In Britain, Blair's turn to put house in order Long out of power, Labor faces high expectations, little cash, busy 100 days

THE BALTIMORE SUN

LONDON -- Tony Blair moves into the prime minister's house " at 10 Downing St. this afternoon and gets all the problems he can handle.

John Major leaves the house in defeat.

It takes Americans more than two months from election to inauguration. But Britain's brisk government transition -- filled with pomp and circumstance -- should be over before today's afternoon rush hour.

Presiding over the entire episode will be Queen Elizabeth II, who can't vote but will accept Major's resignation at Buckingham Palace, then offer Blair the chance to form a new government. When Blair accepts, he becomes prime minister.

After 18 years out of power, Labor will have to hit the ground running, with high expectations and precious little cash to fulfill them.

Blair's calendar is booked solid the next 100 days.

He'll start forming his Cabinet today, with top jobs going to John Prescott, deputy prime minister; Robin Cook, foreign secretary; and Gordon Brown, chancellor of the exchequer. The rest of the 21-member Cabinet will be appointed by Monday.

On May 14, Blair's legislative agenda must be finalized and presented to Parliament in the Queen's Speech. Blair's budget is due July 1.

He also has dates with world leaders. He'll meet his partners in the European Union at a summit this month in Amsterdam, the Netherlands. Next month, he's bound for Denver and a Group of Seven summit, and will address the United Nations in New York.

And as if that's isn't enough, Blair's finance chief, Brown, will meet Wednesday with the head of the Bank of England to discuss raising Britain's interest rates.

Britain's economy may be on the verge of overheating, and there pressure to raise interest rates a quarter of a percent. The business community is also seeking reassurance that the Labor Party is serious about tackling inflation.

The economy figures to be a recurring problem in the first few months for the Labor government. During the campaign, Labor leaders promised not to raise personal income tax rates. They also vowed to cut the Value Added Tax on fuel.

But experts say Labor will have to make difficult choices to avoid busting the country's half-trillion dollar budget.

"Labor signed up to the Conservative spending plan the next two years," says Paul Johnson of the Institute of Economic Affairs. "That budget was much tighter than anything the Conservatives managed to keep with the last few years. Spending has risen by 2 percent every year the last 18 years. It's only destined to rise less than a half-percent the next two years.

"To meet the targets, they can either raise taxes, having said they wouldn't, or they can do some fairly radical things to the welfare state, like encouraging more private use for the health service and reducing coverage of social security benefits.

"All of that is very difficult," Johnson adds.

And, perhaps, politically impossible.

Blair's legislative agenda is filled with programs that won't cost much -- at least for the national government.

Labor has pledged to introduce a minimum wage. It also plans to cut welfare benefits to 250,000 young people and place them in a jobs program, to be funded by a tax on windfall profits of utility companies.

The government also promises to offer referendums to create a Scottish Parliament and a Welsh Assembly as a way of giving those areas greater self-rule.

Labor also plans tough anti-crime measures, including curfews for those 10 years old and under, fast-track punishment for persistent youth offenders and a crackdown on nuisance

neighbors.

On education, Labor is pledged to raising standards while cutting class sizes for 5- , 6- and 7-year-olds.

Britain's relations with its partners in the 15-member European Union will present Blair with problems as it did for the Tories.

Unlike the Conservatives, Blair appears willing to plunge Britain into the heart of Europe. He says any decision for Britain to join a single European currency would have to be approved by referendum.

Few, though, believe Britain will join the single currency when it is scheduled to begin, in January 1999.

Pub Date: 5/02/97

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