2 July 2025 - 7:00am
On paper, it looks like a success for the Labour government. The welfare Bill has passed, and the amendment to derail it has been seen off. Yet it is an almost empty victory. Labour rebels have forced major concessions from the top, dealing a blow to Keir Starmer’s credibility in the process. That this crisis comes less than a year in is striking; that the party must survive four more years in this state is almost unthinkable.
It was a tense early evening in the Commons. The rebels seemed strong. Potentially strong enough to defeat the bill in its entirety. Concessions from last week had failed to win them over. So last night brought an even more screeching U-turn, ripping the heart out of the bill and essentially eliminating the planned welfare savings over the course of this parliament. It is hard to think of a more ignominious end for the Bill. At least forcing a vote and losing would have shown some strength of character.
The approach to welfare now looks like a catalogue of unknowns. Labour MPs are still unsure about what this will mean for future recipients of disability welfare. They remain angry over what they see as the “fear” that has been hanging over disabled people as the Bill went through. The fiscal hawks are also unconvinced, with no clear route to reducing benefit spending. A huge amount of political capital has been spent to achieve very little. In the middle of it all, Secretary for Work and Pensions, Liz Kendall, looks humiliated.
The headache will now pass to Rachel Reeves. If these savings can’t be found, they will have to come elsewhere. Yet Labour backbenchers will feel enthused about standing up to a supposed return to austerity. Tax rises in the autumn look more likely now, and Labour’s election pledges are in even more danger. There are perhaps also threats of rebellion on other issues, too.
Certainly, managing the Labour Party now looks more complicated than anyone would have imagined a year ago. Governments typically enjoy a lengthy honeymoon with their own side, yet Starmer’s has evaporated. This is in part driven by the hand he was dealt — with squeezed public services and limited ways of raising money — but also the way he has played it. Throughout this debate, he has failed to charm his backbenchers at all, and his intransigence has forced an internal disagreement to become a very public climbdown. This looks like something you’d expect from a struggling government with a tiny majority in a second or third term, not one just 52 weeks after a historic victory.
It emphasises how much Labour seems to be struggling. Despite its large mandate, the Government has struggled to achieve much momentum. It already feels beleaguered, derided by the public, falling in the polls, and now divided internally. There is plenty of time to change course, but no strategy is emerging to do it. Unless it regains control soon, the next four years will start to resemble a government on life support.
John Oxley is a corporate strategist and political commentator. His Substack is Joxley Writes.
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