All systems out of control
It is the Government's policy', declared the Chancellor of the Exchequer four months ago in his Letter of Intent to the managing director of the International Monetary Fund, `to abolish as soon as the balance of payments allows the restrictions it currently maintains on travel expendi- ture and small cash gifts, and also the import deposit scheme'. Two possible con- clusions, therefore, follow from Mr Jen- kins's statement to Parliament this week, in which he refused to abolish either the £50 foreign travel restriction or the import deposit scheme. Either Britain's balance of payments recovery is a good deal less soundly based than recent Government trumpetings, from the Prime Minister's downwards, would have had us believe. Or else the Chancellor has flagrantly dis- regarded the pledges made in his own Letter of Intent.
In fact, there is some truth in both these interpretations. Nevertheless, the payments trend is clearly in the right direction, by any reckoning we are now in surplus, and the retention of the £50 travel allowance— which even on the Treasury's own some- what suspect arithmetic saves a mere £2 million a month of foreign exchange—is a monstrous and utterly inexcusable curtail- ment of individual liberty. No Chancellor of the Exchequer, even in a period of severe payments deficit, would dare to dic- tate to each and every family in the land the precise amount of imported butter it may eat in a year. Yet human liberty in its fullest sense has a great deal more to do with freedom. of movement than it has with the freedom to eat foreign butter. As for the import deposit scheme, when this was introduced last December it was dearly presented to Parliament as a strictly temporary measure—so much so that the Act embodying it was given a life of a maximum of one year, and the Govern- ment gave a clear indication that it had no intention of introducing a new Act when the old one expired this December. Yet this is what is now to happen (with only a trivial reduction in the amount of deposit required), in spite of the fact that the Treasury has given up any attempt to quantify the scheme's effect on our import bill and contents itself with describing it as modest'.
In short, Mr Jenkins's decisions make no sense in the context of the balance of Payments. They can only be understood in he context of Mr Jenkins—of his past and his future. Looking back, he is forever haunted by his failure to act against con- sumer spending during his first three months as Chancellor, when he very nearly frittered away all the benefit from devalua- tion. Never again would he allow himself to err—except on the side of caution. Looking forward, he sees the 1970 pre- election Budget as his popular apotheosis, a disgorging of the cornucopia from which will flow both Labour's victory at the general election and his own reputation as its architect. All the goodies must be saved up until then.
What Mr Jenkins fails to comprehend, however, is the damage he is doing now. The credit squeeze he imposed in his last Budget was the worst this country has known. It is not just that money is un- precedentedly dear: for the first time since the nineteen-thirties the total supply of money is actually falling. Business and industry are already beginning to feel the pinch, but the crisis will not really come until the first quarter of next year, when companies have to find the money to pay their tax bills. Many were already becom- ing seriously worried, with the banks under fire from the Chancellor for lending as much as they are now. But until this week it looked as if the money disgorged by the Treasury with the ending of the import deposit scheme in December would at least keep the number of bankruptcies and company failures over the next six months within reasonable bounds. Now even this ray of light has been dowsed.
Such are the consequences (as the Tories once discovered) of having a Chancellor with so tenuous a grasp of the art of economic management. For Mr Jenkins clearly does not understand either the delayed effect of policy changes (such as those introduced in his last Budget) or the irrelevance of the fact that bank advances are still slightly above the ceiling he originally set them. What really matters, of course, is that the money supply is al- ready well below that envisaged in his Budget strategy and spelled out in the Letter of Intent: the reimposition of im- port controls can only tighten the screw still further—as anyone but a Chancellor whose horizon is limited to his petty feud with the joint stock banks would grasp. And the result can only be the cancellation of further capital investment projects, a rash of business failures—particularly among small firms—and, inevitably, in- creased unemployment. Of course the time will come when even Mr Jenkins will see the red light, and frantic relaxations will be the- order of the day. But by then it will be too late to avoid the icebergs that lie in the economy's path. By his own actions the Chancellor will have created a situation that is out of control.
Just as. of course, the industrial situa- tion is out of control today. Last year. for the first time since the war, the number of strikes outside coalmining topped the 2.000 mark. This year the figure is likely to be nearer 3,000. But it is not just a question of the total number of strikes: a growing proportion of them—the dustmen, the tube-train guards and the miners are obvious recent examples—are not merely unofficial but deliberately contrary to official union policy. Thanks in large mea- sure to their connivance in the Govern- ment's abortive incomes policy, official trade union leaders are losing all control over their rank and file.
Needless to say. nothing either the dust- men, the tube-train guards or even the miners can do can harm the economy one tenth as much as Mr Jenkins's folly—al- though what Lord Robens has accurately if unoriginally termed 'industrial anarchy' can, in time, make the conditions of urban life intolerable. But the parallel between the loss of control on the economic and the industrial fronts is. nevertheless, worth pur- suing—and not simply because of the ominous coincidence that the same week that saw the publication of Mr Jenkins's Letter of Intent also saw the Government's abandonment of Mrs Castle's 'In Place of Strife' legislation. For like the new left revolutionaries, for whom a revolution is not a means to an end but an end in itself, so the new unofficial strikers increasingly see the strike as a worthwhile happening in itself as much as a means to secure better pay. As such, this blow for self- expression and freedom by those mostly in boring, routine jobs would be wholly acceptable—were it not for the fact that as often as not they are able to cut loose simply because, through the supplementary benefits mechanism, our crazy state welfare system actually subsidises them to do so.
We face, then, a winter of strikes and bankruptcies: a winter in which the economic and industrial fronts alike will for all practical purposes be out of control. And in each case this lack of control is a direct result of well-intentioned govern- ment action ostensibly intended to impose control on an otherwise 'anarchic' system. The moral is not far to seek.
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