The importance of Mr Lever MONEY
NICHOLAS DAVENPORT
It was good to read this headline in a Sunday paper: 'Lever: High Pay and Profits Vital.' The speech to which this referred was made by a new junior member of the Government, Mr Harold Lever, a joint parlia- mentary secretary of the DEA. It was important because Mr Lever's real job is said to be the restoration of confidence in the down-trodden and despised business community. Hitherto, whenever the DEA boss goes out to refute the prevalent idea that the Government is 'against profits' Mr Michael Stewart invariably adds: 'We are, of course, against profits unfairly won by the exploitation of a monopoly position or of the consumer.' As if this was the usual aim of businessmen! The impression is therefore created that when Mr Stewart admits that profit- making can be moral, he only half-believes it. But when Mr Harold Lever says it, who has been at one time barrister, businessman and banker, we know that he means what he says. But we would all be happier if the whole Cabinet believed him.
Mr Lever was wise to remind his party of the 'vital tasks' assigned to private enterprise, namely, the production of virtually all the goods and services we export to pay our way in the world, the selection, management and finance of virtually all the goods we import, and the raising of a large part of the fidance required for our social services and the capital spending of our public enterprises. The export job is, of course, the most important. And if a lot of it is to be done with very little profit it is essential that private enterprise be allowed to make a handsome profit on its home trade. That badly framed tax, the sEr, must be revised to allow increased profitability, for example, to builders and to hotel keepers, not merely to manufac- turers whose factories are situated in provincial regions of high unemployment. If we are to avoid stagnation or depressingly slow growth we must really make private enterprise much more profitable. And that can be done in the budget.
When Mr Lever says: 'The Government's target has been unambiguously chosen : a suc- cessful mixed economy,' I beg to differ. The Government has been extremely ambiguous about it. It is very difficult to find in the speeches of senior ministers any reference to a mixed economy at all. Ever since the Labour party committed itself to a mixed economy in its 'Statement of Aims' of March 1960 its leaders have been anxious apparently to forget all about it. They know that the Marxist Clause 4 (the nationalisation of everything) remains in the Labour party constitution and is still wor- shipped as a sacred cow by the extreme left back-benchers. So they are not anxious to stir up trouble by boosting the private sector.
The nationalisation of the steel indus- try, which was a sop to the extreme left wing of the party, may well be the last we shall see of the nationalisation of whole industries, but the Labour party is committed to transfer to public ownership any important company 'which fails the nation.' It is therefore vital for the Government to define the scope of the IRC (the Industrial Reorganisation Corpora- tion), which is to promote rationalisation (by mergers) in the private sector of industry. At the moment businessmen are extremely suspicious of the IRC. I hope Mr Lever will take an early opportunity to reveal what the IRC is
doing or is intending to do.
It was also good to have the parliamentary
secretary of the DEA remind his party that ade- quate salaries were as vital as adequate profits in the operation of the private sector. 'We must recognise,' he said, 'that material rewards and incentives play a vital part in calling forth the best use of human resources. It seems to me strange that many who swallow with equa- nimity the astrological earnings of a pop star goggle with egalitarian anger at high salaries paid to the top directors of private or public industry.' The Labour party, having very few rich men in its ranks (Lever is a rare exception) and very many badly off, finds it hard to believe that we must pay big salaries to attract out- standing men for outstanding jobs. No doubt
there will be the usual wrangle over the salaries paid to members of the new Steel Board, but it will be a sad day for the nation if these salaries fail to attract the really talented administrators.
Those of us who have modest incomes or earn a reasonable living out of trade will no doubt still be resentful at the fantastic salaries paid to attract public servants—including Mem- bers of Parliament (£3,250 a year) and Cabinet ministers (£9,750 a year)—but we must remem- ber that these are gross salaries and that after taxation they do not seem so preposterous. On gross incomes of f10,000 the net spendable income for a married man is not much over £5,000. An increase of £10,000, making £20,000, would give the lucky recipient in this high tax bracket an additional f375 or 9d in the £1 It is small wonder that the 'brain drain' is increasing, for America allows its top salaried men to retain a much higher percentage of their gross pay.
It is about time that the Govern- ment realised that excessive personal taxation has become a dangerous farce which, if it is not driving talented people abroad, is causing them to waste a lot of valuable time consulting with lawyers and accountants on how to reduce their surtax liability by lawful means and increase their non-taxable perquisites. Surtax should, of course, be abolished and a new income tax scale devised which, if it ascends pretty steeply as incomes rise sharply, stops short of becoming an absolute deterrent to work and enterprise.
If Mr Lever could only convince his col- leagues that for every £1,000 of surtax removed from high gross incomes they could secure an extra £1,000 million on the gross national pro- duct he would be doing more for the country than all the little 'Neddies' combined.
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