UK's Starmer clears first hurdle to reforming welfare

LONDON, July 1 (Reuters) - British Prime Minister Keir Starmer cleared the first hurdle in his quest to reform the welfare system on Tuesday, defeating an attempt by lawmakers opposed to the proposed law to halt its progress.

After being forced by his lawmakers into an embarrassing U-turn last week that saw Starmer sharply scale back plans to cut disability benefits and for this government to drop a key reform at least for now, the bid to halt the proposed new law in parliament was defeated with a vote of 328 to 149 lawmakers.

Lawmakers will almost immediately hold another vote on whether or not to take the bill to the next stages of the parliamentary process. If the government also wins that vote, those next stages are scheduled for July 9.

A year after winning one of the largest parliamentary majorities in British history, Starmer has seen his authority dented by a series of U-turns, including over welfare reforms he says are vital to get more people into work and make savings.

The government had initially hoped to save 5 billion pounds ($6.9 billion) a year by 2030 by tightening rules for people to receive disability and sickness benefits.

But after the government conceded to pressure from its lawmakers, it said the new rules would now apply only to future applicants, not to the millions of existing claimants as had been proposed. Analysts estimated the savings would likely be closer to 2 billion pounds.

In a further last-minute concession to rebels during a debate on the changes, the government backed down on implementing tougher eligibility rules for a key benefit payment until a review into the welfare system had been completed.

The proposed reforms are designed to reduce the cost of Britain's growing welfare bill, which the government has described as economically indefensible and morally wrong.

Annual spending on incapacity and disability benefits already exceeds the country's defence budget and is set to top 100 billion pounds ($137 billion) by 2030, according to official forecasts, up from 65 billion pounds now.

More than half of the rise in working-age disability claims since the COVID-19 pandemic relates to mental health conditions, according to the Institute for Fiscal Studies think-tank. (Reporting by Elizabeth Piper, Andrew MacAskill and Alistair Smout, editing by Kate Holton)