Latest news with #welfarecuts
Telegraph
12 hours ago
- Business
- Telegraph
As Rayner and McSweeney sealed £3bn U-turn, Reeves looked at tractors 140 miles away
Rachel Reeves was looking at tractors when a new £3 billion black hole was blown in the public finances. Thursday was a hi-vis day for the Chancellor, who sported a fluorescent green waistcoat for her visits first to a nursery supplier and then JCB World Headquarters in Rocester, Staffordshire. The business tour was an attempt to drum up interest in the Government's new trade strategy. However, 140 miles south, a huge about-turn on a welfare cuts package that Ms Reeves had personally demanded was being bartered away in her absence. Morgan McSweeney, Sir Keir Starmer's chief of staff who masterminded Labour's huge general election victory, was one of the three figures present to negotiate the new terms. That was notable – the softly-spoken Irishman had been the target of vicious briefings from rebels, some of whom darkly muttered about ousting him in a 'regime change'. Angela Rayner, the Deputy Prime Minister, was the most senior elected figure in the room. As the most prominent Left-winger in the Cabinet, and privately a critic of the welfare cuts when they were first adopted, she was deemed best placed to win rebels over. The third member of the Government's negotiating team was Sir Alan Campbell, a Labour MP since Tony Blair's 1997 victory, who is now Sir Keir's number-cruncher as Chief Whip. Ms Reeves's absence was eye-catching. Would it not have been wise to have the person in charge of the nation's finances in the negotiations as billions of pounds were being bandied around? Apparently not. Treasury sources have waved away the idea that she was out of the loop. Ms Reeves was kept abreast of negotiations by Mr McSweeney personally, taking calls and texts as she toured the nursery manufacturers and construction companies of Middle England. Negotiations between the rebel leaders, who threatened to vote down flagship welfare legislation next Tuesday, and the three Government figures hand-picked to offer concessions did not happen in Downing Street. Instead, it took place in the Palace of Westminster to avoid drawing attention to what had snowballed into the biggest rebellion of Sir Keir Starmer's year-old premiership. 'It was somewhere on the parliamentary estate where you would not expect it to happen,' said a source tapped into rebel strategy. But the location had symbolism, too. This was the home turf not of ministers, but MPs. A total of 127 Labour backbenchers had publicly attached their names to an amendment to effectively kill off the cuts to disability benefit payments. It was enough to comfortably overturn Sir Keir's vast Commons majority, and No 10 knew it. So it was the Government that came, cap in hand, to the rebels – and not the other way round. The rebels were headed by three Labour MPs – Dame Meg Hillier, Debbie Abrahams and Helen Hayes. Each of them leads a Commons select committee, respectively scrutinising the Treasury, the Department for Work and Pensions and the Department for Education. These were not your usual Left-wing parliamentary agitators but moderate, highly respected Labour MPs. The profiles of the masterminds behind the amendment reflected the core strength of the rebellion, and how widely across the Labour backbenches it reached. Meetings had taken place on Wednesday too, but came to a head around lunchtime on Thursday. Critics were said to be pushing for moderate tweaks – perhaps a change in exactly how the new points system would work for recipients of the personal independence payments (Pip). Cuts to Pip, which gives money to people with disabilities to cover the extra costs brought about by their condition, was at the heart of the stand-off. However, the rebels went much further. The rebels insisted central parts of the package, which the Prime Minister had defended as recently as Wednesday and dismissed criticisms as 'noises off', had to go. The Government team, so exposed by the size of a rebellion that had caught them off guard, was left with little power to argue back. And so there was celebration from the three committee heads, whose actions were driven by a sincere concern about the 800,000 disabled people who would lose out under the initial plan. 