Sir Keir Starmer said changes to his welfare bill “strike the right balance” after making concessions to his backbench MPs.

The prime minister described the U-turn as “common sense” and said it means “we can now get on with the job”.

Politics Live: Starmer defends U-turn

Sir Keir faced a significant rebellion over plans to cut sickness and disability benefits as part of a package he said would shave £5bn off the welfare bill and get more people into work.

Speaking to reporters on Friday, he stood by his position that the welfare system needs reform as “it doesn’t work, and it traps people”.

He added: “We need to get it right. That’s why we’ve been talking to colleagues and having a constructive discussion.

“We’ve now arrived at a package that delivers on the principles with some adjustments, and that’s the right reform, and I’m really pleased now that we’re able to take this forward.

“For me, getting that package adjusted in that way is the right thing to do, it means it’s the right balance, it’s common sense that we can now get on with it.”

The concessions include exempting existing Personal Independence Payment claimants (PIP) from the stricter new criteria, while the universal credit health top-up will only be cut and frozen for new applications.

Analysis: Welfare bill U-turn a humiliating blow for Starmer

More money will also be front-loaded into helping people find jobs, though it is not clear how much beyond the £1bn already announced.

The changes came after 127 Labour MPs signed an amendment calling for the cuts to be delayed and consulted on with disabled people.

Rebels feared the reforms wouldn’t actually help people find work while pushing thousands of disabled people and children into poverty, as per the government’s own impact assessment.

The discontent threatened to derail the Universal Credit and Personal Independence Payment Bill when it comes before the Commons for a vote on Tuesday, on the week that marks a year of Starmer in government.

Asked what he would do about a “hole” in the public finances that the changes are said to leave, Sir Keir said the funding will be set out in the autumn budget “in the usual way”.

The concessions on PIP alone will protect an estimated 370,000 people currently receiving the allowance who were set to lose out following reassessment.

Economists at the Institute for Fiscal Studies and the Resolution Foundation have both suggested that the changes could reduce savings intended in the original package by up to £3bn.

Chancellor Rachel Reeves is also under pressure to find money to pay for the U-turn on cuts to winter fuel, which followed a drubbing at the local elections in May.

Asked about the series of U-turns, Work and Pensions Secretary Liz Kendall earlier said: “Sometimes there’s strength in listening.

“I really believe that to be the case, that you end up in the right position when you talk to all of those with knowledge and experience and actually, if you want decisions to be the right ones and to last for generations to come, I believe that’s how you make the right changes.”

However, she would not guarantee the bill will pass next week.

Some 83 Labour MPs would need to rebel for the government to be defeated.

Last night Dame Meg Hillier, one of the leading rebel voices, hailed the concessions as “massive changes” to protect vulnerable people and involve disabled people in the design of future reforms.

However, not all the rebels have been satisfied with the changes, with several suggesting they would create a “two-tier system”. Sky News is aware of at least 20 MPs who currently intend to still vote against. Many others are undecided.

The concessions came after Downing Street publicly stuck to its guns while engaging in a frantic ring-around to get rebels onside, which further angered MPs.

Many have called for a reset in relations with Downing Street, as the fallout from the rebellion threatens to cause lasting damage.

Conservative leader Kemi Badenoch criticised the U-turn, saying the government’s failure to make “minor savings” on welfare showed they were unable to deal with major issues.

First there was stonewalling, then the private complaints from MPs before a very public outburst that saw an eye-watering 127 MPs tell their prime minister they were going to defy him on a welfare vote.

Now, the inevitable climbdown has arrived, with Downing Street making a significant offer to rebels last night on their planned cuts to disability benefits.

A government with a massive 165-strong working majority had an awakening on Thursday to the importance of parliament as it embarked on a humiliating climbdown after the private warnings of MPs to Downing Street fell on deaf ears.

It’s worth taking a beat to reflect on the enormity of this moment. Less than a year ago, the prime minister was walking into Number 10 having won a landslide, with a Labour majority not seen since the Blair era.

That he has been forced to retreat by angry foot soldiers so early in this premiership, despite having such a big majority, is simply unprecedented. No government has lost a vote at second reading – this basically the general principles of a bill – since 1986 (Thatcher’s shops bill) and that was the only occasion a government with a working majority lost a bill at the second reading in the entire 20th century.

It is obviously a humiliating blow to the authority of the prime minister from a parliamentary party that has felt ignored by Downing Street. And while Number 10 has finally moved – and quickly – to try to shut down the rebellion, the fallout is going to be felt long beyond this week.

Before we get into the problems for Starmer, I would like to acknowledge the predicament he’s in.

Over the past 10 days, I have followed him to the G7 in Canada, where the Iran-Israel crisis, US-UK trade deal and Ukraine war were on the agenda, to Chequers at the weekend as he tried to deal with the US attack on Iran and all the risk it carried, and to the NATO summit this week in the Netherlands.

He could be forgiven for being furious with his operation for failing to contain the crisis when all his attention was on grave international matters.

He landed back in Westminster from the NATO summit on Wednesday night into a domestic battle that he really didn’t need but moved quickly to contain, signing off a plan that had been worked up this week in Downing Street to try to see off this rebellion.

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What will the changes be?

The government has offered significant concessions to Labour rebels.

