Political Commentary

Were there but world enough and time

Patrick Cosgrave

Fondly though I once treasured the possibilirY, an early general election is now out of the question; there have been too many disasters — like Ripon and Ely — and too many setbacks, like the latest sterling perturbation, followed as it was by increased interest rates. What is more, while an early election could in the Past have been plausibly urged on Mr Heath on the grounds that, whatever shape the Government was in, the Labour Opposition was even more battered, the latest Liberal upsurge has introduced an altogether ,e‘v and dangerous factor. So, here we are, at the beginning of autumn 1973; and Parliament has two years less six or seven weeks to

— so when can the Prime Minister make his break for a second term?

Mr Heath must therefore wait upon the turn of events: his fate is in the hands of others, and in the hands of fate itself. He can reasonably hope for a second term if the econotnic boom of which he is so proud works its Way through to the consumer in time; if he

can achieve a pay deal with the TUC; or if he ca produce some demonstrable other

`,,,r1Urnph — probably over his EEC partners. these three the boom is by far the most IMPortant. If the economic situation becomes sourer than it is now, and if the trade unions ontinue to avoid major strike action (it is Interesting to note, by the way, that govern2.1e, nt spokesmen have virtually stopped viaming inflation on wage inflation: the incidence of strikes no longer justifies such pro0,aganda) the Government will be in very ,teeP trouble indeed. And, if such a situation saues arise, then it is likely that the much treasured membership of the EEC will come under even more fire than it has already; and °,Ur entry would then be an issue in a general eiection. But if the boom is really felt on the gh Street then, even now, Mr Heath will be onte and dry. There are, therefore, two quest,i,tnis to be asked about the Government at 'toe present stage of its life: what is happening this boom, and, how did Mr Heath get into ,flis fir? „ The boom really is a mysterious phenome„in. Certain propositions about it made by ministers can be accepted, if not without re3.ervations, still fairly wholeheartedly. There !13 undoubtedly a fairly large-scale increase in industrial investment. The failure of British iliclustry to invest during the early life of the eath administration was, with unemployMent, the main spur to the Prime Minister and his colleagues to reverse their policies on irn dustrial subsidy; and ministers now talk EtieelY and bitterly about the gutlessness of ; litish industry during that period. However, still difficult to be sure how much of this "vestment is real, and how much of it °Eivernment paper money. There is also a aUbstantial improvement both in capacity t4insd productivity; and I will even accept that d"e import boom is to a large extent to be put :'',9Wn to industrialists building up stocks, tlhile its cost is to some degree a function of e 90 per cent increase in commodity prices

ver the last six months. Finally, exports are

!tit, some kind of new high. Mr Walker believes ■ 11 at t

his is the first serious export-led boom rtain has enjoyed since the war; and,

rther, that it is especially encouraging be17kLise exporters are finding new markets, esi:cially in Latin America (though where this :ayes the old supposition that we were all V.ing to make a fortune in Europe is some 1g on which he is less explicit).

But are we in the middle of a boom, or on the verge of a boom? And, in either case can the boom still be destroyed? According to Mr Walker the boom is here: it is real and solid and beautiful. According to Mr Barber the boom is virtually here, but certain readjustments to public spending, interest rates and the international monetary situation are necessary to protect its young life. According to Mr Maudling (he is important because he was chosen as a Government spokesman on The World This Weekend last Sunday, Central Office being unable to field a minister either then or the previous Sunday, when the programme had Mr Jenkins bitterly denouncing Mr Barber as the worst depreciator of the currency in the country's history) we are on the edge of a boom, but all could still be lost through another outburst of wage inflation, or as a result of a panic in the city. Of all these rationalisations I find Mr Maudling's the most elegant and plausible. Mr Walker is too bluff to be wholly convincing; and he and Mr Barber hop and skip about so much among the statistics which they choose to emphasise and those they choose to ignore that one feels they are merely trying to shout the country into happy prosperity. Mr Maudling has, of course, the advantage of having been over this ground before; and it must give him a certain melancholy satisfaction to realise that a Conservative Government has now embarked on the run up to a general election with, in broad outline, the same eco nomic policy, prospects and problems he had in 1963 and 1964. What, then, was all the fuss about in between?

There are, of course, differences between now and then, and I will come to them in a moment. But it is only fair to try to state ob jectively the characteristics of the kind of boom Mr Maudling engineered, and the kind of danger inherent in it, even though, since Mr Maudling never had a chance to see his adventure through, his experiment was never completed. A Maudling type boom depends on what Professor Alan Walters, on television the other night, called steady-state inflation, that is to say, inflation at a steady and predictable rate, spread fairly evenly throughout the price economy. It is peculiarly vulnerable to any loss of confidence by foreigners interested in international trade, which is why the Labour Government, panicking, made such a hash of Mr Maudling's heritage. And, of course, no such boom has persisted long enough for us to be able to see whether it can effect the restructuring and reorganisation of British industry on which continuing prosperity depends.

Now, Mr Maudling's boom very nearly won the 1964 general election for the Tories. The differences between now and then are, however, important. First of all, several years have passed by: the kind of confidence on which such a boom depends — the capacity of the electorate for hope, for example — has been eroded by those years. Second, inflation is now at a much higher and more unstable rate now: it is spread unevenly, so that, even if general figures are encouraging, significant sectors of the electorate, and notably those on which the Conservatives most depend, still suffer a great deal. Third, the unions are both more embittered and more cautious: they are too cautious to allow, a confrontation with the Government, and too embittered to make a deal: if they can prevent a major industrial row, they may yet be able to watch Mr Heath sail to his own destruction. Fourth, we are much more critical nowadays of the underlying structure of this kind of boom. When the Chancellor announced public expenditure cuts recently there was first a tremor of fear, then a hopeful feeling that he had fine-tuned the economy successfully, and that the cuts were necessary to sustaining the boom: now the Commons Expenditure Sub-Committee has come to the conviction that the Chancellor has absolutely no idea where or when he is going to make the cuts: if the Treasury really is ignorant on this subject, it is hard to accept that ministers really know what is going on in the economy.

It is beyond doubt that the Expenditure Sub-Committee simply cannot make up its mind what is going to happen over the next year and a half. And it seems unlikely that Mr Heath and his Cabinet have any very much more percipient intelligence. It is this uncertainty, allied to the difficulty of timing, which makes Mr Heath's difficulties especially acute. When Sir Alec Douglas-Home came to power, there was a plausible case for saying that the government of the day was exhaust ed by thirteen years of power: the time he had available to change the public mind on this subject was horribly short, but he made a brilliant effort, and very nearly reached the tape first. Mr Heath is in an almost exactly similar position, and the Liberal resurgence bids fair to snatch away from him his one advantage of a certainly discredited opposi tion. Now, nobody would suggest that Mr Heath is exhausted: it is merely that his own tactics have left him very little time.

It is not just that he had to change the distinctive policies on which he was elected. It is rather that he was very slow to try them out.

The tax cuts — especially the cuts in indirect taxation — which were to be his principal method of releasing spare capacity in the economy were not introduced until fifteen months after he won the election; and all that time he had to watch the growth of the ter rible inflation which Mr Wilson and Mr Jenkins had created. Almost at the same time, Mr Heath went into reverse gear on industrial subsidy; and it could be said that his present economic policy dates only since last January — which, in effect, means a parliamentary term of two and a half years. We have never had a situation like this in British politics before. The question is: can Mr Heath find resources in himself to overcome it?