'Major concessions' had been won, a senior rebel source told The Telegraph on Thursday evening, adding: 'We wanted to unite around something better. We are getting there.' As news of the victory spread, the full scale of the concessions began to leak. Gone was the plan to cut Pip from existing claimants, meaning 370,000 disabled people would keep their payments in full. Those currently receiving the health top-up to Universal Credit would also be spared. The U-turn also allowed the rebels to reassure constituents that current claimants would not lose out, after MP inboxes had flooded with concerns from residents. There were other concessions too, such as speeding up the new £1 billion fund to help people get back into work and a promise to properly consult with disability charities before the new system kicks in. In a sign of how scrambled negotiations had been, Liz Kendall, the Work and Pensions Secretary who put the initial package together, sent a letter out to Labour MPs explaining the new deal at 12.27am. Formal government communications issued after midnight are usually a tell-tale sign that all is not going to plan. The rebels had won. The Iron Chancellor's tab But Ms Reeves now has to pick up a tab. The promise that current Pip and Universal Credit recipients will remain untouched is a costly one. The rollback of the benefits cuts has created an estimated £3 billion dent in original savings of £4.6 billion savings from the original package. Given it was Ms Reeves herself who insisted that the cuts were announced before her spring statement in March to help balance the books, it is hard to not read the climbdown as a Treasury defeat. The Chancellor is already facing an incredibly tough autumn Budget. Worsening economic forecasts and increased government debt interest payments mean she is at risk of missing her promises to control borrowing. But No 10's newly-found penchant for U-turns is making her task much harder. The recent reversal on the winter fuel payment cut lost her £1.5 billion. Sir Keir has also hinted at lifting the two-child benefit cap, which would cost another £3.5 billion. The 'Iron Chancellor' has staked her credibility by sticking to her fiscal rules. A determination not to break them could well mean substantial tax rises are coming, clashing with another of her past positions – that she would not impose more tax rises before the general election. Reeves in 'deep trouble' Those in the Chancellor's inner circle insist there are still a 'huge number of moving pieces' between now and the autumn Budget, including new growth and productivity forecasts, energy price changes and interest rate decisions from the Bank of England. Officials widely expect the Bank to cut rates in the coming weeks, in line with external forecasts, which would reduce the cost of borrowing for the Treasury. The Office for Budget Responsibility's (OBR) latest forecast predicts that debt interest payments will exceed £100 billion in this financial year – accounting for more than eight per cent of total public spending. But polling shows that two thirds of Labour MPs oppose the party's fiscal rules, and see breaking them and borrowing more as the best solution to the Chancellor's dilemma. 'It's hard to forgive her for where we are now,' said one MP. 'She chose to target the poorest.' There are few MPs now openly discussing Ms Reeves leaving the Government, but most are calling for a 'reset' in Downing Street, and for Sir Keir to consider his political strategy more carefully. One rebel said simply that based on the economic statistics alone, the Chancellor is in 'deep trouble'. Dr Simon Opher, another of the rebels, said: 'The changes do not tackle the eligibility issues that are at the heart of many of the problems with Pip. 'The Bill should be scrapped and we should start again and put the needs of disabled people at the centre of the process.' On Friday, some rebels were vowing to continue the fight. Members of the Socialist Campaign Group, made up of a few dozen Left-wingers, plan to vote against the welfare legislation on Tuesday. Exact numbers remain to be seen. But government insiders and decisive rebel leaders are confident enough critics will support the new package that the legislation will comfortably pass. The Chancellor is left to clean up the mess. She could yet still dig herself out of this growing fiscal hole come autumn – but it may well be the public that ends up paying.
