Sir Keir Starmer was forced to abandon his welfare reform plans last night to avoid a humiliating Commons defeat by his own MPs.
On a shambolic day for Labour, the Prime Minister dropped his flagship plan to cut disability benefits just hours after ministers had insisted they were going ahead.
The decision to abandon the reforms blows a £5 billion hole in the public finances and increases the risk that Chancellor Rachel Reeves will raise taxes again this autumn.
It also deals a shattering blow to Sir Keir’s authority as he prepares to mark his first anniversary in No 10 this weekend.
Kemi Badenoch said the ‘utter capitulation’ showed that ‘Starmer cannot govern’ even with a landslide majority. The Tory leader warned that failure to tackle welfare reform would ‘bury the next generation under a mountain of borrowing and debt’.
Sir Keir had offered huge concessions to rebel MPs last week to head off a revolt.
Work and Pensions Secretary Liz Kendall yesterday said there would be no further concessions, insisting Labour would not ‘duck the big challenges facing this country’.
But, as Labour MPs lined up to condemn the ‘Dickensian’ cuts, Government whips began to panic that the legislation was heading for defeat.
Sir Keir Starmer was forced to abandon his welfare reform plans last night to avoid a humiliating Commons defeat by his own MPs
Work and Pensions Secretary Liz Kendall (pictured) yesterday said there would be no further concessions, insisting Labour would not ‘duck the big challenges facing this country’
Benefits reform has now been kicked into the long grass pending a review by welfare minister Sir Stephen Timms (pictured) next year
Just 90 minutes before the vote, the Government abandoned plans to tighten eligibility for the Personal Independence Payment (PIP), which was at the heart of Sir Keir’s ‘reforms’.
The capitulation was enough to allow the Universal Credit and Personal Independence Payment Bill to pass its first Commons stage by 335 votes to 260.
But it will now save no money – and leaves Sir Keir’s plans for welfare reform in tatters.
Dozens of Labour MPs were incensed by the Government’s ‘disrespectful’ handling of the issue and voted against the Bill despite Sir Keir’s near-total climbdown. The rebellion by 49 Labour MPs was by far the biggest revolt of his premiership.
Last night, even some MPs who sided with the Government said they could switch sides when the legislation returns to the Commons next week – unless they get further concessions.
Benefits reform has now been kicked into the long grass pending a review by welfare minister Sir Stephen Timms next year, which will be ‘co-produced’ by disability campaigners. Sir Stephen last night said his review was ‘not designed to save money’.
The humiliation will raise further questions about Sir Keir’s political judgment and the operation of his top team. Ms Reeves has been singled out for criticism by rebel MPs for demanding the £5 billion savings to balance the books, while the PM’s chief of staff Morgan McSweeney has been accused of ignoring the strength of feeling on the issue.
Shadow welfare minister Helen Whately said the debacle suggested the PM ‘can’t even deliver a U-turn’.
The rebellion by 49 Labour MPs was by far the biggest revolt of his premiership. Pictured: The Labour rebels that voted against the bill
Shadow chancellor Sir Mel Stride said: ‘This farcical climbdown is the most humiliating moment of Labour’s first year in office. Their flagship welfare Bill has disintegrated – stripped bare at the last minute in a desperate attempt to avoid both a defeat, and a confidence vote in Keir Starmer. This isn’t serious government – it’s chaos.
‘Labour has bottled welfare reform, left a multi-billion pound hole in the nation’s finances, and set the country on course for higher taxes or a debt spiral.’
Rebel ringleader Rachael Maskell said the Government’s plans were now ‘a complete farce’ and urged ministers to start again.
Ms Kendall last night acknowledged there were ‘certainly lessons to learn’, adding: ‘I wish we had got to this point in a different way.’
She said welfare reform was ‘never easy, especially perhaps for Labour governments’. But she insisted the Government would continue trying to put the benefits bill on a ‘more sustainable footing’.
Ms Kendall said Labour MPs remained ‘100 per cent behind the Prime Minister’ despite the insurrection.
Sir Keir’s original plan would have ended eligibility for PIP payment for 800,000 disabled people, who would each have lost around £4,500 each. The Government’s own assessment suggested this would drive 250,000 people into poverty, including 50,000 children.
In a climbdown last week, the Government agreed not to apply the cuts to existing claimants. But official estimates said this would still have pushed 150,000 people into poverty in future.
Ms Maskell said the ‘Dickensian cuts belong to a different era and a different party’. And former frontbencher Richard Burgon told fellow MPs it would ‘hang like an albatross around their necks’ if they voted for the Government’s cuts.
Former Labour leader Jeremy Corbyn said the entire package should be scrapped, adding: ‘If it does cost more money, so be it.’
Speaking before the climbdown, Ms Kendall said reform was essential – warning that new PIP claims are rising at a rate of 1,000 a day.
‘I do not believe that this is sustainable if we want a welfare state that protects people who most need our help for generations to come,’ she said.
She added: ‘There is no responsibility in leaving our system of social security to continue as it is, and risk support for it becoming so frayed that it is no longer there to provide a safety net for those who can never work, and who most need our help and support.’
