The benefits timebomb that threatens Burnham’s first major rebellion

Behind closed doors in Downing Street and in his No 10 North Manchester outpost, Andy Burnham is often heard telling aides: “We are going to do this because it is the right thing to do.” While the Prime Minister has been criticised for “shooting from the lip” – making public statements that surprise his ministers and MPs – the “right thing to do” mantra has impressed upon longstanding government figures that what the Prime Minister says in public is more than just a line for TikTok or Gogglebox – he actually means it. It’s a stark contrast with Burnham’s predecessors, notably Sir Keir Starmer, who were often criticised for lacking the ideology or conviction to follow through on their pledges. When it comes to welfare reform – the most hazardous of issues for any Labour leader – is the Prime Minister really going to complete the difficult job of reducing the benefits bill “as soon as we possibly can”, whilst avoiding a repeat of the backbench rebellion which forced Starmer into retreat? That rebellion was more than embarrassing for Starmer, it established the rot that led to his downfall a year later. Prime Minister’s biggest test so far On Friday, the Prime Minister made clear he was prepared to take “difficult decisions” to bring the benefits bill down, telling Times Radio it would, however, need some “up front” investment – raising the prospect of the benefits bill growing even higher before it starts to fall. Burnham is now about to face the biggest test of “doing the right thing”. Two major government reviews on welfare, by Alan Milburn and Stephen Timms, are imminent and could come as early as next week.Milburn’s report on getting Neets (those not in employment, education or training) into work and Timms’ conclusions on disability benefits reform will trigger new government legislation on overhauling the welfare system, which Work and Pensions Secretary Pat McFadden said on Friday would be likely introduced next year. Yet the proposals will also ignite a fresh debate among Labour MPs over how tough the government’s reform of the benefits system should be. There are some, including those representing Red Wall constituencies and are mindful of the electoral threat from the Conservatives and Reform UK, who want clear direction on bringing down the benefits bill – currently projected to rise from £353bn to £431bn by 2031-32. The total welfare bill is expected to rise next year due to new employment support measures introduced off the back of the Milburn and Timms reviews, but Burnham will argue that these plans will help bring down the costs in the long-run, because more people will be helped into work. Burnham could face a rebellion But other MPs, from the left-wing and Burnham’s own caucus of the soft left, are wary that the reforms must not weigh too heavily on the sanctions side of the balance. Rachael Maskell, the ringleader of last year’s successful welfare rebellion against Starmer, said she wants to see the “detail and evidence” that the proposals will help people on benefits rather than punish them before committing to support it. The Labour MP for York Central said ministers will need to “work hard” to ensure the reforms do not punish people. It is clear that a potential challenge to the government’s welfare plans could still be on the cards, depending on the detail. She told The i Paper: “With regards to Milburn, the ambition to ensure every young person is able to work is right, and while some may require additional support, I believe that we must explore every option to enable them to reach this place. “There are ways of delivering the social security which could bring benefit, rather than sanction. “There is a project in my constituency which is working with young people who have experienced sustained unemployment and has achieved a 78 per cent employment outcome. “With regards to Timms, I know that disabled people are already struggling due to the additional costs that they have to pay. “I want there to be positive support to help all who can get into work, but for those that can’t, then the support needs to be there. “However I recognise the considerable discrimination that does occur and the challenges of getting into work, for both groups, and it is this that will require Government to work hard to address.” Burnham has the political capital, allies believe Allies of Burnham are confident that – in contrast to Starmer – the current Prime Minister has enough political capital to bring his Labour MPs on side. They cite his “emotional intelligence” and personal charm which helps him make his case. But also in Burnham’s favour is the fact that Louise Haigh, one of the Starmer welfare rebels of 2025, is now the most powerful woman in government as First Secretary of State. It was Haigh’s political skills in working the Westminster tea rooms and coffee bars this summer that helped Burnham’s smooth arrival in Downing Street with barely a flicker of a challenge for the leadership from any MPs. Many Labour MPs believe the Prime Minister genuinely cares about people on benefits, after he said at PMQs in September – to ridicule from Kemi Badenoch – that national security should not come at the expense of social security. One Whitehall insider said they believed Burnham can win over any welfare rebels because he is a genuine conviction politician with charisma: “He has thrown a comfort blanket around the PLP [Parliamentary Labour Party]”. Yet allies say it would be good for the Prime Minister, who got the job without a general election or Labour leadership contest, to face a big test because this will make him stronger going into an election. Taking on the PLP on welfare and winning would fit the bill of this test perfectly. ‘Prepared to take difficult decisions’ If he can overcome one of the thorniest issues for Labour MPs – cutting the benefits bill without caving into a rebellion, as Starmer did – then this will solidify his position ahead of polling day, allies said. Yet it is also one he cannot afford to lose. Despite a flurry of rumours, fuelled by opposition parties, over the past few weeks that Burnham is preparing to call an early election, The i Paper understands this is not the plan. The Prime Minister wants more time to make his mark on the government, on the totemic issues such as welfare, social care and Brexit, before presenting his plans to the electorate. This will include his vaunted 10-year plan, which he revealed in an interview with The Economist this week could now be coming in early 2027 rather than before the end of this year as originally promised. This apparent delay will not help him fend off the accusation from critics that his positions often change – after a series of verbal missteps since coming into office, which were later rowed back on by Downing Street. Yet allies insist that on the issue of welfare, Burnham is committed to reform. And asked on Times Radio whether he was prepared to cut the benefits bill, the Prime Minister said: “I am prepared to take difficult decisions because I can’t accept the idea that we have a million or more young people in their 20s on benefits. It’s not good for them. It’s not good for anybody. “So there does need to be quite radical change in the way we support young people.” Burnham has also earlier pledged he would not preside over “crude cuts” to the benefits bill. After welfare reform, the EU summit and ten-year plan The welfare plans are expected to include job coaching for young people as well as more support on things like mental health. After grappling the tricky issue of an apology for Britain’s role in slavery at the Commonwealth summit this week, the Prime Minister is preparing to throw himself back into the domestic agenda next week. Welfare reform will take centre stage but Burnham is also gearing up for the EU summit the following week and preparing his flagship 10-year plan. Despite the confidence of the Prime Minister’s allies, a row over welfare is still possible. There is already simmering discontent over some of the detail of Shabana Mahmood’s immigration plans, even after they were watered down, showing there is still appetite among backbenchers for rebellion. Allies of the PM are also hopeful that he and the UK economy can be buoyed by the Democrats’ successful sweep of Congress this week, with the price of oil tumbling. Despite this week’s interest rate rise to 4 per cent – the first rates rise since 2023 – bringing more cost of living misery for Britons, 2027 could see the British economy finally turn around and Burnham could “ride the wave” of an uptick, one insider said. Some in government are also pointing to the optimistic scenario in the Office for Budget Responsibility’s forecasts from last week’s Budget, in which the UK economy stages an “orderly recovery” and the price of oil falls to $55 a barrel in the second quarter of 2027 (it is currently around $100) and gas prices at also fall towards the end of the year. Other far gloomier scenarios from the OBR – the UK’s budget watchdog – are available. The worst of those is its “severe shock” scenario, under which oil prices peak at around $115 a barrel in the first half of 2027 and remaining high until 2031. These numbers are dependent, of course, on whether Donald Trump relaunches military action against Iran. Fresh turmoil in the Middle East would spell more bad news for inflation, which is already stubbornly well above the Bank of England’s target of 2 per cent, and in turn the cost of living. Against this backdrop, Burnham taking “difficult decisions” on welfare, with more up front spending next year, may be a difficult argument to make to voters, even if he wins over his Labour MPs.