Irish Times
15 hours ago
- Business
- Irish Times
Starmer shifts welfare cuts to new applicants only, in bid to avert Labour rebellion
UK prime minister Keir Starmer sharply scaled back planned welfare cuts on Friday to quell a rebellion by lawmakers in his governing Labour Party , the latest dent in his authority just a year after winning power. Planned changes to make it tougher to collect some disability and sickness benefits would now apply only to new applicants, while the millions of people who already rely on the benefits will no longer be affected, the government said. More than 100 Labour MPs had publicly opposed Mr Starmer's reforms, which sought to shave £5 billion (€5.8 billion) a year off a rapidly rising welfare bill. The revolt had meant Mr Starmer faced a potential defeat in a vote on the changes in parliament next week – a year after he won a landslide majority in a national election. READ MORE '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,' a spokesperson for Mr Starmer's office said. [ Vote on Keir Starmer's disability cuts Bill faces major challenge from Labour rebels Opens in new window ] In a letter to MPs, work and pensions minister Liz Kendall confirmed that only new claimants would be subject to the planned tightening of eligibility. 'Our reform principles remain; to target funding for those most in need and make sure the system is sustainable for the future to support generations to come,' Ms Kendall said. Labour MP Meg Hillier, who chairs an influential parliamentary committee and had spearheaded the efforts to water down the Bill, welcomed the government's move as 'a good and workable compromise'. The government did not set out the cost of the change in policy. Care minister Stephen Kinnock said that details would come in the next budget, which is due in the autumn. Ruth Curtice, chief executive of think tank Resolution Foundation and a former senior finance ministry official, said the compromise would reduce the government's savings by about £3 billion a year of the original planned £5 billion. A spokesperson for Mr Starmer said details of the plan would be set out before the vote on Tuesday, but 'these changes will be fully funded, there will be no permanent increase in borrowing'. The spokesperson declined to comment on possible tax rises. It was the third big U-turn for Starmer's government, following a reversal in unpopular cuts to payments to pensioners for fuel to heat homes in the winter, and a decision to hold an inquiry into the authorities' response to gangs that groomed girls for sex, after having said no such inquiry was needed. [ Irishman Morgan McSweeney: the softly-spoken chief of staff to Keir Starmer now facing questions Opens in new window ] Mr Starmer has argued that Britain's disability benefits system is too costly to sustain, and makes it too difficult for people who can work to do so, by penalising them for their earnings. Campaigners said that even if existing claimants are exempt, the changes would still harm too many people. Disability UK, a charity, said it rejected a 'two-tier system' that would deny new claimants benefits that existing claimants can receive. 'It is not a massive concession to have a benefit system where future generations of disabled people receive less support than disabled people today,' said Mikey Erhardt, the group's policy lead. The opposition Conservative Party's work and pensions policy chief, Helen Whately, said the decision was humiliating for Mr Starmer, and represented a missed opportunity to cut the welfare bill. 'Starmer ducked the challenge – leaving taxpayers to pick up the bill,' she said in a post on X. Annual spending on incapacity and disability benefits already exceeds Britain's defence budget and is set to top £100 billion by 2030, according to official forecasts, up from £65 billion now. But the plans to cut payments to some of the most vulnerable in society have proven particularly painful for MPs in the centre-left Labour Party, which founded the state-run National Health Service and sees itself as the protector of the welfare state built after the second World War. Despite Mr Starmer's concessions, one Labour MP, Peter Lamb, said he would still vote down the Bill 'alone' if necessary. 'To me, it's insufficient when better options have repeatedly been put forward and ignored,' Mr Lamb said on X. – Reuters (c) Copyright Thomson Reuters 2025
The Independent
15 hours ago
- Business
- The Independent
Starmer's ‘cruel' welfare cuts must be voted down despite concessions, say charities
