Where the Real Weakness Lies

A TRACT FOR THE TORIES-- 1

By NIGEL LAWSON

"THERE can be little doubt that the most re- 1 markable political phenomenon at the present time is the continuing ascendancy and popu-

larity of the Government, and the depressing ineffectiveness of the Conservative Opposition. It is scarcely to be wondered at that the Tory party in the country is reduced to a state of the opinion polls is lower than that of any party leader since Gallup's records began. The same surveys indicate that Mr Wilson's administration has held the support of a majority of the elec- torate ever since it first gained power nearly two and a half years ago. The 1945 Labour govern- ment, by contrast, barely succeeded in holding its popularity for as much as two years after the election, while Mr Churchill's peacetime ministry lost the support of the majority of the electorate only a few months after coming to power in 1951. Mr Wilson is fast approaching the post-war record at present held by Mr Mac- millan, who enjoyed continuous political ascen- dancy for nearly three years between the summers of 1958 and 1961.

But those were the halcyon days of 'you never had it so good.' The present situation is an altogether different one. It was not, after all, sur- prising that the Government enjoyed popular support from its- assumption of office until the last general election. For that was a period of rapidly rising wages coupled with low and falling unemployment. What is remarkable is that its ascendancy has persisted over the past year, during which time the Government has been living—as Disraeli described Gladstone's first ad- ministration—In a blaze of apology.' The national plan (God rest its soul), upon which the salvation of the nation was to depend, has gone up in smoke—and with it most of the Government's election pledges, especially in the field of social policy. The crisis economic measures of July 20 last completed the biggest 'stop' in the whole sad saga of `stop-go.' In cen- tral Africa, Britain has been thwarted by a white settler population the size of Croydon, and a melodramatic attempt at personal diplomacy and peacemaking by the Prime Minister has ended in ignominious failure. At home, taxes and un- employment have risen, wages are (more or less) frozen and real incomes have fallen.

Yet the state of the parties remains such that, according to all the psephological indicators, if a general election were to be held tomorrow the Government would enlarge its already sub- stantial majority. It is remarkable enough that this conjuncture should exist at all: it would be straining credulity to advance in explanation the thesis that the people of this country have come to admire in Labour failings that three Years ago they detested in the Tories. The Puritan streak in the English is unhappily deep- seated; but at least it has not yet degenerated into the extremes of asceticism—let alone pathologi- cal national masochism. Nor, fortunately, is the British voter sufficiently volatile for so abrupt a itelace.

No, the secret of Mr Wilson's electoral success in the midst of governmental failure must be sought, not in the positive appeal of his ad- ministration's actions, but in the palpable short- comings of the Opposition. And it is at once ap- parent what the Tories' most damaging deficiency is. The 1960s have proved to be a period in which political life is as much dominated by the state of the economy as it was by the Irish question some half a century ago. It was failure to manage the economy successfully that drove the Tories out of office: it is on the economic front that the present Government's most spectacular retreats have been sounded. Nor should the dominance of economic questions in modern British politics be construed simply as an obsession with material prosperity—harmless (if uninspiring) enough though that would be. Every other end of government policy—social reform, defence, European unity—has either become subordinate in importance to the economic means, or has even been identified with the pursuit of eco- nomic strength itself. Yet in spite of the pre- eminent place of economic affairs in the political debate, the Conservative party is without an economic policy.

It is this which makes the Tories appear in the present political context little more than an irritating irrelevance. Nor is there any mitiga- tion to be derived from the fact that the present administration has by and large donned the par-

ticularly ill-fitting suit of clothes that the Con- servatives themselves discarded during their last years of office. Either the Opposition approves the broad outlines of the Government's policies, in which case it should quit carping and give ministers a chance to get on with their jobs; or else it does not--in which case let it state its alternative. What is clear beyond all argument is that in the present political climate a party without a meaningful and clear economic policy will be widely regarded as unworthy of even being considered for support—about as relevant to the needs of the time as a party without a foreign policy in the late 'thirties. It is evident that until this deficiency is remedied the resusci- tation of the Tory party will be hopeless, and the nation will continue to suffer all the ills of a de facto one-party system. Unless the official Opposition can be restored to political health, there is a real danger that disgruntlement with the present Government, when it comes (and it is already beginning to appear), will manifest itself either in increasing support for regional 'nationalist' movements and other fringe pheno- mena which, by their very nature, are incapable of providing a lead to the nation or the possi- bility of an alternative Government—or even, more dangerous still, in mounting disillusion- ment with the system of parliamentary govern- ment itself.

