MPs have backed a Government proposal to reform welfare payments for sick and disabled people - but only after significant concessions were made.
Prime Minister Sir Keir Starmer was forced to abandon a key plank of his welfare reform agenda to get the legislation through its first Commons test.
The Government shelved plans to restrict eligibility for the personal independence payment (Pip), with any changes now only coming after a review of the benefit.
Chancellor Rachel Reeves has now seen a forecast £4.8billion saving from the welfare budget whittled away through a series of changes, leaving her to seek extra money through spending cuts, tax hikes or borrowing to balance the books.
So what happened in the largest revolt so far of Sir Keir's premiership; what does it mean for Pip and Universal Credit; and what comes next?
What has happened?
MPs voted yesterday to allow the Government's Universal Credit and Personal Independence Payment Bill to advance to the next stage in becoming law.
Some 126 Labour backbenchers had previously threatened to vote against the bill, enough to block its passage through the Commons, but in the end only 49 did so.
However, ministers were forced to offer a series of concessions to persuade the rebels to back the Government - in what has been viewed as a farcical climbdown.
What concessions did the Government make?
Last week, Work and Pensions Secretary Liz Kendall announced a partial U-turn aimed at heading off the rebellion that included three key points:
- Changes to Pip eligibility would only come into effect in November 2026, and anyone claiming the benefit before that date would not be subject to the new rules, instead of imposing the changes on everyone.
- People claiming the health element of Universal Credit, and new claimants with the most severe conditions, would see their incomes protected in real terms.
- Disabilities minister Sir Stephen Timms would conduct a review of the Pip assessment, 'co-produced' with disabled people.
During yesterday's debate, Sir Stephen then offered a further concession, saying any changes to Pip eligibility would only be introduced after his review had concluded, further delaying the reforms.
What do the concessions mean for the proposals?
The decision to push back Pip changes to an unspecified date, and leave uncertain the details of what those changes will be, removes a major part of the Government's reform plans.
The proposed changes to Universal Credit remain, raising the standard allowance while halving the health element for most new claimants from April 2026.
But the concessions will also pose a problem for Chancellor Rachel Reeves, who will need to find extra money now the expected savings from welfare reform are no longer expected to materialise.
The Resolution Foundation think tank suggested the concessions meant there would now be no 'net savings' from the reform by 2029/30, a key year for Ms Reeves' fiscal targets.
What happens next?
The Government has pledged to make the necessary amendments to remove the Pip changes from the Bill when it returns to the Commons next week.
It is then likely to continue through Parliament, becoming law after it has been approved by both MPs and peers. But wider questions remain for the Government.
Not only does Ms Reeves face a fiscal headache, but the Prime Minister could face a political one too as he seeks to repair fractured relations with his backbenchers.
And uncertainty will continue to surround the Government's plans for welfare reform.
Ministers will still want to reduce the cost of the welfare bill and get more people back into work, while Sir Stephen's Pip review could result in another row depending on what it recommends.
What about universal credit?
Proposals to cut the health element of Universal Credit by almost 50 per cent for most new claimants from April 2026 remain in place, along with an above-inflation increase in the benefit's standard allowance.
In an earlier climbdown, Work and Pensions Secretary Ms Kendall said existing recipients of the health element of Universal Credit, and new claimants with the most severe conditions, would have their incomes 'fully protected in real terms'.
What exactly is Pip?
Pip is a tax-free benefit aimed at helping the disabled with the increased cost of living associated with their conditions.
Pip is currently paid to 3.6million across England, Wales and Northern Ireland. In Scotland, a similar benefit is called the Adult Disability Payment.
Who can get Pip?
Pip is available to those who have a long-term physical or mental health condition or disability as well as difficulty doing certain everyday tasks or getting around because of their condition.
Pip can be paid even to people who are working, have savings or are getting most other benefits. It is not means tested.
How does Pip work?
There are two parts to Pip:
- The daily living part, if someone needs help with everyday tasks
- The mobility part, if they need help with getting around.
Whether they get one or both parts and how much they get depends on how difficult they find everyday tasks and getting around.
Anyone nearing the end of life such as from a life-limiting illness will automatically get the daily living part - but the mobility part depends on their needs.
How much can you get from Pip?
There is a lower and a higher weekly rate for the daily living part, which is £73.90 and £110.40 respectively.
For the mobility part, the rates are £29.20 the lower and £77.05 for the higher.
Pip is normally paid every four weeks.
What points number will you need to score for Pip?
Those currently apply for Pip need to score at least eight points in total to receive the 'daily living element'.
Daily living activities are classed as 'preparing food', 'eating and ‘drinking’', 'managing your medicines or treatments', 'washing and bathing', 'using the toilet', 'dressing and undressing', 'reading', 'managing your money', 'socialising and being around other people' and 'talking, listening and understanding'.
If the proposed changes are made by the Government, claimants will still need to get at least eight points, but four of those will need to come from one single activity such as eating, washing or communicating.
This is because Labour is aiming to restrict entitlement to the daily living component to only those who are more severely disabled.
For example, to score four points on 'washing and bathing', a claimant 'needs assistance to be able to wash their body between the shoulders and waist'.
