The UK government has confirmed it will make major changes to its planned welfare cuts, aiming to avoid a rebellion by more than 120 Labour backbenchers.

Under the new plan, people already receiving personal independence payments (Pip) or the health element of universal credit will keep getting them. However, the cuts will apply to future claimants.

Labour MPs are mostly pleased with the change. Meg Hillier, who led the rebellion, says she would now support the bill as “it is a good step forward”.

But there are still concerns. Disability rights campaigners say the changes create “a two-tiered” system, since only future claimants will be affected by the cuts.

Conservative leader Kemi Badenoch has also slammed the government’s U-turn, saying the policy change doesn’t meet her three conditions – to reduce the welfare budget, help people into work, and promise no new tax rises.

There’s also the question of money. The Resolution Foundation estimates the welfare changes will likely cost about £3bn. Downing Street says there won’t be a “permanent” increase in government borrowing, but hasn’t ruled out tax rises.

Attention now turns to next Tuesday, when Parliament holds its second reading of the welfare bill. We’ll be following events closely.

That’s it from our live coverage today. If you’d like to read more on this story, take a look at the links below. Thank you for joining us.

• Starmer climbs down on welfare bill after Labour backlash
• Faisal Islam: How much will U-turn on disability benefits cost?
• What are the Pip and universal credit changes?

Image source, Reuters

Image source, UK Pool

In response to the government's welfare changes, Conservative leader Kemi Badenoch says her party would back the prime minister if he met her three conditions: cut the welfare budget, get more people into work, and promise no new tax rises.

But she says the current bill doesn't meet those conditions and "the U-turn is even worse".

Badenoch says there are "a lot of people who should be at work" but aren't. As a result, she says, benefit assessments should be changed and there should be more checks on what she calls "low-level conditions like anxiety."

She says there's "a lot that we can do" to make sure people with "very serious physical conditions get the support they need".

"We are the only party that is serious about fiscal responsibilities," she adds, saying the UK is not "living within our means" and is borrowing more than it should.

Emer Moreau
BBC News

Anne, 70, from Lewisham in London, claims personal independence payments (Pip) for several health problems.

She thinks Pip should be more closely linked to how much claimants actually have to spend because of their disability.

"I have to keep the heat on and take hot baths every day because of my arthritis. I walk with a shuffle so I wear out my shoes very quickly...I'd be happy to provide copies of my energy bills or receipts for my shoes.

"People who've got allergies, their food bill is higher...my Pip money pays for that. But that's all the help I need. I haven't been to the doctor's for ages."

Anne suggests the payment could be replaced with vouchers: "You should have to prove where you are spending it."

"Someone else with another condition doesn't need that money. And someone else needs more money than they get from Pip.

"That should be re-assessed. Keir Starmer has got a point."

Extra welfare cost would require higher taxes or cuts elsewherepublished at 12:28 British Summer Time 27 June

12:28 BST 27 June

Faisal Islam
Economics editor

Labour's original plan to reform the welfare system was a hasty effort to try to make billions of pounds of cuts to a rapidly growing bill in order to help the chancellor meet her self-imposed rules on government borrowing.

But this latest U-turn raises significant questions about just how stability and credibility-enhancing it really is to tweak financial plans every six months to hit budget targets that change frequently due to a variety of reasons, including things such as the cost of borrowing which the government cannot control.

It seems likely that the total cost of the overnight deal is more than half of the originally planned £5bn saving. All will be revealed at the time of the autumn Budget by the government's financial watchdog, the Office for Budget Responsibility.

But this is in addition to the £1.25bn cost of the winter fuel payment U-turn, and would either have to come from higher taxes or cuts elsewhere, given the chancellor's "non-negotiable" borrowing rules.

Image source, Reuters

Downing Street says there won't be a "permanent" increase in government borrowing because of its latest welfare changes.

When asked how changes to Pip and universal credit will be funded, a No 10 spokesman says the government will explain where the money will come from in the autumn.

"We'll set out how this will be funded at the budget, alongside a full economic and fiscal forecast in the autumn, in the usual way," he says.

The spokesman didn't rule out tax rises, saying, "as ever, as is a long-standing principle, tax decisions are set out at fiscal events."

Earlier, the living standards think tank Resolution Foundation suggests the welfare changes are likely to cost about £3bn, adding a burden to public finances.

How will changes to the welfare bill affect Scotland?published at 12:13 British Summer Time 27 June

12:13 BST 27 June

Phil Sim
Scotland political correspondent

Image source, PA Media

Scotland has its own devolved social security system, so the direct impacts of the changes at Westminster will be limited.

Universal credit still applies across the UK, so reforms there will affect Scottish claimants.

But as of this summer, everyone who was getting personal independence payments (Pip) is due to have been transferred to the Scottish equivalent, the adult disability payment.

