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Sir Keir Starmer is locked in talks with rebel MPs as he attempted to head off a revolt over proposed welfare cuts and defuse the biggest political crisis of his first year in office.
Labour MPs have been threatened with deselection or having funding stripped from their constituencies if they derail welfare reforms aimed at saving £4.8bn in a vote next week.
With Starmer trying to fend off an uprising by more than 120 Labour MPs, one rebel said the government’s “brutal” approach had threatened to unleash a “civil war”. On Thursday Downing Street adopted a more emollient approach, promising to soften the proposals, though it is not clear it will be enough.
MPs said on Thursday that Number 10 appeared to be targeting the “leaders” of the revolt in the talks, but backbenchers insisted that they would need to see real change. More names joined the rebellion, taking the number of MPs prepared to sign a “reasoned amendment” against the welfare bill to 126.
The prospect of a defeat is highly embarrassing for a government that has a huge working majority of 165 seats and would threaten to undermine Starmer’s standing just before the anniversary of his general election win next week.
The prime minister has also been warned by City analysts that a retreat would make it even more likely that his struggling Labour administration will have to put up taxes in the autumn Budget.
Ministers are running out of time, with the welfare bill due to have its second reading in the House of Commons on Tuesday. The legislation will then be rushed through Parliament, with its third reading only a week later — leaving MPs with little time for further debate.
“All colleagues want to get this right, and so do I,” Starmer told MPs on Thursday. “We want to see reform implemented . . . that conversation will continue in the coming days, so we can begin making changes together on Tuesday.”
Starmer himself was holding talks on Thursday afternoon with some of the critics of the bill, which include 10 chairs of select committees.
“Keir and [deputy prime minister] Angela Rayner have been working intensively with [work and pensions secretary] Liz Kendall and MPs to try and get everyone back on the same page,” health secretary Wes Streeting told the FT.
The rebels stunned Downing Street when they announced on Monday night that they would put forward a “reasoned amendment” to torpedo the welfare bill. As well as the opposition from dozens of rank-and-file MPs, there are also a handful of junior ministers and parliamentary aides understood to be on the brink of resignation if the government ploughs ahead.
Toby Perkins, a moderate MP who joined the rebellion on Wednesday night, said: “I fear that the changes . . . will hit too many disabled people, many of whom really need the payment in order to be able to access work or to cope with their disability.”
Trade minister Douglas Alexander, a member of the cabinet, on Thursday morning struck a conciliatory note, saying rebels were “bringing these issues to the table for the very best of reasons”.
“If there are improvements that can be made let’s have a conversation, figure out what those improvements are and make sure we get this critical piece of reform legislation not just right fiscally, but right in terms of the impact on vulnerable people,” Alexander said.
The legislation is designed to address the fact that 2.8mn people in the UK have a long-term health condition that prevents them from working, while the government says one in 10 working-age adults claim a health-related benefit.
Kemi Badenoch, the Conservative party leader, has vowed aggressive cuts to welfare if elected, saying on Thursday that the number of people now registered as disabled in the country was “extraordinary”. However, the Tories have said they will only back the bill if Labour accepts several amendments the government deems unpalatable.
Reforms to both disability and incapacity benefits are expected to save the Treasury about £4.8bn, according to government estimates. Rachel Reeves, the chancellor, is seen by rebels as one of the biggest obstacles to agreeing concessions.
Ministers already need to find £1.25bn to pay for a U-turn last month when they decided to retreat from mass cuts to the winter fuel payment.
“The possible U-turns on benefit and welfare spending have left the chancellor in a sticky position,” said Capital Economics’ Ruth Gregory, who predicts the chancellor may need to raise between £10bn and £20bn in the Autumn budget.
“If the chancellor wishes to avoid an adverse reaction in the financial market, she probably has little choice but to raise taxes in the Autumn Budget.”
Ministers have several potential routes to watering down the welfare reforms, any of which would cost the exchequer money, and not all of them would buy off the rebels.
One of the rebel ringleaders told the Financial Times: “Tinkering with the eligibility criteria would not end this; what we are looking for is a wholesale rethink by the government, and now that they’ve seen the level of unhappiness in the [Parliamentary Labour party] they should consider very carefully.”
