Starmer's benefits Bill turns to farce

Telegraph

01-07-2025

Sir Keir Starmer has rendered his flagship welfare cuts legislation 'pointless' in a farcical climbdown to win the support of Labour rebels.
A planned crackdown on the personal independence payment (Pip), which helps disabled people with extra costs, was dropped just 90 minutes before the crunch vote.
The late concession came when it appeared dozens of rebels were still willing to vote down the package, even though it had already been gutted last week to appease critics.
Even with the change, 49 Labour MPs voted against the Bill – the biggest rebellion of the Starmer premiership, which marks its one-year anniversary this week.
Government ministers faced ridicule from Labour critics, who dubbed the handling of the changes 'shambolic', 'unedifying' and a 'total clusterf--- of Godzilla proportions'.
The U-turn means that almost all of the £4.6 billion of annual savings the Bill was meant to deliver have been lost, increasing the chance of new tax rises this autumn.
Labour Left-wingers are expected to seize on Sir Keir's weakness and push for further policy changes, such as a new raid on wealth or relaxed rules on immigration.
The mishandling of the welfare package, despite a working majority in the House of Commons of 165, is also likely to fuel Labour calls for an overhaul in Number 10.
The Prime Minister threw his support behind Morgan McSweeney, his chief of staff blamed by some welfare rebels, in Cabinet meeting on Tuesday morning.
Kemi Badenoch, the Conservative leader, said: 'This is an utter capitulation. Labour's welfare Bill is now a total waste of time. It effectively saves £0, helps no one into work, and does not control spending.
'It's pointless. They should bin it, do their homework, and come back with something serious. Starmer cannot govern.'
Mel Stride, the Tory shadow chancellor, said 'This farcical climbdown is the most humiliating moment of Labour's first year in office.'
He added: 'This isn't serious government, it's chaos. Labour has bottled welfare reform, left a multi-billion-pound hole in the nation's finances, and set the country on course for higher taxes or a debt spiral. It doesn't have to be this way.'
The total disability and incapacity benefits bill is set to continue rising, from £76 billion last year to £98 billion by the end of the decade, piling pressure on the public finances.
Rachel Reeves, the Chancellor, faces a black hole that some estimates suggest could run to tens of billions of pounds, meaning she risks being forced into a new tax raid in her autumn Budget.
Helen Miller, the deputy director of the Institute for Fiscal Studies, said the changes would not save any money by 2029-30.
She said: 'This is a Government with a majority of 165 that is seemingly unable to reform either pensioner winter fuel payments or working-age disability benefits. That doesn't bode well for those hoping this Government will grasp the nettle and address the deeper, structural challenges facing the UK public finances.'
Labour rebels, some of whom are emboldened by forcing billion-pound changes on the Starmer administration, told The Telegraph they will push for new wealth taxes this autumn.
One Labour rebel told The Telegraph: 'I'd say the new review will last longer than the PM. His sell-by date just got a lot closer after this week.'
Andy McDonald, a Labour MP who voted against the welfare plan, said of wealth taxes: 'It is the broadest shoulders argument. 'Distributed to each according to his need.' That's not Marx, it's the Bible.'
A second Labour rebel told The Telegraph: 'I think it is inevitable. I don't think the Chancellor has got any options left.'
Sir Keir had been facing a huge rebellion last week when 127 Labour MPs – around one in four – signed an amendment to effectively block the Universal Credit and Personal Independence Payment Bill.
In an attempt to quash the revolt last week, Mr McSweeney, Angela Rayner, the Deputy Prime Minister, and Sir Alan Campbell, the Chief Whip, personally negotiated a compromise that meant all current recipients of disability benefits would not be affected by the changes.
Instead, the new system would kick in from November 2026. A review of the most contentious part – toughening the eligibility for Pip – would also return that autumn.
But on Tuesday afternoon, ministers were forced to make yet another alteration, removing the entire section of the Bill referring to changes to Pip.
The sudden extra concession, which removed the most important part of the legislation just before the key vote, suggested government whips were not confident the legislation would pass.
It eventually did by 335 votes in favour and 260 votes against - a much tighter result than expected given how drastically it had been watered down. As well as the 49 Labour MPs who voted against the Bill, 19 abstained.
The concession was announced by Sir Stephen Timms, the minister for social security and disability, during the Commons debate just 90 minutes before votes were due to be called.
It came just hours after Liz Kendall, the Work and Pensions Secretary, had insisted there would be no further changes. Ms Kendall, who told broadcasters there were 'lessons to learn' after the result, was the driving force behind the Bill and is likely to face questions over her position.
Labour rebels were left infuriated that the Government was continuing to force through a Bill which had lost the vast majority of its major elements, rather than pulling the legislation entirely.
Paula Barker, the Labour MP for Liverpool Wavertree: 'Whilst grateful for the concessions, this has further laid bare the incoherent and shambolic nature of this process. It is the most unedifying spectacle that I have ever seen.'
Ian Lavery, the Labour MP for Blyth and Ashington, urged the Government to withdraw the 'hodgepodge of a Bill which means nothing to nobody'.
Ms Lavery said: 'This is crazy, man. This is outrageous, man. This Bill isn't fit for purpose.'
'I went out for a banana – and the whole thing changed'
Mary Kelly Foy, the Labour MP for the City of Durham, expressed shock at what had happened after she returned to the Commons after leaving for a snack.
Ms Foy said: 'I popped out for a banana earlier on and, when I came back in, things had changed again. So I'm even more unclear on what I'm voting on.'
The Tories were also critical of how the legislation had been handled.
Simon Hoare, the Conservative MP for North Dorset: 'I have never seen a Bill butchered and filleted by their own sponsoring ministers in such a cack-handed way.
'Nobody can understand the purpose of this Bill now. In the interest of fairness, simplicity and natural justice, is it not best to withdraw it, redraft it and start again?'
Around 800,000 claimants of Pip had been expected to lose money under the original cuts package, including 370,000 current recipients. The changes have now been shelved.
It means the Government is still expected to spend £28.5 billion on Pip by the end of the decade. Already 3.8 million people get the payments, according to official figures.
Sir Stephen will continue with his review, announced last week as part of the initial concessions deal, into Pip eligibility and report back in Autumn 2026.
But government sources were unable to say if any of the original changes would be kept. That includes the most contentious element, which was to increase the number of points someone must get in an assessment for the payments.
The legislation still contains the halving of the health top-up in Universal Credit for new claimants and the scrapping of the work capability assessment, as well as an increase in the amount of standard Universal Credit.