How No 10 Sleepwalked Into A Welfare Crisis
6 min read
Tightly controlled candidate selections and a tough approach to taking away the whip from rebels early in the parliament were not enough to avert a major Labour rebellion on welfare cuts that ultimately forced a humiliating and costly climbdown from the government.
The last time a government lost a vote at Second Reading was almost 40 years ago, yet a whopping third of Starmer’s parliamentary party signed a reasoned amendment last week to inflict just that. “This is not normal,” Labour sources kept saying. The bold move revealed a level of anger that shocked Downing Street, giving senior rebels an exceptionally strong negotiating hand.
In the end, a compromise was agreed with ministers whereby current recipients of disability benefits would not be affected by the major changes proposed, a fundamental review of personal independence payments (PIP) would be brought forward, and the health element of Universal Credit would be increased. At the time of writing, enough rebels are expected to have been peeled off for the government to avoid a defeat in the voting lobbies – but, with a working majority of over 150, this is not how the reforms were supposed to go.
So, where did it go wrong?
To explain how the government got itself into such a mess over welfare reforms, many point to its first big announcement: the winter fuel allowance. When Rachel Reeves announced she would be means-testing the previously universal benefit for pensioners to compensate for the £22bn black hole the Conservatives left behind, it led to a hammering of MPs’ inboxes. Wham! The bright-eyed, bushy-tailed members of the new intake were hit with a wave of fury from constituents that they were not going to forget quickly. It deepened doubts over the political nous of the bosses in Downing Street and set the tone for the rest of this parliament.
Then came the Office for Budget Responsibility’s assessment of the welfare changes. The Chancellor had only just announced the initial plans when the OBR said these would not, in fact, save £5bn – so the Spring Statement had to include wider cuts. This was widely criticised, even by loyal Starmerites who privately complained the tail was wagging the dog. For many MPs, it destroyed the argument of ministers that there was a “moral case” for the welfare reforms.
With the Second Reading of the welfare bill approaching, No 10 talked of “up to 50” Labour MPs rebelling. And yet the rebels themselves were saying they not only had over 100 MPs signing a letter urging a rethink but that this did not include ‘usual suspects’ (i.e. Socialist Campaign Group members) or frontbenchers considering their positions. Whips were aware of the perilous situation, but warnings made little difference – until 108 names, including those of select committee chairs Meg Hillier and Debbie Abrahams, went public.
“It would have been nice if they hadn’t deployed bully tactics and ridiculous claims like ‘the government will fall’. It’s an insult to our intelligence,” a rebel said during the whips’ late efforts to bring them on side. Ultimately, though, most did not deem the whips to be responsible for the mess: “I blame No 10 and the frontbench,” this MP concluded simply.
The media rounds of ministers only deepened the frustration of dissatisfied MPs. Cabinet members repeatedly stated that the threshold changes to PIP eligibility were about getting people back into work, yet employment does not preclude receiving PIP; in fact, PIP was seen by the rebels as a key way of enabling disabled people to work.
The overlooked yet fundamental underlying cause of the rebellion was party management – or lack thereof. Many of the Labour MPs who signed the reasoned amendment to kill the bill have, at some point in Starmer’s tenure, privately told The House they have felt ignored by the leadership. As Prime Minister, Starmer has invited backbench MPs in for lunches, but these meetings did not appear to do the trick.
“Obviously, the biggest motivation is meeting people in surgeries and realising how they’ll be impacted, but I think many also feel they’ve nothing to lose because there is no loyalty dividend. They feel unloved, disrespected and taken for granted,” is how one MP explained their intention to rebel last week.
“MPs are people who want the power to change the world for the better, but so many have been left feeling powerless. They need to change the culture.”
This Labour MP, who outwardly – aside from signing the reasoned amendment – appears incredibly loyal to Starmer, added that, years after they were selected as a candidate, “Keir has never spoken to me and still doesn’t know my name,” and the leadership “certainly don’t seem to know or value our areas of expertise (or they do for some but not most)”.
Whatever the final numbers of the vote, the Parliamentary Labour Party is now bitterly divided – between the senior rebels willing to agree a deal and the more junior and left-wing rebels who were not, but also between those who forced the government’s hand and the MPs who were always loyal. While colleagues pushed for a U-turn, the non-rebel side voiced concern about what the bond market would make of Labour MPs’ refusal to accept spending cuts.
“Frankly, it shows we aren’t serious about doing big changes in this parliament. The next four years are a waste of time if we can’t even do this. All quite depressing,” one MP supportive of the welfare changes said.
“The people not rebelling – who might have a wide spectrum of views on the reforms – are incandescent about the brinkmanship on this. It f***s the government completely,” another new intake MP said of their colleagues.
Fuming that they could “not understand” why the rebels did not have the whip suspended immediately, they added: “One or two times in each parliament you go home crying a bit and feeling bad about yourself… Shit happens.” And of complaints over the PM’s inattention and absence from votes, the MP exclaimed: “He’s got to talk to Donald Trump, not me in the f***ing tearoom!”
Rumours abound of changes beyond concessions to the bill, from Pat McFadden or Yvette Cooper as the new chancellor by the end of the year, to a new role for chief of staff Morgan McSweeney in Labour HQ.
Some certainly blame staff: there is talk of “regime change”, and one aide noted that the spad list should be published soon, allowing “people to look under the bonnet of all the different teams when reflecting which politicians have done well over the last year”. “The malign legacy of the Matts” is how another Labour source described the fiasco, referring to the various Downing Street advisers named Matthew. There has been criticism, too, of No 10 political director Claire Reynolds, who some feel has not engaged directly enough with MPs and has not been receptive when there is engagement.
Others simply repeat the old complaint that Starmer lacks politics and vision. His disdain for the Westminster bubble too often comes across as contempt for his own parliamentary party.
There are no simple fixes: healing the rifts within this parliamentary party will take some work – and that is aside from the consequences for the government’s spending plans in the context of such a tight fiscal envelope.
Additional reporting by Adam Payne.
