The roots of disillusion 2

POLITICAL COMMENTARY ALAN WATKINS

do not object to import controls on doctrinal grounds.... Certainly, there could be occasions where their use would be justified and permis- sible under international agreements, that is, if we should be facing severe balance of pay- ments difficulties which could not be dealt with in better ways . . . the combination of an in- creased capital outflow with a deterioration in the current account will mean a worsening of the overall balance of payments this year.' —Reginald Maudling in the House of Com- mons, 14 April 1964.

Last week we arrived at the conclusion that the Labour party had identified itself with a high rate of economic growth; and that it had done so not only before the advent of Mr Harold Wilson, but also before the 1959 election. I also suggested that growth was an inadequate indicator or determinant of socialism—was even, perhaps, something directly opposed to various socialist notions. But this is a theo- retical point which, however interesting, it is unnecessary to decide, for the reason that growth has not taken place. We have had neither growth nor socialism. Socialism, admittedly, was not reasonably to be expected; growth, however, was; and the crucial and still mysterious question is why growth, as a Labour objective, was abandoned so abruptly and so soon.

For (and here it is necessary to clear away some more contemporary lumber) growth was not abandoned on 20 July. 1966. It was abandoned within days of the Labour govern- ment's coming to office in October 1964. First Mr Wilson deliberately chose to create an economic crisis, or at least—and this amounts to much the same thing—the atmosphere of an economic crisis. I realise that to say this is to repeat Conservative weekend speeches of 1964/65: but really there is no other way of describing his actions. As the quotation given above demonstrates, Mr Maudling was as frank as any Chancellor could legitimately be about the possibility of a substantial deficit on the balance of payments. And by the time Mr Wilson came to make his 1964 campaign speech at Norwich, the possibility had become a cer- tainty. He was well aware of what was going on, or what was not going on. Therefore the line taken by him and by his various colleagues —'we have looked at the books, and they are far worse than anything we expected' and so forth—was, to say the least, dis- ingenuous.

Having created an economic crisis, Mr Wil- son and his colleagues set about solving it by Tory methods. It would, of course, have been open to them to try another means. They could have devalued. They could have imposed import controls. Mr Wilson himself could (adopting a political solution recommended by Mr Anthony Crosland, among others) have used the so-called crisis to justify going to the country within weeks, thus, in all probability, gaining a larger majority than five. The creation of the crisis could then have been excused—and this would have been the sole valid excuse—on the ground that it provided the occasion for radical remedies. Otherwise the best solution would have been to do a Maudling: to lie low, say as little as possible and hope for the best—

which is often, in politics, the most satisfactory solution of all.

But Mr Wilson, Mr George Brown and Mr James Callaghan (and all the evidence is that, in those early months, the major decisions were taken by these three) did not elect to adopt either of these courses. They were not radical, nor did they continue Mr Maudling's methods. They went back to an earlier model, to Mr Selwyn Lloyd; and, when Mr Lloyd failed to provide inspiration, to an even earlier model, Mr Peter Thorneycroft. The import surcharge could, perhaps, lay some claims to ingenuity, but, like corporation tax and the sEr, it was one of those pieces of ingenuity which everyone could well have done without. Following the surcharge, the succession of budgets introduced by Mr Callaghan was conventionally defla- tionist. All this is obvious enough today; it was not quite so obvious at the time; and it is worth inquiring why this should have been so.

First, of course, there was the existence of the Department of Economic Affairs under Mr Brown, who, as he continues to do today, always contrived to give the impression that something was happening. Even in those days, however, Mr Brown was more concerned with prices and incomes, and keeping the trade unionists happy, than with problems of actual production. However, the DEA did appear in those days to stand for something—no one was sure precisely what, but something. The National Plan was taken with the utmost seri- ousness even though it was produced after several deflationary budgets and after Mr Cal- laghan's quite savage measures of summer 1965. (Compare also Mr Ray Gunter's speech to the 1965 'roc) Indeed, we still speak of the Plan's being 'abandoned,' for all the world as if it had possessed some real content.

Secondly, there was the size of the Govern- ment's majority. The Labour party, and in par- ticular the parliamentary Labour party, allowed itself to be convinced, because it wanted to be convinced, that Mr Wilson did not really mean what he said: and that his actions provided no real clue to his true state of mind, which was assumed to be in some way 'socialist' or 'left- wine.' This, perhaps, is a paradoxical way of putting it. Is not the usual trouble, not that

people disbelieve Mr Wilson, but that they be- lieve him only too readily? Yet this is to be

unfair to Mr Wilson. In 1964-66 he made his intentions perfectly clear: but, as ardent marketeers today refuse to believe that General de Gaulle really intends his own speeches, so the left of the parliamentary party then refused to believe that Mr Wilson meant what he said. It was this situation which led someone to remark that Mr Wilson owed more to Mr Michael Foot than he could ever possibly repay; for Mr Foot declined either to rebel individually or to lead a rebellion. And it was this situation which led to the wholly dis- proportionate disillusionment following the measures of July 1966; for it had been assumed that, after the election, and with a huge majority, all would at last be well. If the land was not actually to flow with milk and honey, at least public expenditure might be allowed to rise. But the measures of 1966 were a logical continuation of the measures of 1965.

Today, similarly, there is every reason to suppose that if there were a run on sterling the measures of 1966 would be repeated in still more draconian form. To this extent Mr Richard Crossman's remarks at Shrewsbury were not merely innocuous but superfluous, a work of supererogation and a statement of the obvious. And whether he was talking about un- employment or about a re-imposition of the

freeze is really neither here nor there, for we should probably have both. To refuse: to

recognise this is to fail to perceive the natural and inevitable consequences of the Govern- ment's policies.

So far, then, we can point to two reasons for the prevailing disillusionment: that supporters of the Government were misled by the existence

of the DEA; that simultaneously, in pre-1966 days, they tended to excuse inadequacies on

the ground of the smallness of the Govern- ment's majority. But there is a third reason, per- haps more creditable to the Government. Be- cause Labour was in opposition so long, policies that appeared fresh, even exciting, when they were first publicised are now, when they are being put into operation, of a dog- eared appearance. This, of course, does not apply to the central policies concerning growth, modernisation. and so forth, because these policies are not being put into operation at all.

It does, however, apply to the middling measures such as the leasehold enfranchisement Bill. This, in part, is the reason why the abor- tion Bill created so much interest : it was some- thing new. And the Government itself is failing to provide anything new.

What then can the Prime Minister now do to catch the imagination of his supporters?

The Common Market? 'Never,' observed Mr Wilson at Swansea on 25 January 1964, 'has our influence been weaker than when a Conser- vative government, bankrupt of any ideas for regenerating our economy, looked to the Com- mon Market to solve all our economic prob- lems.' It would be easy to conclude with this quotation. It would also be unenlightening. For the Common Market could have provided part of the solution to Mr Wilson's problem. Irre- spective of our chances of entry, he could have used it to detach himself from his Washington perch; to modify his Blimpish attitude to ster- ling; to be, in a sense, more Gaullist than de

Gaulle. He could have united the party and given it hope. Mr Wilson declined to take this chance. Indeed, he went out of his way to take the opposite course; to be more pro-American, more pro-sterling. In this, as in everything sirice 1964, Mr Wilson is at least consistent.