To Benn or not to Beim
Nicholas Davenport
The Leyland collapse hangs ominously over our industrial future like the fall of Saigon over the future of the free world. Last week I met a worker who had been employed for many years by Leylands. He told me that he was accepting a redundancy offer and would collect about £3,000. He would then go on the dole for six months and receive a third of his previous earnings which were £66 per week. He could continue on the dole for another six months at half that rate but had not yet made up his mind whether he would work.
This feather-bedding is all part of what is known as the "social wage." Mr Healey informed us in his budget speech that the total Government expenditure on items which make up the "social wage" increased last year by 34 per cent. In fact, he added, the "social wage" now amounts to about £1,000 a year for every member of the working population. He expressed surprise and regret that workers did not take the "social wage" more into account when they submitted their annual wage claims, too many of which, he said, went far beyond the "social contract."
To punish the workers for being too greedy — the escalation of wages, says the Price Commission, not profits or raw materials, is now the main cause of our inflation — Mr Healey introduced a deflationary budget in which he raised income tax by 2 per cent and by implication raised unemployment to one million. He was right to do so because if the trade unions are not intelligent enough to see that the nation cannot go on borrowing abroad 5p in every £ to maintain a standard of living which they are not earning they must learn by suffering unemployment. But the question is whether they are too stupid to learn by a mere 2 per cent of suffering. It seems likely that there will have to be collision between a union in the public sector — like the electricity engineers — and a firm government (that is, if Mr Healey can persuade Mr Wilson to be firm), which would create much more suffering. If 2 per cent is not enough to concentrate the mind a painful stone-wall collision may be necessary. A lot of people are longing for it. The Wall Street Journal was so moved by the recent leading article in the Economist entitled "Steady As She Sinks" (i.e. the economy) that it produced a biting, satirical leader with the headline t'Good-bye Great Britain."
I am not inclined to take too seriously what the Wall Street Journal says about the Bennish end of the private enterprise system in Britain and the "total confiscation" of its wealth but I am disturbed to read what Professor Clegg, of ' Warwick University, said at an Institute of Personnel Management conference in London. The Professor should know his stuff. He was a member of the Donovan Royal Commission on the trade unions, a member of the Prices and Incomes Board, and is now one of the three independent academic members on the Governing Council of the Advisory, Conciliation and Arbitration Service. He was sacked four years ago by Mr Heath as a chief arbitrator because he had served as a trade union nominee in a local pay inquiry. After spending six months in Spain the professor returned to find here an amazing apathy and lack of concern about the country's problems. I quote the following from his address:
A solution to our problems can only be found if it is started by the Government and collaborated with by the unions. But neither are doing much at the moment. Britain is spot on course for disaster, that is, the destruction of the democratic and civilised way of life in this country by the continual rending of competitive greed at the fabric of society, encouraged by a leadership too "incompetent or too lacking in resolution to provide the conditions in which we can avoid finding ourselves — in five years — at the mercy of sone cheap dictatorship, whether of the Left or Right.
This is strong stuff, a full mouth
ful of angry words, but he leaves us guessing as to the conditions for avoiding disaster. As a statutory control of incomes is ruled out by the trade unions, who are now in effective control of the economy, we have in effect only a choice between Mr Benn's authoritarian economic take-over — the doubling of industrial investment by forcing the life and pension funds to invest in industry regardless of the profitability of the exercise (e.g. Leyland) — and Mr Wilson's practice of the mixed economy in which private capital is not forced but persuaded to co-operate with government planning. When the chairman of the Life Offices Association protested against Mr Benn's take-over paper and wrote aggrievedly to the prime minister Mr Wilson replied on April 27 in these terms:
Dear Mr Macdonald: I have not seen the document to which you refer. It does not in any way represent Government thinking. The proposals contained therein have not been put to the Government and I see no likelihood that, if they were, they would be adopted as official policy by the Government. The National Executive Committee and its sublcommittees have every right, indeed a duty, to consider long-term proposals for economic policy.. . In this sense you will recall that
the NEC itself commissioned a study about possible action In relation to the futute of insurance companies, bans and building societies. Even that document has not been accepted as Government policy.
Should these proposals (Mr Benn's new paper) be submitted to the Government for consideration we shall, of course, examine them. But the ideas they contain, as set out in press reports, are not in accordance with Government thinking on these issues. They do, however, raise the important question which I and other ministers have discussed with you over the years how far finance accruing from insurance policy holders can in appropriate cases be channelled to assisting the fulfilment of national objectives. I remember in past years how helpful your members have been, for example, in providing finance for credits for shipbuilding exports on a voluntary basis, which governments of different parties_ have found most useful. And any government of any party in the future will no doubt seek your assistance in appropriate cases for schemes of this kind.
Yours sincerely Harold Wilson
This important letter put Mr Benn properly in his place and reassured the managers of the life and, pension funds whose activities liave often been unreasonably criticised in the press — not only on the socialist side. There is nothing wrong with the system of collecting savings through the life, pension and annuity policies of the major insurance companies: it is very efficiently conducted. What is lacking is a set of guide lines from the Government as to the appropriate divisions or categories for the investment of the funds collected. I have argued and campaigned for over thirty years that it is wrong to leave the investment of the funds collected entirely at the discretion of the private boards of directors who have become selfperpetuating oligarchies. The figures of their investment in 1974 just published by the Government reveal what they did with the funds in that disastrous year. The total net investment of the life and pension funds in 1974 was £2,258 million (not £3,000 million as Mr Benn claimed). Of this only £132 million was invested in "company securities" — against £611 million in 1973 and £1,157 million in 1972 — while investment in "cash and other short-term assets" went up from £463 million to £1,229 million. No wonder industrial investment came to a standstill. No wonder the stock market crashed. The life companies only bought £12 million of equity shares in the whole of 1974. They were investing that amount weekly in 1972.
The reason for their refusal to make industrial investments in 1974 was their fear that Mr Benn would take over the private enterprise system. When they realised that this was not going to happen, that Mr Healey was even coming to the rescue of companies suffering from a liquidity crisis and lack of investment, they began to return to their normal practice and buy equity shares. The rapid recovery in equity share prices which followed has enabled many companies to make "rights" issues. The capital market hg, in effect, functioning normally again.
Industrial shares cannot be expected to go on rising until the fateful referendum vote is taken on the EEC but if it is a vote for , staying in, as the Stock Exchange devoutly .hopes, they will probably resume their bullish trend. The new and important point of confidence for the market is Mr Wilson's letter to the Life Offices which dismisses Mr Benn.
Previous page
