UK's Osborne faces rebellion over disability benefit cuts

Already facing serious questions over his plan to pull the economy into surplus by 2020 despite failing to cut debt, Osborne faced the prospect of a second embarrassing climb down over welfare reform. The row is the last thing the government needs as it struggles to stop internal divisions widening ahead of the EU referendum in June.

It also harms Osborne's image as the great fixer of the UK economy as he positions himself to run for the leadership of the Conservative Party once Prime Minister David Cameron honours his pledge to step down ahead of the next General Election, which must be called by May 2020.

The latest row is over tightening the eligibility criteria for disability or long-term sick benefits in an effort to carve £4bn from the welfare budget. Last year the House of Lords rejected proposals to slash welfare payments for those on low incomes.

The benefit, known as personal independence payments, is used to pay for items such as mobility scooters or to make homes more accessible for disabled people.

There were already signs on Thursday night that the government could be shifting into reverse gear as Education Secretary Nicky Morgan told the BBC that the cuts were only a "suggestion" and subject to consultation.

More than 20 Conservative MPs wrote to Osborne ahead of Wednesday's Budget and asked him not to implement the cuts.

"It is simply not sellable, and it is not fair to the people affected. It is not fair to people who cannot work," Conservative MP Andrew Percy told the London Evening Standard newspaper.

"There are scores of Tory MPs who are deeply concerned about this — certainly far more than the government's majority. It would be fair to say there is open rebellion and I would say there is zero chance of getting it through."

'War on the disabled'

Opposition Labour Party leader Jeremy Corbyn said Osborne had "declared war on the disabled" and he would try to force a parliamentary vote on the issue as soon as possible.

"The announcement made by the chancellor is a reverse of the whole trend of the past three decades, to go back to saying disabled people can't lead independent lives, can't get the support they need," he said

Any rebellion would just add to the reputational damage Osborne is suffering over his budgetary plans. On Thursday the influential Institute for Fiscal Studies (IFS) said he had only a 50% hitting his surplus target, with IFS director Paul Johnson saying Osborne was “running out of wiggle room”.

Johnson said if growth deteriorated further Osborne would need fresh spending cuts or tax rises to meet his pledge. He also warned that Britain faced an extra would be an extra "year of austerity" after the next election as Osborne promised to maintain the surplus in 2021.

"The chancellor has added another year of austerity, another year of spending cuts to the end of his plans so even if we get - if we get - to surplus in 2019/20 which is the plan, we'll have to have another year of pain to stay there the following year," he told the BBC.

Downward revisions of UK growth over the next four years by the Office for Budgetary Responsibility were a cause for concern, the IFS said.

"If the OBR is right about that we should all be worried. This will lead to lower wages and living standards, not just lower tax revenues for the Treasury," it said.