Prime Minister Margaret Thatcher's Conservative government has embarked on the most ambitious program of government spending cuts and denationalization of governament-owned industry since the British welfare state was begun three decades ago.
Thatcher's government has started a series of complicated, interlocking moves, most of which will take many months to complete, disigned to fulfill her central campaign promise to move Britain away from socialism by sharply reducing the size of government and its role in the economy.
The success of Thatcher's politically risky moves will determine to a large degree her success as prime minister.
Former Labor prime minister James Callaghan called Thatcher's economic policies "disastrous" for ordinary British families and Len Murray, general secretary of the Trade Union Congress, said the Conservative government was trying to make government spending "Dirty words scrawled on a wall" and predicted widespread unemployment.
In a rush of decison-making recesses for the summer, Thatcher and her Cabinet moved to save about $9 billion by cutting spending at every level of government and selling shares in some of Britain's largest nationalized industries.
National government subsidies for ailing industires, regional economic development, public housing, passenger railroad service, education, local government operations and even the British Broadcasting Corporation's overseas service all are being reduced.
The size of the government bureaucracy, particularly the administrative bureaucracy of the National Health Service, also is to the cut.
British Airways, the nationalized passenger airline, and British Aeropace, the civilian and military aircraft manufacturing industry that was nationalized only two years ago by the previous Labor government, both will be partially denationalized through the sale of up to 49 percent of their stock to private investors, including their own employes.
About a third of the British government's majority interest in British Petroleum, the giant multinational oil corporation, also is being sold to private investors. The smaller but growing British National Oil Corp. will remain in government ownership to protect Britain's interests in North Sea oil drilling, but it will be redesigned to operate like to a private oil company rather than as an extension of the government.
British Shipbuilding, the failing naval and merchant ship construction industry that also was merged and nationalized under Labor in 1977, will be shrunk by a third and subsidized two more years to become profitable enough for private investment or be dismantled.
The National Enterprise Board, set up by Labor to rescue faltering industries ad invest government money speculatively in the engineering, computer and electronic fields, will be restricted to keeping afloat some "lame ducks" such as British Leyland, and Rolls Royce and investing in selected new high technology firms. Its already profitable ventures, including several strong engineering and electronics firms, will be sold entirely to private investors.
Some failing government subsidized firms, that had been barely surviving on government loans, will be allowed to wither and die.
The government's scheme of grants and loans to maintain and start industires in depressed regions of Britain will be cut by a third, with future aid rstricted to the hardest hit areas of high unemployment in Scotland, Northern England and Wales. Only Northern Ireland, Britain's poorest region which continues to suffer from sectarian violence partly rooted in economic decline, will escape the cuts.
Thatcher, who called a special Cabinet metting today to order an increase in next year's government savings by about $2 billion, wants to cut spending enough to finance another income tax cut next spring to stimulate Britain's stagnant economy. She believes that healthy, lasting economic expansion requires private rather than public investment, and that double-digit inflation must be squeezed out of the economy first.
Several of her government's top officials warned today that still more severe cuts in government spending are necessary to accomplish these goals. Employment Secretary James Prior said, "Cuts have to be made right across the board to get the economy on a proper balance. Otherwise we will suffer."
Chancellor of the Exchequer Sir Geoffery Howe told economic experts at a conference here that "very few people have any real inkling of the scale of the problems. The truth is that current reductions in public spending are essential if future improvements in the quality of our public services -- which we strongly desire -- are ever to be possible.
"The cure may be in the short term make things more uncomfortable for us. But we have no choice. The treatment may seen unpalatable, but without the treatment our condition could easily become incurable."
The Thatcher government is taking the risk that these spending cuts, which are certain to mean the loss of tens of thousands of government and government-subsidized jobs, will increase greatly, already rising unemployment here. More than 1.3 million British workers are now out of work and unemployment is highest in those areas where the cuts will cost more jobs in the steel and shipbuildng industries and local government employment.
"What the government is doing threatens group after group of workers," union leader Murrary declared. "When you add all these up, the sum total is a large increase in unemployment. That is not only immoral and unnescessary, ti is absurdly wasteful."
Several union leaders have vowed to resist the government's efforts to make cuts in their industires and others have vowed this autumn to demand larger wage increases to cover rising inflation and shorter work hours to create new jobs. CAPTION: Picture, MARGARET THATCHER . . . moves to cut spending