Welfare concessions are on the table, PM confirms ahead of crunch vote
Concessions on welfare are being discussed with rebel MPs ahead of a crunch vote next week, Sir Keir Starmer has confirmed.
The prime minister opened a statement about the NATO summit he has just returned from with a nod to the troubles he is facing at home.
Politics Live: PM offers olive branch to Labour rebels ahead of pivotal vote
Speaking in the Commons he said all colleagues want to get welfare reform right and “so do I”.
He added: “We want to see reform implemented with Labour values of fairness. That conversation will continue in the coming days.”
Sir Keir faces a difficult task as several MPs have told Sky News they are “sticking to their guns” after frantic calls from cabinet ministers on Wednesday failed to bring them on side.
One MP from the 2024 intake said: “Many are sticking to their guns. It’s now become more than welfare. They were too heavy with their calls this week and pressure on back benches.”
Another MP accused Number 10 and the prime minister of showing “utter contempt” towards the rebels’ concerns and said this “is only annoying people more”.
The Universal Credit and Personal Independence Payment Bill aims to shave £5bn off the welfare budget by 2030.
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Labour Party ‘agrees welfare needs reform’
This includes restricting eligibility for the personal independence payment (pip), the main disability payment in England, and limit the sickness-related element of universal credit.
The government’s own figures show 250,000 people could be pushed into poverty, including 50,000 children, because of the changes.
Ministers say this will be offset by plans to get more people into work, but while lots of MPs agree with that in principle they say it’s not clear how this will be achieved.
What are the rebels calling for?
More than 120 Labour MPs have signed a “reasoned amendment” arguing that disabled people have not been properly consulted and further scrutiny of the changes is needed.
The government initially stuck to its guns amid the growing disquiet.
But while outwardly confident, Sky News learnt that cabinet ministers were ringing MPs asking them to take their name off the amendment and warning of a potential leadership contest or general election if the government loses the vote on Tuesday.
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Government’s battle over welfare reforms explained
What concessions could be reached?
Ministers have since hinted at attempts to reach a compromise, but it’s not clear what sort of concessions would satisfy the bills’ critics.
Sky News understands there has been discussions about watering down the changes to pip.
Under current plans, people will need to score a minimum of four points in at least one activity to qualify for the daily living element instead of fewer points spread across a range of tasks, as is currently the case.
Ministers have discussed lowering the new criteria to three points, but one MP told Sky News this is “still unacceptable” as it would not greatly reduce the number of people set to lose out.
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Another MP said they had not heard anything concrete on concessions yet, but added: “Frankly, personally, this has been so badly mishandled that short of pulling the bill and bringing it back later in the year following the impact assessment and with amendments, I don’t think my position will change going in to Tuesday at this point.”
Timeline for debate ‘unbelievable’
MPs are also annoyed that if the legislation clears the first hurdle it will then face only a few hours’ examination rather than days or weeks in front of a committee tasked with looking at the bill.
Lucy Powell, the leader of the House of Commons, has said following the second reading and vote on Tuesday 1 July, the bill’s remaining stages will take place in a Commons debate on 9 July.
She said the vote next week is for the principles to be considered, with the details to be “discussed and amended” at the next stages.
This appears to suggest the government is asking MPs to back the bill on Tuesday as a show of agreement on the principle of reform, with a promise that changes could be made later.
But it’s not clear whether this strategy will work given one of the rebels’ main concerns is that the bill is being rushed through.
One MP said: “The new line appears to be we all agree on the principle of reform so back at second reading and amend at remaining stages.
“One single day [for] all other stages of the bill is unbelievable.”
The Japanese government is reportedly backing plans to introduce a significant reduction in the nation’s maximum tax rate on crypto profits, with a flat rate of 20% across the board.
Japan’s financial regulator, the Financial Services Agency (FSA), first floated the proposed tax changes in mid-November, outlining plans to introduce a bill in early 2026, and now the government and ruling coalition — the political parties in control of Japan’s parliament, the National Diet — are on board.
According to a report from Japanese news outlet Nikkei Asia on Sunday, the new rules aim to align crypto taxation rules with those of other financial products, such as equities and investment funds.
Under the current laws, taxation on crypto trading is included as part of income taxes for individuals and businesses, falling under the category of “miscellaneous income.” The rate ranges from 5% on the lower end of the spectrum to 45% on the high end, with high-income earners potentially on the hook for an additional 10% inhabitant tax.
Meanwhile, assets such as equities and investment trusts are taxed separately, with a flat 20% tax on profits, regardless of the amount.
