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The government has made an offer to rebel Labour MPs over its controversial welfare reforms, Sky News understands.

More than 120 Labour MPs were poised to vote against the Universal Credit and Personal Independence Payment (PIP) Bill on Tuesday.

The changes come after a ring-around by cabinet ministers failed to bring rebels on side.

The bill was intended to restrict eligibility for the PIP – the main disability payment in England- and limit the sickness-related element of universal credit, to help shave £5bn off the welfare budget by 2030.

‘We have listened’

N.10 said in a letter to MPs: “We have listened to MPs who support the principle of reform but are worried about the pace of change for those already supported by the system.

“This package will preserve the social security system for those who need it by putting it on a sustainable footing, provide dignity for those unable to work, supports those who can and reduce anxiety for those currently in the system.

“Our reforms are underpinned by Labour values and our determination to deliver the change the country voted for last year.”

Liz Kendall, the welfare secretary, said there would be two changes to the bill, including ensuring that all of those currently receiving PIP “will stay within the current system.

“The new eligibility requirements will be implemented from November 2026 for new claims only,” Ms Kendall said.

“Secondly, we will adjust the pathway of Universal Credit payment rates to make sure all existing recipients of the UC health element – and any new claimant meeting the severe conditions criteria – have their incomes fully protected in real terms.”

Sky News political editor Beth Rigby was earlier on Thursday told existing PIP claimants will be able to keep their payments, which means 370,000 people will not lose out.

This will cost the government at least £1.5bn, according to the Institute for Fiscal Studies.

Sky News understands that a senior source has accepted the change, but it will be up to each individual rebel to make a decision on whether to withdraw.

The source said they think the changes are a “good package” with “generous concessions”.

Politics latest: Government to make offer to rebels

A reasoned amendment signed by 126 Labour MPs argued that disabled people had not been properly consulted and further scrutiny of the changes is needed. If passed, this would have killed the bill.

Sky News understands that some senior rebels are willing to accept the concessions – with one saying that “the concessions will be positively received, and I expect to vote with the government now”.

Other MPs who had not wanted to rebel were also expecting to change their votes.

However, several Labour MPs on the left of the party have gone public to say they will still oppose the government, including Diane Abbott, Richard Burgon, Nadia Whittome and Brian Leishman.

Conservative shadow chancellor Sir Mel Stride said the change would mark a “screeching U-turn” – and claimed the changes mark “another unfunded spending commitment”.

Meanwhile, Helen Whately, shadow work and pensions secretary, said: “This is another humiliating U-turn forced upon Keir Starmer.

“With the sickness benefits bill set to reach £100 billion by 2030 the country needs action. But Labour has lurched from a bad plan to a next-to-nothing plan.

“The latest ‘deal’ with Labour rebels sounds a lot like a two-tier benefits system, more likely to encourage anyone already on benefits to stay there rather than get into work.”

What is PIP?

The biggest shakeup to the system involved changes to PIP – money given to people, including some of whom are in work – who have extra care needs or mobility needs as a result of a disability.

People who claim it 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.

From November 2026, people would have needed 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 spread across a range of tasks.

This would have impacted existing claimants as well as new ones. The government’s concessions are understood to see this change dropped for existing claimants.

Universal credit

The government intended to freeze the health element of universal credit, claimed by more than two million people, at £97 a week during this parliament, and cut the rate to £50 for new claimants.

Again, it’s understood the government’s concessions mean this change now won’t apply to existing claimants.

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The three key questions about the China spy case that need to be answered

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The three key questions about the China spy case that need to be answered

The government has published witness statements submitted by a senior official connected to the collapse of a trial involving two men accused of spying for China.

Here are three big questions that flow from them:

1. Why weren’t these statements enough for the Crown Prosecution Service (CPS) to carry on with the trial?

For this prosecution to go ahead, the CPS needed evidence that China was a “threat to national security”.

The deputy national security adviser Matthew Collins doesn’t explicitly use this form of words in his evidence. But he comes pretty close.

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In the February 2025 witness statement, he calls China “the biggest state-based threat to the UK’s economic security”.

More on China

Six months later, he says China’s espionage operations “harm the interests and security of the UK”.

Yes, he does quote the language of the Tory government at the time of the alleged offences, naming China as an “epoch-defining and systemic challenge”.

But he also provides examples of malicious cyber activity and the targeting of individuals in government during the two-year period that the alleged Chinese spies are said to have been operating.

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Witness statements published in China spy trial

In short, you can see why some MPs and ex-security chiefs are wondering why this wasn’t enough.

Former MI6 head Sir Richard Dearlove told Sky News this morning that “it seems to be there was enough” and added that the CPS could have called other witnesses – such as sitting intelligence directors – to back up the claim that China was a threat.

Expect the current director of public prosecutions (DPP) Stephen Parkinson to be called before MPs to answer all these questions.

2. Why didn’t the government give the CPS the extra evidence it needed?

The DPP, Stephen Parkinson, spoke to senior MPs yesterday and apparently told them he had 95% of the evidence he needed to bring the case.

The government has said it’s for the DPP to explain what that extra 5% was.

He’s already said the missing link was that he needed evidence to show China was a “threat to national security”, and the government did not give him that.

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What does China spy row involve?

The newly published witness statements show they came close.

But if what was needed was that explicit form of words, why was the government reticent to jump through that hoop?

The defence from ministers is that the previous Conservative administration defined China as a “challenge”, rather than a “threat” (despite the numerous examples from the time of China being a threat).

The attack from the Tories is that Labour is seeking closer economic ties with China and so didn’t want to brand them an explicit threat.

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Is China an enemy to the UK?

3. Why do these statements contain current Labour policy?

Sir Keir Starmer says the key reason for the collapse of this trial is the position held by the previous Tory government on China.

But the witness statements from Matthew Collins do contain explicit references to current Labour policy. The most eye-catching is the final paragraph of the third witness statement provided by the Deputy National Security Adviser, where he quotes directly from Labour’s 2024 manifesto.

He writes: “It is important for me to emphasise… the government’s position is that we will co-operate where we can; compete where we need to; and challenge where we must, including on issues of national security.”

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In full: Starmer and Badenoch clash over China spy trial

Did these warmer words towards China influence the DPP’s decision to drop the case?

Why did Matthew Collins feel it so important to include this statement?

Was he simply covering his back by inserting the current government’s approach, or was he instructed to put this section in?

A complicated relationship

Everyone agrees that the UK-China relationship is a complicated one.

There is ample evidence to suggest that China poses a threat to the UK’s national security. But that doesn’t mean the government here shouldn’t try and work with the country economically and on issues like climate change.

It appears the multi-faceted nature of these links struggled to fit the legal specificity required to bring a successful prosecution.

But there are still plenty of questions about why the government and the CPS weren’t able or willing to do more to square these circles.

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Trump’s second term fuels a $1B crypto fortune for his family: Report

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Trump’s second term fuels a B crypto fortune for his family: Report

Trump’s second term fuels a B crypto fortune for his family: Report

The Trump family’s crypto ventures have generated over $1 billion in profit, led by World Liberty Financial and memecoins including TRUMP and MELANIA.

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SEC chair: US is 10 years behind on crypto, fixing this is ‘job one’

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SEC chair: US is 10 years behind on crypto, fixing this is ‘job one’

SEC chair: US is 10 years behind on crypto, fixing this is ‘job one’

SEC Chair Paul Atkins said the US is a decade behind on crypto and that building a regulatory framework to attract innovation is “job one” for the agency.

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