Political commentary

The Shetland syndrome

Jo Grimond

No cheer for the Government's perfor- mance so far: no sign that it is to tackle the causes of our distemper. if no sign now, no sign ever, I suspect.

Take government expenditure. The Chancellor may try to shield the. PSBR by selling off capital assets and treating the proceeds as income; but government expen- diture however pruned will grow again like any vigorous shrub with well watered roots. And its roots are indeed well watered. Look at that hardy little plant the Shetland Islands Council. They are the second big- gest spenders per head among the Scottish local authorities. Their staffing is sump- tuous. Their administrative costs are the third highest in Scotland. Their planning costs are over £50 per head against a Scot- tish average of £1.45. Yet their domestic rate bill is the second lowest in Scotland. How is this miracle achieved? Industry and crofting pay no rates. Many householders get some remission on their rates. The big ratepayers in Shetland are the oil com- panies. But they have no votes and in any case can set off at least some of their rates against taxation. So in the end, directly through subsidies or indirectly through off- sets, the taxpayer pays. Incidentally, the local authority is heavily in debt: it pays £777 per head on loan charges against a Scottish average of £90.

When the Secretary of State suggests a cut in expenditure and rates in Shetland there is an outcry. Masochistic, you may think. Not at all, given the upside-down system — very logical. Why should manufacturers, crofters, rate-assisted citizens, welcome a reduction in rates? And then there is even in Shetland with its 22,000 inhabitants a clutch of societies and organisations in receipt of grants from the local authority, whose officials can be relied upon to raise a howl if any economies are suggested. The Scottish rating system en- sures that the rates for shops in central Edinburgh are higher than for Harrods.

So long as we have the present crazy system of local authority finance, so long as the functions of the local authorities are so ill-defined, they will be extravagant, pursu- ing the very philosophy Mrs Thatcher is said to preach — go after a good bargain when you see one. The Shetland syndrome, as it might be christened, is rampant throughout public administration.

Why should public expenditure be reduc- ed? In so far as it is in the form of transfer payments from the rich and employed to the poor, unemployed and ill its purpose is to be commended. The objection is not to the purpose but to some of the methods pursued. The system is ludicrously and un- necessarily complicated, requiring an army of officials upon whose palms some of the transferable cash naturally rubs off. And too often the operation does not help the poor but is a transfer from one pocket to another of the comparatively rich. Nor is any attempt made to interest the clients themselves in the management of the system.

Then public money is also expended on vast subsidies to industries and services, nationalised and private. The present Government has been as profligate as any other in this field. It does not seem to ap- preciate that neither privately owned nor nationalised big business generates enough good will or attachment from the workers. The workers too often believe that they have little to gain from increased efficiency. Nor do they see the top people showing a particularly good example in linking pay to productivity. So there is no point in

substituting semi-monopoly private capitalism for semi-monopoly public capitalism. •

The Government's proposals for London Transport are typical of conservatism bankrupt of ideas, and thirled to the in- terests of the City and Whitehall. No one supposes that the proposed change will make the services more efficient or cheaper. The Ministry of Transport, instead of being abolished, as I believe Mr Hordern, a Tory MP, once suggested, will expand to take over a job of supervision for which it is un- fitted. If the Government wants to reduce the public sector let it abolish a ministry or two, sell off some of its conglomeration of buildings and land, involve the workers directly in owning and running the na- tionalised industries and submit them wherever possible to competition.

The Government professes' to be intent on restraining inflation. One cause at least of inflation, whether working through the money supply or otherwise, is the pressure of demand at .a time when supply is not ris- ing. If the Government is serious in its pro- fessed aims, and if it believes that the best way to curb demand and increase efficiency is through the market, then it should cast a baleful eye on the removal of more and more people, and particularly influential people, from the market. The tycoon, the senior civil or local government official, and indeed the government minister with cheap mortgages, and free cars, free secretaries, heating, telephones and a ration of lodging, food and postage, does not care if prices and interest charges rise — he

doesn't pay; and in any event his salary will rise too. So we have the preposterous spec- tacle of the great age of Adam Smith renew- ed when Sir Denis Rooke — with govern- ment approval no doubt — proposes to raise gas charges, having made a profit of £1 billion (old accountancy), exceeding the profits of ICI, Beecham and Marks and Spencer combined. Indeed it appears that the top people in their sheltered condition think it positively immoral to reduce prices. British Telecom speaks of holding prices of stamps for six months as though that was to suffer an unspeakable hardship. Meanwhile MPs who should be on our side against too big and expensive government are now demanding linkage to cival service pay rates, thereby achieving a common interest in seeing that such rates are as high as possi- ble.

Until the nationalised industries reduce their prices, the heads of public bodies show a real enthusiasm for economy and competition and until the top people themselves have to pay out their own money in the market, inflation will con- tinue.

As for investment in industry, who is go- ing to invest when over the last 20 years the Stock Exchange has shown no real return on investments? Who is going to start a small business to be regarded as a spiv and dragooned into giving up a third of his time to accountancy, tax collection and form- filling, and perhaps another third to dealing with restrictive practices and trade union disputes? One way by which the Govern- ment could improve investment perfor- mance is by shifting the tax advantages from pension funds to private savers. Another improvement would be the en- couragement of local banks or such institu- tions as the 1CFC. Local savings should have a local outlet. And of course once again let us learn from the current adver- tisement, 'They [the workers] behave as though they owned the business, because they do own it.'

The Government so far has shown that it is an essentially conservative administration under which the hard-faced are the most likely to prosper. As John Clerk of Penicuik wrote long ago: 'If all the world were as frugal as by the dictates of good economy they ought to be, the half of mankind would starve.' There are other tests than that of a good balance sheet. But within the sphere where competition is ap- propriate it is intolerable when frugality is imposed on the comparatively poor while the rich contract out from the pressures of the marketplace.

The Alliance must step into the vacuum which is now so obvious. They have in Roy Jenkins a man admirably fitted to sort out the many suggestions available. Penrith shows that their momentum has not stop- ped. But they still need to establish this claim to be the alternative to the Tories bY showing that they have a policy which is more than a half-turn back to state socialism.