A GOOD RECORD Spoiled by intervention on steel
Mr Barber's Budget deserved its parlia- mentary and public triumph and it is right that Mr Heath should share in that triumph: for a Prime Minister and his Chancellor can be very much the odd men out in any Cabinet whenever budgetary policy is concerned. The Easter recess pro- vides a pause, a time for reflection and assessment, an opportunity for an end-of- term—but not yet for an end-of-school- year—report. And if the term's activities had ended with the Budget and the subse- quent changes in welfare benefits and insurance charges announced by Sir Keith Joseph. the report must have been a good one. Sir Alec Douglas-Home's initial clum- siness over South African arms was unfor- tunate, and there have been some Parlia- mentary lapses—Mr John Davies's early efforts were weak, Mr Frederick Corfield suffered an almost total collapse during one of the Rolls-Royce debates, until his Budget the Chancellor's performances had been weak, and there have been times when many Conservative members of Par- liament, particularly among the new and impatient intake of 1970, have felt their morale to be at a low ebb. On the other hand, the Parliamentary performance of the Opposition has been much worse, although this has not been entirely the fault of the Labour party leadership. The Labour party's extreme left, the Tribune group and the mavericks have between them made the organisation and running of a sensible and responsible Opposition practically impossible. It is thanks to them that the official opposition has cut such a miserable and foolish public figure over the Industrial Relations Bill.
The Labour opposition has continually floundered about, with very little apparent idea of where it is going. The Tory gov- ernment has sometimes floundered; but sometimes, unlike the Opposition, it has appeared to know what it is about. The record itself is in parts remarkably good. Mr Heath and his men have survived the Commonwealth Prime Ministers' Confer- ence without concession over South Africa; steps towards a Rhodesian recon- ciliation are being undertaken; the Euro- pean situation remains open; the proposals on immigration need cause no offence and, hopefully, may remove that question from partisan politics, if not from internal party politicking; the Ulster problem is un- solved but has not got worse; we are on friendly speaking terms with most nations abroad, and we show few signs of wishing to extend our foreign commitments; it can be assumed with reasonable confidence that the Concorde project will be stopped as soon as it is contractually possible; and thus far, although it has been a bumpy ride, the Government's handling of the difficult Rolls-Royce crisis has been better than it might have been, notions of pres- tige being what they are. However, it will be on its handling of the overall economic situation that this government, like all post-war governments. will be judged.
During the election no pledge given by Mr Heath was more specific than that on incomes policy: there would, he said, be no compulsory, statutory policy. Since the election, although the Government has spoken confusedly, the overall impression it has given has been one of determination to reduce the amount of state intervention in industry, to allow unions and employers to fight each other, to decline to conciliate, to refuse to bail out, and as an employer to set an example to private industry by keeping wage settlements within the public sector as low as possible. Except where it is itself the employer, the Government's actions on prices and incomes have been exhortatory. This policy of the Govern- ment has, naturally, been accompanied by much industrial unrest and by serious and lengthy strikes. It is much too early yet to determine the success or 'failure of the policy. Yet for it to succeed, one thing is clear: it must be understood.
In the last days of its first term, the Gov- ernment has spoiled its record. The Cabi- net was deeply divided over the steel price issue; and the eventual Cabinet decision, to halve the Steel Corporation's price in- creases from 14 to 7 per cent, is one which renders its entire economic policy obscure again. Just when the broad outline of governmental economic policy was becom- ing clearly defined, a major government decision has had the lamentable effect of fogging it again. If—as many had come to assume—the Government's policy towards the nationalised industries is that they should behave qs far as is possible as if they were private industries, that is, con- duct themselves so as to produce a prof- itable return on their investment, then the steel decision is inexplicable. It is also inexplicable if it be—as many had assumed—the Government's long-term desire and intention to return steel to private ownership or at least to encourage private investment in the steel industry. The Government's intervention—and the Cabinet majority's thinking—may be based (as Mr Hugh Macpherson hints in his 'Political Commentary' this week) upon the long-teim view that steel should nowadays be considered as a raw material, almost a primary product, and therefore best imported from places which produce it cheapest. if so, the Government should come clean and say so. If not, if the Gov- ernment's policy is to maintain a large and expanding steel-manufacturing industry in this country, then its hasty decision on steel prices, which cannot do other than impede new steel investment and reduce confidence throughout the steel industry, is inexplicable. It cannot be part of Mr Heath's 'radical' and 'abrasive' new style to revert to a practice by which the true price of the goods produced by national- ised industry is obscured. The Govern- ment's intervention will distort steel prices in such a way that the customers of the industry get its products on the cheap. Unless the steel industry is so extrava- gantly conducted that it can stand a 14 per cent price increase being halved (in which case Lord Melchett should be instantly dismissed for gross incompetence), the Government's intervention is yet another version of the old, old story- whereby the public at large is compelled to subsidise the nationalised industries and their cus- tomers. If Mr Heath and his Cabinet have not the stomach for the strife, then they should renege on their electoral pledges and settle for a prices and incomes policy which is overhand and general and not underhand and arbitrary. The steel deci- sion spoils the record of the Government to date. It suggests the infirmity of purpose of a divided Cabinet which cannot make up its collective mind.
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