The tax changes could be a boon for the domestic cryptocurrency market, as the higher tax rates may have deterred potential investors.
According to the Nikkei report, the potential changes to crypto taxation in Japan will be introduced as part of a “solid investor-protection framework” proposed in the FSA’s bill, which aims to amend the Financial Instruments and Exchange Act.
The FSA will submit the bill during the regular Diet session in 2026, as it pushes for greater oversight of crypto trading, including a ban on dealing with non-public information and stricter investment disclosures.
Japan finally set for crypto tax change after long fight
The Japan Blockchain Association (JBA), the nation’s major crypto-focused non-governmental lobbying group, has been calling for these changes for almost three years.
Related: Bitcoin falls to $84K: Is Japan’s bond market the culprit, or is more at play?
In July 2023, the JBA published a letter to the government on its website, outlining key tax reform requests to support the industry. The letter called for a 20% tax rate that aligns with other investment vehicles.
“This letter requests a review of tax on crypto assets, which is the biggest hurdle for companies operating Web3 businesses in Japan and a disincentive for the public to actively own and use crypto assets,” the letter reads.
While it is unclear if the JBA had a direct influence on the FSA’s thinking, the financial watchdog did start warming up to the idea and pushing for reform in September 2024.
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Sir Keir Starmer has warned China poses “real national security threats to the United Kingdom”.
But the prime minister also described China as a “nation of immense scale, ambition and ingenuity” and a “defining force in technology, trade and global governance”.
“The UK needs a China policy that recognises this reality,” he added in a speech at the Guildhall in London.
“Instead, for years we have blown hot and cold.
“So our response will not be driven by fear, nor softened by illusion. It will be grounded in strength, clarity and sober realism.”
Prime Minister Keir Starmer giving his speech. Pic: Reuters
Describing the absence of engagement with China – the world’s second-biggest economy – as “staggering” and “a dereliction of duty”, Sir Keir said: “This is not a question of balancing economic and security considerations. We don’t trade off security in one area, for a bit more economic access somewhere else.
“Protecting our security is non-negotiable – our first duty. But by taking tough steps to keep us secure, we enable ourselves to cooperate in other areas.”
Sir Keir’s remarks come after MPs and parliamentarians were warned last month of new attempts to spy on them by China.
And they follow the collapse of a prosecution of two people suspected of spying on behalf of China.
That case led to controversy over how the government under Labour responded to the Crown Prosecution Service’s requests for evidence.
Speech at the annual Lady Mayor’s Banquet. Pic: Reuters
At the time, Sir Keir sought to blame the previous Conservative government for the issues, which centred on whether China could be designated an “enemy” under First World War-era legislation.
Meanwhile, Sky News understands the prime minister is set to approve plans for a controversial Chinese “super embassy” in central London.
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A final decision on the planning application for the former Royal Mint site near the Tower of London is due on 10 December, after numerous previous delays.
Sir Keir is also understood to be preparing for a likely visit to China in the new year.
Since he was elected last year, Sir Keir has been active on the world stage, trumpeting deals with the US, India and the EU and leading the “coalition of the willing” in support of Ukraine.
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PM preparing for likely China visit
But he has also faced criticism from his opponents, who accuse him of spending too much time out of the UK attending international summits rather than focusing on domestic issues.
Sir Keir offered a defence of his approach, describing it as “the biggest shift in British foreign policy since Brexit” and “a decisive move to face outward again”.
While saying he would “always respect” the Brexit vote as a “fair, democratic expression”, he said the way the UK’s departure from the EU had been “sold and delivered” was “simply wrong”.
He said: “Wild promises were made to the British people and not fulfilled. We are still dealing with the consequences today.”
In his speech on Monday, the prime minister accused opposition politicians of offering a “corrosive, inward-looking attitude” on international affairs.
Sir Keir Starmer. Pic: Reuters
Taking aim at those who advocate leaving the European Convention on Human Rights or NATO, he said they offered “grievance rather than hope” and “a declinist vision of a lesser Britain”.
Sir Keir said: “Moreover, it is a fatal misreading of the moment, ducking the fundamental challenge posed by a chaotic world – a world which is more dangerous and unstable than at any point for a generation, where international events reach directly into our lives, whether we like it or not.”
He added: “In these times, we deliver for Britain by looking outward with renewed purpose and pride, not by shrinking back. In these times, internationalism is patriotism.”
Responding to the prime minister’s speech, shadow foreign secretary Dame Priti Patel said: “From China’s continued flouting of economic rules to transnational repression of Hong Kongers in Britain, Starmer’s ‘reset’ with Beijing is a naive one-way street, which puts Britain at risk while Beijing gets everything it wants.
