While many Labour MPs initially indicated they backed the bill in principle, support has ebbed away over recent months amid warnings about the impact the cuts could have on the most vulnerable people in society.
Around 119 Labour MPs have now signed a reasoned amendment to oppose the government’s proposals – which, if passed, would effectively kill the legislation.
But speaking to Sky News’ political editor Beth Rigby from the NATO summit at the Hague, the prime minister said the welfare system needed reform and was “not working for anyone”.
He said the vote planned for Tuesday was not a confidence vote in his leadership but on the need to reform the system.
“I think most colleagues do accept the case for reform,” he said.
“We’ve got to get on and make that reform because the options are: leave the system as it is, trusting people and not helping them, that’s not a Labour option. The Labour option is to reform it and make it fit for the future. So we’re going to press ahead with these reforms.”
Image: Sir Keir Starmer made the comments on his way to a NATO summit in the Netherlands. Pic: AP
Welfare system ‘unsustainable’
Sir Keir spoke to reporters on the way to the summit about the reforms, saying there were around 1,000 people a day signing up for personal independence payment (PIP) – equivalent to the size of the population of Leicester.
“That is not a system that can be left unreformed, not least because it’s unsustainable, and therefore you won’t have a welfare system for those that need it in the future,” he added.
“So those that care about a future welfare system have to answer the question – how do you reform what you’ve got to make sure it’s sustainable for the future?'”
Introduced in March, the government’s welfare bill outlines proposals to make it harder for some disabled people to qualify for PIP while also cutting universal credit, another benefit.
What are the main changes in the welfare bill?
The most controversial elements of the government’s welfare bill are changes to PIP and Universal Credit.
PIP is money for people who have extra care needs or mobility needs as a result of a disability.
People who claim it – some of whom are in work – are awarded points depending on their ability to do certain activities, such as washing and preparing food, and this influences how much they will receive.
Under the plans, from November 2026, people will need to score a minimum of four points in at least one activity to qualify for the daily living element of PIP – instead of fewer points across a broader range of tasks the person needs help with.
Currently, the standard rate is given if people score between eight and 11 points overall, while the enhanced rate applies from 12 points.
The changes do not affect the mobility component of PIP.
And from April next year, the health element of Universal Credit will be frozen in cash terms for existing claimants at £97 per week until 2029/2030.
For new claimants, the health element of Universal Credit will be reduced to £50 per week.
However, ministers point to the fact that the Universal Credit standard allowance will increase from £92 per week in 2025-26 to £106 per week by 2029-30.
Overall, 3.2 million families are expected to lose an average of £1,720 by the end of 2030 due to the changes.
However, the government has stressed that these figures do not take into account the £1bn that is being put towards helping the long-term sick and disabled back into work.
It is these changes that have caused the most anxiety among MPs.
As one Labour MP told Sky News: “If the thrust of the policy is getting people into work, how does cutting support for people in work, work?
“The thrust of the proposals is right but cutting PIP and Universal Credit isn’t about getting people back into work, it’s about saving money.”
The reasoned amendment calls on the government to delay the proposals pending an assessment of the impact of the PIP cuts.
It also cites concern about the government’s own figures which show 250,000 people could be pushed into poverty as a result of the changes and the lack of a formal consultation with disabled people.
One Labour rebel told Sky News there was a “broad sense of unease across all levels of the parliamentary party”.
“Almost everyone thinks there needs to be reform and there are a lot of good things in the bill, but elements need more thought and explanation if they are going to proceed,” they said.
“Unless those issues are revised, or much better explained and justified, I don’t think there is enough support for the measures. People are really worried there is a rush to do this and that we might sleepwalk into this as we have done with other issues.”
On Tuesday, Downing Street suggested the vote would still go ahead despite the concerns of some MPs – including influential chairs of parliamentary select committees.
Asked whether the government was confident it could pass the legislation, a Number 10 spokesman told reporters: “We are focused on delivering last week’s bill and engaging, talking to colleagues, as to why this reform is so important.”
Pressed on whether the vote was happening next week, they added: “I would never get ahead of parliamentary business. It’s scheduled for next week. We are committed to reforming welfare.”
The idea of a wealth tax has raised its head – yet again – as the government attempts to balance its books.
Downing Street refused to rule out a wealth tax after former Labour leader Lord Kinnock told Sky News he thinks the government should introduce one.
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Lord Kinnock calls for ‘wealth tax’
Sir Keir Starmer’s spokesman said: “The prime minister has repeatedly said those with the broadest shoulders should carry the largest burden.”
While there has never been a wealth tax in the UK, the notion was raised under Rishi Sunak after the COVID years – and rejected – and both Harold Wilson’s and James Callaghan’s Labour governments in the 1970s seriously considered implementing one.
Sky News looks at what a wealth tax is, how it could work in the UK, and which countries already have one.
Image: Will Chancellor Rachel Reeves and Prime Minister Sir Keir Starmer impose a wealth tax? Pic: PA
What is a wealth tax?
A wealth tax is aimed at reducing economic inequality to redistribute wealth and to raise revenue.
It is a direct levy on all, or most of, an individual’s, household’s or business’s total net wealth, rather than their income.
The tax typically includes the total market value of assets, including savings, investments, property and other forms of wealth – minus a person’s debts.
