The Labour Government's decision to U-turn on major reform to Personal Independence Payments (PIP) is set to cost the British economy £100million, wiping out any projected savings.
Earlier this evening, MPs voted 335-260 to pass the Universal Credit and Personal Independence Payment Bill, which was drawn up to overhaul the Department for Work and Pensions (DWP).
However, this legislation was only voted through after Labour ministers agreed to scrap proposed tightening of the eligibility criteria for PIP.
Disability rights campaigners and backbench MPs urged the Government to reconsider after an impact assessment determined 150,000 people would be pulled into poverty if the changes were implemented.
The removal of PIP reform from the Government's benefits bill will cost taxpayers, analysts warn
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With this reform now axed, analysts are sounding the alarm that the forecast savings estimated to come from the bill are now non-existent.
On X, Institute of Fiscal Studies' (IFS) associate director Tom Waters said: "What do the changes to the Universal Credit & PIP bill do?
"Tighten PIP eligibility - saves £2.6billion in 2029-30. Cut health element of Universal Credit - saves £1.7billion. Raise basic Universal Credit - costs £1.8billion.
"If the first goes, the bill costs £0.1billion [£100million] in 2029-30."
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Kendall said welfare reform is 'never easy'GB NewsPrior to today's vote, the IFS projected the original Universal Credit and Personal Independence Payment Bill would have saved the government £5.5billion by 2029–30.
A revised package, which was put forward by the Government to address backlash to the reforms, would have seen the tightening of PIP's eligibility criteria for existing claimants removed.
According to the think tank's estimates, this revised set reforms will save only £2.5billion, costing the Government £3billion relative to its previous plans.
At the time, Waters said: "This is set to affect 370,000 current claimants in 2029–30, benefiting them to the tune of around £4,150 per year on average (in today’s prices).
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The UK government's expenditure on benefits has also increased over time, with the largest increase in 2020/21 due to the COVID-19 pandemicChatGPT "It will also indirectly benefit around 50,000 claimants of Carer’s Allowance who look after a PIP claimant, by £4,340 per year."
Reacting to tonight's rebellion, DWP minister Liz Kendall insisted the Labour Party remained "100 per cent" behind the Prime Minister.
However, Kendall told broadcasters there were "lessons to be learned" after the Government's dramatic reversal on welfare reform.
The Resolution Foundation’s chief executive Ruth Curtice confirmed the concessions meant the reforms would now make no “net savings” in 2029/30.
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