Welfare Reform Clash: How Labour MPs Halted £5 Billion in Disability Cuts

In June 2025, UK Prime Minister Keir Starmer was forced into a major U-turn on planned welfare cuts after a significant rebellion within his own Labour Party. The government had proposed tightening eligibility for disability and sickness benefits, aiming to save £5 billion annually as part of efforts to control rising welfare spending. The changes, focused on making the Personal Independence Payment (PIP) harder to claim through a stricter points system, sparked outrage among Labour backbenchers, disability charities, and the wider public. More than 100 Labour MPs, including influential committee chairs like Meg Hillier, publicly opposed the plan, warning it would undermine Labour’s values of protecting the vulnerable and could push hundreds of thousands into poverty. Facing certain defeat in Parliament, the government revised its proposal: the tougher rules would now apply only to new benefit applicants, leaving existing claimants unaffected.

This compromise, welcomed by Hillier as a “good and workable” solution, roughly halves the expected savings to around £2-3 billion a year. The shift marks the third major policy reversal for Starmer’s government within weeks, following U-turns on winter fuel payments and a promised inquiry into grooming gangs, prompting critics to question his authority and decisiveness. However, supporters argue the move reflects a willingness to listen and align reforms with Labour’s traditional commitment to social justice. While some Labour MPs and disability advocates feel the changes don’t go far enough and warn of future inequality for new claimants, the climbdown has largely eased immediate tensions within the party. Analysts, including those at the Resolution Foundation, estimate the revised plan will leave a multi-billion-pound gap in the government’s savings ambitions, with details on how to fill this expected in the autumn budget.

The episode underscores a core challenge for Starmer: balancing fiscal responsibility with compassion, without alienating the Labour base that handed him a landslide victory just a year ago. The welfare reform saga also mirrors similar tensions seen across Europe, where governments from Germany to France have struggled to reform benefits without sparking public outcry. For Labour, the outcome reaffirms the political risks of appearing to retreat from its historic mission of defending the welfare state, and sets the stage for future battles over how best to combine fairness with financial sustainability in the UK’s social security system.