The changes the government made to the welfare bill in the face of a mounting rebellion over its proposals to cut disability benefits will lift 50,000 people out of poverty, an updated impact assessment has found.
The prime minister was forced to abandon the central plank of his welfare bill – cuts to the personal independence payment (Pip) – to avert a large Labour rebellion in the House of Commons last week.
A new impact assessment by the Department for Work and Pensions has found the change will mean 50,000 fewer people, including children and working age individuals, are in relative poverty after housing costs in 2030.
The original government impact assessment found the proposed reforms would push an additional 250,000 into poverty. Some charities said they calculated the figure to be higher.
This was amended to 150,000 people after the government made some initial concessions, including reversing some universal credit cuts and applying the stricter Pip eligibility rules only to new claimants, as it tried to quell a rebellion over the changes.
In the end, Keir Starmer shelved the main component of the cuts which were expected to save the government £5bn a year, and the Resolution Foundation estimates that the bill as it stands will bring no savings in five years’ time.
The means the chancellor is facing a large financial hole,, with tax rises now predicted.
The chief secretary to the Treasury declined to rule out the introduction of a wealth tax when pressed on future tax rises in the Commons on Monday, and said any tax decisions would be set out by the chancellor at the autumn budget.
On Sunday, the education secretary, Bridget Phillipson, suggested the welfare U-turn may make scrapping the two-child benefit cap more difficult to achieve. “The decisions that have been taken in the last week do make decisions, future decisions harder,” she said.