The welfare reform vote: All you need to know
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North Wales Chronicle
an hour ago
- North Wales Chronicle
The welfare reform vote: All you need to know
Below, the PA news agency looks at what happened, what it means for personal independence payment (Pip) and universal credit, and what might come next. – What have MPs agreed to? MPs voted on Tuesday to allow the Government's Universal Credit and Personal Independence Payment Bill to advance to the next stage in becoming law. Some 126 Labour backbenchers had previously threatened to vote against the legislation, enough to block its passage through the Commons, but in the end only 49 did so. But ministers were forced to offer a series of concessions to persuade the rebels to back the Government. – What concessions did the Government make? Last week, Work and Pensions Secretary Liz Kendall announced a partial U-turn aimed at heading off the rebellion that included three key points. Firstly, changes to Pip eligibility would only come into effect in November 2026, and anyone claiming the benefit before that date would not be subject to the new rules, instead of imposing the changes on everyone. Secondly, people claiming the health element of universal credit, and new claimants with the most severe conditions, would see their incomes protected in real terms. Thirdly, disabilities minister Sir Stephen Timms would conduct a review of the Pip assessment, 'co-produced' with disabled people. But during Tuesday's debate, Sir Stephen offered a further concession, saying any changes to Pip eligibility would only be introduced after his review had concluded, further delaying them. – What do the concessions mean for the Government's proposals? The decision to push back Pip changes to an unspecified date, and leave uncertain the details of what those changes will be, removes a major part of the Government's reform plans. The proposed changes to universal credit remain, raising the standard allowance while halving the health element for most new claimants from April 2026. But the concessions will also pose a problem for Chancellor Rachel Reeves, who will need to find extra money now the expected savings from welfare reform are no longer expected to materialise. Indeed, the Resolution Foundation think tank suggested the concessions meant there would now be no 'net savings' from the reform by 2029/30, a key year for Ms Reeves' fiscal targets. – What happens next? The Government has pledged to make the necessary amendments to remove the Pip changes from the Bill when it returns to the Commons next week. It is then likely to continue through Parliament, becoming law after it has been approved by both MPs and peers. But wider questions remain for the Government. Not only does Ms Reeves face a fiscal headache, but the Prime Minister could face a political one too as he seeks to repair fractured relations with his backbenchers. And uncertainty will continue to surround the Government's plans for welfare reform. Ministers will still want to reduce the cost of the welfare bill and get more people back into work, while Sir Stephen's Pip review could result in another row depending on what it recommends.
North Wales Chronicle
an hour ago
- North Wales Chronicle
Starmer ditches Pip benefit reforms in face of Labour revolt
In a late climbdown as MPs prepared to vote, the Government shelved plans to restrict eligibility for the personal independence payment (Pip), with any changes now only coming after a review of the benefit. The move will cause a headache for Chancellor Rachel Reeves, who has seen a forecast £4.8 billion saving from the welfare budget whittled away through a series of concessions, leaving her to seek extra money through spending cuts, tax hikes or borrowing to balance the books. The Resolution Foundation's chief executive Ruth Curtice said the concessions meant the reforms would now make no 'net savings' in 2029/30 – a key year for Ms Reeves's fiscal targets – even if they did reduce costs in the longer term. The decision to remove the Pip changes from the Universal Credit and Personal Independence Payment Bill was announced just 90 minutes before MPs voted on Tuesday night. The legislation cleared its first hurdle by 335 votes to 260, majority 75. Despite the late concession, there were 49 Labour rebels, the largest revolt so far of Sir Keir's premiership. Work and Pensions Secretary Liz Kendall insisted the Labour Party was '100%' behind the Prime Minister, but acknowledged there were 'lessons to be learned' after the rebellion. She also appeared to express regret over the handling of the issue, saying: 'I wish we had got to this point in a different way.' But Ms Kendall also insisted it was 'really important we passed this Bill', saying: 'We need to make changes, because too many people have been written off, are left to a life on benefits, when being in good work is so important.' The decision to remove key parts of the Bill is remarkable for a Government with a working majority of 165 and after just under a year in office. Tory leader Kemi Badenoch accused ministers of 'utter capitulation' and said the legislation was now 