Disability benefits freeze will not go ahead after Labour MP backlash
A freeze to disability benefits will not go ahead following pressure from Labour backbench MPs, Sky News understands.
The government had been looking at freezing the personal independence payment (PIP) next year so it did not rise with inflation as part of a drive to cut down the ballooning welfare budget.
However, following pressure from Labour backbenchers over the past week, this has now been taken off the table, Sky News understands.
The proposal had been set to save about £5bn as Chancellor Rachel Reeves searches for savings after losing £9.9bn of fiscal headroom (the amount she could increase spending or cut taxes without breaking her fiscal rules) since the October budget due to a poor economy and geopolitical events.
Politics latest: Minister plays down level of rebellion
PIP is a payment of up to £9,000 a year for people with long-term physical and mental health conditions and disabilities to help with extra living costs.
However, the government is expected to make qualifying for PIP more difficult when Work and Pensions Secretary Liz Kendall reveals plans on Tuesday.
Sky News’ deputy political editor Sam Coates, on the Politics At Sam and Anne’s podcast, said the Treasury is also expected to abolish the Work Capability Assessment, which determines whether someone is fit or not to work and to then receive disability payments.
The government has described the system as “dysfunctional” as those “not fit for work” do not receive employment support or further engagement after the assessment, which could lock them out of future work altogether.
Explainer: Which benefits could be cut?
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Will there be a backlash over benefits?
Sir Keir Starmer has made cutting the welfare budget a key project as spending on sickness benefits soared to £65bn last year – a 25% increase since the year before the COVID pandemic – and is expected to rise to £100bn before the next general election in 2029.
The number of people in England and Wales claiming either sickness or disability benefit has soared from 2.8 million to about 4 million since 2019.
However, many Labour MPs are uncomfortable with cutting benefits for disabled people.
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Streeting defends wanting to slash welfare benefits
Ms Kendall had been expected to announce welfare cut plans last week but this was delayed by displeasure from backbenchers, with the government taking the unusual step of asking all 404 Labour MPs to attend “welfare roundtables” in Downing Street last week.
Greater Manchester’s Labour mayor, Andy Burnham – a former health secretary – agreed the benefits system “needs a radical overhaul” but wrote in The Times: “I would share concerns about changing support and eligibility to benefits while leaving the current top-down system broadly in place. It would trap too many people in poverty.”
Will government follow through on tough talk despite backbench concerns?
Tomorrow, the government will publish its plans to cut the welfare budget, but it’s the Labour benches that are likely to cause the most havoc.
This mini u-turn on freezing PIP will placate some Labour MPs nervous about the unintended consequences of the welfare crackdown and how it may affect disabled people.
On Sky News Breakfast today former Shadow Chancellor John McDonnell welcomed the news, and said he understood the pressures the Treasury was facing.
His muted tone could be an indication the government’s efforts to persuade backbenchers of the merits of the plan – by inviting them to Downing Street to speak their minds and be reassured the most vulnerable would be protected – is taking effect.
However, despite a relatively understanding tone from Mr McDonnell, he also warned Reeves’s plans may turn out to create more problems than it will solve in the long run.
Mr McDonnell accused the government of not understanding the world has changed, hinting the chancellor ought to follow Germany’s lead, break her fiscal rules and blame the policy pivot on unprecedented global events.
Greater Manchester mayor Andy Burnham also attacked the government’s plans to crack down on the benefits bill, but Treasury minister Emma Reynolds launched the fightback on Sky News Breakfast, insisting the government had a duty to reform the welfare system “according to our values”.
Reynolds argued there is dignity in work and that reforms were needed as “something has gone seriously wrong under the Tories”, arguing the cuts chime with Labour ideology.
And Health Secretary Wes Streeting – the self-proclaimed Tory whisperer – has hardened his rhetoric even further, claiming the over-diagnosing of mental health problems is in part to blame for the ballooning benefits bill.
This hardening of the government’s language is a clear attempt to talk tough, but will the government be able to follow through on the action the Treasury is desperate to see while many Labour backbenchers remain unconvinced Starmer has his priorities in the right order?
Read more:
Why Starmer’s backbenchers are deeply uncomfortable?
