The government has won a vote on its benefits bill by 75 votes, but only after offering last-minute concessions to Labour rebels.
Ministers had already watered down their plans once by reversing some cuts to universal credit and protecting current claimants of personal independence payment (Pip) from stricter eligibility rules.
However, some Labour MPs were still concerned the new criteria for claiming Pip would come into force before the recommendations of a review could be implemented.
Fearing a humiliating defeat, the government announced a further U-turn, saying it would not change Pip rules until it had time to consider the review’s conclusions.
The 11th hour changes leave the government’s Universal Credit and Personal Independence Payment Bill gutted of its most significant measures.
The move undermines Sir Keir’s authority, which has been called into question by a series of U-turns recently, and that of Work and Pensions Secretary Liz Kendall.
It also puts pressure on Chancellor Rachel Reeves’ spending plans, as potential savings of around £5bn will now be delayed or lost entirely.
Helen Miller, incoming director of the Institute for Fiscal Studies think tank, said the figures would “intensify the speculation over the summer about which taxes may rise and by how much”.
She said it raised questions about the government’s credibility adding: “It doesn’t bode well for those hoping this government will grasp the nettle and address the deeper, structural challenges facing the UK public finances.”
Speaking after the vote, Kendall said: “I wish we had got to this point in a different way.”
She said there were “lessons to learn from the process” but defended the bill arguing it put in place “really important reforms” to help those who can, back into work.
She insisted Labour MPs were “100% behind the prime minister”.
Following a tumultuous few hours in Parliament, MPs voted by 335 votes to 260 to give the bill their initial approval. The result saw the government’s working majority cut from 165 to 75.
MPs will continue to scrutinise the bill when it returns to the House of Commons on Wednesday 9 July.
Ministers had hoped changes made last week had convinced wavering rebels to back the bill, but during the debate many still expressed concerns.
Less than two hours before the final vote, disability minister Sir Stephen Timms told MPs the government was making further compromises, by removing sections of the bill which would have introduced new Pip eligibility rules.
“We will move straight on to the wider review and only make changes to Pip eligibility activity and descriptors following that review,” he told MPs.
Several MPs expressed anger and frustration at the last-minute changes. Labour MP Paula Barker said: “Whilst grateful for the concessions, this has further laid bare the incoherent and shambolic nature of this process – it is the most unedifying spectacle that I have ever seen.”
Labour’s Mary Kelly Foy told MPs: “I popped out for a banana earlier on and, when I came back in, things had changed again. So I’m even more unclear on what I’m voting on.”
After the vote had taken place, Labour’s Ian Lavery told the BBC: “This is an absolute shambles. I’ve never seen anything like it.”
Both the Liberal Democrats and the Conservatives criticised the process and said the bill should be pulled entirely.
The government initially announced its plans for a shake-up of the benefits system in March, including measures to limit eligibility for Pip, the main disability benefit in England, Wales and Northern Ireland, and freeze the health-related element of universal credit.
Alongside the measures, it promised a £1bn package of support to help disabled people and those with long-term conditions into work.
Defending the proposals, the government has pointed to steep rises in the numbers claiming benefits and said making changes was the only way to ensure the system remained sustainable in the future.
Ministers also said the current set-up left people dependent on welfare, without giving them proper help to find work.
However, for weeks there had been growing discontent in the Labour ranks, who feared it would push people into poverty.
Last week more than 120 MPs threatened to block the bill – leading the government to say it would change the legislation to ensure the stricter rules would only apply to those claiming after November 2026, rather than existing claimants. It also reversed its plans on universal credit.
The move was enough to convince some Labour MPs, including Dame Meg Hillier who had led efforts to block the bill.
Speaking during the debate on Tuesday, she said she would be backing the government’s bill but warned ministers not to ignore backbenchers’ opinions in future.
But her party colleague Rachael Maskell told MPs she would still be opposing the bill, adding: “These Dickensian cuts belong to a different era and a different party – they are far from what this Labour Party is for.”
The pressure from backbench MPs led to Sir Stephen’s announcement in the House of Commons that the government would only make changes to Pip after the review has concluded.
Despite the multiple climbdowns, 44 Labour MPs still voted for an amendment blocking the bill’s passage.
At times, Tuesday’s debate highlighted a breakdown of trust between the government and its own backbenchers.
Even those Labour MPs who were persuaded by the Pips concessions said they would vote against the bill at a later stage if ministers did not hold true to their word.
There was particular confusion about what Sir Stephen’s promise to remove tighter Pips tests from bill would mean in practice – and whether MPs would get a say over it.
Speaking afterwards, one of the rebels, Paula Barker, said: “I am not sure that all colleagues understood what they voted for.”
She said she hoped this “unedifying spectacle” would trigger a “reset” in the government’s relations with its own MPs, adding: “Perhaps they will question why so many of us are doubting what they are saying.”
“We all want the Labour government to succeed,” she added.
Another rebel, Richard Burgon said: “If the government doesn’t deliver on its promises on personal independence payments, if they don’t take out cuts to universal credit there is a possibility that this bill could still be defeated.
“It is only a week to go but a week’s a long time in politics.”
Following the vote, the MS Society said: “We thought last week’s so-called concessions were last minute. But these panicked 11th hour changes still don’t fix a rushed, poorly thought-out bill.”
Jon Sparkes, chief executive of learning disability charity Mencap, said the changes sounded “positive” adding: “We are pleased that the government has listened.”