LONDON, March 18, 2025 (BSS/AFP) - Britain's Labour government is set to announce Tuesday contested reforms to disability welfare payments, as the country's stagnant economic growth hits public finances.

The centre-left party, traditionally accused by the right of excess spending on benefits, insists the cutbacks are essential to help fill a black hole of œ22 billion ($29 billion) it claims to have inherited from the Conservatives after last year's election win.

Work and Pensions Secretary Liz Kendall is expected to unveil her plans, which have come under fire from some Labour MPs, in an address to parliament.

Her announcement comes ahead of finance minister Rachel Reeves's Spring Statement on March 26, when billions of pounds of spending cuts across various government departments are set to be detailed.

- Pandemic fallout -

Prime Minister Keir Starmer's spokesman said Monday that the changes to disability payments were necessary but that people most in need would continue to be adequately cared for.

"We've got a duty to fix the system to ensure that safety net is always there for the most vulnerable and severely disabled, but also supports people back into work," he said.

"We're the only major economy whose employment rate hasn't recovered since the pandemic. There is a duty to fix the broken system that is letting millions of people in this country down."

The spokesman added that there had been "a surge, particularly since the pandemic, of people applying and reporting anxiety and depression as their main condition".

According to government forecasts, the number of UK working-age people claiming a disability benefit, or PIP, is expected to surge by the end of the decade.

The UK spent œ296.3 billion on welfare, including almost half on pensions, in 2023/24, according to the Office for Budget Responsibility, the country's spending watchdog.

That was equivalent to almost 11 percent of UK gross domestic product (GDP).

- 'Deeply concerned' -

Labour MP Clive Lewis described the government's plans for disability benefit as "incompatible".

"On the one hand it's trying to fix our broken welfare system and at the same time, save money. This is not possible," he told AFP on Monday.

"And it is doubly impossible if we are to adhere to the Labour values people elected this government to pursue."

Labour MP Rachael Maskell told AFP she was "deeply concerned that many disabled people will end up in deeper poverty as a consequence of proposals to change the eligibility criteria for social security".

She urged the "government to think again and spend time listening to disabled people who have got to be at the centre of these discussions".

Tuesday's announcement comes after the government recently said it would hike spending on defence, heaping fresh pressure on government coffers.

Meanwhile, Britain's economy unexpectedly shrank in January, official data showed Friday, piling more pressure on the government ahead of its Spring Statement on the economy.

Uncertainty over the fallout from President Donald Trump's tariffs on imports into the United States have added to the economic headwinds.