Rachel Reeves will “of course” be chancellor in six months’ time, a senior ally of Sir Keir Starmer has said, despite last night’s humiliating showdown over welfare cuts.
Pat McFadden, the chancellor of the Duchy of Lancaster, admitted there would be a “cost” to the government’s decision to effectively neuter its welfare bill, which was intended to save Ms Reeves around £5bn but now leaves her with an estimated £5.5bn black hole.
Speaking to Kamali Melbourne on Sky News’ Breakfast Mr McFadden acknowledged it had been a “tough” few weeks for the government as it faced down its backbenchers over proposals to shake up the welfare system.
Politics latest: Tories go on the attack against Rachel Reeves
The prime minister’s watered-down Universal Credit and Personal Independent Payment Bill, aimed at saving £5.5bn, was backed by a majority of 75 in a tense vote on Tuesday evening.
A total of 49 Labour MPs voted against the bill – the largest rebellion in a prime minister’s first year in office since 47 MPs voted against Tony Blair’s Lone Parent benefit in 1997, according to Professor Phil Cowley from Queen Mary University.
Ms Reeves has borne a lot of the criticism over the handling of the vote, with some MPs believing that her strict approach to fiscal rules has meant she has approached the ballooning welfare bill from the standpoint of trying to make savings, rather than getting people into work.
The PM faced down his party on welfare and lost. I suspect things may only get worse
Labour welfare cuts ‘Dickensian’ and ‘from another era’, says rebel MP ahead of vote
150,000 to be pushed into poverty – as govt reveals new measures to try to win over rebels
Experts have also warned that the welfare U-turn, on top of reversing the cut to winter fuel, means that tax rises in the autumn are more likely.
Asked whether he believed Ms Reeves would still be in her job in the next six months, Mr McFadden replied: “Of course she will. She’s doing an excellent job. We take these decisions as a team. We stand as a team, and we go forward as a team.”
The senior cabinet minister sought to downplay the chaotic scenes that unfolded in the Commons last night, when the government pulled the most controversial elements of the bill, leaving MPs to vote on only one element – cutting universal credit (UC) sickness benefits for new claimants from £97 a week to £50 from 2026/7.
Please use Chrome browser for a more accessible video player
Just 90 minutes before voting started on Tuesday evening, disabilities minister Stephen Timms announced the last of a series of concessions made as dozens of Labour MPs spoke of their fears for disabled and sick people if the bill was made law.
In a major U-turn, he said changes in eligibility for the personal independence payment (PIP), the main disability payment to help pay for extra costs incurred, would not take place until a review he is carrying out into the benefit is published in autumn 2026.
An amendment brought by Labour MP Rachael Maskell, which aimed to prevent the bill progressing to the next stage, was defeated but 44 Labour MPs voted for it.
Follow our channel and never miss an update
Conservative shadow chancellor Mel Stride called the vote “farcical” and said the government “ended up in this terrible situation” because they “rushed it”.
He warned the markets “will have noticed that when it comes to taking tougher decisions about controlling and spending, this government has been found wanting”.
Read more:
Beth Rigby: I suspect things may only get worse for the PM
How did your MP vote on Labour’s welfare bill?
Beth Rigby: The PM’s choice – welfare v warfare
Mr McFadden argued it was not “entirely a bad thing that Labour MPs feel passionately about this issue” despite it causing the most damaging rebellion of the prime minister’s leadership so far.
Please use Chrome browser for a more accessible video player
“There’s a long history of Labour MPs feeling passionately about this issue. But where we’ve got to, in the end, is the second reading of the bill going through and the reforms to PIP, which were the most contentious part of this taken forward in slower time now, through a review led by my colleague Stephen Timms.”
He added: “There is a financial consequence to the decision – there’s no denying that.
“But this is also about changing incentives, getting a better system, getting more support for people, who are looking for work.
“There are important key elements of the welfare reform package that were passed in the vote last night that were still valuable. And we will take that forward.”
