Latest news with #welfarecuts
The Sun
3 days ago
- Business
- The Sun
Tories will join with rebel Labour MPs and vote AGAINST welfare cuts to try to defeat Keir Starmer
TORY leader Kemi Badenoch will attempt to inflict a humiliating defeat on Sir Keir Starmer by ordering her MPs to vote against the sickness welfare cuts. The Conservatives will team up with Labour rebels in a bid to defeat the package, which is expected to shave £5billion off the bloated benefits bill. 1 Around 100 Labour MPs have signed a letter to Sir Keir warning that they will not support his cuts when the vote comes before Parliament later this month. The PM has a working majority of 165, while the Tories have 120 MPs. It means that if the Conservatives team up with a large band of Labour rebels they could inflict a defeat. The Tories will oppose the plans on the basis that the cuts do not go far enough. A government source said: 'We could lose the vote if the Tories team up with Labour MPs to vote against the measures. "The rebellion is going to be awful. There will be MPs in tears. It will breed some real resentment towards No10 and it could even cause a permanent rift.' Work and Pensions Secretary Liz Kendall has claimed the reforms will get more people into work and protect the benefits system. Speaking earlier this month, she said: 'Unless we reform the system to help those who can work to do so, unless we get social security spending on a more sustainable footing . . .the risk is the welfare state won't be there for people who really need it in future.' Britain's welfare bill has ballooned since Covid. According to official estimates, taxpayers will have to pay a staggering £70billion a year on working-age sickness and disability benefits by 2030.
The Guardian
5 days ago
- Business
- The Guardian
Ministers consider tweaks to soften welfare cuts before key vote
Ministers are considering tweaks to soften their controversial welfare cuts before a crunch vote in parliament next month. The government is examining a potential change that could allow up to 200,000 people to keep their disability benefits by tweaking assessment rules. In March, Labour announced plans to save £5bn a year by overhauling the welfare system, including by cutting personal independence payments for disabled people. The proposals have alarmed many Labour MPs, with more than 100 signing a letter saying they cannot support them ahead of the vote. Ministers are looking at potential tweaks to mollify Labour backbenchers. The Financial Times reported that one of the changes being looked at is a tweak to the proposed Pip assessment rules so that individuals who receive a high overall score continue to be eligible, even if they do not receive at least four points in any category. A government source told the Guardian that this was 'an option they're considering', although sources in Downing Street and Whitehall denied it was on the table. Under the government's planned changes, claimants would not qualify for Pip unless they scored a minimum of four points on a single daily living activity. Assessments score the difficulty from zero to 12 that claimants face in a range of living activities such as preparing and eating food, communicating, washing and getting dressed. Another potential tweak could mean more time is given to claimants who lose access to one disability benefit to apply for other support they may be eligible for. The Times reported this week that benefit claimants could be given longer 'transitional periods' to ease the impact of losing support. Keir Starmer has been under pressure over his welfare cuts since they were blamed for Labour's poor local election results earlier this month. Ministers are looking at potential changes to the disability benefit cuts as a way of staving off a major backbench rebellion against them. Last week the prime minister announced a U-turn over the winter fuel allowance for pensioners, which is worth up to £300 a year and was scrapped from 10 million pensioners in one of the Labour government's first moves last July. At prime minister's questions last Wednesday, Starmer told the Commons he would ease the cut by changing the threshold to allow 'more pensioners' to qualify again. The government has yet to set out more details on what the change will mean, but Angela Rayner said last weekend that the payments would not be restored in their entirety. Nigel Farage has sought to outflank Labour on welfare by committing to fully reinstating winter fuel payments and scrapping the two-child benefit cap. Eluned Morgan, the Welsh first minister, urged the government to scrap the two-child benefit cap on Wednesday and said it was 'damaging for lots of families in Wales'. She has previously criticised the winter fuel cut. Starmer told a press conference on Thursday that he was looking at 'all options' to drive down child poverty when asked if he would like to get rid of the two-child benefit cap. 'One of the proudest things that the last Labour government did was to drive down child poverty, and that's why we've got a taskforce working on this,' he said. 'I think there are a number of components. There isn't a single bullet.'
Daily Mail
27-05-2025
- Business
- Daily Mail
Rachel Reeves 'faces having to hike income tax, NICs or VAT this Autumn' to fill gaping hole in public finances as Cabinet war over spending cuts rages
Fears are mounting of 'inevitable' tax hikes in the Autumn as Cabinet warring over spending and benefits cuts rages. Rachel Reeves faces having to fill a gap of between £10billion and £30billion in the public finances, with growth slowing and Trump's tariffs hitting global trade. The Chancellor's problems have been fuelled after a Labour revolt forced Keir Starmer to commit to partly reversing the scrapping of the winter fuel allowance. The government has also been dropping strong hints about easing the two-child benefits cap, while MPs are fighting to block other mooted curbs to the welfare budget. Ministers are also wrangling bitterly over departmental spending settlements due to be announced next month. Pressure on Labour has been intensified by Nigel Farage moving to woo left-wing voters, promising a full reversal of winter fuel allowance cuts and to ditch the two-child cap on benefits. Closely-watched PMI figures have showed the UK economy losing momentum in recent months Ms Reeves left herself a thin £9.9billion margin to hit her fiscal rules in the Spring Statement, but experts say that has already been wiped out. She has insisted she will not repeat the huge tax raid from the Autumn Budget, when she sent the burden to a new record high. However, there is scepticism about whether further spending cuts will be politically sustainable in the face of Labour resistance. Critics insisted at the time that the plans were not plausible. A leaked memo revealed last week that Angela Rayner put forward an array of tax hikes to pensions and companies as an alternative to benefits cuts. Stephen Millard, acting director of the National Institute of Economic and Social Research (NIESR), suggested Ms Reeves could need to bring in between £10billion and £30billion. He told the Telegraph that scale of revenue could only come from increases to broad taxes such as income tax, national insurance or VAT. 'It is pretty much inevitable now that she will have to raise one of those big taxes,' he said. Shadow chancellor Mel Stride said: 'Rachel Reeves, our tin foil Chancellor, has folded at every turn - rewriting fscal rules and then constantly teetering on the edge of breaking them, while at the same time fuelling speculation over welfare U-turns.'
