Starmer offers major concessions on benefit cuts after crisis talks with Labour rebels
Sir Keir Starmer has caved to a Labour rebellion and offered major concessions to his backbenchers on his planned benefit cuts.
In a screeching £1.5bn U-turn, people currently receiving personal independence payment (Pip) will be protected in a move the prime minister hopes will spare him a humiliating defeat on Tuesday.
Adjustments to universal credit will also see existing claimants' incomes protected, work and pensions secretary Liz Kendall confirmed in a letter overnight.
The U-turn followed crisis talks with backbenchers, with some 126 Labour MPs within the party having signed an amendment that would hve killed the flagship welfare bill. It cuts £1.5bn from the £5bn the government had hoped to save through the changes, and blows a hole in Labour's spending plans that economists warn will need to be filled with either tax hikes or spending cuts elsewhere.
Speaking after the U-turn was announced, care minister Stephen Kinnock refused to say how the £1.5bn shortfall would be made up, pointing to the chancellor's Budget this autumn.
He said he was 'really pleased with the way that the dialogue happened' and that the changes were a 'step in the right direction'. And he went as far as accusing critics of the original welfare proposals of spreading 'misinformation', claiming that Labour had always planned to 'protect the most vulnerable in society'.
Sir Keir's Universal Credit and Personal Independence Payment Bill has its second reading on Tuesday, the first opportunity for MPs to support or reject it. The major concessions announced overnight should be enough to win back the support of tens of rebels and get the measures over the line.
A Downing Street spokesman said: 'We have listened to MPs who support the principle of reform but are worried about the pace of change for those already supported by the system.
'This package will preserve the social security system for those who need it by putting it on a sustainable footing, provide dignity for those unable to work, supports those who can and reduce anxiety for those currently in the system.
'Our reforms are underpinned by Labour values and our determination to deliver the change the country voted for last year.'
The government's original package restricted eligibility for the personal independence payment (Pip), the main disability payment in England, and limited the sickness-related element of universal credit.
Existing claimants 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 by aiming to soften the impact of the changes.
In her letter, the work and pensions secretary said: 'We recognise the proposed changes have been a source of uncertainty and anxiety.
'We will ensure that all of those currently receiving PIP will stay within the current system. The new eligibility requirements will be implemented from November 2026 for new claims only.
'Secondly, we will adjust the pathway of Universal Credit payment rates to make sure all existing recipients of the UC health element – and any new claimant meeting the severe conditions criteria – have their incomes fully protected in real terms.'
She said a ministerial review would ensure the benefit is 'fair and fit for the future' and will be a 'coproduction' with disabled people, organisations which represent them and MPs.
'These important reforms are rooted in Labour values, and we want to get them right,' she said.
The change in Pip payments would protect some 370,000 existing claimants who were expected to lose out following reassessment.
If the legislation clears its first hurdle on Tuesday, it will then face a few hours' examination by all MPs the following week – rather than days or weeks in front of a committee tasked with looking at the Bill.
The so-called 'reasoned amendment' tabled by Treasury select committee chairwoman Dame Meg Hillier had argued that disabled people have not been properly consulted and further scrutiny of the changes is needed.
She said: 'This is a good deal. It is massive changes to ensure the most vulnerable people are protected… and, crucially, involving disabled people themselves in the design of future benefit changes.'
While the concessions look set to reassure some of those who had been leading the rebellion, other MPs remained opposed before the announcement.
Speaking before the U-turn, Rachel Maskell said: 'As the government is seeking to reform the system, they should protect all disabled people until they have completed their co-produced consultation and co-produced implementation.
'I cannot vote for something that will have such a significant impact … as disabled people are not involved, it is just a backroom deal.'
One MP said that ministers would need to 'go back to the drawing board' to make the Bill acceptable.
Another said they expected the legislation would get through second reading if the government conceded the key sticking points relating to existing Pip claimants, the health element of universal credit and a policy consultation.
'It would need to be in the Bill, not just a commitment,' they said.
Speaking in the Commons on Wednesday, Sir Keir told MPs he wanted the reforms to reflect 'Labour values of fairness' and that discussions about the changes would continue over the coming days.
He insisted there was 'consensus across the House on the urgent need for reform' of the 'broken' welfare system.
'I know colleagues across the House are eager to start fixing that, and so am I, and that all colleagues want to get this right, and so do I,' he said.
