Disabled protesters holding signs outside Parliament during a welfare demonstration

Labour’s “welfare U-turn”: easy cuts, internal tensions, and a fight to be fair

Last Updated: August 4, 2025By

It’s been a week of scrambled policies, sharp internal tensions, and attempted course-corrections for the Labour government – and as I write this, it’s still only Thursday morning.

Most of the controversy surrounds the same fundamental question: who pays the price for balancing the books?

Yesterday (Wednesday, May 21), Prime Minister Sir Keir Starmer confirmed a partial U-turn on cuts to the Winter Fuel Payment, after the government suffered mounting criticism from across the political spectrum, including many figures within his own party.

The benefit now excludes more than 10 million pensioners after it was made means-tested last year, in a move estimated to save £1.4 billion.

It will now be reworked to allow “more pensioners” to qualify once again, though how many and when remains unknown.

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That policy was deeply unpopular, and some Labour figures are openly blaming it for the party’s disappointing performance in local elections earlier this month.

Even MPs who defended the move said it was the number one issue raised with them on the doorstep.

In response, Starmer made the announcement during Prime Minister’s Questions.

But the winter fuel U-turn isn’t an isolated case. It’s part of a wider pattern of mounting backlash over Labour’s welfare reforms, particularly cuts to Personal Independence Payment (PIP) and other benefits that support disabled people and those with long-term health conditions.

Earlier this year, Chancellor Rachel Reeves announced £5 billion of welfare cuts as part of her Spring Statement — including reforms to PIP and Universal Credit.

She insisted these were necessary to “stabilise the public finances,” after she ruled out borrowing to fund day-to-day spending.

But the fallout from those cuts has not gone away.

In a significant intervention, the Work and Pensions Select Committee — an all-party group of MPs chaired by Labour’s Debbie Abrahams, a long-standing advocate for disability justice — has called on the government to pause its planned PIP reforms.

The committee has expedited publication of a report warning that the cuts could backfire, pushing people into poverty, worsening health inequalities, and driving disabled people further from the labour market, rather than incentivising work.

Committee members are urging ministers to consult meaningfully with disabled people and their organisations before moving ahead — a basic step many feel has been sorely lacking.

There is also growing concern over the government’s own figures, which suggest the cuts could push 250,000 people into poverty, including 50,000 children.

It’s not just Labour’s backbenchers raising the alarm.

Disability charities, experts, and MPs from across the House are voicing the same concerns.

Campaigners fear the proposed reforms are being driven not by evidence or fairness, but by the cold arithmetic of departmental savings.

And this is where Labour’s internal contradictions are being laid bare.

Work and Pensions Secretary Liz Kendall, speaking on Wednesday, doubled down.

She insisted she would not “resile”* from hard decisions, arguing that if the system isn’t reformed now, it won’t survive in the long run.

But her framing — that these are “difficult” or “unpopular” choices — obscures something crucial.

As critics have pointed out: cutting support from the poorest, least powerful people in the country isn’t a hard choice.

It’s an easy one.

A fair one would look elsewhere.

Enter Angela Rayner, the Deputy Prime Minister, whose department reportedly urged the Treasury earlier this year to consider raising taxes instead of cutting benefits.

A leaked memo shows proposals to raise £3-4 billion through wealth taxes — such as ending dividend tax breaks and reversing the Conservatives’ scrapping of the pensions lifetime allowance.

The memo was ignored.

Rayner’s intervention hasn’t been denied — and it points to an increasingly public divide in Labour’s top ranks.

While Reeves has kept a tight lid on tax policy, resisting new levies or borrowing, others are clearly asking: why cut support for sick and disabled people before asking the wealthiest to contribute more?

The government says it is “listening carefully,” but has so far refused to commit to reversing the PIP cuts — even as MPs warn of a rebellion on the issue.

With departmental budgets being finalised in its spending review on June 11 and Labour’s new fiscal rules under growing scrutiny, more internal friction seems inevitable.

Behind all this manoeuvring is a more fundamental truth: the choices being made are political, not inevitable.

There are always alternatives — including fairer taxation — but only if the government chooses to pursue them.

For now, one benefit cut may be being walked back, at least partially.

Whether the same happens for PIP remains to be seen.

But the message from campaigners, charities, and some MPs is clear: if Labour chooses to balance the books on the backs of the sick and the elderly, it won’t be because they had no other choice — but because they made the wrong one.

*It means “abandon a position or course of action”.

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