Heavy Borrowing Perils Britain's Welfare State
BRITAIN'S welfare spending looks like a prime target as Prime Minister John Major prepares to slash government borrowing, now running at a record 1 billion British pounds (US$1.55 billion) a week.Skip to next paragraph
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Despite warnings from Conservative party supporters, he has ordered Michael Portillo, a senior Treasury minister, to examine all aspects of public spending and produce a formula for reducing it by 5 percent after inflation.
Treasury officials say that inevitably means deep cuts in the national health service, reduced welfare benefits to the poor, and an end to middle-class tax breaks.
Among measures being considered in Mr. Portillo's spending review are "hotel charges" of up to 40 British pounds a night for beds in public hospitals (currently free to patients); reducing or taxing benefits paid to parents with children up to age 18; and phasing out tax relief on house loans.
Comments by Portillo about possible cuts have been seized upon by opposition Labour party spokesmen. Gordon Brown, Labour's "shadow" chancellor, has spoken of a "betrayal of welfare state principles," and a "callous abandonment of election pledges."
The Conservative government's latest drive to cut spending on the welfare state lacks the ideological zeal of Margaret Thatcher's 12-year premiership. Under Thatcher, a determined attempt was made to reduce citizens' dependence on state benefits and to encourage privately funded medical care and pension schemes.
Mr. Major, a defender of public health care, has made it clear that he is driven not by dogma, but by economic imperatives. He faces a government borrowing need of 50 billion British pounds which, if financed by the Bank of England, could force up inflation.
Defending Portillo's wide-ranging search for spending economies, the prime minister said on Tuesday that "we are emphatically not targeting the poorest and most vulnerable members of society. We have a responsibility to them, and we will meet that."
Government sources admit that Portillo's attention is riveted on the big-spending departments of health and social security - the two main elements in the fabric of Britain's welfare state, which together account for nearly half of government spending.
The search for economies is creating problems inside Major's Cabinet and causing disquiet among Conservative MPs.
Virginia Bottomley, the health secretary, is digging her heels in against what departmental officials say is heavy pressure to accept deep spending cuts. In an interview, she said her "bottom line" was a health service which provided care "on the basis of clinical need, not ability to pay."
Peter Lilley, social security secretary, took the step of writing a newspaper article in which he said cuts would be acceptable "only if Parliament and people recognize the need for change."
Some Conservative MPs reacted sharply to Portillo's suggestion on Sunday that free medicine should not be available to people who could afford to pay for it. A senior Conservative backbencher complained: "That kind of approach alienates our middle class supporters.... I sometimes wonder whether Mr. Portillo is being paid by the Labour party."
Howard Glennerster, author of a four-year study of welfare in Britain, said slashing the welfare state could damage the Major government. "It would attack those people who have in the past supported the Conservative party," he said. "The middle class is a major beneficiary of the welfare state."