2nd Jul 2025 08:42
(Alliance News) - There will be "financial consequences" to UK Prime Minister Keir Starmer's last-minute climbdown on welfare reform, a Cabinet minister has said, as he declined to rule out tax rises.
Pat McFadden said that ministers "will keep to the tax promises" in their election manifesto.
Rachel Reeves has seen the GBP4.8 billion predicted savings from welfare changes whittled away through the government's changes to plans designed to keep backbenchers onside.
In a late concession on Tuesday evening, ministers shelved plans to restrict eligibility for the personal independence payment, Pip, with any changes now only coming after a review of the benefit.
The prime minister had a revolt of almost 50 MPs regardless of the changes.
The Chancellor of the Duchy of Lancaster told Times Radio on Wednesday that there will be "financial consequences" to the decision, and indicated that would be set out at the budget expected in the autumn.
Economists at the Institute for Fiscal Studies, IFS, and Resolution Foundation think tanks warned that Tuesday's concessions meant Reeves could now expect no "net savings" by 2029/30 – a key year for meeting her fiscal targets.
McFadden told BBC Breakfast he is "not going to speculate" on what could be in the budget, due in the autumn, but said that ministers "will keep to the tax promises" in their manifesto.
Asked explicitly whether he could rule out tax rises, the Cabinet Office minister told the programme: "I'm not going to speculate on the budget.
"We will keep to the tax promises that we made in our manifesto when we fought the election last year. But it doesn't make sense for me to speculate on something where, as I say, there are so many moving parts of which this is only one element."
Ministers have repeatedly insisted that Labour will not raise taxes on "working people", specifically income tax, national insurance or VAT.
But Reeves also remains committed to her "iron clad" fiscal rules, which require day-to-day spending to be covered by revenues – not borrowing – in 2029/30.
Despite the last-minute concessions, a total of 49 Labour MPs rebelled and voted against the legislation, the largest revolt of Keir Starmer's premiership.
Overall, the legislation cleared its first parliamentary hurdle by 335 votes to 260, a majority of 75.
The changes were announced by minister Stephen Timms to MPs in the Commons, and came after a first round of concessions offered last week did not seem enough to quell the rebellion.
McFadden described the wrangling as a "difficult process" but told Times Radio that the government "got to a position where the second reading of the Bill was passed".
York Central MP Rachael Maskell had tabled an amendment designed to halt the legislation, which was backed by a total of 44 Labour MPs.
Maskell said on Wednesday that the concessions signalled a "change in power between the prime minister" and disabled people.
She told BBC Radio 4's Today programme that Tuesday saw "the Bill disintegrating before our eyes".
Maskell added: "And I think throughout the day, what we saw was a change in power between the prime minister and his government and disabled people across our country, they having their voice at the heart of Parliament, and that's why I put the reasoned amendment down."
The York Central MP also said that she is "glad" that the debate was "had in public" and "now disabled people should feel empowered to have their voice at long last in an ableist parliament".
By Caitlin Doherty and Christopher McKeon
Press Association: Finance
source: PA
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