Leila Nathoo
Political correspondent

The rebels are still angry about where this has ended up.

One who voted against the government's plans last night - despite the concessions - said a "deep seated arrogance at the heart of government" had led to this point, saying "they ‘could have told them this would end in tears and it has".

The rebel said a "complete reset" was needed - in the form of the Chancellor Rachel Reeves abandoning her fiscal rules.

Other MPs have told me that Rachel Reeves doesn’t have much support in the party at this point. She’ll certainly be feeling the pressure - both politically and economically - in the run up to the budget.

The government wanted to freeze a universal credit health top-up for existing claimants until 2030, but these payments will now rise in line with inflation.

The basic payment for UC will rise to £106 a week by 2029-30 as planned, and proposals to end the health top-up until claimants are aged 22 or over also remain.

As it stands, more than three million recipients of universal credit have no requirement to find work due to their health.

The basic level of universal credit is £400.14 a month for a single person aged 25 or over. This more than doubles with a health top-up worth over £400 if someone has limited capacity to work because of a disability or long term condition.

New claimants will now see the top-up fall from £97 per week to £50 a week by 2026-27, but this figure will not be frozen and will rise in line with inflation.

To assist people with health conditions to return to or enter the workforce, the government also plans to invest an extra £1bn a year by 2029/30 to expand tailored employment support - and Work and Pensions Secretary Liz Kendall confirmed this money can be spent this year.

There will now be no changes to Pip until a review by Disabilities Minister Sir Stephen Timms has been completed - and this is not expected until the end of 2026.

Initially, the government planned to make changes to the current points-based system that designates how these payments are awarded - which would have made the criteria harder to satisfy.

They estimated this could save £3.8bn by 2029/30, but the the Department for Work and Pensions (DWP) assessed that this change could have resulted in 370,000 claimants losing Pip altogether.

Before deciding to call a halt on Pip reform for now, the government had already backed down once, when it confirmed that existing Pip recipients would remain on the current system - meaning they wouldn’t have to be reassessed under the new, stricter, criteria.

• For context: Pip - or personal independence payment - is paid to 3.7 million people with a long-term physical or mental health condition in England and Wale. Assessments to receive the various payments on offer involve questions about everyday tasks, with each scored from zero - for no difficulty, to 12 - for most difficulty. Learn more about these benefits in our explainer.

Leila Nathoo
Political correspondent

I’m in Parliament’s Portcullis House this morning, where Labour MPs are grabbing coffees - digesting what happened in the Commons last night.

The strength of feeling on both sides is clear. One Labour MP loyal to Starmer told me: "We are where we are, even if where we are is not a good place."

I asked if they blamed the rebels for where things have ended up. "We’re supposed to be one team. Look at the polls. We’ve got Reform breathing down our necks."

Referring to one rebel backbencher most critical of the government’s welfare plans, the MP said it would be on Rachael Maskell’s conscience if Reform won the next election.

A huge repair job ahead for relations within the Labour Party.

Brian Wheeler
Political reporter

Angela Rayner – who apparently played a key role in brokering last minute concessions with Labour rebels last night to avert a government defeat – was looking pretty relaxed on the Lorraine sofa on ITV just now.

The deputy prime minister says events in the Commons might have looked like “chaos” but insisted “we have got to a better place” with welfare reforms.

She also bats away Lorraine’s inquiries about whether she is after Keir Starmer’s job, insisting that she is focused on delivering for communities – and that the changes voters want to see will take time.

She jokes that before she entered politics she always told friends she did not want to be prime minister “because it will age me by 10 years”.

Image source, ITV

Speaking on Radio 4's Today programme a little earlier, Labour rebel Rachael Maskell says that yesterday's last-minute changes represented a win for disabled people in the country.

The changes mean disabled people "had their voice" in Parliament, she says.

"Yesterday they had their voice, and they rejected government proposals", Maskell says, adding that the government "would have known that if only they consulted disabled people" about the reforms.

She says that she still wants to see Parliament find cost-savings elsewhere, pointing to a wealth tax as a possible option.

Image source, Getty Images

Shadow chancellor Mel Stride has written a letter to Chancellor Rachel Reeves, suggesting that yesterday’s “unfunded U-turns” will “cost billions”.

In the letter, which he published on social media, Stride lists three of the government's “unfunded U-turns on social security benefits”, including changes to winter fuel payments and changes to personal independence payments and universal credit.

“You have said on many occasions that you will not make unfunded spending commitments, so where is the money coming from?” he asks.

“Will you raise taxes or increase borrowing?”