Unlike capital gains tax, which is paid when an asset is sold at a profit, a wealth tax is normally an annual charge based on the value of assets owned, even if they are not sold.
A one-off wealth tax, often used after major crises, could also be an option to raise a substantial amount of revenue in one go.
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Wealth tax would be a ‘mistake’
How could it work in the UK?
Advocates of a UK wealth tax, including Lord Kinnock, have proposed an annual 2% tax on wealth above £10m.
Wealth tax campaign group Tax Justice UK has calculated this would affect about 20,000 people – fewer than 0.04% of the population – and raise £24bn a year.
Because of how few people would pay it, Tax Justice says that would make it easy for HMRC to collect the tax.
The group proposes people self-declare asset values, backed up by a compliance team at HMRC who could have a register of assets.
Which countries have or have had a wealth tax?
In 1990, 12 OECD (Organisation for Economic Co-operation and Development) countries had a net wealth tax, but just four have one now: Colombia, Norway, Spain and Switzerland.
France and Italy levy wealth taxes on selected assets.
Colombia
Since 2023, residents in the South American country are subject to tax on their worldwide wealth, but can exclude the value of their household up to 509m pesos (£92,500).
The tax is progressive, ranging from a 0.5% rate to 1.5% for the most wealthy until next year, then 1% for the wealthiest from 2027.
Image: Bogota in Colombia, which has a wealth tax
Norway
There is a 0.525% municipal wealth tax for individuals with net wealth exceeding 1.7m kroner (about £125,000) or 3.52m kroner (£256,000) for spouses.
Norway also has a state wealth tax of 0.475% based on assets exceeding a net capital tax basis of 1.7m kroner (£125,000) or 3.52m kroner (£256,000) for spouses, and 0.575% for net wealth in excess of 20.7m kroner (£1.5m).
Image: Norway has both a municipal and state wealth tax. Pic: Reuters
The maximum combined wealth tax rate is 1.1%.
The Norwegian Labour coalition government also increased dividend tax to 20% in 2023, and with the wealth tax, it prompted about 80 affluent business owners, with an estimated net worth of £40bn, to leave Norway.
Spain
Residents in Spain have to pay a progressive wealth tax on worldwide assets, with a €700,000 (£600,000) tax free allowance per person in most areas and homes up to €300,000 (£250,000) tax exempt.
Image: Madrid in Spain. More than 12,000 multimillionaires have left the country since a wealth tax was increased in 2022. Pic: Reuters
The progressive rate goes from 0.2% for taxable income for assets of €167,129 (£144,000) up to 3.5% for taxable income of €10.6m (£9.146m) and above.
It has been reported that more than 12,000 multimillionaires have left Spain since the government introduced the higher levy at the end of 2022.
Switzerland
All of the country’s cantons (districts) have a net wealth tax based on a person’s taxable net worth – different to total net worth.
Image: Zurich is Switzerland’s wealthiest city, and has its own wealth tax, as do other Swiss cantons. Pic: Reuters
It takes into account the balance of an individual’s worldwide gross assets, including bank account balances, bonds, shares, life insurances, cars, boats, properties, paintings, jewellery – minus debts.
Switzerland also works on a progressive rate, ranging from 0.3% to 0.5%, with a relatively low starting point at which people are taxed on their wealth, such as 50,000 CHF (£46,200) in several cantons.
The Chinese owner of British Steel has held fresh talks with government officials in a bid to break the impasse over ministers’ determination not to compensate it for seizing control of the company.
Sky News has learnt that executives from Jingye Group met senior civil servants from the Department for Business and Trade (DBT) late last week to discuss ways to resolve the standoff.
Whitehall sources said the talks had been cordial, but that no meaningful progress had been made towards a resolution.
Jingye wants the government to agree to pay it hundreds of millions of pounds for taking control of British Steel in April – a move triggered by the Chinese group’s preparations for the permanent closure of its blast furnaces in Scunthorpe.
Such a move would have cost thousands of jobs and ended Britain’s centuries-old ability to produce virgin steel.
Jingye had been in talks for months to seek £1bn in state aid to facilitate the Scunthorpe plant’s transition to greener steelmaking, but was offered just half that sum by ministers.
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British Steel has not yet been formally nationalised, although that remains a probable outcome.
Jonathan Reynolds, the business secretary, has previously dismissed the idea of compensating Jingye, saying British Steel’s equity was essentially worthless.
Last month, he met his Chinese counterpart, where the issue of British Steel was discussed between the two governments in person for the first time.
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Inside the UK’s last blast furnaces
Jingye has hired the leading City law firm Linklaters to explore the recovery of hundreds of millions of pounds it invested in the Scunthorpe-based company before the government seized control of it.
News of last week’s meeting comes as British steelmakers face an anxious wait to learn whether their exports to the US face swingeing tariffs as part of US President Donald Trump’s trade war.
Sky News’s economics and data editor, Ed Conway, revealed this week that the UK would miss a White House-imposed deadline to agree a trade deal on steel and aluminium this week.
Jingye declined to comment, while a spokesman for the Department for Business and Trade said: “We acted quickly to ensure the continued operations of the blast furnaces but recognise that securing British Steel’s long-term future requires private sector investment.
“We have not nationalised British Steel and are working closely with Jingye on options for the future, and we will continue work on determining the best long-term sustainable future for the site.”