Political Commentary

The coming cloudburst

John Grigg

Increasingly, now, the House of Commons has the air of a condemned playground. Alas, regardless of their doom, The little victims play!

No sense have they of ills to come, Nor care beyond today.

On both sides there is an astonishing reluctance to face reality, an almost childlike indulgence in fantasy. But all the time thick clouds are gathering and the first drops are beginning to fall.

Mr Callaghan goes on saying that, if only the trade unions will agree to another round of wage restraint, an age of prosperity and plenty such as we have never known will have dawned by the 1980s. His message to his party and its industrial wing is that one more year's support for the Government's 'strategy' will bring salvation to the country and victory to Labour at their next election.

Even if the miracle he dreams of were to occur — and it is now virtually certain that it will not occur — he is wrong to believe that it would necessarily work to Labour's electoral advantage. So long as people are aware of crisis many of them will tend to feel that Labour has a better chance than the Tories of winning acceptance for drastic austerity measures. The most favourable moment for a Tory victory would be when things were starting to look up, because nervous voters would then feel free to return the party that would cut taxation at all levels with genuine enthusiasm.

For the time being, however, there is very little prospect of things looking up and every likelihood of another run on the pound before the end of the year, if not considerably sooner. Our present rate of inflation is so much higher than that of our main competitors that anything more than the single-figure norm for wage increases which the TUC advocated earlier this year, and which Mr Healey then put forward, will have a predictably bad effect upon foreign confidence. Yet it is clear that all hope of an agreed single-figure norm has been abandoned, that any figure now voluntarily accepted by the unions would be wildly inflationary, and that a wages explosion can be averted only by monetary or statutory means.

The Conservatives' delusion is that all would be well, or at any rate manageable, if the Government could be brought down, an • election held and a Tory Government returned with a massive majority. But for the reason already indicated it would be rash to expect such a majority in a time of crisis, and even if one were obtained there would be a grave danger that the new Government — despite its popular mandate — would be unable to govern. In that event democracy would seem to be bankrupt.

A senior member of the Opposition was saying to me the other day that the Fraser government in Australia had had less trouble with the unions than many feared when it took office, in rather questionable circumstances, at the end of 1975; and that this was a hopeful sign for the Conservatives here. The argument is unsound, because our economic state is worse than that of Australia, where unemployment is lower and the inflation rate a good deal lower. Besides, Australia is a different sort of country; vast, with a federal constitution.

Another dangerous argument, now fashionable on the right, is that the trade unions are becoming 'paper tigers' because their own members are turning against them. But to the extent that this is true it is by no means wholly encouraging. Trade union leaders have been suffering for their virtues as well as for their faults. Opposition to them from the rank and file is due quite as much to their cooperation with the Government in the attempt to contain inflation, as to their political partisanship and obsolete doctrinaire fads. In any case, the return of a Conservative government with a programme of strict monetary controls and public expenditure cuts would unite the Labour movement wonderfully.

Yet another fantasy is that the Jubilee spirit could be translated into a tidal wave of support for a Conservative government. In fact, the Jubilee spirit is partly a spirit of sheer escapism, and partly a spirit of intense hostility to party politics. It might be mobilised in support of a government of national unity, if such a government were on other grounds either possible or desirable. But it will be appealed to in vain by any

party government.

The position now seems to be that Mr. Callaghan has got himself into a dreadful mess, but that his Government is unlikely to fall so long as his arrangement with the Liberals holds. Much as they dislike it, the Tribune Group will not carry their dislike to the point of voting with the Tories on an issue of confidence — even though many Tories would be ready enough to vote with them on almost any issue to bring the Government down.

But it is one thing to be able to hang on to office and quite another to be able to govern with any semblance of effectiveness. Mr Callaghan has lost much of his moral authority in recent weeks, above all through his disastrous error in appointing his sonin-law to the Washington embassy. He and Dr Owen between them have discredited and demoralised the social democrats, whose economic policies will soon be sub

jected to the most severe test.

Mr Callaghan may now be confident of a time-table for Scottish devolution in the next session, but by that time devolution will be one of the least of his problems. The supreme challenge will be inflation and the desperate measures needed to fight it, on which — as on European direct elections — the Cabinet will be divided, but on which he cannot afford to permit any agreement to differ.

His rise to the premiership was based upon his espousal of the unions' cause in 1969, when the Wilson government was proposing to legislate on industrial relations in a manner repugnant to the unions. And a remark that he made then can be quoted against him now by trade unionists and left-wingers.

When Brian Walden pointed out to him that the issue of trade union reform would have to be faced sooner or later, he replied that that might well be so but that it was 'not our issue' . Precisely the same will be said by some of his colleagues of the policy of holding wages and living standards down to satisfy the IMF and foreign creditors, and to reassure the foreign holders of sterling. They will say that such a policy is 'not our issue' .

In fact, resistance to inflationary demands by the trade unions, and defeating the Marxist threat to British democracy, is a Labour issue — just as it was for the Tory Parity to go through with decolonisation in the Macmillan period, and for a Republican president to get the United States out of Vietnam. The events of 1973-4 proved that Labour in opposition would sabotage the efforts of a Tory government to contain inflation, and who can doubt that the same — or worse — would happen in the still more difficult conditions of today?

If (I would almost say when) the pound begins to slide again, a general election will surely be out of the question until stability has been restored. It is hard to believe that the prime minister would be so irresponsible as to plunge the country into three weeks of electioneering in the middle of a sterling crisis, or that Mrs. Thatcher and her more sober-minded colleagues would wish to fight an election in such circumstances, whatever the promise of the opinion polls.

The only practical alternative to a grand coalition would be a programme of emergency measures, which might include a statutory incomes policy, supported by a majority of Labour MPs, the Liberals and the Tory opposition. Mr Callaghan would have to accept, if necessary, the resignation of left-wingers in his Cabinet, and he would have to risk a permanent schism in the Labour movement.

Greater courage would be required of him that he has ever yet shown, but he would not be 'doing a MacDonald' so long as there was no coalition, so long as he held the allegiance of most Labour MPs, and so long as at least some trade unions (those, presumably, which would suffer most from a free-for-all) were prepared to back him.