“Starmer continues to kowtow to China and is captivated by half-baked promises of trade.
“Coming just days after the latest Chinese plot to interfere in our democracy was exposed, his love letter to the Chinese Communist Party is a desperate ploy to generate economic growth following his budget of lies and is completely ill-judged.
“While China poses a clear threat to Britain, China continues to back Iran and Russia, and plots to undermine our institutions. Keir Starmer has become Beijing’s useful idiot in Britain.”
The chairman of the Office for Budget Responsibility (OBR) has resigned after an investigation into the leak of last week’s budget criticised the watchdog’s leadership.
Richard Hughes stepped down following the publication of a report into the early release of Rachel Reeves’s fiscal event.
The OBR’s official forecast, which revealed the contents of the record-breaking tax rise budget, was accessed at 11.35am last Wednesday, about an hour before the chancellor stood up to deliver it.
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Rachel Reeves said she only found out about the leak when she was in the House of Commons
In a letter to Ms Reeves and the chairwoman of the Commons Treasury Committee Dame Meg Hillier, Mr Hughes said he was quitting to allow the OBR to “quickly move on from this regrettable incident”.
He said he took “full responsibility” for “the shortcomings identified in the report”.
Mr Hughes said: “By implementing the recommendations in this report, I am certain the OBR can quickly regain and restore the confidence and esteem that it has earned through 15 years of rigorous, independent economic analysis.”
An investigation ordered by the independent fiscal forecaster soon after the budget called the leak “the worst failure in the 15-year history of the OBR” and strongly criticised the watchdog’s processes for protecting sensitive information.
The probe found there was “nothing to suggest” the premature access was the result of “hostile cyber activity by foreign actors or cyber criminals, or of connivance by anyone working for the OBR”.
“Nor was it simply a matter of pressing the publication button on a locally managed website too early,” the report stated.
It concluded that “configuration errors” led to “a failure to ensure the protections which hide documents from public view immediately before publication were in place”.
“The ultimate responsibility for the circumstances in which this vulnerability occurred and was then exposed rests, over the years, with the leadership of the OBR,” the investigation said.
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Did Rachel Reeves mislead the nation with her budget?
Kemi Badenoch claimed that Ms Reeves was trying to use Mr Hughes as a “human shield”.
The Conservative leader said on social media: “More serious questions for the chancellor as she tries to make Richard Hughes her human shield.
“Her actions have turned this into a full blown political crisis for the government. If [Prime Minister] Keir Starmer had a backbone, he would have sacked Reeves long ago.”
Mr Hughes had been under pressure to explain the leak, which he immediately apologised for, and ordered the investigation.
It is also led by Professor David Miles and Tom Josephs, with Baroness Sarah Hogg and Dame Susan Rice as non-executive members.
There are 52 permanent staff, who are civil servants, with six of those working on the strategy, operations and communications team.
The report acknowledged the leak “changed the pattern of budget day to the chancellor’s disadvantage”.
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It revealed the OBR’s spring statement 2025 was also accessed ahead of time, but said the likely explanation “is benign”.
And it said last week’s budget forecast document had multiple attempts to access it before it was inadvertently made accessible online.
The investigation partly blamed the Treasury and the Cabinet Office, as the OBR’s IT services were moved on to the Treasury’s shared systems in 2023 to “align more closely with Treasury security arrangements”, particularly around the sharing of sensitive budget information between the OBR and Treasury.
It said the Treasury should pay “greater attention” when setting the OBR’s budget, currently £6.4m, to the need for adequate support.
The investigation said there was pressure on the small team involved to ensure the full economic and fiscal outlook was published when the chancellor sat down after giving her budget, so a pre-publication “facility” was used.
But this commonly used device created a “potential vulnerability if not configured properly” and had not received the same amount of attention by the OBR as it had placed on security of communications with the Treasury “during the long period of run-up to the budget”.
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Starmer says he did not mislead the public
An outside web developer, who has helped the OBR team since it came into existence 15 years ago, assists the internal team and manages content and uploads at times of pressure, including the release of the budget forecast.
The report said the risks of this approach have increased over the years as technologies have developed and online threats have risen.
“With hindsight, it is clear that over the years this arrangement should have been regularly reexamined and assessed by the management of the OBR,” the report said.
It recommended the process for publishing forecasts should “immediately” be removed from the OBR’s locally managed website, which is a WordPress website, and published as part of a government website.
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