Labour faces a major challenge from its own backbenchers ahead of an announcement to restrict some sickness and disability benefits.
The plans are likely to be opposed by those in the party who are concerned about attempts to slash the ballooning welfare bill and encourage adults back to work.
Work and Pensions Secretary Liz Kendall is expected to set out the reforms on Tuesday, but details of where those cuts could fall is proving highly divisive within Labour.
Total welfare spending in 2023-23 was about £296bn, by the end of the decade it is forecast to reach almost £378bn.
The chancellor needs to find savings to meet her strict fiscal rules and Rachel Reeves has previously insisted “we do need to get a grip” on the welfare budget.
One proposal reportedly under consideration is to save around £5bn by freezing or tightening the rules around the personal independence payment (PIP).
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But Labour’s Mayor of Greater Manchester Andy Burnham, a former Labour health secretary, has “urged great caution on how changes are made” although, writing in The Times, he accepts “the benefits system needs a radical overhaul”.
“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,” he added.
Health Secretary Wes Streeting argued on Sunday Morning With Trevor Phillips that the current system is “unsustainable” and welfare reforms are needed. He also said mental health conditions are often overdiagnosed.
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0:45
‘1,000 people every day signing on to PIP benefits’
PIP is a payment of up to £9,000 a year for people with long-term physical and mental health conditions.
Campaigner Steve Morris is one of those 3.6 million PIP claimants and says freezing it at the current level would make his life much harder.
Image: Steve Morris claims PIP and is worried about what reforming the benefit could mean for him
“I’m deafblind. PIP makes a huge difference to my life. It enables me to, afford some of the additional costs that are associated with my disability.
“For so many disabled people benefits are a lifeline. So to hear that lifeline might be taken away or severely restricted is hugely concerning.”
Liz Kendall told The Sunday Times it was an “absolute principle” to protect welfare payments for people unable to work. “For those who absolutely cannot work, this is not about that,” she said.
But she said the number of people on PIP is set to more than double this decade, partly driven by younger people.
Sky’s political correspondent Liz Bates said the government had been expected to announce a detailed plan over welfare spending last week.
“This particular issue of PIPs stopped that plan being announced because of the strength of backlash… from the backbenches all the way up to cabinet level.”
She added that talks were going on behind the scenes about whether the policy could be softened in some way, although it was unlikely reforms could be avoided completely ahead of the spring statement on 26 March.
“Could there be a bit of backtracking from Number 10 and from the department? This is what we’re going to find out on Tuesday. There is, of course, a lot of pressure coming from the chancellor.”
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3:05
Welfare system ‘letting people down’
Labour is also aiming to tackle economic inactivity – especially among those under 35 – with an increasing proportion out of work due to long-term sickness.
A recent PwC report warns “a significant proportion of working adults are close to becoming economically inactive” and ill-health “is a major driver”.
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The poll of 4,000 people shows 10% of the workforce are currently actively considering leaving work, and not just their current role.
That rises to 37% of those aged 18-24, who say they have either seriously considered leaving work in the last year, or are actively considering doing so now.
While the factors are complex and vary by age, the report reflects mental health is a major concern with 42% of 18-24 year-olds citing it as the biggest reason to leave work.
Image: Backbench Labour MPs are concerned welfare reforms will harm vulnerable people claiming benefits. File pic: PA
On Sunday, Ms Kendall teased one policy announcement to attract people back to work, effectively giving disabled people the right to try employment without the risk of losing their benefits.
The so-called “right to try guarantee” aims to prevent those people who receive health-related benefits from having their entitlements automatically re-assessed if they enter employment.
The Conservatives support welfare reform but claim Labour is “divided” over the issue and “cannot deliver the decisive change we need”.
Shadow work and pensions secretary Helen Whately said: “The government’s dithering and delay is costing taxpayers millions every day and failing the people who rely on the welfare system.”
Migrants will have to live in the UK for a decade before they can apply for citizenship under plans to reduce reliance on foreign workers.
The change from five to 10 years will come with exceptions for people who make a “high contribution” to the economy or society, who will able to be fast-tracked for permanent settlement rights.
It comes on top of new English language requirements across every visa route, which will extend to adult dependents for the first time.
The measures will be announced by Sir Keir Starmer today ahead of the Immigration White Paper, which will set out further reforms to bring net migration down.
At a press conference later, the prime minister will say: “This is a clean break from the past and will ensure settlement in this country is a privilege that must be earned, not a right.
“And when people come to our country, they should also commit to integration and to learning our language.
“Lower net migration, higher skills and backing British workers – that is what this White Paper will deliver.”
Net migration – the difference between the number of people immigrating and emigrating to a country – soared when the UK left the EU in January 2020.
