NEDC on Trial
By NICHOLAS DAVENPORT IF you want to bring home to the British people that there is a crisis at their doors you must ask them to work on Sundays. Mr. Maudling showed that he had a keen sense of the dramatic when he called a meeting of the National Economic Develop- ment Council (NEDC) last Sun- day. Admittedly the weather was prohibitive of sport, but I can
imagine that Dr. Beeching could have spent the time more profitably by closing down a few more stations than waste hours agreeing with Mr. Sydney Greene and others that every other industry must grow by 4 per cent, or more a year. At the end of the session the communique for the press was an anti- climax. The full report is not to be published till t?ext month and there was no agreement upon issuing immediately the section which isolates the obstacles for economic growth and makes sug- gestions. There was apparently trade union objection to this section because it dealt with prices and incomes and restrictive practices. There is something pathetic about the NEDC. It has no power to do anything but work out figures, state principles and make recommenda- tions, An up-to-date computer might do the job Just as well. If it had power to act or cause in- dustry to act it would never have got the trade unionists to serve on it with the industrialists, for in this country it is not 'done' to have managements and workers sit down in amicable co-operation for the purpose of raising output and Productivity. (It is notable that in the case of. the National Incomes Commission, which might really interfere with wage claims by turn- I°8 on them the spotlight of factual analysis, the TUC has steadfastly refused to serve. The Presence of Mr. George Woodcock on NEDC and his absence from NIC were therefore sugges- tive of the harmless impotence of the one and the Potential thrust of the other.) Now it may 1,3_e good for the immediate national morale to have NEDC proclaim that we must have a growth rate of 4 per cent. when the economy has een limping along under Mr. Selwyn Lloyd's deflation at a rate of If per cent. to 2 per cent., but it could also lead to national cynicism if the words turned out to be mere words. After all growth rates have to be related to exports, 40.d who can 'order' a growth rate for exporters? academic Robert Shone, who leads the team of 4,cademic economists working out these growth figures for NEDC, is the expert responsible, I a.n) told, for the growth target of the steel in- clnstry—now plagued with a huge surplus capa- tItY and working at under 75 per cent. There is 'n the aY a lot of cynicism about national planning steel industry. It would be a pity if the NEDC brought planning on a national scale into Popular disrepute. Let ,us be realistic about the NEDC set-up. It Was contrived by Mr. Selwyn Lloyd partly tas a bait to catch the TUC in his NIC trap rld heaven knows that to get the TUC to agree an incomes policy is worth any subterfuge) and Conservative Partly to convince the electorate that the nrservative Party had been converted to plan- rig. But it is not planning in the real sense of 4cn ordered use of the national resources. The s,"riell does not employ industrial experts to it down with the various industrial leaders and
work out their plant extensions and techniques (as the experts of the French Commissariat du Plan do). It does not employ such men. It only employs academic economists who have had no industrial experience or training. It is mainly an estimating body delivering figures and plati- tudes, working like a computer when the Chan- cellor of the Exchequer presses the button. And it is producing the figures he wants today to justify his coming expansionary Budget which might otherwise upset a few Conservative diehards. Indeed, in view of the disappointing export figures for January—seasonally adjusted exports for the three months ending January were 4 per cent. down on the previous three months—there will be increasing alarm about the balance of payments when the Budget is presented.
For real expertise in figure-spinning, give me the National Institute of Economic and Social Research. I cannot imagine why Mr. Maudling does not make use of this eager brotherhood of reflation-minded economists who are at the moment playing his game with the utmost gusto. Their advice would cost him nothing, the Insti- tute being an independent body supported by the Ford Foundation and other industrial concerns, and it would be expressed in incisive language free of official jargon. Their last report was a masterpiece in statistical cooking. It said bluntly that the expansionary measures so far taken by Mr. Maudling would be sufficient to raise the growth rate to 31 per cent., but as this could be obtained from the potential rise in productivity it would hardly increase employment. As they doubt (rightly) whether the Government can afford to have over half a million people out of work again next Christmas, they recommend a highly expansionary Budget and suggest raising the growth rate from 31 per cent. to 5 per cent. by injecting some £400 million of purchasing power into the economy. This might raise im- ports, they say, by up to £150 million, but the Government could risk running a temporary balance of payments deficit of the order of £150 million, having regard to our reserves and draw- ing rights on the IMF. They admit that a 5 per cent. growth rate is not sustainable over a period, but that does not matter if it can be followed by 3} per cent., to 4 per cent. and not by 1 per cent. to 2 per cent.
This advice gives Mr. Maudling the full sup- port he wants for his reflationary Budget, though he may think that it goes too far in taking on a deficit on the balance of payments of £150 million (which turns out to be £250 million, be- cause they have taken credit for a favourable 'balancing item' of £100 million) just at a time when the foreigner may be getting, nervous of sterling and Mr. Harold Wilson. Where I would criticise the National Institute is in their in- sistence on pushing the £400 million into the economy by way of consumption. They suggest consolidating all purchase taxes at 10 per cent. (releasing just over £200 million) and cutting the standard rate of income tax by 6d. and the re- duced rates by 3d. (increasing disposable incomes by £150 million). The abolition of Schedule A would add the £50 million. This is the sure way to increase imports and secure a nasty balance of payments deficit, ending up in another Treasury `stop'! The right way for Mr. Maudling is surely to go on increasing government spend- ing on capital works while allowing for some modest increase in consumption. It is true that public investment is to increase by f200 million in the next financial year and that it would be difficult to double this in a hurry, but what the country needs is better-planned and sited fac- tories, a transfer of new industries to the indus- trial north and Scotland together with their ancillary housing and public services. In the last five years France has managed to modernise its industrial layout. Could we not do the same? But this brings up again the need of a real State planning bureau which can take action and get industry to move forward. If Mr. Maudling would swallow his pride he would start some- thing on the lines of the French Commissariat du Plan and just leave NEDC to go on talking and figuring.
Previous page
