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Welfare reform

Welfare Reform Bill Advances Despite Concessions

Strategic Insights

— 1 min read

A Government proposal to reform welfare payments for sick and disabled people has narrowly passed in the Commons, despite significant concessions made to mitigate the impact on vulnerable groups. The Universal Credit and Personal Independence Payment Bill will now advance to the next stage in becoming law, but the concessions made to appease Labour rebels have removed a major part of the Government's reform plans. The changes to the welfare system, including the halving of the health element for new universal credit claimants, will now proceed, but without the planned changes to the Personal Independence Payment (Pip) eligibility.

Key Takeaways:

  • MPs voted 126-49 to allow the Government's Universal Credit and Personal Independence Payment Bill to advance to the next stage in becoming law, with Labour rebels voting against the legislation.
  • The Government made concessions to persuade Labour rebels to back the Bill, including delaying the changes to Pip eligibility until November 2026 and conducting a review of the Pip assessment with disabled people.
  • The concessions will 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 proposed changes to universal credit, including raising the standard allowance while halving the health element for new claimants, will still proceed from April 2026.
  • The Pip changes will be removed from the Bill when it returns to the Commons next week, but the review of the Pip assessment, led by Minister Sir Stephen Timms, will still take place.

Statistics:

  • 126 Labour backbenchers initially threatened to vote against the Bill, but only 49 ultimately did so.
  • The Government made 3 key concessions to persuade Labour rebels to back the Bill: delaying Pip changes, protecting incomes for claimants with severe conditions, and conducting a review of the Pip assessment.
  • The proposed changes to Pip eligibility will only come into effect in unspecified date, leaving uncertain the details of what those changes will be.
  • The Resolution Foundation think tank estimated that the concessions will result in no "net savings" from the reform by 2029/30.

Sources:

  • PA news agency
  • Work and Pensions Secretary Liz Kendall
  • Disabilities Minister Sir Stephen Timms
  • Chancellor Rachel Reeves
  • Resolution Foundation think tank

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