Benefits changes: what's left?published at 08:51 British Summer Time 2 July

08:51 BST 2 July

Chris Mason
Political editor

You might reasonably be asking what is actually left in the government’s benefits plans?

The short answer is they have been eviscerated. They are a shell of what they once were.

But there are still changes coming, which will matter to millions of people.

The two big ones are the raising of the standard rate of universal credit and, alongside that, a reduction of the health element of universal credit for all, except those with the most serious conditions.

Ministers also remain committed to what they call the "Right to Try" – giving jobseekers the chance to try employment without the fear of instantly losing out on benefits.

But the rest of the plans – including the vision to save £5bn a year by the end of the decade – are in a skip.

Tough choices are hurtling down the trackpublished at 08:47 British Summer Time 2 July

08:47 BST 2 July

Henry Zeffman
Chief political correspondent

It’s clear this morning that the prime minister and cabinet need to find a way to reset and move on.

But it’s going to be hard for them to do so with all the bad blood and animosity in the parliamentary Labour Party.

We’ve heard a lot from the rebels, so it’s worth remembering that there are more Labour MPs who are - and were, even before the concessions - loyal to what the government is doing. And they are furious: at their colleagues who forced the concessions, and at the prime minister for backing down more than once.

Everyone will take a breather. The wheel will turn. Parliament’s summer break isn’t far off.

But the Budget in the autumn is hurtling down the track. The chancellor and the Labour backbenchers with whom she is now co-governing will have to decide whether they want tax rises, spending cuts or changes to the fiscal rules.

Each difficult options, each with particular downsides — but that is a choice that can’t be ducked as simply as ripping a clause out of a bill.

Helen Miller, the deputy director for the Institute for Fiscal Studies (IFS), earlier suggested that yesterday’s concessions will mean the government makes no net savings on the welfare bill by 2029/30.

Elaborating on the BBC’s Today programme just now, Miller says that by rowing back on plans to tighten eligibility for benefits, "the government have moved from the position of saving some money to saving nothing, at least by the end of this parliament".

And, while accepting that "nothing is nailed on", Miller says this could ultimately mean the government has little room to manoeuvre in other areas.

"It’s important here that they’ve left themselves very little wiggle room so even relatively normal things that aren’t out of the ordinary can change the picture," she explains.

"The chancellor could get lucky, but I think it’s looking more likely than not that she’ll have to do something to meet her pledge that revenues meet spending, and if she doesn’t want to cut spending that means higher revenues, it’s basically as simple as that."

More now from Labour minister Pat McFadden, who's been speaking to the Today programme.

He admits it’s been a "difficult process" to get the welfare bill moving, but says the government will not "duck reform and change" in the country.

McFadden adds there’s a long history of welfare debate within the Labour Party, pointing out that during the Tony Blair era there was a similar rebellion.

He says that now, while the Pip reform will go at a "slower pace", other reforms like that of universal credit “is happening”.

When asked, after all these U-turns, how the Work and Pensions Secretary Liz Kendall can continue her work, McFadden says "she can carry on because she is an excellent person to do this job".

"We stand as a team," he adds.

Labour minister Pat McFadden - who just ruled out increases to income tax, National Insurance or VAT on BBC Breakfast - is due to speak to our colleagues on Radio 4's Today programme soon.

You can listen live at the top of the page.

Henry Zeffman
Chief political correspondent

Pat McFadden says the government will not increase income tax, National Insurance or VAT in response to its welfare concessions.

The senior cabinet minister acknowledged, however, that the massive climbdown on personal independence payment would have a "financial consequence" for the government.

Asked by BBC Breakfast about the possibility of tax rises in the autumn Budget, McFadden says: "I'm not going to speculate on the Budget.

"We will keep to the tax promises that we made in our manifesto when we fought the election last year."

Those promises were not to increase income tax, National Insurance or VAT.

McFadden says: "The decisions yesterday do have a financial consequence. I'm not going to duck those.

"Where all the money for everything comes from is set out at the Budget. That will take place in a few months' time.

"This is one piece of the Budget. This is one moving part. Budgets are made up of maybe 100 different moving parts, so I'm not going to speculate where they'll all be in a few months' time.

"But yes the decision taken yesterday does have a financial consequence."

Asked about the scenes in the Commons yesterday, McFadden acknowledges that "it's been a difficult process" and "it's not been an ideal process".

As we've just reported, economists expect the government's changes to mean no net savings by 2030 - down from an initial planned saving of £5bn a year.

Labour minister Pat McFadden tells our colleagues on 5 Live Breakfast: "I don’t deny decisions like yesterday have a financial consequence.

"It’s one moving part. And a budget has one hundred moving parts."