Hundreds of charities and campaigners have urged MPs to continue to oppose Sir Keir Starmer's welfare cuts despite a late night climbdown from Downing Street, arguing the concessions are a 'desperate attempt to rush through a disastrous piece of legislation'. It comes after the government offered Labour rebels a series of concessions in an effort to head off the prime minister's first major Commons defeat since coming to power. Some 126 Labour backbenchers had signed an amendment that would halt the Universal Credit and Personal Independence Payment Bill in its tracks when it faces its first Commons hurdle on 1 July. Rebels now believe the compromises on offer, which include protecting Personal Independence Payments (PIP) for all existing claimants, will be enough to win over a majority. But charities and campaign groups have slapped down the offer, warning the cuts will entrench poverty and create a two-tier benefits system. Disability charity Mencap warned that the changes will create a 'generational divide in the quality of life for people with a learning disability'. 'Cutting disability benefits is not a fair way to mend the black hole in the public purse,' executive director Jackie O'Sullivan said. Amnesty International warned that the new reforms continue to 'fail on human rights checks', dubbing the concessions 'nothing more than a superficial attempt to get MPs to vote through this cruel and harmful piece of legislation.' 'It will deepen poverty, entrench discrimination, and create a two-tier welfare system that cannot be justified under any circumstances', the organisation said. 'Freezing or cutting benefits for new claimants doesn't prevent poverty, it pushes more people into it, while entrenching income inequality across generations. 'These proposals are not human rights compliant. They are being rushed through without proper scrutiny, transparency or engagement with those who stand to lose the most. 'We urge MPs to stand firm against a Bill that continues to discriminate, harm, and marginalise.' The Disability Benefits Consortium (DBC), a coalition of over 100 disability charities including Scope, the MS Society and Parkinson's UK, echoed Amnesty's remarks - saying the 'supposed 'concessions' to the cuts bill are just a desperate attempt to rush through a disastrous piece of legislation'. They warned the government is 'betraying the next generation of disabled people' by 'pushing the cuts onto future claimants'. 'Why should someone who needs support to wash in 2025 be entitled to PIP, but not someone who has the same needs in 2035? 'If the bill passes in its revised form, it will still push more people into poverty and worsen people's health. We urge MPs to use their power to stop this impending disaster. The bill must be stopped in its tracks.' Meanwhile, Helen Barnard, Trussell's director of policy, said the proposals 'still present a bleak future for future claimants'. While the concessions were welcomed, she warned they still risk 'placing the government's commitments to end the need for emergency food and tackle poverty in serious jeopardy. 'Being disabled isn't a choice. Our fears remain the same, and key MP concerns still remain to be addressed.' 'We urge MPs who stood against the bill to continue to do so, and protect the people these changes will affect in the near future', she added. And the Joseph Rowntree Foundation said new disabled claimants 'will continue to be pushed into deep hardship by these cuts, which should be opposed'. While they said the government has 'listened, grasped the severity of the impact and taken some mitigating actions', the organisation warned that bill overall must 'offer the right support to those who need it without subjecting disabled people to further hardship'. 'At the moment that is not the case for people who may need support in the future', they said. Meanwhile mental health charity Mind said the bill 'remains fatally flawed'. 'If current protections are right for disabled people now, why are they not right for disabled people in the future?' executive director Jemima Olchawski said. The reforms also attracted criticism from Tory leader Kemi Badenoch, who dubbed them the 'worst of all worlds". Speaking to reporters on a visit to Essex, she said: "I think we're seeing a government that is floundering, a government that is no longer in control despite having a huge majority. "I don't see how they're going to be able to deliver any of the things they promised if they can't do something as basic as reducing an increase in spending." Mrs Badenoch added: "What they're doing now with this U-turn is creating a two-tier system ... this is the worst of all worlds." The government's original package had restricted eligibility for PIP, the main disability payment in England, and cut the health-related element of Universal Credit, saying this would save around £5bn a year by 2030. Now, the changes to PIP eligibility will be implemented in November 2026 and apply to new claimants only while all existing recipients of the health element of Universal Credit will have their incomes protected in real terms. Work and Pensions Secretary Liz Kendall confirmed the U-turn in a letter to MPs late on Thursday night, along with plans for a review of the PIP assessment to be led by disabilities minister Sir Stephen Timms and 'co-produced' with disabled people. While the revised bill is now expected to pass through the Commons on Tuesday, it is understood that a number of Labour MPs are still planning to vote against it, believing that the adjustments don't go far enough to mitigate their concerns. 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 disability 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.' A Number 10 spokesperson 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.'
