Keir Starmer warned of 'two tier' benefit system as he says U-turn 'strikes right balance'

Keir Starmer is battling to push through watered down cuts to disability benefits as he faced warnings it would create a "two tier" system.

In a dramatic climbdown, the Prime Minister offered a series of concessions to Labour rebels opposed to moves that would see hundreds of thousands of disabled people lose lifeline benefits.

But campaigners said it risked "betraying the next generation of disabled people" - and some Labour MPs remain opposed ahead of a Commons vote next week.

After fraught negotiations on Thursday, the Government agreed to protect all existing claimants from losing Personal Independence Payments (PIP).

Plans to tighten eligibility will now only apply to new claimants from November 2026, in a reprieve to around 370,000 people who were due to lose around £4,150-a-year. And existing recipients of the health element of Universal Credit will have their incomes protected in real terms.

READ MORE: Labour's dramatic DWP benefit climbdown explained in full - see how it affects you

The original plans to reform the welfare system were designed to save around £5billion from the benefits bill by 2030.

But economists said the changes will cost around £3billion, on top of around £1.5billion for the U-turn on the winter fuel allowance, leaving Chancellor Rachel Reeves to make up the shortfall.

No10 failed to rule out such raising taxes to foot the bill, saying “tax decisions are set out at fiscal events”.

Today, Mr Starmer said the reforms now "strike the right balance". "It's very important that we reform the welfare system, because it doesn't work and it traps people, and therefore we're going to press ahead with the reforms," he said.

"We need to get it right. That's why we've been talking to colleagues and having a constructive discussion. We've now arrived at a package that delivers on the principles with some adjustments, and that's the right reform, and I'm really pleased now that we're able to take this forward."

Work and Pensions Secretary Liz Kendall said the Government had listened to concerns.

She told broadcasters: "I think we're in a good place now, alongside the huge investments we are putting in to create the jobs that people need in every part of the country, to get waiting lists down in the NHS, to ensure stronger rights at work, but also to make sure there's employment support for those who can work and protections for those who can't."

She insisted it was "very common in the welfare system that there are protections for existing claimants".

Leading rebel Meg Hillier said she would now support the bill and is expected to drop her amendment, which had been signed by 126 Labour MPs.

READ MORE: All the Labour MPs who forced PIP change as PM warned welfare fight isn't over

READ MORE: 'I feel betrayed by DWP cuts to PIP - thinking about them gets my heart racing'

Ms Hillier, who chairs the Commons Treasury Committee, said it was "a good deal" involving "massive changes" to protect vulnerable people - and said disabled people would be involved in designing future reforms.

She said: "It's encouraging that we have reached what I believe is a workable compromise that will protect disabled people and support people back into work while ensuring the welfare system can be meaningfully reformed."

But Labour MP Nadia Whittome said "Even these revised proposals are nowhere near good enough and frankly are just not well thought through. It would create a two-tier system in both PIP and the UC system when somebody became disabled.”

Andy McDonald, the Labour MP for Middlesbrough, said: "I'll be voting against it because it hasn't dealt with the totality of the picture.It is bringing about the change, it's just poverty delayed, or poverty postponed for millions of people in the future."

Charles Gillies, Senior Policy Officer at the MS Society and Policy Co-Chair of the Disability Benefits Consortium, said: “These supposed ‘concessions’ to the cuts bill are just a desperate attempt to rush through a disastrous piece of legislation. By pushing the cuts onto future claimants, the government are betraying the next generation of disabled people."

He urged MPs to "stop this impending disaster" when the Universal Credit and Personal Independence Payment Bill comes to the Commons on Tuesday.

Mikey Erhardt, Policy Lead, Disability Rights UK said: “We completely reject the imposition of the two-tier system on offer. It is not a massive concession to have a benefit system where future generations of Disabled people receive less support than Disabled people today."

He added: "By attempting to push through cruel cuts to the benefits of Disabled people, the Government prioritised balancing its books over improving the lives of Disabled citizens... the Government needs to stop playing politics with our lives."

James Taylor, director of strategy at disability equality charity Scope, said: "It is encouraging that the government is starting to listen to disabled people and MPs who have been campaigning for change for months.

"But these plans will still rip billions from the welfare system. The proposed concessions will create a two-tier benefits system and an unequal future for disabled people.

"Life costs more if you are disabled. And these cuts will have a devastating effect on disabled people’s health, ability to live independently or work.

"We urge the government to properly engage with disabled people and MPs on how best to reform welfare and create an equal future."

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