The folly of the blacklist
Jock Bruce-Gardyne
If hypocrisy is, as the French believe, a vice which we British elevate to the level of an art-form, then incomes policy is surely the best of all stages to watch it performed. Consider this small jewel from the lips of our learned Attorney S. Silkin: 'It is not now, and has never been, the policy of the Government that it should take any, action with the intention or consequences of causing a breach of contractual ... obligations'. Even by the standards of the serpentine Silkins, does this not deserve a prize of sorts? What were he and his cronies up to when they decided that export contracts entered into by the Belfast firm of James Mackie were no longer in 'the national interest' following a pay settlement which threatened to 'open the floodgates' of inflation (J. Barnett, Chief Secretary, dixit)? Some of us thought that they were bullying Mackie's to scrap their settlement. Now I suppose we are expected to believe that they just wanted them to forget about exports, and sell at home instead.
It is not, however, only ministers who trip up over their own bootlaces when incomes policy is on the agenda. Consider the plight of that excellent body the Confederation of British Industries. The CBI, we are told, 'supports Government efforts to achieve moderation in pay settlements', but it is 'against sanctions'. It is even talking of organising what might be called a 'write-out' on public contracts, although it is much to be feared that what in the end Roy Hattersley calls 'wiser counsels' will prevail.
It was not always so. When the Conservative Government produced its pay code in 1973, a code which (it is sometimes forgotten) had no more legal authority than the 10 per cent 'guideline', the CBI issued stern injunctions to its members to toe the line, and helped to draw up the Counter-Inflation Act which performed the equivalent role to the present government's blacklist.
We have a dilemma. Belief in the need for some form of centralised regulation of wages if we are to avoid a return to hyper-inflation is shared by most of Whitehall, the Bank of England, the industrial establishment, and the CBI (I pass over the academic soothsayers of the National Institute and the Cambridge economic faculty, who see themselves running it). But unfortunately such is the cussedness of human nature that, if the Government simply sets a permissible ceiling as it has done, this immediately becomes a floor for every wage negotiation to start at — as it has done. So how are we to 'make the limit stick'?
The real incomes policy enthusiasts, who stretch in political terms from the Cambridge economists, through the mainline Liberals of Mr Steel's persuasion, to what might be called the Prentice wing of the Tory Party, have no problems. They believe in a full-blown, permanent Board of Guardians, to make us 'high or lowly', and 'order our estate'; a body whose magisterial judgments will be enforced, if any were so disrespectful as to challenge them, by due process of law. Those with slightly longer memories pause and draw breath at this prospect. They have visions of some new deal being cooked up with Mr Joe Gormley, only to be followed by the revelation that Mr Gormley himself was an uncertain guide to his members' likely responses, with the consequences that we all know about.
Hence the understandable caution of the CBI. Incomes policy, yes: sanctions, no. But where does that lead us? 10 per cent, says the Government, is the most we can afford (the CBI would have preferred to make it 5 per cent, it seems, but that is really neither here nor there). Then when Mr Frank Chapple , or Mr Moss Evans, or Mr Arthur Scargill decide that this isn't going to be enough, the Government presumably shrugs its shoulders and comments that boys will be boys. Back to the days of the Social Contract, in short — and 30 per cent inflation.
So the Government has plumped instead for a polite fiction. In theory we have returned to 'free collective bargaining'. But in practice if this results in a settlement the Government does not like and feels strong enough to challenge, then it will call in aid whatever weapons it has to hand to hurt the offender. Not to induce 'a breach of contractual obligations' — perish the thought. No, the idea is simply, as Voltaire explained the execution of Admiral Byng, that il put tuer les uns pour encourager les autres.
Now there is much about these proceedings that is rightly seen as outrageous. What can be much more contemptible than an administration which dare not withdraw an £80 million handout from the Ford Motor Company for fear that it might abandon plans to build a new factory in South Wales and thus upset the Prime Minister's constituency, but does not hesitate to cut off a £50,000 grant from a Midland road haulage company which was unlucky enough to attract the attention of the Department of Employment when it was forced to give in to ruthless picketing by the legions of Mr Jack Jones? Sir Harold Wilson was once congratulated on winning his 'Anguilla Star'. Scrutiny of the poor little minnows whose names appear on Mr Callaghan's black list provokes the thought that this might be the most appropriate testimony to the courage of the present administration.
Rather than conclude from this unsavoury performance that what is needed is a legal framework for pay control, we would do better to draw two very different morals. The first is that the discretionary patronage in the hands of government has increased, is increasing, and ought to be diminished. If we give to governments the power to offer or withhold export credit guarantees, investment grants and other forms of 'selective assistance' according to their assessment of the national interest, we really should not be surprised that they succumb to the temptation to abuse them for purposes of political expediency. Were the blacklist affair to persuade Parliament to have a long hard look at this mountain of unconsidered trifles available for the reward of services rendered. it would indeed have served a purpose.
The second moral is, or ought to be, that there is no such thing as an incomes policy which is either fair or effective. It is typical of Roy Hattersley to accuse the Opposition of trying to 'undermine' the 10 per cent guideline. The reality is that if the Government had rested firmly on the combination of its monetary guidelines and cash limits coupled with specific financial targets in the public sector, warned the unions that excessive wage claims would lead to lost jobs which it would not intervene to save, and then left employers in public and private sectors alike to conduct their own negotiations, our inflation rate would have been substantially lower this year than it is going to be — and perhaps the level of unemployment too.
For the real folly this winter has not been the fact that profitable businesses such as Ford and Mackie's have agreed to pay their employees an extra 12 or 20 per cent, but that massive loss-makers like British Steel and Rolls-Royce (1971) feel it incumbent upon them to pay an extra 10 per cent to tens of thousands of employees they would be better off without. Yet such are the wonders of incomes policy that 20 per cent at Mackie's is treated as the prelude to economic collapse, and 10 per cent at British Leyland or British Shipbuilding as some sort of triumph.
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