McFadden is speaking on BBC Breakfast now - watch live at the top of the page.

When first announced, the government's welfare changes were designed to save around £5bn a year by 2030.

Changes announced last week trimmed those savings to an expected £2.5bn a year.

But the last-minute concessions announced on Tuesday - delaying changes to personal independence payments until after a review - mean the savings could be less than that.

The Institute for Fiscal Studies (IFS) and Resolution Foundation think tanks say Tuesday's concessions will mean no "net savings" by 2029/30.

Helen Miller, IFS deputy director, says "since departmental spending plans are now effectively locked in, and the government has already had to row back on planned cuts to pensioner benefits and working-age benefits, tax rises would look increasingly likely."

One of the leaders of the Labour rebellion, Rachael Maskell MP, has been reacting to last night's welfare vote on BBC Breakfast.

"Yesterday we saw Parliament at its worst but also Parliament at its best, because real people’s voices were heard in the chamber," she says, after tabling an unsuccessful amendment to have the bill dropped entirely.

Although unsuccessful in getting the bill pulled, Maskell says she saw it "disintegrate" in the House of Commons - and she now expects it will be in a "very different" shape when it returns to Parliament for a second reading.

She says she now wants to "build bridges" in the "tradition of the Labour Party" after clashing with the prime minister and his cabinet over benefits cuts.

Reeves' and Kendall's futures are being questioned inside Labourpublished at 06:49 British Summer Time 2 July

06:49 BST 2 July

Chris Mason and Henry Zeffman
Political editor and chief political correspondent

Image source, Reuters

The implications of the welfare vote are head-spinning.

Plenty now believe tax rises in this autumn's budget are inevitable.

Whether Chancellor Rachel Reeves will still be chancellor to deliver it is being questioned by Labour figures at all levels.

Some suggest that Liz Kendall, the work and pensions secretary, ought to resign without delay. She has said she wants to carry on.

One senior government source argued that though the government had been preparing to lift the two-child benefit cap in the autumn, this would no longer be possible.

Meanwhile some at the heart of government are still reeling from a string of interviews given by the prime minister to mark his first anniversary in Downing Street on Friday, taken by some senior figures as a repudiation of the approach he has taken - and therefore of his advisers.

One senior source said: "The atmosphere in there [No 10] is appallingly bad", accusing the prime minister of "dumping on people who are a staunch part of the team".

They added: "A lot of it comes back to the question of what does Keir think - about policy and about personnel. It's the question everyone asks all the time because nobody knows."

• Read Chris and Henry's full analysis here

Image source, PA Media

The government's bill passed last night - but the concessions mean the changes, if and when they become law, will be very different from the original plan, which was designed to save £5bn by 2030.

In a post on X, Conservative leader Kemi Badenoch writes: "This is an utter capitulation.

"Labour's welfare bill is now a TOTAL waste of time. It effectively saves £0, helps no one into work, and does NOT control spending. It’s pointless."

Badenoch adds that the government "should bin" the bill, "do their homework, and come back with something serious".

Adam Goldsmith
Live reporter

We’re resuming our live coverage after the government - just about - won a vote on its welfare reform bill last night.

After a turbulent few hours in Parliament, MPs voted by 335 votes to 260 to give the bill their initial approval - but 49 Labour MPs voted against their government.

But Conservative leader Kemi Badenoch labelled the legislation "pointless" after the government offered major concessions to MPs who had threatened to vote against the government.

After hours of debating in the House of Commons chamber, disability minister Sir Stephen Timms told MPs that new Pip eligibility rules would not be introduced before his review was complete. They had been planned for November next year.

That came after Labour had already watered down their plans by reversing some cuts to universal credit.

There’ll also be reaction from all sides of the debate as politicians begin the morning media round, so stick with us.

Government wins welfare vote - but two big questions remainpublished at 20:45 British Summer Time 1 July

20:45 BST 1 July

Alex Forsyth
Political correspondent

So, let’s just take a breath.

The government won the main vote on its welfare bill, but it took not just one but two major concessions – one last week and the second coming during the course of the debate itself today with a promise to pause changes to Pip until a review has been carried out.

While some Labour MPs signalled support for the government during the debate, plenty raised serious concerns about the government’s approach – not just today, but all the way through this process when they claimed their concerns - and those of disabled people – hadn’t been listened to early enough.

And it leaves a couple of big questions.

Firstly, what this means for the welfare reforms ministers say are desperately needed, and what this means for the government’s budget.

And secondly, what this means for Keir Starmer’s authority.

We're pausing our live coverage now, but will be back in the morning to bring your more reaction and analysis. Updates will be shared in our main story in our absence.