LONDON – Sir Keir Starmer has managed to get his welfare reform bill through its second reading in the House of Commons, but the cost is high. Forty-nine Labour MPs broke ranks in the biggest rebellion Starmer has faced, exposing fault lines within his party.
The Universal Credit and Personal Independence Payment Bill, which aims to rein in rising welfare costs, passed by 335 to 260 after the government made key changes that have left Chancellor Rachel Reeves with a financial headache.
Led by high-profile backbenchers like Meg Hillier and Rachael Maskell, the revolt brought Labour’s inner tensions into public view. Several MPs called the proposed changes “Dickensian”, with warnings that the new rules risk pushing vulnerable families further into hardship.
Despite Starmer’s late efforts to win over critics by protecting those already receiving Personal Independence Payment (PIP), the bill’s passage has reopened arguments over Labour’s priorities and direction.
The bill is designed to tackle the sharp increase in disability and sickness payments, projected to climb from £52 billion last year to £66 billion by 2029 if left unchecked.
The original plan aimed to save £5.5 billion each year. This was to come from stricter eligibility checks for PIP, a benefit for people with long-term health needs, and a reduction in the top-up paid to those claiming Universal Credit due to ill health.
Key proposals included making PIP claimants prove they need more help with everyday tasks, such as washing or preparing food. The government also wanted to freeze the Universal Credit health top-up at £97 a week for those already on it, with new claimants getting only £50.
Finding the Money
The Work Capability Assessment, which checks if people can work, was due to be scrapped by 2028, with PIP assessments taking its place.
However, after strong opposition, ministers backtracked, promising that those already receiving PIP and the Universal Credit health element would not lose out. These changes will now affect only new claimants.
The government’s U-turn will cost around £3 billion a year, wiping out any expected savings over the next four years. Rachel Reeves now faces the challenge of finding money elsewhere, either through new taxes or spending cuts.
The Institute for Fiscal Studies has warned that these last-minute changes could mean the bill delivers no real savings, putting the government’s financial plans under pressure.
The government defends the reforms by pointing to a surge in people starting welfare claims. According to Starmer, about 1,000 people apply for PIP each day, adding up to numbers equivalent to a new city the size of Leicester each year.
Benefits for working-age adults who are ill or disabled have soared. Since 2019–20, costs have jumped from £36 billion to £52 billion, with mental health problems and long-term illnesses driving much of the increase.
Some critics say the UK is moving closer to being a welfare state, a situation made worse by record levels of migration. Official data shows more than 20,000 migrants have crossed the Channel this year, which has added pressure on public services and benefits.
Welfare Spending Drains Resources
The government’s research suggested the original proposals could have pushed 250,000 people, including 50,000 children, into relative poverty. This has drawn criticism from Labour MPs and groups like the disability charity Scope, which says changes could leave disabled families facing £15,000 in extra costs each year by 2030.
This welfare row comes as the economy struggles. Official figures show fewer jobs in sectors like hospitality and retail, where many benefit claimants look for work. Some employers have blamed recent tax rises for hiring fewer or cutting jobs, feeding into higher unemployment.
The Office for Budget Responsibility has said Labour’s employment support plans, including its “right to try” scheme, lack enough detail to judge if they will help people find jobs.
Conservative leader Kemi Badenoch has called the UK economy “stuck in first gear”, blaming welfare spending for draining resources. She says benefits for conditions like anxiety need to be cut back, suggesting the money should go into mental health care instead. Critics say this view oversimplifies the challenges faced by claimants.
Starmer’s standing has taken a hit after the rebellion, with his poll ratings and Labour’s popularity slipping since their landslide victory last year. The welfare bill row has made some voters and party members question Labour’s handling of key issues.
Starmer Support Dwindling
Starmer brushed off the revolt as “noises off”, but his refusal to compromise at first angered many MPs. Richard Burgon said the bill would become a burden for Labour in future elections.
Labour’s handling of the bill has been called “shambolic” by MP Paula Barker. Even after making concessions, at least 50 MPs stayed opposed, a sign that unrest will continue.
Some bookmakers have cut odds on Starmer stepping down, with names like Wes Streeting and Angela Rayner seen as possible replacements.
The rebellion has also encouraged some MPs to push for an end to the two-child benefit cap, further testing Starmer’s grip on the party.
While the bill passed its second reading, the retreat has shaken Starmer’s authority and left Rachel Reeves scrambling to fix the numbers. The government now faces a tough task: finding a way to keep welfare spending sustainable while trying to hold the party together and keep public support.
One rebel MP summed it up: “We lost the vote, but we won the fight because the bill was watered down.” With the autumn budget ahead, all eyes are now on Reeves as she tries to plug the funding gap, and on Starmer as he tries to heal party divisions before more rebellions break out.
