Politics

Winning back the Tories

Some Tory backbenchers had started to L./ grumble again even before the new term began on Wednesday, this time about the brevity of their Christmas recess. It was a well-grounded grumble. All Conserva- tives believe that there is far too much legislation, so why, after five and a half years, is it still necessary for the Govern- ment to hurry MPs back to the Bill factory?

It is also surprising that the Government was so eager to reassemble its troops — for there is no sign that the break has im- proved their temper. In November and December, Tory MPs developed a taste for broken glass and ministerial blood. This should cause the party leadership much anxiety, for as Labour's history demon- strates, rebellion is habit-forming. If a habit of dissent were to emerge on the Tory benches, this would threaten the Government's authority and credibility. Over time, the public would conclude that if even the Government's own MPs don't think it's doing a good job, why should they?

So what has gone wrong, and how can ministers do better? A year ago, the most frequently-heard criticism of the Govern- ment from its own supporters was that it had no strategy — that if there wasn't a secret manifesto in the 1983 election, there damn well ought to have been. That criticism has now focussed on the absence of policies to deal with unemployment.

One problem for ministers is that they and many of their backbenchers are using the same term, economic recovery, to mean different things. An increasing num- ber of Tories is thoroughly exasperated to hear ministers talking up the economy's progress — when Alastair Burt said that it was a strange definition of economic suc- cess that included three and a half million unemployed, he spoke for many of his colleagues. And yet when the Government claims that a recovery is under way, it has a perfectly respectable case. It can argue that on inflation, output, productivity and growth, matters are improving as rapidly as world conditions will allow. Its problem is that the British economy seems able to produce anything except jobs.

Here Thatcherism has a difficulty (Thatcherism, that is, as opposed to the tendency Auberon Waugh last week au- thoritatively defined as Harryism). Thatch- erism is primarily about morals, not econo- mics. Historically, it was a counter-attack on the view widely held in the mid- Seventies that Britain was irreversibly in decline. So it meant getting the British to stop belly-aching and roll their sleeves up in order to produce the higher morale that is required before the seven-stone weakl- ing even buys a Bullworker.

All this commended itself to many vot- ters, who accepted the Government's argu- ment that certain economic indicators — especially inflation and the PSBR — had a moral as well as a practical significance, and were therefore of primary importance, while others — unemployment (which was seen as temporary), manufacturing exports — had no moral content, and could there- ford be disregarded.

But the corollary to this was the expecta- tion created in voters' minds that recovery, when it did arrive, would have a capital R. Everything would come right, amoral as well as moral indicators. So when they are told that there is a recovery — in fact, it's been going on for three years, they just haven't noticed — it doesn't work. The public will not accept that the recovery has even begun until unemployment starts to fall, instead of continuing to worse.

Many ministers are aware of this. The problem of unemployment is being taken very seriously behind closed doors in Whitehall. (It is entirely characteristic of this Government's political flair to be giving the major problem it faces much more attention in private than in public.) Tom King is currently conducting a wide- ranging review of possible measures to stimulate employment while within the next few weeks Lord Young will be going public with the first fruits of his enterprise unit. We shall hear a great deal about the need for reforms to allow a proper labour market to operate, so that the unemployed can price themselves into jobs.

Now these reforms are essential. But in this area, it is not enought to be right. For 200 years, publicists with rather more finesse than this Government can generally command have made only limited headway in convincing public opinion of the case for the free market — and there are aspects of that case more immediately sellable than the need to cut wages to deal with uneml ployment. So left to fend for themselves, the Young reforms could easily create political difficulties for the Government. The abolition of wages councils, the re- moval of young people from the scope of the Employment Protection Act, limits on young persons' entitlement to social secur- ity benefits — there are strong arguments for all these changes. But it should be fairly simple for a competent Opposition to claim that here is a Government of the affluent and the secure telling the poor and inse- cure that they're having life too easy. The argument that what Britain needs is a lot

Charles Moore is on holiday. Bruce Ander-

more low-wage, law-tech jobs is equally vulnerable politically. The sceptic could easily argue that he thought Britain was supposed to be the workshop of the world, not the sweatshop of the world, and that to regard high wages as the industrial equiva- lent of a bad harvest has always been the hallmark of Scrooge economics.

Moreover, measures to reform the labour market have the further disadvan- tage that applies to all structural reforms. Where they involve pain, it is felt im- mediately, but we shall have to wait years for the benefits to become apparent.

So there is a strong argument for con- voying the Young reforms — linking them with other measures which might create jobs more quickly, and which will not have ;the same political risks. Of these, the most widely canvassed hass been the use of the 'fiscal adjustment' — that is, the amount the Chancellor can give away in his Budget — for a programme of public works. But over the past few days, the Government has had some success in putting the case that this money should be spent on raising tax thresholds, to reduce the burden of income tax on the low paid. It is now clear, both that the Government intends to stick to its guns, and that the arguments for the tax-cutting strategy are much stronger than was generally realised before Christmas.

Indeed, those in favour of public works might have been better advised to justify the projects themselves, rather than allow them to be treated as a means of job creation. It is a very short-sighted form of economics to refuse to spend money on necessary housing maintenance now, thus piling up bigger bills for the future — and it is a back-handed tribute to Victorian values to allow the heritage of Victorian civil engineering to crumble around us.

But job creation by public works seems to be of the agenda. One measure minis- ters are actively considering is re-jigging national insurance contributions so that the low-paid and their employers pay less, while the higher paid and their employers pay more. This might be thought to cause problems with the Harryites, those striv- ing, sharp-elbowed, I'm-all-right-Jack Tories who vote with their wallets. But they would have the higher allowance, and disguise the fact that their effective tax rate had increased. And the Harryites' MPs, who should know, seem to think that their constituents regard job creation as a higher priority than tax cutting.

Anyway, what the Government would like, by whatever means, is for unemploy- ment to start falling by the autumn of 1985, for it to keep on falling, and to have dropped below three million by the sum- mer of 1987. If that were to happen, then the sting in the unemployment issue would be greatly reduced. At the moment there is no evidence that it will happen, or that the Government has thought of another way of winning back its own supporters.