Political Commentary
The almost new Denis Healey
Ferdinand Mount
See you in July . . . that will have to wait until next month's mini-Budget . . . I can never remember whether this is Denis Healey's thirteenth or fourteenth Budget . . . or is it only his second election Budget . . . Such, I am sorry to report, are the prevailing reactions to the Chancellor's latest effort. Nor are these flippant and offensive comments confined to hacks and subversives. Senior ministers, not excluding the most senior, are said to talk in the same low vein.
There is, how shall we say, a certain absence of finality about Mr Healey's Budgets. They somehow lack that certainty and durability which Mr Gladstone prized. Thet have instead the blurry, bungy quality of old knicker elastic. This quality inevitably causes pain to the serious-minded.
For example, take in one hand the Treasury's indispensable Red Book and turn to paragraph three of the section on the Economic Outlook to mid-1979, entitled Assumptions. It says: 'The forecasts assume that average pay increases in the year beginning in August 1978 are about half the average for the current pay round.' As Thurber might have commented, it may be only a naive domestic assumption, but you cannot help being amused by its presumption. The average pay rise for the current round is about 14 per cent. The assumption is therefore that earnings will not rise by more than 7 per cent in the next year — a limit never observed in this decade. Can the Chancellor seriously believe that after three years of more or less compulsory pay control, the unions will stand for that?
But of course Mr Healey's Budgets are not designed for serious-minded people any more than saucy postcards are designed for diocesan synods. They are not objects for intellectual contemplation and analysis. They are designed to sell and sell fast. Why should he care if the thing falls apart as soon as you get it home?
Rightly, Mr Healey believes that single Budgets are soon forgotten — rightly in his case at any rate. All that matters is that they should leave no lasting ill-feeling behind. His aim therefore is to square anyone who needs squaring at as little cost as possible. How much will the child poverty lobby take to keep quiet? 70p on account, the balance to follow next year (next year doesn't matter, next year is several Budgets away). And the Liberals? Well, they want profit-sharing and as much off income tax as possible. The Chancellor counted the nods from the Lib eral bench with the boyish anxiety of a new outside — right looking for the manager's approval. But the Liberals could not have too much off income tax because to do so would involve putting up VAT and beer and smokes and that would offend against the Grand Object of ensuring that, as one Senior Minister put it, 'no ordinary chap should be worse off as a result'. What happens if the Liberals decide to make a fuss and start voting with the Tories to reduce income tax at the top end during the committee stage of the Finance Bill? Here, ministerial sources give a kind of continental shrug (sources are somewhat inclined to shrug in these parts) which is to imply that the government will not be too displeased, although if the Liberals really tear holes in the Budget strategy we are led to believe that the Prime Minister will perform all manner of terrible things such as call General Elections.
At this juncture, the thought may steal upon the sceptical mind that this Budget bears some reseinblance to an election Budget, that it is in some measure intended to secure votes for the Labour Party. Nothing, ministerial sources assure us, could be further from the truth. What the.' Budget really is is 'the British contribution to the concerted international approach to world economic problems agreed between heads of government of the seven leading world economies with a view to climaxing at the Bonn summit in July'. According to the Prime Minister, the EEC has already agreed 'to present a European dimension to the wider summit.' What with all this climaxing and presenting and widening, you will hardly be surprised to hear that the government has had little or no time for mere domestic electoral considerations.
But we cannot omit some reference, however indelicate, to these grosser matters. The important thing in the Chancellor's view is that, with the Budget taken into account, domestic living standards could rise by nearly 6 per cent between August 1977 and August 1978. Further
rises in living standards cannot be guaranteed much beyond that point, nor can Mr Healey be sure that the money supply will not begin bumping hard against its ceiling, if not shooting up through the rafters. He cannot therefore guarantee immunity from financial crises, credit squeezes, wage controls etc. beyond October. In fact, he cannot ever guarantee a smooth run up to that point. He has given himself as little margin of protection as he dared. The borrowing requirement is menacingly high — and last year's blessed shortfall is unlikely to recur. Mr Healey has all but used up the contingency reserve he set aside for public spending. There is not much room to turn round in if the road starts crumbling. So for all the Chancellor's mock protestations that next April will be his election budget, the Sting is set up for this October. Of course the date can still be postponed if Labour's prospects continue to look poor, but it would be a sticky business.
After years of spite and improvidence, Mr Healey is engaged on a desperate campaign of self-rehabilitation. He is trying to take his place in respectable society again before it is too late. His Budget speech attained a kind heroic pathos when he boasted of his $350 million loan to be raised in the New York market that 'the United States rating agencies have said that they will rate such an issue triple A, the highest credit rating they can award.' Only the discharged bankrupt feels the need to tell us that his credit is now good.
Like those millionaires at art auctions who are to be interpreted as bidding when they are silent and silent when they are bidding, Mr Healey is now acting when he is not acting up. Note the pin-stripe suit, the sobriety of language, the gravity with which the bromide is poured. 'I believe that small businesses have a special role in improving our industrial performance.' What truthvalue should be assigned to the word 'believe' in that sentence when it is spoken by a man who has destroyed more small businesses than any politician in British history? What exactly is going on inside the brain of a man who introduces the Capital Transfer Tax and then a couple of years later asserts that 'a very large increase in retirement relief is justified to help the small businessman who has worked hard all his life to build up a modestly successful business?' What affecting scenes this sympathetic allusion conjures up . . . `Tha and me's come a fair way. Fred, since we started in t' shed at ebottom of Drain Street wi' a pair o' dobbits and hand grunge."Ay, Mr Earnshaw, five bob a six' month `twere in them days and free butts on t'works outin'! 'A h've got a tidy bit put by, Fred, and ah don't mind telling you me and t'wife goes down on our knees each mornin' and thanks Mr Healey for the retirement relief."Healey? T'wouldn't he any relation to t'Denis Healey who promised to make t'rich howl wi' anguish, would it, Mr Earnshaw?"No relation, Fred, o° relation at all.'
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