Sir Keir Starmer has made a significant concession to head off a major Labour rebellion, agreeing that current disability benefit claimants will not lose their support under planned welfare reforms.
The Prime Minister has decided that existing recipients of the Personal Independence Payment (PIP),a benefit that helps cover the extra costs of living with a disability, will be protected. The changes will now only affect new claimants going forward.
The decision dramatically reduces the expected savings from the government’s original welfare shake-up, cutting the projected £4.6 billion by 2029/30 to £3.1 billion, a reduction of around £1.5 billion. This move adds further pressure on Chancellor Rachel Reeves to balance the books in the autumn Budget, potentially forcing tax rises or spending cuts elsewhere.
Starmer’s U-turn comes ahead of a critical Commons vote next Tuesday that could have resulted in the first defeat of his premiership. More than 120 Labour MPs had backed an amendment to block the welfare legislation. Talks between senior government figures and rebel leaders, in which Starmer himself is said to have been involved and led to the revised package.
One prominent rebel described the outcome as major concessions, adding: “We wanted to unite around something better. We are getting there.”
The revised measures are expected to secure the backing of most Labour MPs who previously opposed the plan, although hardline members of the Socialist Campaign Group may still vote against it. The government now appears likely to win the vote with Labour support.
Originally, around 800,000 people were expected to be affected by the proposed PIP changes, including 370,000 current claimants. These individuals will now be spared cuts.
To further placate MPs, the Treasury will bring forward a £1 billion support package aimed at helping people return to work, a measure that was initially scheduled to phase in over several years. This earlier rollout will further strain public finances.
Rebels also pushed for the unfreezing of the health-related component of Universal Credit, which supports people with severe long-term illnesses. While this demand hasn’t been confirmed as granted, several adjustments to the original legislation are said to have been agreed upon during negotiations.
The shift marks another high-profile retreat by the Labour leadership. Last month, the government reversed its decision to scrap the winter fuel payment for most pensioners. Meanwhile, the Chancellor is also reportedly reconsidering her non-dom tax policy in the wake of an exodus of wealthy individuals from the UK.
Conservative shadow chancellor Mel Stride condemned the changes, calling them “yet another screeching U-turn from this weak Labour government.” He warned that the move would burden working taxpayers and called Starmer’s welfare approach chaotic.
“This latest reversal shows Labour has no grip on public spending,” Stride said. “Families across the country will pay the price in higher taxes.”
Economists have also warned that Labour’s fiscal position is becoming more precarious. Ben Caswell, of the National Institute of Economic and Social Research, said the government’s inconsistency risks undermining both political and economic confidence.
With public spending rising and tax revenue constrained, Starmer’s concessions may help him avert a political crisis now, but they could also set the stage for tougher choices in the months ahead.
