The economy
Nonsense questions
Jock Bruce-Gardyne
T ord (Joel) Barnett is a citizen of credit Land renown. And, unlike some, de- servedly so. From the back benches he used to be one of those rare brave souls who dared to tell his colleagues in the Labour Party that neither the laws of gravity nor those of arithmetic were neces- sarily suspended for a Labour government, and as perhaps the most successful Chief Secretary in the history of that office, from 1974 to 1979, he unflinchingly delivered the same message to his comrades round the Cabinet table. So naturally, when the Boundaries Commission played musical chairs with the constituencies in 1983, he was passed over in favour of a Marxist nonentity. He now continues to preach a lot of robust good sense from the Opposi- tion front bench in the House of Lords. He also produced a splendidly indiscreet account of his years at the Treasury which has become a goldmine for Tory Treasury Ministers.
The best of us, however, are allowed the occasional fall from grace: and that is what — or so it seems to me — Lord Barnett perpetrated in the correspondence columns of the Times last weekend. A Cabinet committee, he advised, should be set up `to consider all government expendi- ture and its value to society'. In support of this proposition he recalled the occasion when Tony Crosland, as Environment Secretary, offered him a one billion pound package of cuts in capital expenditure in such areas as water and sewerage. In a sane world, he implies, he would have told his colleague to go away and grow up, and come back with less destructive economies in current spending; whereas in practice he had to take what he was offered, and be thankful. Similarly, he suggests, Sir Keith Joseph and the current Treasury should have had the nous to anticipate the tempest that would be unleashed by an assault on subsidies to the student offspring of well- heeled families. 'But neither Mr Whitelaw nor the Cabinet would have known any- thing at all about the choice of priorities made by their two colleagues.' This, he concluded, was 'a crazy way of planning public expenditure'; and I suppose he would join the chorus of excoriation of
Chancellor Lawson for daring to tell the Treasury Select Committee that this was a 'nonsense question', since there was no way round the need for 'common sense and judgment'.
Yet surely in this instance it is Nigel Lawson who is being realistic, and Joel Barnett who has succumbed to wishful thinking. It may well be true that a bunch of platonic 'guardians', trained to make decisions on pure principles of enhance- ment of the public good, would have concluded that a saving of f1,000 million would more sensibly have been achieved by accelerated elimination of hopelessly uneconomic coal mines or steel plants than by abandoning improvements to sewerage and water systems. But if Joel Barnett expects us to believe that a Cabinet com- mittee of such visionaries as Mr Wedg- wood Benn and Mr Silkin, under the benevolent eye of Jim Callaghan, would have come up with such an ordering of priorities, he is having us on.
The most probable outcome of the adop- tion of the Barnett system would be that Cabinet ministers, primed by their far- from-innocent officials, would offer to their assembled colleagues a parade of Whitehall's treasured 'bleeding stumps', happily reflecting that those colleagues would reject each one in turn. Lord Bar- nett tells us that he actually secured the establishment of such a committee just before the fall of the last Labour govern- ment, which 'unfortunately prevented us having more than a couple of meetings.' Lucky Lord Barnett.
The latest fracas over students' grants is, however, shaping up to be no more than the hors d'oeuvre to a veritable feast of controversy over the composition of the 1985 Budget. The Chancellor, with the staunch endorsement of the Prime Minis- ter, has set his sights on reductions in direct taxation, at the cost if need be of substan- tial extensions to the coverage of VAT, and something nasty in the woodshed for the pensions industry. His critics are already in full cry, charging that personal incomes released from taxation would be spent on Japanese videos, and that the ranks of the captains of industry are facing decimation as they claim their lump sum retirement bonuses before Lawson lays his hands upon them. What he should be doing is to give a boost to capital spending programmes, angled especially at the con- struction industry, rich in job potential and blessedly immune to import penetration.
The irrepressible Professor Minford of Liverpool comes smartly to the Chancel- lor's aid with calculations to prove to his
own — if to no one else's — satisfaction that expenditure on construction would actually diminish employment in the
medium term. The rest of us could be entitled to question the propriety of a political judgment that Jap videos are wicked if that is what we happen to want, and •can afford. But according to the Treasury Select Committee all this is wish- ful thinking anyway, since the Chancellor's calculation that he may have £1.5 billion — or thereabouts — to give away is based on assumptions about oil revenues which are unsustainable.
Most of this looks like shadow-boxing. Certainly the assumptions built into the Autumn Statement about oil revenues look hazardous (and now that it pays the oil companies to dump the crude they have to sell to BNOC — and then buy back — upon the spot market, prior to purchasing it yet again at a higher price, we know what the Texas oilman was talking about when he dubbed BNOC at its inception as standing for 'British Nonsense Over Crude'). But it ought to be apparent to the critics by now that the Chancellor is not going to have hang-ups about a larger Budget deficit in 1985 if that is the way the cookie crumbles, regardless of the rhetor- ic. At the present rate of progress this year it may not be too difficult to claim moves in the right direction on both the deficit and money growth, since the targets look like being so largely overshot in 1984-5.
Nor are capital spending programmes necessarily going to draw the short straw. Only time will show whether the cross Channel road-rail link is at last to be given clearance. If its backers have the courage of their conviction that it will yield an eight per cent real rate of return then they should have no difficulty in raising the capital they need on the financial markets without benefit of any form of government guarantee. Their insistence that a comfort letter from the two governments is indis- pensable must be indicative that the game may not be worth the candle. But we have a long tradition of squandering the tax- payers' contributions on projects that do not yield a commercial return, and the fact that all the — no doubt considerable — transitional employment which would thereby be generated will arise in the corner of the United Kingdom least in need of it would also be par for the course. All in all it looks as though Chancellor Lawson will stand indicted of relishing .3 hair shirt he will not be wearing, and will respond by charging his critics with advo- cating frivolity in the shape of the course which he will, in fact, be following. Perso- nally I'd be inclined to argue that if you r going to sin you might as well take credit for so doing.
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