There will be no changes to eligibility for the mobility part.
How is the assessment done?
The Department for Work and Pensions assesses how difficult someone finds daily living and mobility tasks, and looks at four areas for each task.
- 'whether you can do it safely'
- 'how long it takes you'
- 'how often your condition affects this activity'
- 'whether you need help to do it, from a person or using extra equipment'
Why did the Government want to change Pip?
The number of people receiving one Pip has risen rapidly over the past five years and the Government believes this is now becoming unsustainable.
The number of working-age people receiving Pip has more than doubled from 15,300 to 35,100 a month since the pandemic.
The number of young people aged 16 to 24 receiving Pip per month has also skyrocketed from 2,967 to 7,857.
The Government believes that over the next five years, if no action is taken, the number of working age people claiming Pip will increase from 2million in 2021 to 4.3million, costing £34.1billion annually.
Do the changes mean there will be tax rises?
Cabinet minister Pat McFadden said today that ministers 'will keep to the tax promises' in their election manifesto but declined to rule out tax rises.
Rachel Reeves has seen the £4.8billion predicted savings from welfare changes whittled away through the Government's changes to plans designed to keep backbenchers onside.
The Chancellor of the Duchy of Lancaster told Times Radio this morning that there will be 'financial consequences' to the decision, and indicated that would be set out at the budget expected in the autumn.
Mr McFadden also told BBC Breakfast: 'We will keep to the tax promises that we made in our manifesto when we fought the election last year.'
'But it doesn't make sense for me to speculate on something where, as I say, there are so many moving parts of which this is only one element.'
Ministers have repeatedly insisted that Labour will not raise taxes on 'working people', specifically income tax, national insurance or VAT.
But Ms Reeves also remains committed to her 'iron clad' fiscal rules, which require day-to-day spending to be covered by revenues - not borrowing - in 2029/30.
How has Labour analysed the climbdown?
The decision to remove key parts of the bill is remarkable for a Government with a working majority of 165 and after just under a year in office.
Work and Pensions Secretary Liz Kendall insisted the Labour Party was '100 per cent' behind the Prime Minister, but acknowledged there were 'lessons to be learned' after the rebellion.
She also appeared to express regret over the handling of the issue, saying: 'I wish we had got to this point in a different way.'
But Ms Kendall also insisted it was 'really important we passed this bill', saying: 'We need to make changes, because too many people have been written off, are left to a life on benefits, when being in good work is so important.'
The concession came after frantic behind-the-scenes negotiations in Westminster involving the Prime Minister, his Cabinet and wavering Labour MPs.
The legislation cleared its first hurdle in Parliament yesterday by 335 votes to 260, majority 75
Who were the Labour rebels who voted against the bill?
- Rosena Allin-Khan (Tooting)
- Paula Barker (Liverpool Wavertree)
- Lee Barron (Corby and East Northamptonshire)
- Lorraine Beavers (Blackpool North and Fleetwood)
- Olivia Blake (Sheffield Hallam)
- Richard Burgon (Leeds East)
- Ian Byrne (Liverpool West Derby)
- Irene Campbell (North Ayrshire and Arran)
- Lizzi Collinge (Morecambe and Lunesdale)
- Stella Creasy (Walthamstow)
- Peter Dowd (Bootle)
- Neil Duncan-Jordan (Poole)
- Cat Eccles (Stourbridge)
- Clive Efford (Eltham and Chislehurst)
- Mary Kelly Foy (City of Durham)
- Tracy Gilbert (Edinburgh North and Leith)
- Mary Glindon (Newcastle upon Tyne East and Wallsend)
- Chris Hinchliff (North East Hertfordshire)
- Imran Hussain (Bradford East)
- Terry Jermy (South West Norfolk)
- Kim Johnson (Liverpool Riverside)
- Ian Lavery (Blyth and Ashington)
- Brian Leishman (Alloa and Grangemouth)
- Emma Lewell (South Shields)
- Clive Lewis (Norwich South)
- Rebecca Long Bailey (Salford)
- Rachael Maskell (York Central)
- Andy McDonald (Middlesbrough and Thornaby East)
- Navendu Mishra (Stockport)
- Abtisam Mohamed (Sheffield Central)
- Grahame Morris (Easington)
- Simon Opher (Stroud)
- Kate Osamor (Edmonton and Winchmore Hill)
- Kate Osborne (Jarrow and Gateshead East)
- Richard Quigley (Isle of Wight West)
- Bell Ribeiro-Addy (Clapham and Brixton Hill)
- Marie Rimmer (St Helens South and Whiston)
- Cat Smith (Lancaster and Wyre)
- Euan Stainbank (Falkirk)
- Graham Stringer (Blackley and Middleton South)
- Marie Tidball (Penistone and Stocksbridge)
- Jon Trickett (Normanton and Hemsworth)
- Derek Twigg (Widnes and Halewood)
- Chris Webb (Blackpool South)
- Nadia Whittome (Nottingham East)
- Steve Witherden (Montgomeryshire and Glyndwr)
- Marsha De Cordova (Battersea)
- Diane Abbott (Hackney North and Stoke Newington)