People who currently receive the personal independence payment (PIP) will continue to do so, as will recipients of the health element of universal credit.

Planned cuts will only hit future claimants.

The change in PIP payments will protect 370,000 existing recipients who were expected to lose out following reassessment.

One senior parliamentary source told me on Thursday night they thought it was a “good package” with “generous concessions”, but said it was up to individual MPs to decide whether to withdraw their names from the amendment that would have torpedoed the welfare bill.

In the coming days, Number 10 will have to make the case to backbenchers and whittle down the rebellion in order to get the welfare bill passed on Tuesday. But it’s clear Number 10 has given MPs a ladder to climb down.

But the bigger question is, where does it leave the government and its party?

There is quiet fury from many MPs I have spoken to, angry at the Number 10 operation and critical of what they see as a “boy’s club”.

There has been criticism levelled at the PM’s chief of staff Morgan McSweeney, with MPs in seats facing challenge from the left rather than the right frustrated that the whole Number 10 strategy seems to be seeing off Reform, rather than look to the broader Labour base and threats from the Lib Dems or the Greens.

There is also much ire reserved for Rachel Reeves – interestingly Liz Kendall is escaping the criticism despite being the architect of the reforms – with MPs, already angry over winter fuel debacle, now in open revolt over the chancellor’s decision to force through these cuts ahead of the Spring Statement in March in order to help fill her fiscal black hole.

MPs felt talked down to

One Labour figure told me on Thursday the growing drumbeat in the party is that Reeves must go.

Another MP told me colleagues hated the cabinet ring around to try to persuade them to back down over welfare, saying more MPs ended up adding their names to the list because they felt talked down to.

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All of this needs work if the PM has any hope of rebuilding trust between his party and his operation.

There is also the problem of what flows from the concessions.

The chancellor will have to fund these concessions, and that could mean hard choices elsewhere. Will this mean that the government ends up doing less on reforming the two-child cap, or will it have to find welfare cuts elsewhere?

That flows into the third problem. In seeing off this rebellion, Number 10 has contained MPs rather than converting them.

What the parliamentary party has seen is a government that, when pressed, be it on winter fuel or benefit cuts, will fold.

That will only serve to embolden MPs to fight again. In the immediate term, the government will hope it has seen off a potentially catastrophic defeat.

But seeing off the growing malaise around the Starmer administration just got a bit harder after this.

Liz Kendall has defended the government’s welfare U-turn saying: “Sometimes there is strength in listening.”

The embattled work and pensions secretary said “positive changes” have come about as a result of crisis talks with senior Labour backbenchers, who were poised to vote against planned cuts to disability benefits next week.

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However, she would not guarantee the bill will pass, amid criticism from some MPs the changes don’t go far enough.

The welfare concessions follow a U-turn over cuts to winter fuel and the decision to launch a grooming inquiry.

Asked how the government can be trusted, Ms Kendall said: “Sometimes there’s strength in listening.

“I really believe that to be the case, that you end up in the right position when you talk to all of those with knowledge and experience and actually, if you want decisions to be the right ones and to last for generations to come, I believe that’s how you make the right changes.”

The concessions include exempting existing personal independence claimants (pip) from the stricter new criteria, while the universal credit health top-up will only be cut and frozen for new applications.

This has led to criticism of a two-tier system, but Ms Kendall said it is “very common in the welfare system that there are protections for existing claimants”.

She said she “hopes” the changes have done enough to get the bill over the line next week.

The cabinet minister also said government had “more to do” and would “talk to people over the coming days”, with many MPs still on the fence about whether they will back the new proposals.

The concessions were hashed out last night after a frantic ring around of MPs earlier in the week failed to bring critics onside.

The government had planned to tighten pip criteria for new and existing claimants, with some 370,000 people set to lose out.

It was part of a package of measures aimed at shaving £5bn off the welfare bill by 2030 and getting more people into work amid record levels of economic inactivity.

However, MPs were concerned that disabled people had not been consulted, while the government’s own impact assessment said the changes could plunge 250,000 people into poverty, including 50,000 children.

Ministers insisted this would be offset by measures to get people back into work, but many rebel MPs said while they agreed with that in principle it wasn’t clear how this will be achieved.

By Thursday, 127 Labour MPs had backed an amendment calling for the changes to be paused for further consultation – meaning the bill was at risk of being defeated when it goes to a vote on Tuesday.

Dame Meg Hillier, the chair of the Treasury select committee who had tabled the amendment, said last night that the government had offered a “good deal”.

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What are the concessions to the welfare bill – and will MPs back it?

Ultimately, individual MPs will decide if they want to support it.

Many MPs on the left of the party have said they won’t, with the likes of Ian Byrne and Nadia Whittome saying no concessions are enough while cuts are still going ahead and the bill should be pulled.

Others have told Sky News they are undecided and want to see more details first.

None of the rebels have publicly said they will now support the government, but two have told Sky News they expect they will vote for the new measures.

It’s not clear how much the new package will save, with those details expected to by set out in the autumn budget.

The prime minister’s spokesperson said on Friday that the changes will be fully funded but refused to be drawn on whether that meant tax rises.

He rejected the suggestion that Sir Keir is at the mercy of his backbenchers, saying he has “listened to MPs who support principles but worried about pace of change”.