The search for a Tory economic policy—by which is meant not merely a valid alternative policy to that pursued with such little success by the present administration, but one which is con- sistent with a comprehensive Tory philosophy— must therefore take precedence in any serious attempt to rehabilitate the Conservative party with the electorate and, indeed, with its own sup- porters. It is perfectly true that there are many other areas of policy, too—Rhodesia, for ex- ample—in which the Government's clothes-steal- ing operations have seemingly left the Tories powerless to promote a distinctive Opposition line. But none of this would matter if the deficiency could be remedied in the paramount economic debate.

That is not to say that this is all that needs to be done. Indeed, in contradistinction to the Socialists, the Tory party draws its in- spiration and purpose largely from outside the economic field. But the crucial paradox is that it is only by finding a solution to the nation's recurrent economic crisis that the stranglehold of economic imperatives can be removed from the country's political life, and the other objec- tives of policy be given their due weight and attention. Consideration of these other objectives, and their place in an imaginative Tory pro- gramme and philosophy, must therefore be deferred to a subsequent article. It must be the task of the first two parts of this inquiry to formulate a Conservative economic policy; and to do so, initially, by means of a rigorous analysis of the nature of the problem to be solved and the void to be filled. If this at times appears tedious, the excuse must be the damage that loose thinking and grand generalisations have already done to the economic health of the nation.

The claim that the Tories are at present without an economic policy of their own may, on the face of it, seem exaggerated. There is, of course, always the time-worn issue of private enterprise versus nationalisation and the rest—upon which clear party lines, at least on the surface, appear to exist. But this is not the principal problem that faces a government in the economic sphere. This is not the sort of thing that Chancellors of the Exchequer spend most of their time worrying about. Their con- cern is rather about exports and imports, pro- duction, employment, inflation and so on. On this basic core of the economic problem there seems to be precious little in the way of a specifi- cally Tory point of view.

The Labour government's first reaction to the balance of payments problem was to attempt, as the Tories did, an incomes policy—but with even less success, with the result that they have felt obliged to resort to a measure of statutory con- trol of wages and prices which at the very least involves an intolerable invasion of individual liberty, unprecedented in this country and unknown in any other free country. Even so, it is doubtful whether this can have more than a very temporary and marginal effect on overall national competitiveness. It is difficult to escape the conclusion from the efforts that are flow being made to perpetuate and institutionalise this originally 'temporary' expedient, and from the increasing ministerial use of the term 'recalcitrant' to describe the behaviour of those who might not 'voluntarily' conform their pri- vate behaviour to the Government's political concept of the 'national need,' that the balance of power within the Cabinet is steadily shifting in favour of those elements for whom the sup- pression of personal freedom is an end in itself. The fact that a substantial number of petit-bour- geois supporters of the Conservative party actively welcome this suppression of freedom (seeing that the squeals come for the moment chiefly from organised labour) renders this menace more rather than less alarming.

But because the economic effects of such a policy are so dubious, the Labour government, again like its Tory predecessors, has felt obliged to nail its colours to the mast of deflation by means of a severe credit squeeze and an unparalleled increase in taxation which have already destroyed the national 'plan' and set the economy firmly on the road to recession. In other words, Mr Wilson has adopted the policy

of `stop-go' just as Tory Chancellors of the Ex- chequer did before him, and just as he himself had pledged not to do before coming to power. Shorn of its trimmings, Labour's basic reaction to the British economic malady is exactly the same as the Tories' was—and even most of the trimmings, such as regional policies and indus- trial training, are merely continuations of pioneer- ing Tory measures, for which the Tories themselves, incidentally, seem oddly reluctant to claim any credit.

Of course, it might be argued—and no doubt is on the far left of the Labour party—that there is indeed a Tory economic policy, but that the reason why there is no difference between what the Wilson administration has done and what the Tory Chancellors of the Exchequer did is simply that the present Government has adopted Tory measures. However plausible this explanation may appear in terms of recent history, Conservatives should be very wary indeed of accepting any ideologically proprietorial rights to this particular economic policy.