'We want to see reform implemented with Labour values of fairness.
'That conversation will continue in the coming days, so we can begin making change together on Tuesday.'
There was a 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'.
'It is the right thing to do and sends a clear message – cutting disability benefits is not a fair way to mend the black hole in the public purse,' director of strategy Jackie O'Sullivan said.
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'.
Head of campaigns at the charity, Charlotte Gill, said: 'We urge MPs not to be swayed by these last-ditch attempts to force through a harmful Bill with supposed concessions.
'The only way to avoid a catastrophe today and in the future is to stop the cuts altogether by halting the Bill in its tracks.'
The Tories described concessions as 'the latest in a growing list of screeching U-turns' from the government.
Shadow chancellor Mel Stride said: 'Under pressure from his own MPs, Starmer has made another completely unfunded spending commitment.
'Labour's welfare chaos will cost hardworking taxpayers.
'We can't afford Labour.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Guardian
5 minutes ago
- The Guardian
A broken housing market is driving inequality right across Europe – and fuelling the far right
Housing is as personal an issue as it gets. Homes are where we take refuge from the outside world, express ourselves, build relationships and families. To buy or rent a house is to project your aspirations and dreams on to bricks and mortar – can we see ourselves sitting outside in the sunshine on that patio? It can also be a deeply frustrating process – can we afford that house? For more and more of us, the answer is no. Experienced at such an individual level, it's easy to think that rising costs are a problem particular to your community, city or country. But unaffordable house prices and rents are a continent-wide issue. According to the European Parliament, from 2015 to 2023, in absolute terms, house prices in the EU rose by just under 50% on average. From 2010 to 2022, rents rose by 18%. As an editor, I wanted to know some of the stories behind these stats and, as a person who lives in a very expensive city (hello from London!), hear some solutions. I commissioned a range of housing experts to contribute to a series, The housing crisis in Europe, describing what the situation looks like in some of Europe's most expensive cities. Agustín Cocola-Gant writes about how changes to policy after the 2008 financial crisis encouraged wealthy foreigners to buy second homes or short-term rentals in Lisbon, pricing locals out of their city. Now some Portuguese families rent rooms, not flats. In a reversal of roles, it's the newcomers who have it worse in Amsterdam, according to Amber Howard. Older, long-term residents live in secure and affordable social housing while younger people and recent arrivals, often on lower incomes, are left to the costly and insecure private housing sector. While social housing stock has dropped over time, private stock has increased as politicians sought to encourage wealthier residents to move into the city. It's a similar story in Budapest, says Csaba Jelinek. Social housing was sold off after the end of the cold war, and private ownership was championed as a rejection of socialist values. What this has meant in practice is older Hungarians investing in housing and driving up prices and rents for younger generations. One city not facing an affordability crisis is Vienna. As Justin Kadi writes, since the 1920s the city has had a stable stock of social housing for tenants of all incomes. Like in Amsterdam, newcomers rent privately, but social housing has had a damping effect on rents. You don't need to be a housing expert to see the dynamics playing out in Europe's housing market. Over more than 40 years, housing policy has favoured those who invest in homes at the expense of those who live in them. This power imbalance is at its most stark in countries with big institutional investors – such as private equity, hedge, insurance and pension funds – as Tim White explores in his piece. When houses are not homes but assets, there is a transfer of wealth from those who have not to those who have. Across Europe – and much of the rest of the world – property has become a driving force of inequality. In turn, inequality is a driving force of resentment. Far-right politicians have tapped into this anger for their own political gain, as reported by the Guardian in a previous series of reports from the frontlines of Europe's housing crisis. As the European commissioner for jobs and social rights, Nicolas Schmit, commented: 'The housing problem divides our societies, and it may be a risk for our democracies.' Housing policies are set at a national level, but the European Union can set frameworks and support access to finance. In 2024, all housing ministers from member states signed a declaration calling for a 'new deal' on affordable and social housing. There are solutions, and there is political will, and in the meantime let's hope this series will go some way to helping those who face unaffordable housing across Europe realise they're not alone. Kirsty Major is a deputy Opinion editor for the Guardian
BBC News
7 minutes ago
- BBC News
States of Guernsey to close loop-hole to stop tax avoidance
The States has confirmed it will close a tax loophole as part of plans to help tackle the government's £44m the current law, people are able to create their own personal investment companies, lend them money, and then take it back as loan repayments without paying any guidance has been added to the Statement of Practice M45 "Legal avoidance" to make it clear that if anyone uses this type of company to take money out as a loan repayment, it will be treated as a dividend, and Policy and Resources Committee also approved a proposal to amend the Income Tax (Guernsey) Law, 1978, so the change will be included in the island's 2026 budget. Deputy Lyndon Trott, committee president, said: "When it comes to income tax, we have to ensure that everyone is paying their fair share, including businesses and individuals."But we are even more acutely aware of this at a time when we as a government have a £44 million deficit."This isn't the panacea for our financial woes, but we're taking action to close this loophole to make sure that we're collecting tax that belongs to the public purse."