It reached 903,000 in the year to June 2023 before falling to 728,000 in mid-2024. But that is still well above its pre-Brexit high of 329,000 in the year up to June 2015.
The government is under pressure to tackle legal migration, as well as illegal immigration, amid Reform UK’s surge in the polls.
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9:47
Reform: Immigration ‘should be frozen’
However, experts have questioned whether some of the changes announced by Sir Keir today will have much of an impact, at least in the short term.
Currently, migrants have to live in the UK for five years to get indefinite leave to remain, or “settled status” if they are from the EU. They can then use this to apply for British citizenship, usually 12 months after settlement.
There were 162,000 grants of settlement in 2024, up 35% from 2023, and 270,000 grants of citizenship in 2024, up nearly a third on the previous year.
‘Contributions-based’ citizenship model
The new “contributions-based model” means people must spend a decade in the UK before applying to stay, unless they can show a “real and lasting contribution to the economy and society”.
Image: Sir Keir Starmer at a summit in Oslo. Pic: PA
The Home Office said this will include “high-skilled” and “high-contributing” individuals like nurses, doctors, engineers and AI leaders.
The details are still being fleshed out and will be put to consultation later this year rather than in the white paper, Sky News understands.
However, the thinking is that those who pay higher taxes or who work in a priority sector will be eligible to be fast-tracked. Home Secretary Yvette Cooper is also keen for discounts to apply to those who make an “outstanding contribution” to society, such as community leaders, it is understood.
English language requirements
The government also plans to raise English language requirements across every immigration route, so foreign workers speak a higher standard of English.
For the first time, this will also extend to all adult dependents by requiring them to demonstrate a basic understanding of English, which the government says will help people integrate and find employment.
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Dr Madeleine Sumption, director of the Migration Observatory at the University of Oxford, told Sky News that extending the amount of time people need to be in the UK to get permanent settlement rights is unlikely to significantly affect migration levels, as there is “no evidence” this affects their decision about whether to migrate.
Any impact would be seen in five to ten years, “when people get to that point of the visa journey”, she said, adding that the main effect of this policy would be to “bring in more visa-fee revenue to the Home Office” and “to make it harder for migrants to settle in”.
She said that language requirements “are more likely to have an impact on the number of visas granted”, as more than half of skilled worker visas over the past couple of years have gone to dependents.
“However, there’s no data on how many of them would have passed a language test so it is hard to say how big,” Dr Sumption added.
The Home Office has not put a figure on what sort of reduction these policies could achieve, with Ms Cooper to give more details in parliament on Monday afternoon.
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16:59
Minister reveals new immigration plans
On Sunday, she told Sky News’s Trevor Phillips that plans to close the care worker visa route and change the skilled visa threshold to require a graduate qualification would cut the number of overseas workers by about 50,000 this year.
However, she refused to put a target on the overall levels of net migration the government is aiming for, saying that approach “failed” under the Conservatives.
The Tories have admitted making mistakes in office, but are still calling for a binding immigration cap and want to repeal the Human Rights Act for immigration issues.
Shadow Home Secretary Chris Philp said Labour has “overseen the worst ever start to a year for illegal immigrants crossing the channel” adding: “The idea that Starmer is tough on immigration is a joke.”
Tinian, a small island in the US territory of the Northern Mariana Islands, could get a second chance at launching a stablecoin after the territory’s Senate voted to override the governor’s earlier veto of its stablecoin bill.
On May 9, the Northern Mariana Islands Senate voted 7-1 to override Governor Arnold Palacios’ April 11 veto of the bill, which would allow the Tinian local government to issue licenses to internet casinos and includes a provision for the Tinian treasurer to issue, manage and redeem a “Tinian Stable Token.”
The bill will now head to the 20-member Northern Mariana Islands House, which will need a two-thirds majority vote to override the veto and pass the bill into law.
If the House is quick to pass the bill, the Tinian government could be in the lead for the first US public entity to issue a stablecoin. It’s in a race against the state of Wyoming, which is aiming to issue a stablecoin by July.
Tinian is governed by the local government, the Municipality of Tinian and Aguiguan, and is one of four municipalities in the Commonwealth of the Northern Mariana Islands, a small US territory in the Pacific north of Guam.
Tinian has just over 2,000 residents, and its economy heavily relies on tourism.
Senators push “much-needed” bill despite “deep concerns”
Governor Palacios said in his letter last month that he vetoed the bill as it “presents several legal issues and may be unconstitutional” and would regulate an activity that could not “be clearly restricted” to Tinian.
