Sir Keir Starmer has admitted that the UK’s benefits system is “broken” and vowed to reform it, calling the task a “moral imperative”. The Labour leader’s remarks came shortly after he was forced into a policy reversal by his own MPs over planned cuts to disability and health-related benefits. Speaking at the Welsh Labour conference, Starmer stressed that the party would not take away the “safety net” for vulnerable people, but warned it must not “become a snare” for those capable of working. He said “everyone agrees” the system requires urgent change.
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The reversal followed mounting pressure from over 120 Labour MPs who had signed an amendment opposing the welfare bill. Party veterans, including Lord Falconer, called for a “reset” of the government’s approach, while Diane Abbott MP criticised Starmer’s inner circle as “angry and factional”. Despite the retreat, some MPs are reportedly preparing another amendment to delay the bill, due for its second reading in the Commons on Tuesday. Starmer now faces challenges not only from opposition parties but from within his own ranks.
Economists have since warned that the decision to protect existing disability benefit claimants could cost significantly more than anticipated. The Resolution Foundation estimates that safeguarding those on Personal Independence Payments (PIP) and Universal Credit’s health component will cost £3.2bn annually by 2030. This would effectively nullify most of the £5bn in savings the government had planned to make through the reforms. The think tank also suggested that tax rises are now highly probable to cover the shortfall.
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The National Institute of Economic and Social Research echoed those concerns, stating that tax increases will “almost certainly” be needed in the autumn Budget. One widely discussed option is extending the freeze on income tax thresholds, a move known as “fiscal drag”, to raise additional funds without headline tax rises. Conservative Party leader Kemi Badenoch criticised Starmer’s reversal, claiming it had delivered “the worst of all worlds” by abandoning reform without offering a clear financial alternative. Ministers have so far declined to confirm how the gap will be bridged.
