POLITICS
The U-turn Mrs Thatcher didn't need to make
FERDINAND MOUNT
Pilot is a work of substance. You can almost hear Bismarck's heavy boots thumping down the steps and feel the depth of his scorn for the lightweight Kaiser who has presumed to sack him. Our modern version would be, I think, a more frothy affair. I picture Mr Nigel Lawson calling upstairs, as he shepherds through the hall two dignified elderly gentlemen (labelled 'Monetarism' and 'Expenditure control') 'Darling, do come and say good- bye. The Professors are just leaving.' Last Thursday was clearly identifiable as the moment in our affairs when the practical men kiss farewell to all those academics, ideologues and assorted camp followers who have been labouring under the delu- sion that politics is about something other than the pursuit and retention of power. It is the moment too when the cynics look up from their newspapers and sigh, `Well, I did tell you they were just another bunch of politicians.' Mr Lawson's Autumn State- ment will, I think, be seen in retrospect as one of the turning-points in this adminis- tration. At its worst, it might mark a resumption of national decline.
It certainly stunned the House of Com- mons. Attention was drawn immediately to the gaping mouths and panic-stricken eyes of the Opposition parties. Mr Lawson had stolen their clothes, dished the Whigs, shot their fox (how readily Disraelian parallels leap to mind in all their thoughtless cheer- ful vulgarity). How could Labour portray Mrs Thatcher as an inflexible flintheart when she was proposing to ladle out no less than £11,500,000,000 (it is important on these occasions to write out all the noughts) by 1989? Somehow it was tricky simultaneously to argue that the relaxation was not enough and that it was a humiliat- ing abandonment of everything this Gov- ernment has stood for — and neither Mr Hattersley, nor the agile Bryan Gould, newly made Shadow Chief Secretary to the Treasury, could readily manage it.
But it was the Tory benches who caught my eye. Bewildered and uneasy, they mostly had to swallow hard to express support for the Chancellor's statement, which, after all, involved eating most of the words they had been loyally spouting for the past seven years. Only Sir Ian Gilmour up in the gallery wore a seraphic smile upon his melancholy countenance.
There is, of course, a defence for Mr Lawson's actions, as there is for most things in life. And the Prime Minister duly offered it in her speech to the Lord Mayor's Banquet: reward of seven years' prudent management . . . wouldn't involve borrowing an extra penny . . . public ex- penditure still declining as a proportion of our national wealth. The Chancellor him- self still asserts that it is 'our ultimate object to eliminate inflation altogether'.
It is not a very good defence. According to the Chancellor's own figures, next year the proportion will only be declining by the fraction of a percentage point; the slightest overrun — and on this' year's form, who would dare to exclude that possibility? -- and this promise goes for a Burton. 'Ulti- mate' is always a crafty word; the point is that as a result of the Autumn Statement, zero inflation is several years further away, not nearer. And while next year's borrow- ing target may still be around £7 billion, that can be achieved only by the large-scale once-for-all sale of assets. I don't mind counting these sales as revenue (some people are fussier), but how is borrowing to be steadily reduced in later years when these huge proceeds from privatisation are no longer available? One needs ask only two questions: would the Government be deviating so wildly from its previous pub- lished plans if there were no general election looming? And what would happen if they had made Herculean efforts to stick to those previous plans?
Well, perhaps the first question scarcely needs answering. But just suppose Mr Lawson had not added £41/2 billion on to the £144 billion he plans to spend next year and had also eschewed the £3 billion tax cuts which he seems to have in mind. What an intoxicating prospect would have opened up, assuming that the revenue continued to flow in as strongly as it has of late. Not £7 billion Government borrow- ing, but nil borrowing. The Government would have balanced its books, for the first time since Good King Roy's golden days. Interest rates could have been cut to German-Swiss levels. Inflation ditto, with growth humming along nicely at three per cent or thereabouts. Unemployment com- ing down too as the demographic curve flattened out. The path of republican virtue would have brought its own reward.
To which the plaintive answer comes: but an unspotted conscience is poor con- solation if you have just lost the election. The political risks of continued restraint are said to outweigh the benefits. The CBI heaves a sigh of relief to see the Govern- ment spending like mad, not merely be- cause so many of its members stand to benefit, but because higher public spend- ing improves the chances of another Con- servative government being returned.
Does it really? The great achievement which Mrs Thatcher has now abandoned was to begin building a constituency for thrift and prudent management. According to the opinion polls, the Tories were three or four per cent ahead of Labour before the Autumn Statement. They did not need to make a U-turn.
That is the cruel jest of the business. If Mrs Thatcher had had those polls at her elbow when she took the crucial decisions to accept the bids from the spending departments, would she have acted dif- ferently? We -must not, after all, be too hard on Mr Lawson. He is no more the principal actor in this affair than Tony Barber was in his boom (indeed, Lord Barber was constantly pressing Mr Heath to apply the brakes to runaway credit). The Chancellor was doing his best to protect the Exchequer. The Prime Minister re- fused to support him. A week later and she might have. A saddest-words-of-tongue- and-pen situation.
The Conservatives have now embarked on a chancer's game. Will the consumer boom and the exchange rate hold up for long enough to wait until October? Will inflation take off again? Mr Lawson has put the Government's fate at the mercy of the markets. And even if the Tories win the election, for which they remain the favourites, the task of regaining the path of virtue afterwards will be all the harder.
But the loss of purity is harder yet to bear. Even the most calloused libertine cannot miss the post-coital sadness that now hangs over the Government. On the edge of great things, they drew back and settled for second best. It is as though the Children of Israel had come within sight of the Promised Land, but on seeing the last hundred yards of steep and stony path to be negotiated had said to one another, 'I don't really fancy it do you? Why don't we stop and have a bite of lunch first?'
What's in the Queen's Speech? Nothing much, but I cannot say that I care greatly. The laurels are cut down and we'll go to the woods no more.
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