The Scottish government prides itself on offering a more generous welfare system, with extra allowances for children and a winter fuel payment which is £3 higher than that down south.

But that means social security spending is growing fast - from just over £6bn last year to over £9bn in 2030.

And if spending is cut at Westminster, that reduces the amount of funding sent to Holyrood in the annual "block grant".

Scottish government officials are already scratching their heads about what it means for their budgets.

All of this has a major political impact too, with the SNP and Labour locked in a contest for votes ahead of next May's Holyrood election.

How much will these proposed changes cost?published at 11:57 British Summer Time 27 June

11:57 BST 27 June

Faisal Islam
Economics editor

The latest deal appears to row back more than half of the annual £5bn earmarked saving from the welfare reforms by 2029-30.

The planned cut to disability personal independence payment (Pip) eligibility was set to raise the bulk of this saving, £4.5bn.

But now the changes will apply only to new claimants from November 2026, and the criteria for the assessments will be drawn up together with disability charities. So how these assessments will work is still unclear and it suggests the changes may not save as much money as expected.

There will also be a knock-on impact for Carer's Allowance. It seems plausible that this part will cost about £2bn.

The original universal credit health changes - freezing the health element until 2029-30, and halving it then freezing it for new claimants from next April - would have raised £3bn in 2029-30.

Now 2.25 million existing recipients will see a rise in line with inflation, and the most severe cases out of 730,000 new claimants will no longer see this halved. This would cost several hundred million, perhaps £1bn.

The government has also promised to pull forward investment in employment, health and skills support in order to frontload support to get those on health benefits back into work.

However, there are many moving parts here, and it is worth noting the original costings were highly uncertain.

Image source, EPA

Liz Kendall, Secretary of State for Work and Pensions, says the welfare bill concessions agreed late last night mean it’s “in a good place”.

She’s hopeful the bill will pass its second reading in parliament next week.

“I believe these are positive changes. We've worked hard to get agreement on this."

Kendall says the changes mean existing claimants won't be affected, while at the same time making "the welfare state sustainable for the future".

"We have listened to people, we are in a good place now.”

She adds that the Treasury will reassess budgets “in the normal way”.

“I think that's really important it's done in the autumn but we will begin to get the welfare bill done on a more sustainable footing in future.”

Image source, Getty Images

The government has confirmed it will make major concessions to its planned benefits reforms, aiming to avoid a rebellion by more than 120 Labour MPs.

If you're just joining us, here’s a quick update:

• Work and Pensions Secretary Liz Kendall tells Labour MPs that the revised cuts will only affect future claimants, with no changes for current personal independence payment (Pip) recipients
• Labour MPs are broadly happy. Meg Hillier, who led the rebellion, says she would now support the bill as "it is a good step forward"
• MPs from other parties have also reacted. Shadow work and pensions secretary Helen Whately called the U-turn "humiliating", while Green Party MP Sian Berry urged Starmer to withdraw the bill
• Disability Rights UK campaigner Mikey Erhardt says the changes create "a two-tiered" system
• The Resolution Foundation estimates the welfare changes will cost about £3bn - this highlights the challenges for public finances, our chief economics correspondent writes

Stay with us for more updates and reactions.

Government climbdown highlights challenges of curbing soaring welfare billpublished at 11:16 British Summer Time 27 June

11:16 BST 27 June

Dharshini David
Chief economics correspondent

Image source, PA Media

The government's climbdown will bring relief for some benefit claimants. But it highlights the challenges for the public purse.

Add in the need to fund the U-turn on winter fuel payments, higher borrowing costs and a weakened growth outlook and some economists reckon the chancellor will need to find around £20bn extra in the Budget - the equivalent of raising the basic rate of income tax by 3p (although the government has ruled that particular measure out; it is more likely to extend the freeze on thresholds at which different rates of tax on income apply, so-called fiscal drag, which is just as painful for workers).

It also highlights the challenge of curbing a soaring welfare bill; the initial measures only aimed to reduce a projected rise in this part of the welfare bill of £30bn in the next few years by £5bn.

And a further challenge to any attempts to reduce welfare payments has emerged; getting back into work has become harder.

Official figures show employment has been falling in some sectors - such as hospitality and retail - those where claimants may be most likely to seek work.

Surveys show many employers in these sectors citing the chancellor's own measures, including tax rises, as deterring hiring plans.

Almost a year since Keir Starmer won the general election with a historic landslide, our chief political correspondent Henry Zeffman has been talking to those at the heart of the Labour party about the prime minister's turbulent tenure.

From welfare to tax and Donald Trump, you can hear from senior cabinet ministers, including the prime minister himself, about what’s really happened, and whether the government can turn things around.

You can listen to Starmer’s Stormy Year on BBC Sounds now or on BBC Radio 4 on Monday at 11:00 BST.

