Hospitals to levy 'hotel charges': Prime Minister adds his authority to restructuring of 'unsustainable' welfare state

CHARGES for NHS patients convalescing in hospital are being pursued by ministers as part of a fundamental reshaping of the welfare state.

John Major underlined the Government's determination to press ahead with a radical shake-up yesterday when he backed Peter Lilley after the Secretary of State for Social Security came under fire for warning that more people would have to help themselves in the future.

The Prime Minister, in his constituency, answered criticism after Mr Lilley suggested some state benefits, including the state pension, would have to be means- tested if Britain was to meet the cost of the welfare state in the next century.

'What Peter Lilley is pointing out is something that is occurring right across the Western world - Europe and beyond Europe - that is, the costs of many aspects of welfare are outstripping economic growth. What we need, to maintain the welfare state, is to make sure we concentrate (wealth) where it really needs to be.'

Mr Major's remarks raised speculation that the Government is softening up public opinion for hard decisions. The Chancellor's Budget on Tuesday will signal the first stage of far-reaching cuts in the growth of the welfare state. It is expected to include widely trailed cuts in the provision of unemployment benefit and housing benefit and measures to curb the rising cost of invalidity benefit.

Charges for prescriptions, eye tests and dental care will be increased substantially from April, as a result of the Budget, to help to pay for a real increase in health spending next year.

And the Independent has learnt that senior Cabinet ministers, including Virginia Bottomley, Secretary of State for Health, are now prepared to support 'hotel charges' in NHS hospitals, covering food, beds and extras such as telephones and televisions, in spite of denials by Mr Major and Kenneth Clarke, the Chancellor.

Sources close to Mrs Bottomley said she believes 'hotel charges' could be introduced before the next election without breaking manifesto pledges, although there would be no question of charging for medical treatment.

Her support for new charges, which would be highly controversial, signals the growing consensus, with Cabinet right-such as Mr Lilley and Michael Portillo, Chief Secretary to the Treasury, in favour of a root-and-branch overhaul of the welfare state.

Donald Dewar, the Labour spokesman, said: 'If welfare state provision is simply a second-rate safety net carrying the stigma of failure, that makes a mockery of the term society and welfare.'

Mr Lilley told a conference on Thursday that the welfare state would collapse under its own weight unless changes were made. Yesterday, pursued by reporters to explain his plans, Mr Lilley said: 'Something like two-thirds of people who are retired have additional provision over and above the state pension . . . we want to build on that and encourage it; in that way, there is less of a burden on the taxpayer at the same time as better provision for retired people.'

Mr Lilley, who has been ordered to carry out a long-term review, is expected to announce some short-term cuts in eligibility for benefits on Wednesday, after the Budget. The Prime Minister's office said there was 'nothing new' in his remarks, which had been made by other ministers, including Mr Portillo, Mr Clarke's deputy.

Mr Portillo raised the prospect of NHS 'hotel' charges in October. 'When people go in to hospitals today, some want extra things . . . but if the Government tries to provide all that, the Government is going to pile up all the cost on to the public, and that is going to become unsustainable.'

Attacking the Tory 'opt-out welfare state', David Blunkett, Labour Health spokesman, said last night: 'The Government may hold off charging people for recuperating after NHS operations this year, but Mr Lilley's soulmate at the Treasury, Michael Portillo, clearly has other ideas for the future.' John Smith, the Labour leader, has ordered an independent long-term review of the welfare state.