UK (Parliament Politics Magazine) – Pat McFadden says scrapping PIP cuts will affect the budget, while IFS warns tax hikes after £5bn PIP savings plan is dropped.
As reported by The Guardian, a senior minister in Prime Minister Keir Starmer‘s team has admitted that the government’s welfare U-turn will come at a budgetary cost. The IFS also warned that fresh tax hikes may be on the horizon.
Pat McFadden’s views on Labour’s welfare U-turn
Pat McFadden, Chancellor of the Duchy of Lancaster, supported Keir Starmer and Liz Kendall amid growing criticism. His remarks came after the welfare bill narrowly passed its second reading due to the withdrawal of a central measure.
During an interview on the BBC, when asked about Liz Kendall’s role following the scrapping of proposed PIP cuts, Mr McFadden said, “Most of all we stand as a team.”
He confirmed that cutting the planned £5bn-a-year savings from PIP reforms would change the government’s budget plans for the upcoming autumn.
Mr McFadden said,
“You can’t spend the same money twice. I acknowledge there is a cost from yesterday, but everything has to be taken in the round at the budget.”
What did the IFS warn about Labour’s welfare U-turn?
Helen Miller, the new director of the Institute for Fiscal Studies, warned that removing proposed PIP savings makes future tax increases more probable.
She added that Chancellor Rachel Reeves now has “very limited financial room” ahead of the autumn budget.
Ms Miller stated that the welfare bill, in its current form, would no longer generate savings, warning, “By the end of this parliament, the government will save nothing.”
The IFS director said the £5bn welfare rollback and £1bn spent on winter fuel support have eaten into Ms Reeves’s budget flexibility, leaving little space, especially if growth forecasts are revised downward.
What did Nigel Farage say about Labour’s welfare U-turn?
Reform UK leader Nigel Farage criticised the revised welfare bill, stating the government was “in big trouble” and branding Keir Starmer a “puppet.”
He said,
“U-turn after U-turn after U-turn, denial of what he said in the speech on immigration, ‘oh, I regret it, I regret it, I hadn’t read it’, a self-admission that he’s a puppet. Today, to avoid a potentially massive defeat in the House of Commons, a watering down of a bill is being proposed that renders it almost meaningless. I’m looking at the big picture. This government is in big trouble.”
Mr Farage added,
“We voted against it, because I won’t lift a finger to help a government that is doing so much damage to our country.”
Labour’s U-turn on welfare reforms
The government’s welfare bill passed its second reading with 335 ayes and 260 noes, as 49 Labour MPs rebelled against the benefit cuts.
- PIP eligibility delayed: Stricter rules for new claimants postponed until after a 2026 review.
- Existing PIP protected: Current recipients won’t face reassessment under new rules.
- Universal credit adjusted: Base rate rises by £7/week; new health claimants get reduced support.
- Reform delay concession: U-turn followed rebellion threat from 126 Labour MPs.
- Disability input promised: Timms’ review to involve disabled groups, despite earlier lack of consultation.
- £5bn budget gap: Axed PIP cuts leave Chancellor Reeves searching for alternative savings.
Labour MPs and figures critical of the welfare bill
- Debbie Abrahams
- Louise Haigh
- Marie Tidball
- Rachael Maskell
- Andy Burnham
- Sadiq Khan