people eligible for health and disability benefits. Spending on disability benefits, which includes disability living allowance and personal independence payments, accounts for £14.9 billion (25%) of the £60.4 billion extra spending on welfare in 2029/30. – How does spending on health and disability benefits break down by age group? The OBR defines health and disability benefits as covering the following entitlements: the standard allowance and health element spending for Universal Credit claimants; employment and support allowance; incapacity benefit; severe disablement allowance; income support for incapacity; disability living allowance; personal independence payment; attendance allowance; spending on the Universal Credit carer's element; carer's allowance, and income support for carers. Spending on all these benefits was estimated to be £75.7 billion in 2024/25, three-quarters of which (75% or £56.9 billion) went to working-age adults. Just under a fifth (19%, or £14.2 billion) went to pensioners, while 6% (£4.5 billion) went to children. Although the amount spent on health and disability benefits is forecast to rise to £97.9 billion in 2029/30, the proportions are expected to remain broadly the same: 74% on working-age adults (£72.3 billion), 19% on pensioners (£18.3 billion) and 7% on children (£7.0 billion). – How does welfare spending compare with other government departments? In 2023/24, actual spending on health and disability benefits was £66.3 billion. This was more than than the total departmental expenditure on defence (£57.6 billion) or transport (£32.6 billion), but well below the figure for education (£127.0 billion) and overall health and social care spending (£196.7 billion), according to the latest Treasury data. Total expenditure by the Department for Work & Pensions (DWP) stood at £275.1 billion in 2023/24, up from £239.1 billion in 2022/23 and the highest figure among all government departments. – What proportion of total government spending goes on welfare? The DWP's total spend of £275.1 billion in 2023/24 made up just over a quarter (26%) of all spending by Government departments. The next largest portions were taken by the Department of Health & Social Care (19%), Education (12%) and the Treasury (8%). The estimated total welfare budget of £313.0 billion in 2024/25 made up 24% of all Government expenditure (£1.28 trillion). This is forecast to rise slightly to 25% in 2029/30.
Leader Live
40 minutes ago
- Leader Live
Labour MPs demand ‘reset' in relations with Number 10 after welfare U-turn
A late-night climbdown on welfare cuts from Number 10 may have seen off the threat of Sir Keir Starmer's first major Commons defeat, with rebels suggesting they now expect the Universal Credit and Personal Independence Payment Bill to pass its first hurdle on July 1. But speaking to the PA news agency, a number of Labour backbenchers expressed deeper frustration with how Downing Street has handled its backbenchers since last year's election. One warned that discontent and low morale among MPs would 'continue to fester' without a 'wider reset' in relations between Number 10 and the Parliamentary Labour Party after 'a year of poor party management'. Another accused decision-makers in Government of operating as an 'exclusive club' and showing 'disregard' for both backbenchers and experts outside Westminster. They told PA: 'I think the Government have got to stop pretending they know everything and start listening, because they might learn something.' Several backbenchers pointed to the Prime Minister's words at a press conference on Wednesday, in which he referred to keeping a 'focus on the change that we want to bring about' rather than the 'noises off'. Although Government sources suggested Sir Keir was talking in more general terms, rebels have taken his 'noises off' comment as referring to them. One said: 'A lot of colleagues are sickened at language being used, from the PM's 'noises off' to the senior source saying they thought Keir and Morgan (McSweeney, the Prime Minister's chief of staff) had cleansed the party of self-indulgent rubbish.' But their frustration is not shared by all Labour backbenchers, with others suggesting Friday's U-turn on welfare cuts shows Downing Street is willing to listen. One told PA: 'They're a new team, they're a year in and occasionally teams do need to have a moment where things come to a head and they learn.' Arguing that some backbenchers needed to 'chill out and have a cup of tea', they added they thought the Prime Minister had 'clocked that it's important that we work as part of a team. 'All of us want him to succeed and all of us want the Government to succeed,' they said. A Number 10 spokesman insisted on Friday that the Prime Minister 'remains fully committed to engaging with parliamentarians'.
