Labour MPs Rebel Against Welfare Reform Bill

In June 2025, the UK government faced significant internal opposition over its proposed welfare reform bill, which aimed to reduce annual spending by £5 billion through stricter eligibility criteria for disability benefits. The reforms, primarily targeting the Personal Independence Payment (PIP) and the health-related component of Universal Credit (UC), were met with resistance from over 120 Labour MPs who signed a "reasoned amendment" opposing the bill. This marked one of the most substantial rebellions within the Labour Party during Prime Minister Keir Starmer's tenure.

Government Concessions and Policy Adjustments

In response to the mounting dissent, the government announced several concessions to the proposed welfare reforms:

• Protection for Existing Claimants: Current recipients of PIP and the health-related UC component will retain their benefits under existing criteria. The stricter eligibility rules will apply only to new claimants starting from November 2026.

• Employment Support Investment: An additional £1 billion will be allocated to employment support programs aimed at assisting individuals with long-term health conditions in returning to work.

• Universal Credit Adjustments: The standard allowance for UC will see an increase, while the health-related top-up for new claimants will be reduced. A new premium will be introduced for individuals with severe conditions.

These adjustments are projected to reduce the anticipated savings from £5 billion to approximately £2 billion annually.

Fiscal Implications and Treasury Concerns

The revised welfare reform plans have introduced a £3 billion shortfall in the government's fiscal projections. This development has raised concerns within the Treasury about meeting budgetary targets and has led to discussions about potential tax increases to offset the deficit. Chancellor Rachel Reeves is under pressure to outline strategies to address the financial gap without compromising support for vulnerable populations.

Ongoing Opposition and Future Legislative Challenges

Despite the government's concessions, a faction of Labour MPs remains opposed to the welfare reform bill, arguing that the changes still disproportionately affect disabled individuals and those with long-term health conditions. Disability advocacy groups have also expressed dissatisfaction, stating that the reforms could lead to increased poverty and reduced access to essential support services.

The welfare reform bill is scheduled for a second reading and vote in the House of Commons on July 1, 2025. The outcome of this vote will be a critical indicator of the government's ability to navigate internal party divisions and implement its policy agenda amid growing scrutiny and public concern.