Lilley to discuss reforming benefits

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Indy Politics
(First Edition)

PETER LILLEY will discuss radical proposals for long-term reform of the welfare state over dinner tomorrow with members of the Thatcherite No Turning Back group of Tory MPs.

The group, of which the Secretary of State for Social Security was a founder member, is preparing the ground for a report putting forward its own recommendations for change. It is expected to advance the case for means testing of more welfare benefits.

As a Cabinet minister, Mr Lilley will take no part in the drafting of the document, but right-wing Tory MPs believe it will help him to put long-term changes on to the agenda.

Yesterday Downing Street denied Mr Lilley had ordered a fundamental review of the welfare state, but confirmed that the department was 'keeping things continually under review, making steps in small parcels'.

Mr Lilley is reluctant to be seen to be reviewing benefits when unemployment is poised to exceed 3 million. But ministers have confirmed that a review is under way.

The NTB group, which sees Mr Lilley as its champion in the Cabinet, will press him not to be deterred by the political difficulties of changes, some of which might have to await the next Parliament for implementation.

Leading members of the NTB want child benefit to be limited to poorer families, and favour measures to encourage more to opt out of contributory state pensions. Liam Fox, a GP and one of the group's new members, is studying plans for limiting care available on the NHS to help to tackle the rising demand for funds.

Right-wing ministers are campaigning to stop Norman Lamont, the Chancellor, widening the VAT base to zero-rated goods in the Budget. They are urging him to balance the Budget by further cuts in public expenditure and are warning that the Tories, like President George Bush, would be damaged by tax increases.

Eddie George, chosen as the next Governor of the Bank of England, was attacked last night in a Commons motion by Peter Hain, secretary of the Tribune group of Labour MPs, for failing to take more action over BCCI, the collapsed bank.