Starmer to offer rebel MPS £2bn welfare concessions

Keir Starmer is expected to announce major concessions on his controversial welfare reforms as concerns grow the government will need to raise taxes to pay for the dramatic climbdown.

- MILLIE COOKE, KATE DEVLIN, ARCHIE MITCHELL

After a day of crisis talks with rebel Labour MPs, The Independent understands the prime minister has offered to water down his package of reforms, including protecting Personal Independence Payments (PIP) for all existing claimants.

The concessions could shave up to £2bn off the £25bn worth of meaning only new claimants would be subject to tougher rules, planned savings from the Universal Credit and Personal Independence Payment Bill, and follows Downing Street refusal to rule out tax rises for any changes.

At least 126 Labour MPs have signed an amendment that would effectively have killed the welfare cuts off, piling pressure on the prime minister to back down amid fears of a damaging Commons defeat at the second reading of the bill next week. Last night a deal was still being thrashed out between the rebels and the government.

It marks a major U-turn for the prime minister, who will now hope the costly concessions will starve off the rebellion within his party.

However, the government could now face a new headache after top economists warned that failing to pass the reforms would wipe out Rachel Reeves’ financial headroom ahead of her Budget this autumn, meaning a tax rise or cuts to spending elsewhere would be needed to plug the gap.

Asked whether the government accepts it would be forced to hike taxes if it waters down the legislation earlier yesterday, the prime minister’s official spokesperson said ministers would take the changes “right”, adding that the chancellor wanted to get decisions “in the round in the future”.