How will Labour pay for welfare U-turn?

After the government was forced into a further, last-minute climb-down on its welfare reform bill, questions are now being asked about how the Treasury will balance the books.

The extra expense is expected to be in the range of £2.5 billion and could mean "tax rises in this autumn's budget are inevitable", said Chris Mason at the BBC, while the Chancellor Rachel Reeves is "being questioned by Labour figures at all levels" about where the money will come from.

What did the commentators say?

Though the bill eventually passed through Parliament, the debacle showed the government is "transparently not in control of events" and the "implications" of the concessions are "head-spinning", said the BBC. Tax rises look likely, and potential changes to policies like the two-child benefit cap will "no longer be possible".

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That lack of control in trying to make billions of savings ended as it did in the government's "attempt to cut the winter fuel allowance", with it "spending slightly more than if it had done nothing at all", said Will Dunn in The New Statesman.

It leaves the chancellor in a "deeply frustrating position", not least because she is cornered by her own "fiscal rules" and the promise "not to raise any of the three biggest revenue-raising taxes". Perhaps now is the "time to be bold" for Reeves; "tweaks to the system" are not likely to solve Britain's problems, but an "overhauled" tax system might.

Bending the fiscal rules would mean softening "her self-proclaimed 'iron chancellor' image", but she has already "declined to explicitly rule out amending the rules", said George Parker and Sam Fleming in the Financial Times. A change, however, could "damage the chancellor's credibility with investors and put her job on the line", particularly given her already "mounting fiscal and political woes".

Reeves "could yet strike lucky", and "growth could bounce back" to rapidly ease the pressure, said Heather Stewart in The Guardian. However, the current fiscal outlook means "she would have to proceed with caution" to "allow herself more leeway", and the Treasury "surely" must now be "poring over a menu of potential tax rises" to announce in the autumn budget.

Higher taxes would not be opposed by many left-wing Labour MPs, and the successful rebellion against the welfare bill means they "scent blood in the water", said Ben Riley-Smith in The Telegraph.

The "worsening economic forecasts" and the "eroded" authority at the top of government will be where the rebels "press their advantage", with almost certainly calls for "new wealth taxes" to help balance the books.

What next?

Labour entered government determined to present "stability and strength" in its handling of the economy, but so far its "tax and spending decisions" have turned into a "grim spectator sport", said Stewart. The Treasury now has "unenviable tasks" ahead of it before the autumn, including working on a "possible package of tax increases" and hoping the Office for Budget Responsibility's forecast will not "downgrade its expectations of productivity" as much as is predicted.

There are now two choices facing the government: "muddle through" with "compromises" until facing "disaster at the next election", or "try to make history" with bold plans, said Dunn. But while it's easy to "present such plans", actually "getting it past the party and the public is very different".