BBC Radio 5 Live’s Nicky Campbell has been speaking to Suzanne in Exeter, who says she is "extremely cross" that the government has backed down on proposed disability benefit changes.

Suzanne says she has worked in health and social care all her life and volunteers at a food bank. She believes the government should be supported in "trying to break down dependency" on benefit payments.

She tells Campbell that she thinks the welfare state is there to support people when they need it, but it is not "a right", adding that people have responsibilities as well.

Suzanne also says young people are burdened with taxes and that free bus tickets shouldn't be given to people who can afford them.

Why was the government trying to cut welfare spending?published at 10:41 British Summer Time 27 June

10:41 BST 27 June

By Ben Chu

It is concerned about the rise in the number of people claiming working-age benefits in recent years and the implications of this trend for the public finances.

Last Autumn, the government projected that the numbers of working-age claimants of Pip in England and Wales would rise from 2.7 million in 2023-24 to 4.3 million in 2029-30, external, an increase of 1.6 million.

At that time, the Office for Budget Responsibility (OBR), the government's official forecaster, projected, external that the overall cost of the working-age benefit system would rise from £48.5bn in 2024 to £75.7bn by 2030.

That would have represented an increase from 1.7% of the size of the UK economy to 2.2%, roughly the size of current spending on defence.

Ministers argued that this rising bill needs to be brought under control and that changes to the welfare system are part of that effort.

What are your thoughts on the latest concessions? What questions do you have about the changes and what this could mean for you?

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Why is Pip so important for disabled people?published at 10:15 British Summer Time 27 June

10:15 BST 27 June

Nikki Fox
Disability correspondent

The personal independence payment (Pip) is an extra cost benefit. In many cases, Pip supports people already in work and is essentially delivered with an acknowledgement that life as a disabled person is often more expensive.

The wheelchairs a person can apply for through the NHS are basic, for example. They're also based around a clinical assessment, and you may need to fund additional things like cushions or a tilt facility to prevent pressure sores yourself.

There's also a cap on the financial support you can get to pay for home adaptations. Carers and personal assistants, too, sometimes cost more than the funding available, so if you work, you have to top up using your own money.

The charity Scope says life costs over £1,000 a month more on average if you're disabled. Changing the eligibility criteria of Pip could have meant people leaving jobs because they've lost a benefit which levels the playing field for them.

Image source, Getty Images

Asked where the money to fund welfare changes will come from, Care Minister Stephen Kinnock says he wouldn't "pre-empt the Budget, and that's the chancellor's job".

In an interview with BBC Radio 4's Today programme, Kinnock says the chancellor will take the changes to the welfare bill into account and explain how the government will pay for them in the autumn.

Earlier, Ruth Curtice from the Resolution Foundation suggests the government's recent welfare changes are likely to cost around £3bn.

Ruth Curtice, chief executive of the living standards think tank Resolution Foundation, says changes to the welfare bill are a “compromise that in the end takes the system to the one the government wanted, as more and more new recipients apply and the existing recipients roll off”.

In an interview with BBC Radio 4's Today programme, Curtice suggests the cost of the welfare changes is likely to be around £3bn.

That’s because changes to personal independence payment (Pip) are estimated to cost between £1.5bn and £2bn, she says.

Curtice also says that undoing the freeze on universal credit (UC) health-related support is expected to cost another £1bn.

On top of this, she says the winter fuel allowance U-turn would cost a further £1bn.

• For context, under the new proposals, people already getting Pip or the health element of UC will keep their current payments. The planned cuts will only affect people who claim in the future

BBC Radio 5 Live’s Nicky Campbell speaking to to Viv from Pateley Bridge, who claims personal independence payments (Pip).

Yesterday, she told him she “wouldn’t survive” if her disability benefits were cut.

Viv says she feels “very sorry” and “very guilty” that new claimants will be affected by the changes, but she’s relieved she’ll still receive her payments.

She also believes Prime Minister Keir Starmer changed his plans just because he couldn’t challenge rebel Labour MPs, adding, “he hasn’t done it for us.”

A Disability Rights UK campaigner says the government's new changes to disability and sickness benefits create "a two-tiered" system.

As mentioned, the government has confirmed it will make major concessions to Labour rebels over its planned benefits reforms, with cuts now only affecting future claimants.

Speaking on Times Radio earlier today, Mikey Erhardt says: "The idea that you will be less in need, or less deserving of support depending on when the condition that necessitates that support, is something you just have to reject out and out."

Another disability advocate, Lucy Webster, also writes on social media that "creating a two-tier [personal independence payments] and [universal credit] system where new claimants get less than existing ones is a political concession, but not a moral one."

"Not good enough," Webster adds.

BBC Radio 5 Live's Nicky Campbell is now taking calls on the changes to disability and sickness benefit cuts.

You can follow along by clicking watch live at the top of this page.