The Martyrdom of St Keith

Ferdinand Mount

Quiet week. Only a 'holding statement' from the Department of Industry to let Mr Ian MacGregor have £500 million to see him through till April. To you and me £500 million may sound like a nice hunch of lettuce to be holding, but it is only lunch money compared to what British Steel is due for in a few weeks' time. The interviews get stickier all the time . . .

'A billion, did you say? Oh, four billion. Seems rather a lot. You only want one billion in cash and the rest in written-off debts? I suppose that makes it a little better. But last week you had another billion for British Leyland. I know money doesn't go far these days, Keith, but you'd be surprised how a billion here and a billion there mounts up.'

The whole spectacle is painful in the extreme. It was agony enough to watch Sir Keith Joseph rescuing British Leyland for the umpteenth time and having to admit that he could not guarantee it would be the last time. To watch him saving British Steel again is sheer torture. To doubt the gen-, uineness of the pain is like questioning some Italian Mannerist painter about his Martyrdom of St Euphemia, all rolling eyeballs and hands flung wide: 'But surely, she didn't really look like that.' To which the only answer is: 'Listen, amico, you ever seen anyone being martyred?'

Visitors to Number 10, Downing Street, are given a more dignified explanation of events. The nationalised industries repre sent a problem: unpleasant, expensive but temporary. It is this problem which is unhinging the Government's whole strategy. The costs of the slump — the extra dole bill, the loss in tax revenue — are dwarfed by this huge problem. And yet there is light at the end of the tunnel. We are going through the worst of it. This is the end of the beginning, and so on.

Now this problem has its convenient side.

For it provides an explanation of the Government's difficulties which is somehow not the Government's fault. Just as Mrs Thatcher often gives the impression that this is not her government but rather a bunch of dim-witted old buffers who happen to be blocking her light, so the nationalised industries are presented as a series of Acts of God committed by the Almighty in His most Old Testament mood — wrath, brimstone and boils.

It would be nice to think so. However, less than a year ago, the Government's Expenditure Plans took a somewhat rosier view of the nationalised industries: The figures for later years, though inevitably highly uncertain, show a progressive reduction in the industries' financing needs. In particular they adssume that the coal, steel and shipbuilding industries will succeed in reducing or eliminating current losses, that British Rail will be able to contain costs.'

Ah, those were the days. Now it was never a plausible assumption that between 1979 and 1983, the nationalised industries would switch from borrowing £2,300 million a year to paying back £400 million a year. And so it has proved.

What went wrong? Let us quietly retrace our steps to the dawn of nationalisation, or, as they picturesquely call it, Vesting Day (one pictures millions of stout woollen vests being donned simultaneously, a ceremony not unlike Dr Paisley's GallantFive Hundred simultaneously waving their Firearms Certificates, a manoeuvre requiring the utmost military discipline if it is not to look like the Goodbye number from Hello Dolly!).

The intellectual error, committed as much by Conservatives as by Socialists, was to imagine that nationalisation had anything to do with socialism. In reality, as we have now twigged, it was a measure of straightforward job protection, reflecting and enhancing the power of the trade unions. The purpose — and the effect — of public ownership was not to increase the power of the State over the means of production and distribution; it diminished the power to encourage better management and the economic use of resources.

But what it did achieve was to freeze or slow down for a time the rate of job losses. It delayed the onset of reality; but when reality arrived, it came with a bump. At unbelievable cost, it provided a period of grace, lasting about ten years.

Altogether, the six main industries taken under state control — railways, coal, dock labour, shipbuilding, steel and British Leyland — have shed well over one million jobs to date since their post-war peaks. But in the first few years after nationalisation, the loss was only a trickle as public money was poured in to prop up the industry.

In 1948, the National Coal Board employed 716,000 men.In 1959, it was still employing 640,000. Last month, it was employing 227,000. In 1950, British Rail employed 537,000. When Dr Beeching arrived in 1961, there were still around half a million railwaymen. Now the number is down to 175,000, with Sir Peter Parker calling for another 30,000-odd redundan cies. For ten years or more, employment in the docks scarcely budged from its pre nationalisation level of 80,000. Now there are less than 23,000 men in the docks. Employment in steel fell only 'slowly from 257,000 at the time of nationalisation in the late Sixties, until the sudden plummet over the last' two years, down to 110,000 under Mr Ian MacGregor's 'Survival Plan'.

This delayed drop — due to the inertia and timidity of earlier post-war governments — has produced a catastrophic conjunction of effects. First, it is inevitable that a great number of the men made redundant would be too old or too set in their ways to find other work.

The delayed drop has released them on to the unemployment register during the decade of world recession between 1974 and 1984. This is one contribution to the high levels of unemployment which took so many forecasters by surprise. The delayed drop has also meant that the redundancies were far more expensive, because they came at a time when trade union power had entrenched higher expectations of compensation for losing your job. The average steelman made redundant by BSC receives about £12,000 — three times the pay-off from private steel firms which are now suffering so badly from BSC's unfair competition (the State subsidy is worth £85 for every tonne sold at £185-200, according to Sheerness Steel). Worst of all, the politicisation of these industries has preserved hopelessly unrealistic manning levels into a world of nosediving demand.

All this is why we are where we are. One would not wish to start from here, would one? But as we must, it is necessary to see that the question is not the same as it was. Except for British Rail, manning is no longer the prime question. What we now have to decide is the 'Presence Question'. Ought we to maintain a significant national presence in each of these fields — a major steelmaker, a British-owned car giant? Are the costs too high, the benefits exaggerated?

By methods both open and furtive, France and Japan have used governmental power to build up industrial giants which are economically efficient. We have not tried. Essentially, until now we have been running official job protection rackets. The only major British industry which the government has built up solely and specifically to increase production is agriculture; in its own terms, that operation has been the most stunning success. In the last ten years alone, British farmers have increased the proportion of home-produced food we eat from 45 to 60 per cent; in temperate foodstuffs, we are moving towards selfsufficiency — 75 per cent last year; food exports have doubled. Would we be better off if we had stayed out of the EEC and let the hill farmers go to the wall and happily munched New Zealand lamb, Dutch butter and Polish bacon at knockdown prices? Should we let Datsun and Ford take all the unpleasant decisions on our behalf? Or does a world of cartels and governmental intervention force every competing country to resort to some degree of public pushing and propping? The awful — and expensive — truth is that we cannot know until we have tried.