Streeting denies Labour turning into Tories over disability benefit cuts
UK and global economic forecasts slashed
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Labour faces criticism over welfare reforms
Treasury minister Emma Reynolds played down the level of discontent over plans to freeze PIP, as she told Sky News: “It is absolutely everyday business that we should have discussions with backbenchers, meetings between our MPs and ministers happen all day, every day.
“So this isn’t something that is any different, but we’re determined to strike the right balance here.”
She added there will “always be a safety net for the most vulnerable” and pointed out Labour created the welfare state in 1945, but it needs to be “more sustainable”.
Paul Atkins could move one step closer to becoming the US Securities and Exchange Commission’s new crypto-friendly chair, with a Senate committee hearing reportedly in the works for March 27.
President Donald Trump nominated Atkins to lead the SEC on Dec. 4, but his marriage into a billionaire family has reportedly caused headaches with financial disclosures — delaying his potential start date.
While it isn’t clear whether the White House has produced those papers to the Senate, Senate Banking, House and Urban Affairs Chair Tim Scott is reportedly eyeing a March 27 hearing to review Atkins’ standing, Semafor’s Eleanor Mueller said in a March 17 X post.
“No clarity yet on whether the committee has Atkins’ paperwork in hand, but either way, this is the most momentum we’ve seen so far.”
Atkins would, however, need to be voted in by the Senate at a later date.
Mueller also said the Senate banking committee is also planning to hold a bipartisan meeting on Atkins’ nomination on March 21.
Source: Eleanor Mueller
It follows an earlier March 3 Semafor report, where Mueller said financial disclosures had held Atkins back from scheduling a Senate hearing to review his standing.
His wife’s family is tied to TAMKO Building Products LLC — a manufacturer of residential roofing shingles that reportedly turned over $1.2 billion in revenue in 2023, Forbes said on Dec. 14, 2024.
“It’s a lot to go through,” one former Senate Banking Committee staffer reportedly told Mueller on March 3.
“But he got named so early on, so I think that’s why people are starting to be like, ‘What the hell’s taking so long?’”
Atkins previously served as an SEC commissioner between 2002 and 2008 and worked as a corporate lawyer at Davis Polk & Wardwell LLP in New York before that. He is expected to regulate the crypto arena with a more collaborative approach than former SEC Chair Gary Gensler.
It’s been almost four months since Atkins was chosen by Trump to lead the SEC on Dec. 4, and over two months since Trump was inaugurated on Jan. 20.
A late start for an SEC chair wouldn’t be too unusual, however.
The two most recent SEC chairs, Gary Gensler and Jay Clayton, started on April 17, 2021, and May 4, 2017 — months after presidential transitions occurred in those years.
Related: SEC’s enforcement case against Ripple may be wrapping up
Meanwhile, Mark Uyeda has been serving as the SEC’s acting chair since Gensler left on Jan. 20.
Since then, the Uyeda-led SEC has established a Crypto Task Force led by SEC Commissioner Hester Peirce and canceled a controversial rule that asked financial firms holding crypto to record them as liabilities on their balance sheets.
The SEC has dropped several investigations and lawsuits that the Gensler-led commission filed against the likes of Coinbase, Consensys, Robinhood, Gemini, Uniswap and OpenSea over the last month.
The SEC is also looking to abandon a rule requiring crypto firms to register as exchanges and may even axe the Biden administration’s proposed crypto custody rules, Uyeda said on March 17.
Magazine: SEC’s U-turn on crypto leaves key questions unanswered
The US Securities and Exchange Commission could change or scrap a rule proposed under the Biden administration that would tighten crypto custody standards for investment advisers, according to the agency’s acting chair, Mark Uyeda.
In prepared remarks to an investment industry conference in San Diego on March 17, Uyeda said the rule proposed in February 2023 had seen commenters express “significant concern” over its “broad scope.”
“Given such concern, there may be significant challenges to proceeding with the original proposal. As such, I have asked the SEC staff to work closely with the crypto task force to consider appropriate alternatives, including its withdrawal,” Uyeda said.
The rule was floated under the Biden administration during Gary Gensler’s tenure leading the regulator. It aimed to expand custody rules for investment advisers to any and all assets held for a client, including crypto, and upped the requirements to protect them.