Times
26-05-2025
- Business
- Times
Welfare U-turns may jeopardise Rachel Reeves's fiscal rules
Rachel Reeves's 'iron-clad' fiscal rules will be 'touch and go' if the government restores winter fuel payments for pensioners and scraps the two-child limit for benefit claims, economists have warned. Sir Keir Starmer is open to scrapping the two-child benefit in the autumn amid a mounting rebellion over welfare cuts, a move which would cost about £3.5 billion. The prime minister has also committed the government to a partial U-turn on reinstating winter fuel payments for pensions, which could cost £1.5 billion. The chancellor is already facing a shortfall of about £60 billion in the public finances because of anaemic levels of economic growth and the rising cost of government borrowing.
Telegraph
26-05-2025
- Business
- Telegraph
Reeves needs to find £5bn. These are the tax rises she will target
Last week was a costly one for the Chancellor. After the Prime Minister's U-turn on winter fuel payments and amid mounting speculation that the two-child benefit cap could be next, she is facing a £5bn black hole in the public finances. With further welfare or spending cuts off the table, tax rises are inevitable. But which ones? Angela Rayner, the Deputy Prime Minister, has provided a starter for 10 in the memo sent by her department to the Chancellor and revealed by this paper. We looked at most of Rayner's suggestions when I was at the Treasury so I have a good idea what officials will be advising Reeves. Increasing the bank surcharge, an additional tax on the profits of banks and building societies, is seen as relatively straightforward, and it was pointedly not included in the Government's promise to freeze corporation tax. The teams responsible for financial services inside the Treasury will be warning about the impact on the competitiveness of the banking sector and it would certainly run counter to the Government's growth narrative. But it would be popular with Labour MPs and the public at large, and is therefore easy to do. The same could be said for the abolition of inheritance tax relief on AIM shares, a further reduction in the dividend allowance or an increase in dividend tax rates. These are straightforward tax changes, and aligning dividend rates with income tax rates and making AIM shares subject to inheritance tax would certainly be seen by many inside the Treasury as 'good tax policy'. But would the Chancellor really want to double down on the war she has started with investors and entrepreneurs? The property tax suggestions in the Rayner memo were a collection of either small changes that wouldn't raise much, or wholesale interventions into stamp duty that would have knock-on implications for the property market. I suspect these were dismissed quite quickly. Reintroducing the Pensions Lifetime Allowance on the other hand would certainly have got a warmer hearing from officials who were never that keen on Jeremy Hunt abolishing it in the first place. They weren't against raising the allowance, but had concerns about getting rid of it completely. So I wouldn't be surprised if work was underway to reintroduce an allowance of some sort. Whether they can do this without the senior doctors who benefited from its abolition striking over its reintroduction is another matter. The final tax suggestion from the Deputy PM was to continue the income tax threshold freeze for additional rate payers. This alone wouldn't really raise much but the fact that Rayner's memo stated that such a freeze would be 'consistent with the manifesto' was alarming. It is clear that parts of the Government are prepared to argue that freezing thresholds doesn't amount to a breach of their commitment not to raise income tax rates. If that's the case, and given that the Chancellor needs to raise £5bn to plug this black hole, she will have a straightforward political choice. She could announce a damaging set of banking, dividend and inheritance tax changes that would slow growth but close the gap. In doing so she would obviously face a justifiable backlash from the nation's wealth creators. Instead, she could announce a continuation of all income tax and National Insurance threshold freezes, not just those for additional rate taxpayers. This would raise roughly what she needs. We would then be treated to a re-run of the ridiculous spectacle we saw last Autumn, where, having raised National Insurance, the Chancellor said with a straight face that she hadn't. This time she would argue that the manifesto said Labour wouldn't increase income tax rates and ignore the previous sentence that said they wouldn't 'increase taxes on working people'. That is a hard sell. And a promise is broken. As a result, if she only needs to find £5bn I think she'll opt for the hit on banks and entrepreneurs. At least that way she'll 'only' be breaking a relatively recent promise not to 'come back for more tax' from business rather than a manifesto pledge to the wider public. The bad news for the Chancellor though is that having to find just £5bn in revenue is the best case scenario she will be facing in the Autumn. When you add in some or all of the £2bn a year needed for the recent public sector pay rises, a £5bn hit from the negative impact of US tariffs, a £7bn blow thanks to the OBR's treatment of a reduction in net migration and a downgrade in trend productivity growth worth anything up to £20bn a year, you can see why the Chancellor is in real fiscal and political trouble. And why Number 10 is likely thinking of changing the fiscal rules. The Prime Minister's decisions on welfare means Rachel Reeves will have to break some of her promises. She will likely survive doing so if it is only her tax pledges that are broken. But if the situation leads Starmer down the irresponsible road of rewriting Reeves's'non-negotiable' fiscal rules I suspect he will need a new Chancellor. As I said at the start: quite a costly week.
