The Government’s proposal to reform welfare payments for sick and disabled people has been approved by MPs, but only after significant concessions led to much of Sir Keir Starmer’s original plan being abandoned.
In a surprising last-minute reversal, the Government dropped plans to restrict eligibility for the Personal Independence Payment (PIP). Any changes to PIP will now only proceed after a comprehensive review of the benefit, delaying the reforms indefinitely.
This concession poses a financial challenge for Chancellor Rachel Reeves, who had anticipated saving £4.8 billion from welfare reforms. With these projected savings now eroded through a series of government retreats, Reeves faces pressure to find extra funds through spending cuts, tax increases, or borrowing to balance the budget.
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Ruth Curtice, chief executive of the Resolution Foundation, stated that the concessions mean the reforms will produce no net savings by 2029/30, a crucial fiscal target year for Reeves, though some long-term cost reductions may still occur.
The decision to remove PIP changes from the Universal Credit and Personal Independence Payment Bill was announced just 90 minutes before the Commons vote, which the legislation cleared with a majority of 75, tallying 335 votes in favor and 260 against. Despite the late concession, 49 Labour MPs rebelled—the largest revolt under Sir Keir’s leadership so far.
Work and Pensions Secretary Liz Kendall asserted that Labour remains fully supportive of the Prime Minister but admitted the rebellion revealed the need to improve communication and handling of the welfare reforms. She emphasized the necessity of the Bill to prevent people from being “written off” and to encourage movement into employment.
This retreat is notable for a government holding a sizeable working majority of 165 seats and less than a year in office. Earlier, a failed attempt to block the Bill counted over 120 Labour supporters but was dropped after a partial U-turn that initially restricted PIP changes to new claimants starting November 2026. Even this timeline has now been abandoned.
Disability Minister Sir Stephen Timms announced during the debate that any PIP eligibility changes will only take place following his detailed review of the PIP assessment process, expected to conclude in autumn 2026. This decision acknowledges widespread concerns about implementing reforms before the review is complete.
Despite the concessions on PIP, proposals to cut the health component of Universal Credit by nearly 50% for most new claimants from April 2026 remain intact, alongside an above-inflation increase to the benefit’s standard allowance. The government pledged to protect incomes “in real terms” for current recipients of the health element and new claimants with the most severe conditions.
Following intense negotiations involving the Prime Minister, Cabinet members, and wavering Labour MPs, the government secured enough support to advance the Bill. It will face further stages in Parliament before becoming law.
Chancellor Reeves must now address the fiscal gap created by the loss of anticipated welfare savings, while the Prime Minister faces the task of mending relations with backbenchers. The welfare reform agenda remains uncertain, with Sir Stephen’s review of PIP potentially opening new debates.
How did MPs vote?
The vote highlighted deep divisions, with 49 Labour MPs rebelling against the party line. In total, 335 MPs voted in favor and 260 against the Bill. The government required and achieved a majority, but the scale of dissent signals ongoing unease within key parties on welfare reforms.
In summary, the welfare reform bill passed but with significantly diluted scope regarding PIP changes. The government’s fiscal and political challenges are now compounded, with major decisions about welfare reform delayed pending a review later in 2026.