GROWTH

By NICHOLAS DAVENPORT

jillt IN the last ten years the turn-

over at the widely popular

*,t2I stores of Marks and Spencer has

\''' grown at an average rate of 91 \\ per cent. per annum compound.

,---, ' '4,--- This emerges from the table

.. given in the chairman's annual statement. Why is it that the

ti 'gross national product' does not LI-I's grow at anything like the same pace? The pert answer is that the Chancellor of the Exchequer is not Sir Simon Marks. In all seriousness the Prime Minister would be well advised to offer Sir Simon Marks Mr. Amory's job when he retires. Running the nation's business is not a job which should be given as a reward for political service. (The same applies to the Coal Board.) It requires a business brain, an organising genius, a mind which is in tune with all the scientific and technical developments of the age, a creative imagination, an understanding of the basic economics of life. All these qualities Sir Simon Marks possesses. Otherwise he could not have steered Marks and Spencer along the road of steady expansion year by year. But they are not qualities usually found in successful politicians or in the trusties of the establishment. Yet to these inveterate empiricists we hand over the complicated business of the nation and grumble when our rate of growth lags behind that of other nations.

The latest World Economic Survey published by the United Nations should be sent to Mr. R. A. Butler for review It will be a long time before he is allowed to forget the rash prophecy he made at the Conservative Party Conference in 1954: He saw no reason then why we should not double our standard of living in a generation. 'raking a generation to be twenty-five years this meant that we should grow in well-being at the rate of 2.8 per cent. per annum compound. We have never been able to do this. If we take the measure of the rate of growth in productivity, that is, product pe: man-hour, we find that the British record is 1.6 per cent. per -annum com- pound for the period 1913 to 1930, 0.9 per cent. per annum for 1931 to 1953 and 1.3 per cent. per annum from 1953 to 1958. (I quote the Oxford statistician Mr. Colin Clark ) For the United States over a long period the rate of growth in productivity has been 2.3 per cent. per annum compound. The long-term rate for most countries is between 2 per cent. and 21 per cent. An excep- tionally high rate is. of course, usually shown in a period of industrial recovery from war. The fastest developing rate of productivity since the last war has been seen in Germany, Japan and Italy. In 1959 when we were recovering in Britain from the self-imposed recession of 1956-58 we managed to increase productivity by 4 per cent. That appears to have.,been a flash in the pan.

By comparison with other countries we do not emerge so well either from the more simple test of the growth of the national output. According to the World Economic Survey our output grew at the rate of 2.2 per cent. per annum in the period 1950-58 against 3.3 per cent. for the US, 4.3 per cent. for France and 7.4 per cent. for West Germany. This cannot be attributed to

shortage of labour, for the Survey points out that the increase in our labour force was adequate— larger in fact than in France. it can only be explained by inadequate investment in factories, plant and equipment, for which the Government is primarily responsible through its 'stabilising' measures. For example, we were only putting 14 per cent. of our productive effort to invest- ment in the 1950s, while France was putting 17 per cent.

There is possibly another reason why we lag behind in the race for output. We have not in- dulged in the five-year economic plans of other countries. Planning, of course, does not come naturally to our political all-rounders. It is a highly technical and boring undertaking to the non-specialist, and the average politician in office will want to study as few statistics as possible. But this persistent amateurishness is putting us low in the economic race. We certainly need for the Sixties two five-year plans of carefully ordered investment with a strict order of priority. At the bottom of the priority list today I would put office-building, but in our haphazard way we are allowing the big property tycoons to build as they please for the biggest profit. Is it not an extraordinary thing that we allow private entre- preneurs to plan their profits over the years but do not allow the State to plan the national capital development outside its nationalised in-

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dustries? Is is not rather bizarre that the Govern- ment should bother to reappoint the Council on Prices, Productivity and Incomes—three elders of the establishment to review past history—and not consider setting up an investment board to advise it on the next five years of capital forma- tion?

The inadequacy of our past investment is already landing us in trouble today. The latest survey of the Federation of British Industries reveals that most of their members are now up against a shortage of labour. Two out of every five of the 714 companies answering the question- naire declared that it was less easy to obtain labour than it was four months ago. Employment has risen sharply in the last two months and wages will follow. The fact that 38 per cent. of the Federation firms have reported pressure on profit margins already and 47 per cent. a rise in unit costs is surely evidence that their investment in plant and equipment in the Fifties was in- adequate.

There is some truth in Mr. Richard Crossman's attack on the failings of our national productive effort in his latest pamphlet on Labour in the Affluent Society, nut surely the solution is not in apeing the Russians and naving more nation- alisation (even if we have enough Robenses to run the boards), but in applying some intelligent planning and control to the virile private enter- prise we have got. 7o get a higher rate of growth through more projuctive industrial investment all we need to start with is a building control and a five-year plan.