UK government's vote on welfare reform barely passed

One year after the parliamentary victory, the Labour prime minister Keir Starmer has been pushed to several policy U-turns by his lawmakers . This undermin es government’s ability to enforce future reforms. Labour’s prime minister , despite a huge parliamentary majority of 165MPs (normally eas i ly to pass any desired legislation ) , faced the biggest rebe l l ion in his premiership over the welfare reforms . After granting a number of concessions last Friday , the changes to the disability payments will be only made after the conclusion of the welfare minister’s review next autumn. Indeed, y esterday evening , s till 49 Labour lawmakers voted against the welfare reform bill , with the government’s working majority being reduced to 75 from 165. Overall, the scale of the rebellion pointed to the prime minister’s weakening authority and undermined government’s fiscal efforts . The government had initially planned to save around £ 5 billion per year by 2030 by tightening eligibility rules for disability and sickness benefits. After a huge U-turn with new rules only applying to future applicants, the savings are likely to be rather closer to £ 2billion. Overall, t he £ 9.9bn fiscal headroom announced in the Spring Statement risks being wiped out , possibly forc ing the Chancellor to raise taxes or cut government spending in other areas to stay on target to meet her fiscal rules . On a positive note, the monetary policy could help alleviate government’s debt burden after the Bank of England Governor Andrew Bailey mostly emphasized downward risks to the economy ( rather than the inflation risk ), suggesting that the level of policy restrictiveness would come down over time. A continued gradual rate cutting cycle and the likely reduced pace of the quantitative tightening (the decision due in September) are set to alleviate government’s debt costs. Still, the current government’s reduced working majority and possible policy reversals risk creating political stalemate, dampening investors’ trust in government’s ability to keep country’s fi nances in check.