Source: SEC
This meant that investment advisers would have to custody their clients’ crypto with a qualified custodian. Gensler said at the time that investment advisers “cannot rely on” crypto platforms as qualified custodians due to how they operate.
The proposal caused friction with Uyeda and Commissioner Hester Peirce, along with industry advocacy bodies who claimed the rule was unlawful and dangerous.
“How could an adviser seeking to comply with this rule possibly invest client funds in crypto assets after reading this release?” Uyeda remarked at the time. He did, however, support the proposal despite disagreeing “with a number of provisions.”
Peirce, who was the sole commissioner of the five to vote against the rule, said at the time that the proposed rule “would expand the reach of the custody requirements to crypto assets while likely shrinking the ranks of qualified crypto custodians.”
Related: Congress repealed the IRS broker rule, but can it regulate DeFi?
Uyeda’s latest remarks come days after he said on March 10 that he had asked SEC staff “for options on abandoning” part of a proposal pushing for some crypto firms to register with the regulator as exchanges.
The Trump-era SEC has also killed a rule that asked financial firms holding crypto to record them as liabilities on their balance sheets, called SAB 121.
In December, President Donald Trump picked former SEC Commissioner Paul Atkins to take over from Uyeda to chair the agency. This is now a step closer, with a Senate hearing reportedly slated for March 27.
Magazine: SEC’s U-turn on crypto leaves key questions unanswered
Tory leader Kemi Badenoch has dismayed green Conservatives by declaring the UK’s target to reach net zero by 2050 “impossible”.
In a speech on Tuesday, the Conservative Party leader is expected to tell what she says is the “unvarnished truth” that the net zero goal cannot be achieved without “a serious drop in our living standards or by bankrupting us”.
Ms Badenoch will say she is not making a “moral judgement” on net zero or debating whether climate change exists.
But, as she begins to renew party policy, she will say that current climate policies are “largely failing” to improve nature and “driving up the cost of energy”.
Politics latest: Follow live updates
Net zero means cutting emissions of greenhouse gases, which cause climate change, to virtually zero, and absorbing the rest elsewhere.
Scientists say the world must reach that point by 2050 to avoid even worse flooding, wildfires, and other damage – but that action is lagging behind.
The UK has already cut its greenhouse gas emissions in half.
The next half is expected to be more challenging as it requires changes to people’s heating, cars and diet – things that often need upfront costs, but could save people money in the long run with the right government support, advisers have said.
Ms Badenoch’s plans take the Conservative Party to its most sceptical position on net zero yet – a target set in law by Tory Prime Minister Theresa May in 2019.
And it comes at a time when Reform UK is questioning climate science and US President Donald Trump, leader of the second most polluting country in the world, is dismantling nature protections.
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Kemi Badenoch heckled by climate protesters on Monday
Ms Badenoch’s “policy renewal” she is outlining on Tuesday will see shadow cabinet members set core priority questions as a move towards formulating new policy for the party.
Sam Hall, of the Conservative Environment Network of 50 MPs, said it was “a mistake” for Ms Badenoch to have “jumped the gun on her own policy review and decided net zero isn’t possible by 2050”.
He said the Tory leader was right to question Labour’s climate plans, but that the target is driven “not by optimism but by scientific reality; without it climate change impacts and costs will continue to worsen”.
Abandoning the science would risk losing voter’s support, he added.
Four in five Conservative voters in last year’s general election and two thirds of Reform voters thought it was important that the government cared about tackling climate change, according to polling by More in Common.
Shaun Spiers, executive director of thinktank Green Alliance, called it “disappointing” to see Ms Badenoch “turn her back on cleaner, cheaper, homegrown energy”.
“It is even more disappointing to see the leader of the opposition take cues from climate deniers across the pond,” he added, in a veiled swipe at President Trump.
“Net zero is not ‘nice-to-have’, it’s an achievable, evidence-based target designed to protect the UK from the worst impacts of climate change.”
The UK’s Climate Change Committee (CCC), which advises governments on how to reach net zero, said last month the goal is “ambitious” but “deliverable”.
But it also warned as Labour took office last summer that, at that time, just one third of the cuts to greenhouse gases needed to reach an interim 2030 target were covered by a “credible plan”.
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