Disability benefits freeze will not go ahead after Labour MP backlash

Published

22 hours ago

March 17, 2025

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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?

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.

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?

Mhari Aurora

Political correspondent

@MhariAurora

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?

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”.

Politics

Big benefits cuts are imminent – here’s what to expect and why it could be just the start

Published

19 mins ago

March 18, 2025

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Big benefits cuts are imminent - here's what to expect and why it could be just the start

Those with “milder mental health” issues and “lower-level physical conditions” could see their disability benefits cut, as the government looks to shave £6bn off the welfare bill.

Liz Kendall, the work and pensions secretary, is expected to target sickness and disability benefit payments for savings today, which comes ahead of the spring statement next Wednesday.

Politics latest: Welfare reforms ‘imminent’

Her welfare reform green paper will arrive after Downing Street insisted there is a “moral and an economic case for fixing our broken system”.

Government figures argue the rising sickness and disability bill, which has ballooned since the pandemic, is unsustainable and will “leave the welfare state losing legitimacy” in the eyes of the wider public if not dealt with.

The cuts come as the chancellor eyes a hole in the public finances on the back of lower than expected growth and rising borrowing costs, with the £9.9bn headroom she had at the budget in October now wiped out.

Rachel Reeves’ self-imposed fiscal rules mean day-to-day government spending must be covered by tax revenue by 2029-30, which leaves her needing billions of pounds in spending cuts (after ruling out further tax rises, her other option).

What changes should we expect?

Ms Kendall is expected to target personal independence payments (PIP) – one of the main forms of disability benefits for those with long-term illnesses or disabilities – amid a spike in claimants.

The PIP bill has grown from £13.7bn a year before the pandemic to £21.8bn in the current financial year, and is set to increase to £34.1bn by the end of the decade.

The number of people claiming this disability benefit is projected to more than double from two million to 4.3 million.

The work and pensions secretary will tell MPs that Labour will protect those who have a serious condition and can’t work, and the government’s rowed back from plans to freeze PIP payments after backlash from its backbench MPs.

These payments are now expected to rise in line with inflation, but the eligibility criteria will be tightened to whittle back the number of people eligible to claim.

One government figure told me it would result in some conditions – such as “milder mental health” or “lower-level physical conditions” – being ineligible for PIP.

But they stressed that those with more severe conditions and who are never going to be able to work would be protected and cared for.

The key principles driving reforms

The changes are likely to draw criticism from some MPs, though one senior Labour source said they didn’t think there would be any ministerial resignations over the benefit announcements.

Another Labour figure told me they would be “massively shocked” if there were resignations.

However, a number of Labour MPs have voiced their concerns, as has Greater Manchester Mayor Andy Burnham.

In a bid to assuage MPs, the work and pensions secretary is also expected to earmark £1bn of savings into employment support programmes as she frames the reforms around three clear principles.

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The first will be to prevent people from falling into long-term economic inactivity with a better support offer to get people back into work quickly.

The second will be to change the incentive systems to move people away from welfare dependency.

This could see Ms Kendall slash the highest level of incapacity benefit for working age people who have an illness or disability that limits their ability to work, while increasing the basic rate of support for those out of work (universal credit).

This is because the lower level of unemployment benefit has led to more people claiming for additional incapacity and disability benefits, while disincentivising them to try to find work.

The government will also announce a “right to try” scheme, allowing those on incapacity benefits to try returning to work without the risk of losing their benefits, as happens in the current system.

‘I don’t think they go far enough’

But with one in 10 working age people claiming sickness benefits, and one in eight young people not in education, employment or training, the reforms could be just the start of bigger changes – and potentially bigger political battles.

The cost of long-term sickness and disability benefits for working-age people has risen by about £20bn since the pandemic to about £48bn, and is forecast to hit almost £100bn by 2030.

“People are trapped on benefits and the bill is getting out of hand,” said one government figure.

“We are currently spending more than three times the annual policing bill on these benefits. It’s getting out of hand.

“I don’t think the reforms go far enough, and I don’t think people have clocked the size of the numbers going on here.”

Politics

LIBRA memecoin orchestrators named as defendants in US class-action suit

Published

4 hours ago

March 18, 2025

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LIBRA memecoin orchestrators named as defendants in US class-action suit

The Libra token scandal is set to be reviewed by the Supreme Court of New York after a newly filed class-action lawsuit accused its creators of misleading investors and siphoning over $100 million from one-sided liquidity pools.

Burwick Law filed the suit on behalf of its clients against Kelsier Ventures, KIP Protocol and Meteora on March 17 for launching the Libra (LIBRA) token in a “deceptive, manipulative and fundamentally unfair” manner. The token was then promoted by Argentine President Javier Milei on X as an economic initiative to stimulate private-sector funding in the country.

The law firm slammed the two crypto infrastructure and launchpad firms behind LIBRA — KIP and Meteora — claiming that they used a “predatory” one-sided liquidity pool to artificially inflate the memecoin’s price, allowing insiders to profit while “everyday buyers bore the losses.”

Within hours, the insiders “rapidly siphoned approximately $107 million from the liquidity pools,” causing a 94% crash in LIBRA’s market value, Burwick Law said in a March 17 filing shared on X.

President Milei was mentioned in the lawsuit but wasn’t named a defendant.

Burwick accused the defendants of leveraging Milei’s influence to aggressively promote the token, deliberately creating a false sense of legitimacy and misleading investors about its economic potential.

Approximately 85% of LIBRA’s tokens were withheld at launch and the “predatory infrastructure techniques” allegedly used by the defendants weren’t disclosed to investors, Burwick said.

“These tactics, combined with omissions about the true liquidity structures, deprived investors of material information.”

Burwick is seeking compensatory and punitive damages, the disgorgement of “unjustly obtained” profits and injunctive relief to prevent further fraudulent token offerings.

Data from blockchain research firm Nansen found that of the 15,430 largest Libra wallets it examined, over 86% of those sold at a loss, combining for $251 million in losses.

Only 2,101 profitable wallets were able to take home a combined $180 million in profit, Nansen noted in a Feb. 19 report.

The venture capital firm behind the LIBRA token, Kelsier Ventures, and its CEO, Hayden Davis, were apparently two of the biggest winners from the token launch. They claim to have netted around $100 million.

Davis, who is now facing a potential Interpol red notice following an Argentine lawyer’s request, said on Feb. 17 that he didn’t directly own the tokens and wouldn’t sell them.

Meanwhile, Milei has distanced himself from the memecoin, arguing he didn’t “promote” the LIBRA token — as fraud lawsuits filed against him have alleged — and instead merely “spread the word” about it.

Argentina’s opposition party called for Milei’s impeachment but has had limited success thus far.

Magazine: Meet lawyer Max Burwick — ‘The ambulance chaser of crypto’

Politics

Paul Atkins closes in on SEC chair role amid setbacks: Report

Published

6 hours ago

March 18, 2025

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Paul Atkins closes in on SEC chair role amid setbacks: Report

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.

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.

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