Finances Force Britain to Review Welfare Costs like Other European Countries, Britain Looks for Better Balance between Curbing Public Spending and Maintaining Social Provisions

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BRITAIN'S financially hard-pressed Conservative government is preparing to rein in spending on the welfare state.

Prime targets are the state- financed National Health Service (NHS) and ballooning welfare benefits which have helped to boost indebtedness to a record British pounds50 billion (US$76 billion) annually.

Like other West European countries which have spent the last 40 years developing government-financed health and welfare provisions, Britain is having to accept that there are limits to what the state should be asked to do. In the European Community, unemployment has reached 18 million. Combined with a rapidly aging European population, government finances are shouldering a heavy burden.

Prime Minister John Major has appointed Michael Portillo, chief secretary of the treasury, to push through a sweeping review of public spending in the run-up to November's budget. Mr. Portillo, widely seen as a Cabinet torchbearer for the free-market ideas associated with Margaret Thatcher, the former premier, spelled out his views in a magazine article circulated among delegates at this week's Conservative Party Conference.

Portillo wants to encourage private medical insurance, extend the market principle to running public hospitals, and gradually replace state-paid pensions with private pension schemes.

His ideas are in line with other West European countries' thoughts on welfare. Earlier this year, the Netherlands ordered cuts in sickness benefits. Sweden has already begun trimming back its generous welfare and health provisions. In Germany, Chancellor Helmut Kohl's coalition government in July approved a series of welfare cuts intended to save 35 billion deutsche marks (US$22 billion) a year and reduce the federal budget deficit by 5 percent over three years.

In Britain, Portillo accepts that the government still has a part to play in providing a "safety net" for the sick and unemployed, but he says people "must rethink what provision should be made for the contingencies of life by the state, and what by the individual."

Peter Lilley, social security secretary, told delegates to the Conservative conference that in the future, government would crack down on foreigners who came to Britain and claimed welfare support payments and housing benefits. Mr. Lilley said he had no intention of reducing help for people in real need, but was determined to curb Britain's "something-for-nothing society."

In his first year as premier, Mr. Major spoke often of the need to maintain the welfare state, and recalled that as a young man of limited means he relied heavily on state-paid medicine during a long period of illness. Like other European leaders, however, he is having to face harsh economic facts.

In France, a study commissioned by the government earlier this year forecast that the deficit in the state pension budget would increase tenfold to $35 billion by the year 2010 if cuts were not ordered. …