In the first place, `stop-go' was not notably successful in the past, nor is it being notably successful at the present time. Of course the balance of payments deficit is gradually dis- appearing: it always does when the government brings economic expansion to a halt and shatters industrial confidence sufficiently to bring about a decline in capital investment. The chief difference this time is that the imbalance is taking substan- tially longer to rectify. But success can only legitimately be claimed if a new deficit is avoided when expansion is resumed. The ex- perience of last year, when, in spite of all the Government's measures and of an unusually rapid growth in world trade, the volume of British exports rose no faster than the average rate for the 'sixties, is hardly a sign of the eco- nomic miracle that ministerial apologists, to the derision of professional economists, are almost daily proclaiming.

Nor, again, is 'stop-go' a policy that greatly commends itself to the electorate. And, finally, there is no known Tory principle from which a dedication to this form of economic policy can logically be derived.

Certainly, if there is such a thing as a Tory economic policy, the Tories themselves are keep- ing remarkably quiet about it. If we look at last year's election manifesto Action Not Words, we find that the first aim of the 'new Conservative programme' is to 'get the economy straight, check rising prices and restore expansion.' But if we then study the document to find out how this is going to be achieved, there is an embarrassing void. The manifesto declares that 'the next Con- servative government will not hesitate to take all the measures necessary to deal with the im- mediate economic situation,' but what these measures are is nowhere stated. It says that 'our new economic programme will make a prices and incomes policy really effective,' but what sort of prices and incomes policy the Tory party believes in is nowhere explained. A series of general aims are stated—expansion, stable prices and so on—but nowhere is there any indication of which comes first. Nothing is said about inflation or deflation, about import surcharges or export subsidies, about the crucial .problems of the sterling area and the sterling exchange rate, about unemployment or overfull employment, nothing about planning, or about industrial in- vestment, nothing about the balance of payments and the relevance to this of government expendi- ture overseas.

In fact, in the economic section of the mani- festo, which is apparently so important that it has to be put first in the whole document, there is little more in terms of policy than commit- ments to lower taxation, increased incentives for earning and saving, more competition and the reform of the trade unions. All of them doubtless worthy aims, but they hardly add up to an economic policy even in good times, let alone in the highly critical state in which the British economy finds itself today. Moreover, the principal plank in this inadequate platform, the pledge to reduce—and not just reform—taxation, cannot in any case be justified without some sort of a policy both on public expenditure and on the central question of economic management and the place of taxation within it.

The conclusion is inescapable: the Conserva- tive party at the present time has no answer —or, at least, no answer that it can call its own—to the really big economic problems with which economists and civil servants grapple and on which governments spend so much of their time these days.

It is perhaps an awareness of this void which leads a number of Conservatives to embrace the doctrines of Manchester School liberalism. Un- certain as to what a Tory government ought to do in the economic field, they fall back on the answer that it should do nothing at all—or at least as little as possible, leaving as much as possible to the free play of market forces. There are undoubtedly attractions in this type of approach. Socialists distrust the working of the market and advocate an ever-increasing role for the state, while Tories, like the old-style liberals, believe that in present conditions there is more cause to distrust the state and to leave a far greater share of the load to the free economy. There is, thus, a clear distinction between the parties.

But convenient and natural as this approach to Conservative economic policy is, it is plainly an inadequate one. Partly this is simply because modern industry is seldom organised in the form that is implicitly envisaged in the doctrines of the Manchester liberals. There is oligopoly —if not, in fact, monopoly—instead of classical competition; and large modern companies be- come closer and closer to miniature states them- selves, run by their own bureaucracy and dominated by a sense of responsibility for the welfare of their 'subjects,' rather than approxi- mating to the economic unit of the textbook. But there is a more fundamental reason why this approach is inadequate. The slumps of the past have shown all too clearly that complete laissez-faire leads to anything but the optimum solution to a nation's—indeed, the world's— economic problems. This is one reason why governments are forced to intervene and take a positive role in economic policy. And another reason is that they are directly responsible for a large sector of the economy themselves— defence, education, welfare and so on—not to mention the less direct relationship with the nationalised industries, which must not only be run efficiently but whose activities in- evitably have a profound bearing on the rest of the economy and on the economic problems of the nation as a whole.

So therefore it is not enough, valid as it is as far as it goes, for Conservatives to stand on the liberal platform of less state interference. They can say, certainly, that the state's role should be smaller than is advocated and practised by the present Government. They might even legiti- mately hold the view that it should be smaller than it was in the last days of the last Con- servative administration. But whatever happens there remains a major government rale left, and the important question in the formulation of Conservative economic policy is what that role should be. This is the heart of the matter.

(To be continued next week)