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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.

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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?

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Will there be a backlash over benefits?

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.

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Streeting defends wanting to slash welfare benefits

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?


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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?

Read more:
Why Starmer’s backbenchers are deeply uncomfortable?
Streeting denies Labour turning into Tories over disability benefit cuts
UK and global economic forecasts slashed

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Labour faces criticism over welfare reforms

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”.

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US Senate passes GAIN Act, prioritizing domestic AI and HPC chip sales

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US Senate passes GAIN Act, prioritizing domestic AI and HPC chip sales

US Senate passes GAIN Act, prioritizing domestic AI and HPC chip sales

The provision in the National Defense Authorization Act could create even more economic pain for the crypto mining industry if passed.

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Six global policy changes that affected crypto this week

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Six global policy changes that affected crypto this week

Six global policy changes that affected crypto this week

Major policy changes worldwide are shaping how the crypto industry will operate.

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Corbyn and Sultana have ‘patched things up’ – but what really happened?

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Corbyn and Sultana have 'patched things up' - but what really happened?

For decades he was the dissident backbencher, then unlikely Labour leader. She was a firebrand left-wing Labour MP with a huge online presence. To the left – on paper – it looked like the perfect combination.

Coupled with the support of four other independent MPs, it held the blueprints of a credible party. But ever since the launch of Your Party (working title) the left-wing movement has faced mockery and exasperation over its inability to look organised.

First, we learned Jeremy Corbyn’s team had been unaware of the exact timing of Zarah Sultana’s announcement that she would quit the Labour Party. Then a much bigger row emerged when she launched a membership drive linking people to sign up to the party without the full consent of the team.

It laid bare the holes in the structure of the party and pulled focus away from its core values of trying to be a party to counter Labour and Reform UK, while also drawing out some pretty robust language from their only woman MP calling the grouping a “sexist boys club”. It gave the impression that she was being sidelined by the four other male MPs behind the scenes.

This week, they tried to come together for the first time at a rally I attended in Liverpool and then, in quick succession, another event at The World Transformed conference the day after. But not everyone I spoke to who turned up to see the two heroes of the left found them all that convincing.

Jeremy Corbyn admitted to me that “there were some errors made about announcements and that caused a problem”. He said he was disappointed but that “we’re past that”.

Jeremy Corbyn and Zarah Sultana take part in a discussion on Your Party at The World Transformed conference in Manchester. Pic: PA
Image:
Jeremy Corbyn and Zarah Sultana take part in a discussion on Your Party at The World Transformed conference in Manchester. Pic: PA

Zarah Sultana said they were like Liam and Noel, who managed to “patch things up and have a very successful tour – we are doing the same”.

The problem is, it didn’t really explain what happened, or how they resolved things behind the scenes, and for some, it might have done too much damage already.

Layla signed up as a member when she first saw the link. It was the moment she had been waiting for after becoming frustrated with Labour. But she told me she found the ordeal “very unprofessional, very dishonest and messy”, and said she doesn’t want to be in a disorganised party and has lost trust in where her money will end up. She’s now thinking about the Greens. She said their leader, Zack Polanski “seemed like such a strong politician” with “a lot of charisma”.

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Jeremy Corbyn’s back – with Zarah Sultana and a new party. But is it a real threat to Labour, or just political theatre?

Since Polanski’s rise to power as leader, the Green Party has surged in popularity. According to a recent poll, they went up four points in just one week (following their conference). Voters, particularly on the left, seem to like his brand of “eco populism”.

While he has politely declined formally working in conjunction with Your Party publicly, he has said the “door is always open” to collaboration especially as he sees common goals between the two parties. Zarah Sultana said this weekend though that the Greens don’t describe themselves as socialists and that they support NATO which she has dubbed an “imperialist war machine”.

While newer coalitions may not be the problem for now, internal fissures might come sooner than they expect. Voters at the rally this weekend came with pretty clear concerns about some of the other independent MPs involved in Your Party.

The two heroes of the left fell out over a row over their party's paid membership system
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The two heroes of the left fell out over a row over their party’s paid membership system

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I asked Ayoub Khan if he considered himself left-wing. A question that would solicit a simple answer in a crowd like this. But he said his view was very simple, that he is interested in fighting for equality, fairness and justice: ‘We all know that different wards, different constituencies have different priorities and MPs should be allowed to represent the views of the communities they serve.” To him, that can sometimes mean voting against the private school tax and against decriminalising abortion.

The Your Party rally on Thursday night was packed, but the tone was subdued. People came full of optimism but they also wanted to make up their mind about the credibility of the new offering and to see the renewed reconciliation up close.

The organisers closed the evening off with John Lennon’s song, Imagine. That was apt, because until the party can get their act together, that’s all they’ll be doing.

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