Can Keir Starmer stem the welfare rebellion?

Keir Starmer is gearing up for a showdown with his party as the Prime Minister prepares to unveil his welfare reforms. On Tuesday, Work and Pensions Secretary Liz Kendall will announce the details of the government’s plan to shake up the benefits system in a bid to reduce the ballooning welfare bill and get more people back into work. The measures mooted have already proved controversial – there was talk of an announcement last week, for example, only for it to be delayed as final details were thrashed out.

The measures Kendall is expected to include in what is being touted as £5 billion in savings involve tightening the eligibility criteria for Personal Independence Payments (PIP) welfare payments and freezing or cutting Universal Credit payments to long-term sick and disabled people. The general idea is to change the system so only the most severely disabled apply and incentivise the rest of the claimants to return to work.

Speaking on Sunday, Health Secretary Wes Streeting suggested that some claiming sickness benefits were able to work. Streeting said there has been an ‘overdiagnosis’ of mental health problems in Britain, as when it comes to ‘mental wellbeing/illness, it’s a spectrum’. He also made the case that this was an issue for some of those now out of work as they risk being ‘written off’. It’s this moral argument for returning individuals to the workplace that ministers are keen to advance.

However, there is already plenty of Labour pushback. Writing in the Times, the Greater Manchester metro mayor Andy Burnham has warned that the planned changes would ‘trap too many people in poverty’. Given that Burnham is historically one of the most critical Labour voices for Starmer, these comments aren’t all that surprising. The question is how far the unhappiness will spread. As Bloomberg first reported, several ministers – including Ed Miliband and Angela Rayner – voiced concern at Cabinet last week over the proposals.

While government whips remain confident that the Prime Minister has enough support for the bulk of the proposals, Starmer is already having to consider a climbdown on one aspect of the shake-up. Proposals to freeze PIP payments are expected to be shelved in the face of backbench criticism. Labour MPs made the point that even the austere chancellor George Osborne wouldn’t go this far. However, one of the reasons the idea appealed to some ministers is that it could have scored them some immediate points with the OBR. This matters ahead of the Spring Statement later this month when Reeves could well discover that all of her headroom is gone, forcing her to respond accordingly. If Labour MPs secure a U-turn here, they may be inclined to keep pushing for more concessions.

This is where the debate is really heading: to the question of what economic approach Starmer’s government should adopt. This week is likely to see deep unease on the Labour benches over welfare cuts that for many are the opposite of the reason they came into politics. But the question being asked is what is the alternative? Already some in the Labour party are suggesting more tax rises would be preferable or that Reeves should revisit her fiscal rules. The Chancellor has no plans to do the latter, and tax rises are for now seen as something to avoid given the last Budget hurt both business confidence and the UK’s growth prospects. Yet if enough Labour MPs lack the stomach for Starmer’s welfare cuts, a very difficult conversation looms on the government’s next steps.