The personal independence payment (PIP) scheme is “creaking” due to a surge in demand, the Work and Pensions Secretary warned as he suggested many claimants would face cuts.

Mel Stride insisted that benefits reform would ensure the UK’s welfare system is “fit for the future” as he urged companies to step up hiring within Britain rather than looking overseas – with a new ministerial task force and advertising campaign to promote links between business and job centres.

But he warned that “the public’s support for welfare cannot be taken for granted” and set out plans to cut the overall bill.

The Government has already announced changes to PIP which will see cash handouts replaced by other forms of support in some cases.

Mr Stride said in a speech in London that the payment, which tops up the income of disabled people who face additional costs due to their condition, is “creaking under the weight of the profound changes we’ve seen in the nature of disability since it was introduced over a decade ago”.

He added: “If we do nothing, the cost to the taxpayer will rise by 60 per cent over the next five years – an increase of almost £14bn. So the Modernising Support green paper that I have published sets out how the welfare system can better target support at those who need it most and deliver better value for the taxpayer.

“Because the public’s support for welfare cannot be taken for granted. It rests on a system that is compassionate but also fair, with carefully managed spending.”

The minister blamed social media and Covid lockdowns for poor mental health among some young people, making it harder for them to enter the workplace, as he insisted that reforms would help more Britons find jobs and reduce the need for mass immigration.

But asked by i whether PIP claimants in England and Wales should prepare for a reduction in income due to his planned overhaul, Mr Stride said only: “The consultation which is ongoing at the moment is really about recognising that there is a weakness in having a one-size-fits-all approach to PIP because people have a variety of different needs that need to be addressed – and through time we’ve seen a greater prevalence, for example, in mental health conditions.

“So all the consultation is doing is looking at the way that other countries are doing it around the world, and there are many different variations of this, really trying to move towards a system that better meets the needs of those that receive that particular benefit.”

He also used his speech to push the use of AI in the benefits system, arguing that new technology was able to highlight potential issues for example by scanning the 25,000 letters sent to the Department for Work and Pensions every day and picking out those which relate to vulnerable people and need urgent attention.

Labour’s Shadow Minister for Work and Pensions, Alison McGovern said: “After laying bare the Tories’ damning failure on work, skills and training, Mel Stride is going to be furious when he finds out who has been in power for the last 14 years.

“Talking shops and billboards do not even scratch the surface of what is needed to get Britain working. The Tories should be prioritising proper plans to tackle worker shortages and adopting Labour’s plan to connect the immigration system to skills.”

And Martin Green of Care England claimed the Government was not doing enough to boost the domestic workforce, saying: “Today’s announcement is the latest short-term initiative that leaves the key issues of pay, terms and conditions, and meaningful career progression unaddressed.”