Leader Live
8 minutes ago
- Leader Live
Welfare reforms: What concessions has the Government made?
Here, the PA news agency takes a look at what the changes are and how Labour MPs and disability groups have reacted. – What had the Government originally planned? In March, reforms to the welfare system – aimed at encouraging more people off sickness benefits and into work – were announced. The Government said the changes, including restricting access to the main disability benefit known as Pip (personal independence payment) and the sickness-related element of universal credit (UC), were expected to make welfare savings of £4.8 billion by 2029-30. With around 1,000 new Pip awards every day – 'the equivalent of adding a city the size of Leicester every single year', the Government argued the current situation was unsustainable. An impact assessment published alongside the Bill included estimates that changes to Pip entitlement rules would see about 800,000 people lose out, with an average loss of £4,500 per year. Changes to UC were expected to see an estimated 2.25 million current recipients of the health element impacted, with an average loss of £500 per year. Overall, as a result of the changes, it was estimated some 250,000 more people, including 50,000 children, across Great Britain were likely to fall into relative poverty after housing costs by the end of the decade. – What concessions have been made? In a late-night letter to MPs, Work and Pensions Secretary Liz Kendall conceded two changes she said would 'strengthen the Bill'. In recognition of the 'uncertainty and anxiety' caused by the proposed changes, she said all current Pip recipients would keep their benefits, saying only new claims from November 2026 will come under the tightened eligibility requirements. An impact assessment had stated that 370,000 current recipients were set to lose Pip entitlement across England and Wales. Ms Kendall also vowed all those currently receiving the UC health element, as well as new claimants meeting the severe conditions criteria, will have their incomes 'fully protected in real terms'. The Work and Pensions Secretary has also promised a review of the Pip assessment, led by social security and disability minister Sir Stephen Timms, which will have input from disabled people 'to ensure the benefit is fair and fit for the future'. – What are disability groups saying? Mikey Erhardt, from Disability Rights UK, accused the Government of 'playing politics with our lives', insisting the Bill must still be pulled. He said the changes will mean 'a benefits system where future generations of disabled people receive less support than disabled people today' and added that, in making the original announcement of cuts, the Government had 'prioritised balancing its books over improving the lives of disabled citizens'. Mr Erhardt added: 'Despite seemingly rowing back on some of the worst aspects of its plans, the Government is still attempting to slash billions of pounds from a system that doesn't provide enough support as it stands.' The MS Society said the Government was simply 'kicking the can down the road and delaying an inevitable disaster', and urged MPs 'not to be swayed by these last-ditch attempts to force through a harmful Bill with supposed concessions'. Food bank network Trussell welcomed the 'significant' concessions but said the proposals 'still present a bleak future for future claimants and still risk placing the Government's commitments to end the need for emergency food and tackle poverty in serious jeopardy'. – What are Labour MPs saying? Dame Meg Hillier, one of the leading rebel voices, described 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.' Health minister Stephen Kinnock said he is confident the welfare reforms – being brought under the Universal Credit and Personal Independence Payment Bill – will pass a vote in the Commons on Tuesday in the wake of the concessions. But some Labour MPs are still not satisfied, with Nadia Whittome saying the concessions are 'nowhere near good enough', vowing to still vote against the Bill unless 'serious' proposals are made to 'protect the dignity of disabled people'. Speaking to the Today programme on BBC Radio 4, she said MPs she had spoken to 'are sticking to their position because we understand that we are answerable to our constituents'. Ms Whittome added: 'If the Government doesn't pull the Bill, doesn't consult properly with disabled people and come back to MPs with a serious proposal that protects the dignity of disabled people, I will vote against and I will be far from the only one.'
