Juppe ready for storm over benefits

Paris - The French Prime Minister, Alain Juppe, is preparing to introduce controversial changes to France's 50-year-old social security system by edict, under cover of an official government policy statement, it emerged last night, writes Mary Dejevsky. The changes, designed to arrest disastrous financial losses in the system, are currently being finalised.

It had been expected that Mr Juppe would present his "structural solution" to the "grave difficulties" facing the social security system during a two-day parliamentary debate on 13 and 14 November, giving MPs a chance to discuss and vote on the measures. Now this debate may be cancelled. A final decision is expected today.

According to figures released last week, the social security system, known as the Secu, will run up a deficit of 64.5bn francs (pounds 8.3bn) in the current financial year. The Secu, which incorporates all spending on health and social benefits, is administered separately from the state budget, but Mr Juppe has pledged to bring it into balance by 1997 in the interests of sound financial management, and because the state has to fund its debts.

Those who manage the Secu - a commission made up of doctors', trade unions' and employers' representatives - know the situation cannot continue.

Presenting the Secu's audited accounts for 1994 and projections for 1995 and 1996 last week, its general secretary, Jean Marmot, began: "The time has come for hard decisions to be taken on the French social security system ... social solidarity cannot be financed on credit."

The trade unions' preferred solution is to have the system, now funded from workers' and employers' contributions, part-funded from the central budget. But they are wary of losing their say in running it. The employers fear any change in funding could mean more money being taken from them.

Knowing that any changes will be dynamite to already discontented public sector workers, not to mention taxpayers, who have forked out an extra 2 per cent in VAT this summer, Mr Juppe is showing great caution on the surface, while holding the big guns in reserve.

Last month he launched a nationwide debate, which boiled down to 22 regional seminars, at which all interested parties were invited to voice their concerns and suggestions. Not surprisingly, the exercise produced no consensus over reducing spending.

It is widely predicted that benefits and allowances, which are mostly neither taxed nor means-tested, will be considered as income and taxed accordingly. There is talk of a temporary increase of 1 per cent in the "social charge", roughly equivalent to a National Insurance contribution, which is paid by everyone in work, and of means-testing family allowances. Regulations for claiming unemployment and housing benefits may be also tightened.

Some of the most contested changes could be in health spending. It is already known that charges for hospital stays will be going up by 15 per cent. GPs may have to forgo a pay increase next year. A nominal charge of 5 or 10 francs for prescriptions, or for each packet or bottle of medicine, has been mooted, as has a one-off charge to GPs for setting up in urban areas, where ministers believe there are too many doctors.

Any curbing of doctors' freedom to practise and prescribe will be unpopular, and the complaints are already loud. The leader of the main doctors' union stormed out of a Secu budget meeting last week, shouting that ministers were blaming doctors for this year's overspending and that this was "intolerable".

Mr Juppe has said nothing officially, and has reportedly banned his ministers from saying anything. Answers given by the two ministers most immediately concerned at a recent press conference suggested they are being kept as much in the dark as the public, and are not best pleased about it, especially as they will also have to defend whatever is announced.