LONDON (Reuters) – Chancellor George Osborne faced the prospect on Friday of a politically damaging and financially costly U-turn as dissent within his ruling Conservative Party grew over his plans to cut disability benefits.

Osborne is seen as a contender to succeed Prime Minister David Cameron before a 2020 election but his political fortunes took a knock last year in a similar row over welfare cuts.

Despite worsening economic forecasts, Osborne this week stuck to his target of turning Britain’s still-large budget deficit into a surplus by 2020.

As part of the savings needed to hit the target, he announced 4.4 billion pounds worth of savings from disability benefits over the next five years as part of his annual budget statement.

But some members of Osborne’s party have threatened to block the plan to tighten eligibility criteria for a state benefit which supports the disabled or long-term sick.

“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.”

The unrest leaves Osborne with an unpalatable choice: water down the reform and risk his reputation as a guardian of the public finances, or press ahead and face the threat of a damaging rebellion at a time when the Conservatives are already deeply divided over whether to stay in the European Union.

CLIMBDOWN?

Osborne said he would listen to proposals on how to improve the plans. Education minister Nicky Morgan said on Thursday that they were “a suggestion” and there would be consultations.

That could mark the beginning of a climbdown similar to that seen last year when widespread anger at Osborne’s plans to reduce welfare payments for low-earners forced him to back down after a protracted and reputation-damaging row.

The Conservatives were elected last May on a mandate to fix Britain’s public finances, including cuts to welfare spending, but their popularity has weakened as the scale of the cuts has become clear.

Opinion polls this week have shown the main opposition Labour Party level or slightly ahead of the Conservatives.

(Reporting by William James; Editing by William Schomberg and Gareth Jones)