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Sir Keir Starmer has been forced to abandon a key plank of his welfare reform package in the face of a Labour rebellion.
The Government has shelved plans to restrict eligibility for the personal independence payment (Pip) and any changes will now only come after a review of the benefit.
The climbdown came just 90 minutes before MPs were due to vote for the first time on the Universal Credit and Personal Independence Payment Bill.
It will cause a major headache for Chancellor Rachel Reeves as the welfare squeeze was originally meant to save £4.8 billion a year, which was subsequently reduced to £2.3 billion when the Bill was first watered down last week.
Postponing any changes to the eligibility criteria for Pip means it is now uncertain how much the reforms will save from the soaring welfare bill.
Tory leader Kemi Badenoch accused ministers of “utter capitulation” and said the legislation was now “pointless”.
She said: “They should bin it, do their homework, and come back with something serious. Starmer cannot govern.”
Some 39 Labour MPs have signed an amendment which would see the Bill fall at its first hurdle in the Commons.
Rebel ringleader Rachael Maskell said: “The whole Bill is now unravelling and is a complete farce.
“What it won’t do is stop the suffering of disabled people which is why we are determined to go ahead with the reasoned amendment and attempt to vote down the Bill at second reading.”
A previous effort to kill the Bill had attracted more than 120 Labour supporters, but was dropped after the first partial U-turn on the legislation last week, which restricted the Pip changes to new claimants from November 2026.
That date has now been abandoned in the latest climbdown, with any changes now only coming after disability minister Sir Stephen Timms’ review of the Pip assessment process.
Sir Stephen announced the climbdown in the middle of the debate on the legislation.
He acknowledged “concerns that the changes to Pip are coming ahead of the conclusions of the review of the assessment that I will be leading”.
He said the Government would now “only make changes to Pip eligibility activities and descriptors following that review”, which is due to conclude in the autumn of 2026.
The concession came after frantic behind-the-scenes negotiations in Westminster involving the Prime Minister, his cabinet and wavering Labour MPs.
It appeared to have won round some Labour doubters.
Josh Fenton-Glynn, who was one of the 126 Labour MPs who signed the original rebel amendment to the welfare reform Bill last week, described the move as “really good news”.
He said he wanted to support the Government at “every opportunity” and was glad changes to personal independence payment eligibility would be delayed until after the Timms review.
But other Labour MPs appeared exasperated, with one telling the PA news agency that no-one “knew what they were voting on anymore”.
Charlotte Gill, head of campaigns and public affairs at the MS Society, said: “We thought last week’s so-called concessions were last minute. But these panicked 11th hour changes still don’t fix a rushed, poorly thought-out Bill.”
But Jon Sparkes, chief executive of learning disability charity Mencap, said: “The last-minute change relating to the review Sir Stephen Timms is leading sounds positive and we are pleased that the Government has listened.”
He added: “Disabled people should not have to pay to fix black holes in the public finances.”
The Government’s concessions have effectively removed a major plank of its welfare reform, leaving only parts of the current Bill still on the table.
Proposals to cut the health element of universal credit by almost 50% for most new claimants from April 2026 remain in place, along with an above-inflation increase in the benefit’s standard allowance.
In an earlier climbdown, Ms Kendall said existing recipients of the health element of universal credit, and new claimants with the most severe conditions, would have their incomes “fully protected in real terms”.
