Juppe tries to head off social security clash

MARY DEJEVSKY

Paris

The ferocious argument about the future of France's health and social security system entered its final stage yesterday with the opening of a two-day debate in the National Assembly by the prime minister, Alain Juppe. The debate, expected to be acrimonious, with deep divisions on the right as well as between right and left, is intended to pave the way for Mr Juppe to present his proposed reforms tomorrow, when they will be made the subject of a vote of confidence.

With the prospect of widespread public sector strikes looming today, Mr Juppe was clearly concerned not to be accused of making "cuts" for their own sake and insisted that the crisis facing the social security system - popularly known as the Secu - was not just financial. It lay, he said, in the inability of the system to combat "the two great plagues that threaten our society: unemployment and deprivation". Swelling costs, especially of the health service, and stagnating revenue, however, are at the root of the problem. The Secu's annual deficit increased from 10bn to 60bn francs between 1990 and 1993, and its debt for this year is expected to reach Fr64bn (pounds 8.4bn).

Mr Juppe said yesterday that France spends 25 per cent per head more on health care than Germany and 60 per cent more than Britain, and tops the European league - without having markedly better life-expectancy or perinatal mortality rates than anyone else. He also noted that the cost of operations could vary by 50 per cent from one region to another.

Soon after taking office, Mr Juppe said that he intended to bring the Secu back into balance on its current account within two years. But its accumulated debt stands at between Fr120bn and Fr230bn. The task became more urgent two weeks ago after President Chirac, with the franc under acute international pressure, went on television to say that his absolute priority was reducing the Fr320bn domestic budget deficit. Although the Secu is run separately from the state budget and funded almost entirely by workers' and employers' contributions, its debts have to be serviced by the state.

The problem represented by the system has been recognised by successive recent French governments, but the search for a solution raises similar passions and prejudices as in Britain. The difference, especially on the right, is whether revenue should be increased or spending cut.

Mr Juppe is believed to favour the introduction of a "temporary" contribution to be paid by workers and employers to eliminate the Secu's debt. The taxation of family allowances appears to have been ruled out, but this and other family benefits could be frozen.

Edouard Balladur, the former premier, has warned strongly against increasing tax and contributions.