Democrat Senator Celina Babauta, the only one to vote against overriding the veto, said before the vote that she had “deep concerns with respect to the lack of resources, the lack of manpower” to enforce the gambling law and police use of the stablecoin.
“We are restricted by federal statutes and must comply with that,” she added.
Senator Celina Babauta (right) delivers remarks at a Senate hearing alongside Senator Karl King-Nabors (middle). Source: YouTube
“We struggle with trying to find creative and innovative ways to diversify our economy and our industries,” Babauta said. “I don’t believe that gambling is the only thing that we can be looking forward to every single time there’s an investor that comes in.”
However, Republican Senator Karl King-Nabors, who represents Tinian and co-authored the bill, said it was “a far more stringent and efficient way to oversee the online gaming aspect.”
“This stablecoin is tracked through software, and if anything, it allows for more transparency when it comes to the Tinian Casino Gaming Control Commission,” he added.
King-Nabors said the bill aligned with “much-needed” economic diversification measures, as the local economy was yet to bounce back from a COVID-19 pandemic-induced slump.
“This legislation stands at a time where we’re going through so much economic hardships,” King-Nabors added. “I find it difficult that we’re constantly having to step over obstacles when we’re trying to incentivize and look for ways to bring in revenue that don’t affect our environment, that don’t require a brick and mortar, that don’t impact our land.”
Tinian bids for fully-backed stablecoin
Republican Senator for Tinian, Jude Hofschneider, led the introduction of the bill in February, which aims to amend a local Tinian law to allow internet-only casino licenses, along with allowing the island to launch a fully backed US dollar-pegged stablecoin.
A four-member Tinian delegation to the Marianas legislature, which includes Hofschneider and King-Nabors, had passed the bill to Governor Palacios in a unanimous vote on March 12.
Statements shared with Cointelegraph in March said the stablecoin is called the Marianas US Dollar (MUSD) and will be backed by cash and US Treasury bills held in reserve by the Tinian Municipal Treasury.
The Tinian government chose tech services firm Marianas Rai Corporation, based in the Northern Mariana Islands’ capital of Saipan, as the exclusive infrastructure provider to issue and redeem MUSD.
MUSD is built on the eCash blockchain, a network that rebranded from Bitcoin Cash ABC in 2021 and is a fork of Bitcoin Cash, a blockchain that split off from Bitcoin in 2017.
Marianas Rai Corp. co-founder and technology chief Vin Armani told Cointelegraph in April that it was “in active discussions with potential partners” about launching the token after Governor Palacios’ veto and was “poised to act quickly” as US Congress is looking to pass stablecoin laws.
In the US, one stablecoin bill, the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, has since stalled in Congress after Senate Democrats pulled support for the bill due to concerns about President Donald Trump’s sprawling crypto ventures.
Another stablecoin-regulating bill in the House, the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act, has also lost Democrat support due to Trump’s crypto tie-ups.
The combination of full prisons and tight public finances has forced the government to urgently rethink its approach.
Top of the agenda for an overhaul are short sentences, which look set to give way to more community rehabilitation.
The cost argument is clear – prison is expensive. It’s around £60,000 per person per year compared to community sentences at roughly £4,500 a year.
But it’s not just saving money that is driving the change.
Research shows short custodial terms, especially for first-time offenders, can do more harm than good, compounding criminal behaviour rather than acting as a deterrent.
Image: Charlie describes herself as a former ‘junkie shoplifter’
This is certainly the case for Charlie, who describes herself as a former “junkie, shoplifter from Leeds” and spoke to Sky News at Preston probation centre.
She was first sent down as a teenager and has been in and out of prison ever since. She says her experience behind bars exacerbated her drug use.
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Image: Charlie in February 2023
“In prison, I would never get clean. It’s easy, to be honest, I used to take them in myself,” she says. “I was just in a cycle of getting released, homeless, and going straight back into trap houses, drug houses, and that cycle needs to be broken.”
Eventually, she turned her life around after a court offered her drug treatment at a rehab facility.
She says that after decades of addiction and criminality, one judge’s decision was the turning point.
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“That was the moment that changed my life and I just want more judges to give more people that chance.”
Also at Preston probation centre, but on the other side of the process, is probation officer Bex, who is also sceptical about short sentences.
“They disrupt people’s lives,” she says. “So, people might lose housing because they’ve gone to prison… they come out homeless and may return to drug use and reoffending.”
Image: Bex works with offenders to turn their lives around
Bex has seen first-hand the value of alternative routes out of crime.
“A lot of the people we work with have had really disjointed lives. It takes a long time for them to trust someone, and there’s some really brilliant work that goes on every single day here that changes lives.”
It’s people like Bex and Charlie, and places like Preston probation centre, that are at the heart of the government’s change in direction.