Telegraph
18 hours ago
- Politics
- Telegraph
Kemi should stop playing political games
After the Prime Minister's latest U-turn, Tuesday's vote on the Universal Credit and Personal Independence Payment Bill may not now be as traumatic for the Government. It does though still pose a challenge for the credibility and future electability of the Conservative Opposition. In the next few days, the Government's whips will be counting the votes to see if the Government's concessions will be enough to avoid defeat. As I write, the rebellion looks to have been quelled and so it is unlikely that the votes of Conservative MPs will make a difference. But the dilemma for the Tories remains: vote against the reforms in a vain attempt to defeat the Government or vote for reforms they believe in. Kemi Badenoch has said the welfare cuts don't go far enough. Her party would only vote with the Government if they pledged further cuts in welfare spending, created more jobs in the economy and ruled out tax rises in the next Budget. These sound like impossible conditions to fulfil, particularly by Tuesday. Kemi knows this. Her conditions were not designed to be met. Their purpose was purely to provide an excuse for Conservative MPs to vote with the Labour rebels to defeat the Government. Or put it another way, Conservative MPs would be whipped to vote against cuts they knew they would have to make if they were in government. There is no excuse for such cynical politics. As a result, the reforms will now yield smaller savings for the Exchequer. I have been in the position of Conservative MPs. I understand their dilemma. I'm also convinced that recent political history demonstrates why the Conservative Party needs to vote with the Government in these circumstances. I was a new Conservative MP with just three years of experience in the year 2000 when the Conservative Opposition faced a similar predicament. Tony Blair's Government was proposing to reform the air traffic control service (NATS) and turn it into a 'public private partnership'. The previous Conservative government had similarly planned to privatise NATS but they ran out of time. Just like today, a rebellion was stirring amongst Left-wing Labour MPs hostile to any form of private sector involvement in managing our skies. To my shame, I voted with my Conservative colleagues as we were whipped into the same voting lobby as those Labour rebels, in an attempt to stop something we actually thought was good for the country. We claimed it wasn't the right kind of privatisation; it didn't go far enough. Just as today the Conservatives are arguing that the Government's benefit cuts are the wrong kind of cuts. What we meant was we wanted to defeat the government. Still smarting from an historic defeat, we were playing political games, and everyone knew it. As it turned out the Blair Government defeated the rebels and won the Nats vote with a majority of 93. The Conservatives went on to another historic election defeat at the 2001 General Election. Fast forward to 2006. Blair's flagship Education Bill sought to redefine the role of local authorities in the running of our 23,000 state schools, giving schools more autonomy, freeing them from the dead hand of local council bureaucracy. These were reforms that the then leader of the Conservative Party, David Cameron, strongly believed in and they were an important element of our emerging education policy. But many centrist and Left-wing Labour MPs were deeply unhappy and, like this week's welfare reform measures, it looked like it was headed for defeat. On Second Reading 52 Labour MPs voted against the Government but, because David Cameron took the principled decision to support the Bill, it passed. And at each subsequent vote Conservative MPs voted with the Labour Government and against the rebels and thereby secured its safe passage into law. Labour had its Bill. The Conservatives had credibility because we had voted for what we believed in. This was a seminal moment for David Cameron and the Conservative Party. It showed an Opposition serious about its role and ready for government. So, it's decision time for Kemi. They can follow Reform down a road of dishonest populism – making promises that cannot be delivered and offering false hope – or they can stake out a position that is all their own. They can tell the truth about the choices the country faces and set out policies to deal with them. They can demonstrate principle, integrity and seriousness about what's right for our country. They can demonstrate in Kemi's words that her Conservative Party has changed. Or they can try to score cheap political points. For the sake of the future of the Conservative Party I hope they make the right choice.
