Sir Keir Starmer has given in to the demands of rebel Labour MPs opposing his Government’s welfare reform bill in a bid to avoid his first Commons defeat.
The original reforms would restrict eligibility for personal independence payments (PIP), the main disability benefit, and the universal credit (UC) health top-up, aiming to save £5bn a year by 2029/30.
They would apply to both current and future claimants, stripping up to 1.2 million people of thousands of pounds.
Starmer’s plans sparked widespread backlash, including from dozens of Labour backbenchers.
More than 120 of them signed a “reasoned amendment” that would have prevented the Universal Credit and Personal Independence Payment Bill from being heard at its second reading on Tuesday.
Respected MP Dame Meg Hillier, chair of the Treasury Select Committee, spearheaded the charge, which would have killed the bill if selected by the Speaker.
Seeking to win the rebels over, Work and Pensions Secretary Liz Kendall told Labour MPs that current recipients of the UC health element and PIP claimants will continue receiving the benefits. The planned cuts will only apply to future recipients.
Here, The i Paper explores why the Government will still need to push through with the welfare reform bill – and the dangers posed by its latest U-turn.
Surging welfare bill
The Government’s savings following its U-turn are expected to drop from £5bn a year by 2029/30 to as low as £2.5bn, according to the Institute for Fiscal Studies (IFS).
Meanwhile, the benefits bill is forecast to rise by an average of £2.9bn each year until 2028/29, meaning the savings may not be enough to cover the rising cost of welfare.
This has sparked concerns that tax rises to fill the financial gap created by the U-turn will be introduced in the autumn budget.
IFS associate director Tom Waters warned the “changes more than halve the saving of the package of reforms as a whole, making the Chancellor’s already difficult budget balancing act that much harder”.
Downing Street declined to rule out tax rises in the autumn to pay for the welfare concessions, saying instead there will be “no permanent increase in borrowing”.
A No 10 spokesman said: “We’ll set out how this will be funded at the Budget, alongside a full economic and fiscal forecast in the autumn, in the usual way.”
Asked whether the Government could say there would be no tax rises to pay for the changes, the spokesman said: “As ever, as is a long-standing principle, tax decisions are set out at fiscal events.”
Rise in PIP claims
Most of the Government’s planned savings would come from the planned cuts to PIP, which helps people cover extra costs relating to long-term ill health or a disability.
The daily living component of PIP is intended to help people in England, Wales and Northern Ireland with the extra costs of daily tasks such as preparing food, washing and dressing, if they are disabled or in ill health.
Without any reforms, the number of people claiming PIP was set to double this decade from 2 million to more than 4 million, the Government warned.
The original reforms to PIP were forecast to save £4.5bn a year by the end of the decade
But following the government’s U-turn, the reforms will only apply to new PIP claimants from November 2026, meaning around 370,000 existing claimants will be exempt.
The IFS estimated that this will allow these claimants to benefit by £4,150 on average each year.
There will also be a knock-on impact for around 50,000 claimants of carer’s allowance who look after a PIP claimant, allowing them to receive £4,340 per year, the IFS said.
This means the U-turn on PIP reforms is expected to cost around £2bn.
Rise in UC claims
The original reforms to the health element of UC would freeze it for existing claimants at £97 per week until 2029/30.
Meanwhile, the UC health element, which is an extra payment for people whose ability to work is limited by a physical or mental health condition, would be reduced for new claimants to £50 per week in 2026/27 and then frozen until 2029/30.
An estimated 2.25 million current recipients of UC would be impacted by the freeze, taking an average hit of £500 per year, Government figures show.
A further 730,000 future recipients of UC health would sustain an average £3,000 loss per year.
The reforms would have raised an estimated £3bn in 2029/30.
Following the Government’s U-turn, 2.25 million existing recipients will see a rise in line with inflation, and the most severe cases out of 730,000 new claimants will no longer see this halved.
This is expected to cost up to £1bn.
Drop in economic activity due to long-term illness
A surge in long-term illnesses forcing working-age people out of employment has fuelled the rise in welfare claims.
One in 10 people of working age were claiming a sickness or disability benefit, according to figures released by the Department for Work and Pensions in the spring.
The number of people claiming health-related benefits with no requirement to work has increased by 800,000 since 2019/2020 – a rise of 45 per cent.
Economic inactivity due to long-term sickness has skyrocketed, rising from around 15,000 in the first three months of 2020 to more than 438,000 during the same period in 2023.
Since the pandemic, there has also been a surge in the claims for the 20 most common conditions people receive PIP for.
Claims for arthritis rose by 36 per cent between October 2019 and the same month in 2024.
Meanwhile, claims for mixed anxiety and depression more than doubled, from 223,433 in October 2019 to 454,387 in October 2024.
Read More Details
Finally We wish PressBee provided you with enough information of ( The charts that show why Starmer had to act on benefits bill )
Also on site :
- Are You Showering at the Wrong Time? Health Experts Weigh In
- Seldom Seen Iconic Late Night Talk Show Host, 75, Steps Out on Red Carpet As He & Wife Navigate Health Issues
- RHOM star Larsa Pippen got ‘boob job, nose job, BBL and fillers’ to look like a ‘doll,’ top plastic surgeon claims