Controversial welfare reforms will now lift 50,000 children out of poverty after a Labour rebellion forced a humiliating Government U-turn, official figures show, but the package will no longer save any money.
An updated impact assessment showed the plans – initially designed to save £5bn to help Rachel Reeves balance the books, but predicted to put 250,000 people including 50,000 children into relative poverty – will now save nothing, but actually lift 50,000 adults and 50,000 children – 100,000 in total – out of relative poverty.
It comes after ministers were forced by Labour rebels into an embarrassing climbdown – first revealed by The i Paper – to drop plans to make it harder to claim the Personal Independence Payment (PIP).
The Government also U-turned by exempting existing claimants from a freeze in the higher rate of health-related universal credit.
It means the flagship welfare legislation is now hollowed out and contains mainly plans to increase the standard rate of UC, encourage more people back to work and extend protections for severely sick or disabled claimants.
Reeves, the Chancellor, has since signalled that tax rises will be needed to cover the black hole that has been left in the public finances after the U-turns on welfare and the winter fuel payment.
There have also been warnings that early plans to lift the two-child cap on benefits may have to be abandoned.
It has led to calls on Reeves to consider a wealth tax, which she has previously ruled out.
The Universal Credit Bill will come back to the Commons for its final stages on Wednesday, with some Labour MPs threatening to rebel again.
But The i Paper understands that Labour whips are expecting these to be limited and unlikely to come close to threatening the Government’s majority or forcing concessions.
Ministers will meanwhile attempt to put the focus on the Conservatives and Liberal Democrats, arguing that if they vote down the legislation they are opposing lifting 50,000 children out of poverty.
This is a breaking news story and will be updated.
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