A rebellion by Labour MPs that forced the government to abandon plans to restrict eligibility for Personal Independence Payment (PIP) last year is now giving way to a new readiness to accept benefit cuts, according to a key figure in the uprising. Dame Meg Hillier, chair of the Treasury Committee, told the i Paper that opinions in the parliamentary Labour Party are now “worlds apart” from where they stood in 2024, when Prime Minister Sir Keir Starmer had to shelve the reforms. The shift follows the publication of a government-commissioned report warning that up to one in six young people aged 16–24 could be not in employment, education or training (Neet) by 2031.

The £4.8 billion hole in Rachel Reeves' welfare plan

The aborted PIP curbs were meant to save the Treasury an estimated £4.8 billion, according to the source report, and their collapse left Chancellor Rachel Reeves scrambling to fill the gap. That fiscal pressure has not gone away. As the i Paper reported, the government is now embroiled in a separate row over defence spending that has already triggered two ministerial resignations. The welfare freeze is a direct consequence of the rebellion: Labour MPs indicated they would vote down the PIP restrictions, forcing a humiliating retreat for Starmer. Now, with the Neet report in hand, the same MPs are reconsidering.

The 1.25 million Neet forecast that changed minds

Former health secretary Alan Milburn’s interim report, published last month, found that the UK is facing a “whole system failure” that could see 1.25 million 16- to 24-year-olds out of work or education by 2031 – one in six of the cohort.. The report, commissioned by the government, estimated the crisis costs the UK roughly £125 billion a year in lost taxes and higher health and welfare spending, a sum that exceeds annual education spending in England. According to Department for Work and Pensions (DWP) data cited in the source,PIP claimants in England and Wales already hit 3.93 million in January 2025, up 6% from a year earlier. Dame Meg described the Neet report as a “game-changer” that made reluctant MPs acecpt the need for reform.

Dame Meg Hillier's 'worlds apart' turn on conditionality

The ringleader of the rebellion explicitly told the i Paper that she would now support benefit conditionality if applied correctly, a stark reversal from the unified front against cuts last year. “Conditionality is not necessarily a bad thing if it’s done right,” Dame Meg said, while insisting she would demand “really clear guarantees” that people with lifelong health problems and disabilities would not lose out. She added: “We know sanctions don’t work. But particularly for that young cohort, getting them into a rhythm and pattern and work experience is something that’s necessary.” The shift suggests the Labour backbench is divided between protecting the most vulnerable and addressing a ballooning welfare bill that threatens the government’s fiscal credibility.

What 'conditionality done right' would mean for lifelong claimants

The key open question remains: how will the government distinguish between young Neets who can be nudged into work and disabled people with permanent conditions who rely on PIP for daily living costs? The source reports that Dame Meg still wants “really clear guarantees” for the latter group, but the Milburn report does not offer that granularity. it estimates the £125 billion annual cost but does not break down how much of that is tied to PIP versus other benefits. The Treasury’s chief secretary, Lucy Rigby, admitted to Hillier’s committee that the government cannot reduce student loan interest payments further because of welfare demands – a blunt trade-off that may force harder choices ahead. The exact mechanism for conditionality, and whether it will survive another rebellion, remains unspecified in the source.