Thatcher Cabinet may balk at plans to cut spending further

Can Prime Minister Margaret Thatcher and her monetarist advisers justify one more turn of the screw to hold down public spending and guide the economy into fresh productive efforts?

This is the essential question confronting a government that swept back to power with an increased majority only six weeks ago but now seems to be doubting its own ability to put Britain back on the road to prosperity.

In terms of sheer toughness, the approach of Mrs. Thatcher's new chancellor, Nigel Lawson, is in no doubt. At the first opportunity he strode to the House of Commons dispatch box and demanded that public spending be slashed to the tune of a further (STR)1 billion ($1.5 billion).

This was essential, he said, if the government's financial targets were to be met and if inflation, already on the rise, was to be kept under control.

But immediately the wisdom of the Mr. Lawson's new economies was called into question, even by political interests previously solidly behind Thatcherite methods of pumping fresh long-term life into British industry.

Cabinet ministers made it plain that they wanted (STR)5 billion ($7.6 billion) more from the chancellor than he was prepared to give them. They told him they were reluctant to accept massive budget restrictions.

The big-spending departments, such as defense and social welfare, decided that they could not implement the new round of economies demanded by Mr. Lawson without doing serious damage to their policy aims.

Education, too, already suffering from deep cuts in the schools and universities, appeared threatened by the Lawson economies outlined in a parliamentary speech that was sharply criticized by leading Fleet Street newspapers.

Part of Mr. Lawson's problem is that his new money cuts have been sprung, as it were, on the nation.

Before the general election June 9, there was little hint that economies of such magnitude were in the pipeline.

The new chancellor had the unenviable task of explaining to the House of Commons that the Thatcher government's pre-election financial estimates were significantly astray and that adjustments were necessary.

Some of the harshest criticisms of his maiden speech as chancellor came from national health service workers, who forecast a serious diminution in patient care if the proposed cuts were carried through.

Then school inspectors weighed in with the charge that teaching standards had been undermined in the past four years of strict economies. Further cuts, they said, would do even greater damage.

Even the Confederation of British Industries (CBI), representing the mainstream management sector, found fault with what Mr. Lawson was demanding.

CBI spokesmen asserted that what was needed was a cut in civil service manpower so the labor force could be moved into more productive channels.

For Mrs. Thatcher, still flushed with her slashing victory at the polls, reactions to the chancellor's opening gambit threatened considerable embarrassment.

The prime minister believes that the way to financial recovery for Britain is that of ''shaking out'' excessive state spending. Her commitment to monetarism, deep when she took office in 1979, is scarcely diminished today. At the same time, however, the fruits of her policies, especially in the social and educational spheres of British life, are becoming more apparent.

Parents are having to pay more for school meals. Medical patients are having to pay extra for prescription charges. Local authorities are having to restrict services they provide, such as adult education courses and welfare programs.

Westminster observers say Mr. Lawson, after his first attempt to assert himself as a strong chancellor, may find his biggest problems with fellow Cabinet ministers.

Individually they will demand more than they are likely to get. Collectively they may begin to believe that the chancellor is offering less than the nation needs for its own well-being.

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