The Independent
a day ago
- Business
- The Independent
Starmer expected to announce £2bn welfare concessions sparking tax rise fears
Sir Keir Starmer is expected to announce major concessions on his controversial welfare cuts as concerns grow the government will need to raise taxes in order to pay for the dramatic climbdown. After a day of crisis talks with rebel Labour MPs, The Independent understands the prime minister has agreed to water down his package of reforms, including protecting PIP payments for all existing claimants, meaning only new claimants would be subject to tougher rules. The concessions could shave up to £2bn off the £5bn worth of planned savings from the bill, and follow Downing Street refusal to rule out tax rises for any changes. More than 120 Labour MPs signed an amendment that would effectively kill the welfare cuts off, piling pressure on the prime minister to back down amid fears his bill could be defeated at its second reading next week. Asked whether the government accepts that it would be forced to hike taxes if it waters down the legislation earlier on Thursday, the prime minister's official spokesperson said ministers wanted to get the changes 'right', adding that the chancellor would take tax decisions 'in the round in the future'. The row comes as top economists warned that failing to pass the reforms would wipe out Rachel Reeves's financial headroom ahead of her Budget this autumn, meaning a tax rise or cuts to spending elsewhere would be needed to plug the gap. Tory leader Kemi Badenoch said Sir Keir was in the "fight of his life", after the former Labour cabinet minister David Blunkett warned that if his welfare plans were rejected, Sir Keir would face a confidence vote. With tensions running high, there were reports of MPs in tears after discussions with advisers from No 10. Sir Keir insisted on the need for the reforms on Thursday, warning benefits claimants were 'failed every single day' by a 'broken system' but admitted Labour MPs want to see 'reform implemented with Labour values of fairness'. However, rebels told The Independent that any concessions would have to be wide-ranging if they were to be accepted. Currently, the plans set to be voted on this Tuesday restrict eligibility for Personal Independence Payments (PIP), the main disability payment in England, and limit the sickness-related element of Universal Credit (UC). The government hopes the changes will get more people back into work and save up to £5bn a year. Existing claimants will be given a 13-week phase-out period of financial support, a move which had been seen as a bid to head off opposition by softening the impact of the changes, before this week's revolt erupted. The rebellion comes at a time when Labour MPs are growing increasingly critical of the prime minister's attendance in the Commons, with him having voted less in his first year so far than any of his predecessors up to Sir Tony Blair – while forcing his backbenchers into the Commons to take part in tough votes. Labour MP Rachael Maskell, formerly a member of the Commons health and social care committee, told The Independent the government would have to agree to a multitude of changes if they were to win back support. She said: '[Ministers would need to] ... agree a consultation with disabled people, they would need to end cuts to PIP without first replacing this with a fairer system and they would need to not cut Universal Credit, as this still leaves disabled people worse off, as they have significantly higher living costs. Scope [charity] has evaluated this to be over £1,000 a month.' Another Labour MP said the only solution the government could offer was to pull the bill in its entirety and warned that MPs were unlikely to accept much less. "I'm not going to support anything that will put disabled people into hardship,' they said. 'The government have just not been listening. It didn't need to get this far and the fact that it has is just pretty tin-eared to be honest. 'No 10 sees MPs as irritants and fodder. The disrespect that comes out of there... We're all working hard and this is how they treat us. It goes back to the point about how arrogant and out of touch they are." Another Labour MP said parts of the plans were 'unacceptable' and called for 'investment first', to get people access to mental health professionals or off UC and into work, before the cuts were implemented. Meanwhile, the National Institute of Economic and Social Research (NIESR) think tank warned that without passing the reforms, chancellor Rachel Reeves would be forced to raise taxes or cut other spending to meet her self-imposed borrowing rules. Senior economist Ben Caswell said: 'More considered policy could help reduce political churn and the associated economic cost, particularly when consumer and business confidence is already low.' But Scottish Labour leader Anas Sarwar was optimistic the welfare bill would look different by Tuesday's vote, as a third of all Scottish Labour MPs are backing the rebel amendment. Mr Sarwar told the Holyrood Sources podcast: "The bill's not going to look the same... Legitimate concerns should be addressed. We have to support the principle of the reform." But during a speech on Thursday Ms Badenoch suggested the Tories would go even further than Labour, promising to slash £9bn off the welfare bill. She called for a 'fundamental rethink about which conditions should qualify for long-term financial support' saying that a focus on those with 'really severe conditions' would allow the government to save money. 'That's where we should be focusing our efforts,' she said. 'I know it won't be easy. In fact, things are likely to get worse, before they get better.' Earlier on Thursday, trade minister Douglas Alexander claimed that both ministers and the rebels agree that 'welfare needs reform and that the system is broken' and that the disagreement was over the 'implementation to those principles'. Asked about concessions, Angela Rayner, the deputy prime minister, sought to reassure backbenchers that they would not be expected to betray Labour's traditional values. "I haven't changed my Labour values and we're not expecting our benches to do anything that isn't in check with them,' she said in an interview on ITV's Peston programme. "What we want to do is support people, and that is the crucial bit around these reforms of what Labour are trying to achieve, and we're discussing that with our MPs."