'pointless'. She said: 'They should bin it, do their homework, and come back with something serious. Starmer cannot govern.' Earlier, a Labour rebel attempt to halt the legislation was defeated by 179 votes. A total of 44 Labour MPs including two tellers backed the bid by rebel ringleader Rachael Maskell, who described the Bill as 'unravelling' and 'a complete farce'. A previous effort to kill the Bill had attracted more than 120 Labour supporters, but was dropped after the first partial U-turn on the legislation last week, which restricted the Pip changes to new claimants from November 2026. That date has now been abandoned in the latest climbdown, with any changes now only coming after disability minister Sir Stephen Timms' review of the Pip assessment process. Sir Stephen announced the climbdown in the middle of the debate on the legislation. He acknowledged 'concerns that the changes to Pip are coming ahead of the conclusions of the review of the assessment that I will be leading'. He said the Government would now 'only make changes to Pip eligibility activities and descriptors following that review', which is due to conclude in the autumn of 2026. The concession came after frantic behind-the-scenes negotiations in Westminster involving the Prime Minister, his Cabinet and wavering Labour MPs. Charlotte Gill, head of campaigns and public affairs at the MS Society, said: 'We thought last week's so-called concessions were last minute. But these panicked 11th hour changes still don't fix a rushed, poorly thought-out Bill.' But Jon Sparkes, chief executive of learning disability charity Mencap, said: 'The last-minute change relating to the review Sir Stephen Timms is leading sounds positive and we are pleased that the Government has listened.' He added: 'Disabled people should not have to pay to fix black holes in the public finances.' The Government's concessions have gutted the reforms, leaving only parts of the current Bill still on the table. Proposals to cut the health element of universal credit by almost 50% for most new claimants from April 2026 remain in place, along with an above-inflation increase in the benefit's standard allowance. In an earlier climbdown, Work and Pensions Secretary Ms Kendall said existing recipients of the health element of universal credit, and new claimants with the most severe conditions, would have their incomes 'fully protected in real terms'.
Leader Live
an hour ago
- Leader Live
Welfare U-turn raises questions over Labour's tax plans
The concessions, including the last-minute shelving of plans to restrict eligibility for personal independence payments (Pip), were enough to head off the Government's first Commons defeat on Tuesday evening. But they also removed a key plank of Sir Keir Starmer's welfare reform agenda, delaying changes to Pip until after a review of the benefit not due to conclude until autumn 2026. With no clarity on when the changes will be enacted or what they might entail, the Chancellor now faces a fiscal headache as a forecast £4.8 billion in welfare savings have been whittled away to nothing. Economists at the Institute for Fiscal Studies (IFS) and Resolution Foundation think tanks warned that Tuesday's concessions meant Ms Reeves could now expect no 'net savings' by 2029/30 – a key year for meeting her fiscal targets. IFS deputy director Helen Miller said the move had effectively halved the Chancellor's 'margin of error' against her main fiscal rule, once again raising the possibility of tax rises in the autumn. On top of that, a stuttering economy and global instability could mean she has even less room for manoeuvre than expected. Ms Miller said: 'Since departmental spending plans are now effectively locked in, and the Government has already had to row back on planned cuts to pensioner benefits and working-age benefits, tax rises would look increasingly likely.' The Resolution Foundation's Ruth Curtice agreed that there would be no savings in 2029/30, but suggested changes to universal credit – almost the only part of the Government's proposals still standing – could save money in the longer term. On Wednesday morning, the Conservatives accused Labour of making billions in unfunded spending commitments, including both the U-turns on welfare and the partial reinstatement of winter fuel payments. In a letter to Ms Reeves, shadow chancellor Sir Mel Stride demanded to know where the money was coming from, asking: 'Will you raise tax or increase borrowing?' Ministers have repeatedly insisted that Labour will not raise taxes on 'working people', specifically income tax, national insurance or VAT. But Ms Reeves also remains committed to her 'iron clad' fiscal rules, which require day-to-day spending to be covered by revenues – not borrowing – in 2029/30. Meanwhile, Sir Keir himself will face a grilling from MPs on Wednesday as he attempts to repair relations with his backbenchers. The weekly session of Prime Minister's Questions comes just a day after 49 of his own MPs voted against his welfare reforms – the biggest rebellion of his premiership so far – while several backbenchers described the Government's handling of the issue as 'chaotic' and 'a shambles'.
