Major aims to reduce power of the state: Bureacrats under fire. Colin Brown reports

(First Edition)

THE NUMBER of bureaucrats in the NHS will be cut with a Bill in the autumn to abolish the health regions and allow smaller health authorities to merge, the Prime Minister disclosed last night.

Promising a shift of more power from the state to the individual, John Major yesterday announced the NHS Bill as part of his plans for a 'second revolution' in the public services.

Boundaries between the private sector and the public sectors were being broken in five ways: by privatisation; more private investment in public schemes; more competition for public services; devolving more power; and making public services more accountable through the Citizen's Charter.

His keynote speech to the European Policy Forum echoed remarks in June 1992 to the right-wing Adam Smith Institute when he committed the Government to felling the 'Goliath' of central government. Highlighting differences with Labour, he said concern for the individual, defence of private property and the protection of the citizen against the power of the state had always been central objectives of Conservatism.

'The central objective of socialism, by contrast, has always been the pursuit of equality. Egalitarians find allocation more palatable than choice. They put uniformity before improvement. That means more power to the state and less to the individual.

'If they had believed in ownership, as we do, they would never have opposed council tenants' aspirations for home ownership the biggest transfer of wealth and power from the state to the individual of the past 15 years.'

The Prime Minister said his ambition was smaller, more efficient government at all levels.

'The longer I've been Prime Minister, the more certain I've become that government should be wary of interference and aware of its limitations,' he said.

Baroness Thatcher began to roll back the frontiers of the state in the 1980s. 'We can no more stop fighting the battle against big government than the gardener can stop mowing the lawn or digging out the ground elder.

'We must resist the clamour for government action, magnified by pressure groups on almost every item of news. It is one of the greatest follies of the late 20th century,' he said.

The Tories did not manage to stem the tide of European regulation during the 1980s under Baroness Thatcher. But Mr Major said the Maastricht treaty which he negotiated had 'put up the breakwaters'.

Reminding supporters that income tax rates had reached 98p in the pound under Labour, he said the Tories saw personal incentives as the key to growth. The lower 20 per cent tax band would be taken further, when possible. 'Our ambitions to limit taxes on the least well off are far from satisified.'

Government had to make a first-rate job of ptorecting the citizen - defending the country, upholding law and order, providing high quality education and health, and security for those who depended on the welfare state, including the old.

'But we need reform even in these areas. Putting the front line first, getting the basics right, securing the best value for the taxpayer's money and applying good old-fashioned commonsense: these are the disciplines being applied in every part of government.'

On education, he wanted to extend nursery serbvices, when the resources were available, but he emphasised he wanted it to be partly done through the private sector. 'It would destructive to enlarge it soley through LEAs (local education authorities) and wreck private and voluntary provision.'

Labour's first nationwide campaign with Tony Blair as leader is for to mount a strong call for the Post Office to be kept in public ownership. Mr Blair said at the launch of the party's anti-privatisation drive: , making his last public appearance before leaving for a family holiday in France, said: 'As a private business the Post Office would focus not on how it could provide service to the public but on how it could make money out of the public.'

Speaking at the Westminster launch of Labour's summer anti-privatisation drive, Robin Cook, shadow trade and industry secretary, said it was an example of the 'new campaigning Labour party.'

Under the Government's favoured option in last month's green paper, 51 per cent of the Royal Mail and Parcelforce would be sold off. Protests from Tory backbenchers fearing the demise of rural post offices convinced the Government to keep the Post Office Counters business in the public sector.

Labour insisted yesterday that small post office remained under threat because of the impending loss of cross-subsidies.

Mr Cook said Post Office accounts showed that about pounds 250m a year is paid by the Royal Mail to Post Office Counters to support the post office branches that handle Royal Mail. 'One thing is quite clear. If Royal Mail becomes privatised it will first of all try and find ways in which it can achieve its own direct outlet for mail and other services, circumventing the post office branches.

'Secondly, it will look for ways of reducing its payment to Post Office Counters. When that money goes down, then Post Office Counters is faced with some very tough, hard commercial decisions.

'At the moment the payment to the rural branches for the handling of Royal Mail is eight times per item the payment in the Crown Post Offices.

'If Post Office Counters is left with the reduced reckoning then there can only be one conclusion as to where the axe will fall. It will fall on those branches with high costs and low turnover.'

Mr Blair said the Post Office was a success story in the public sector. It should remain there 'not for reasons of ideology but for reasons of good common sense.'

Mr Cook said there were already signs that the Government could be defeated if it attempted to push the plan through Parliament. Seven Tory MPs and two Ulster Unionists had already signed a Commons early day motion opposing the sell-off, he said.