`Plan'—or Fraudulent Prospectus?

By JOHN

BRUNNER rue National Plan contains few major sur- j priseS. The central assumption of 25 per cent growth remains, thus implying a still faster acceleration over the later part of the period 1.964-70 than had been originally envisaged. A more than proportionate increase in exports and public expenditure and a less than proportionate increase (21 per cent) in private consumption had already been intimated. And it is. of course, anticipated that the balance of payments will be well and truly in the black in 1970.

But the nagging doubts that have been felt all along about this 'frame of reference' or 'guide to action' also remain. In particular, just what pre- cisely is its status? Is all this figuring supposed to enumerate what we can • achieve by 1970, or what we will achieve or what we should achieve? At different moments the Plan appears to be subscribing to all three itverpretations, but the three are really quite incompatible. What we can do is essentially a matter of capacity. This. as any economist knows, is a highly elastic term. but that we could grow at an average rate of .3.8 per cent per annum over the six years in question goes almost without saying. II. for exaniple, demand could be channelled to where the unemployed resources of men and machinery exist, if we could change the attitudes o!' men and managements, if the international environment were helpful, we certainly could reach the magic figure. But then 'if ifs and ans.' . . .

What, therefore, of the Plan seen as a compre- hensive, forecast of the economy in 1970, a sort

of glorified market research operation? In many places the Plan purports to represent what will happen, but appearances can be deceptive. Thus 'the aggregate of industries' final estimates com- bined with estimates for the Central and Local Government sectors gave a total increase in out- put between 1964 and 1970 of 25 per cent.' But this was not always so, we gather. 'The original estimate by industry gave a significantly lower in- crease in total output and showed a different pattern from that finally put forward.'

The mind boggles at the arm-twisting which must have gone on behind the scenes and at the end of it there were apparently three recalcitrant industries which refused to adjust their forecasts for the benefit of the planners. This might not have mattered were they three tom tiddlers. Since they happen to be the motor industry, the mechanical and electrical engineering industries and the fuel and power industries the so-called discrepancy is perhaps unfortunate.

No less suspect and still more crucial are the estimates of foreign trade in 1970. Between 1954 and 1964 the volume of imports rose by an aver- age of 5 per cent a year. Between 1964 and 1970 it is scheduled to rise 4 per cent annually despite the postulated rise in the rate of growth. Exports by contrast are supposed to rise 5i per cent a year in volume compared with an increase of 3 per cent a year over the previous decade. These are highly desirable changes of trend but can hardly be called forecasts.

Indeed, even the planners from time to time have to give up the pretence that their forecasts deserve to be taken at their face value. Even that already celebrated and wholly fatuous forecast of the 'manpower gap' in 1970 (obviously if you run the economy flat out you will get a shortage of labour) is admitted to be of `no great significance' . . . 'given the difficulties of forecasting supply and demand for labour for five years ahead.'

The National Plan is therefore in essence neither a serious measure of potential nor a genuine forecast bf future developments but a Political manifesto, a blueprint of what the Government feels ought to be done. Now there is nothing necessarily discreditable about a political manifesto and. this one contains many laudable objectives, but it is humbug to pretend that they are not primarily political. As the Plan itself puts it, 'a choice has had to be made between many desirable aims.'

Thus many people would dispute the need for public expenditure to absorb an increasing share of the national product, particularly if they realised that a higher share in constant prices is a much higher share in current prices owing to the known propensity of public sector prices to rise faster than average. Others would doubt whether the greater agricultural autarchy visualised by the Plan (albeit in somewhat vague terms) was desirable, implying, as it almost in- evitably— does, higher relative food prices or greater subsidies. Others again would even question the aim of 25 per cent. If it involves giving up the prospect of longer holidays (Mr. Brown has already denounced this trend as a threat to his cherished target) or allowing in more immigrants (the recent restrictions have also caused serious heart-searching in the DEA) many would prefer, rightly or wrongly, to ditch the target.

The need for clarity about the status of the Plan is not just a question of intellectual honesty or semantic purity. We have already seen in the lamentable episode of 4 per cent the harm that can result from confusing the likely with the hoped-for. Our unhappy economic experience of the last year was largely due to the chicken- counting that preceded it. There is, alas, little evidence that the authors of the National Plan have really learned this lesson. As they see it, the success of the Plan depends to a large extent on people believing it will be successful..

The other danger of this sort of Plan may seem paradoxical in view of the brave words of its fore- word written by Mr. 1970 himself :,

To make the Plan work requires above all an acceptance of change. For the manufac-■ turer, changes in what he makes, what lie sells, and where he sells it; for the worker, changes in what he does, where he does it, and-how he does it, and for all of us a different approach to prices and incomes. Change will often mean disturbance, and we must take care of the effect it has on individuals. But without change there c6n be no opportunities and no rewards.

So far from accelerating change, the Plan may actually inhibit it.

This is not just a question of the tacit en- couragement the Little Neddies give to market- sharing and other devices. for preserving the status quo. Any figure for 1970 (other than those in the industrial annexes) is liable to acquire a certain aura. When therefore the inevitably unforeseen eventuality occurs and it becomes desirable to revise such a figure, it will be that much less easy to do so. We saw how difficult it was to wean the coal industry from its attach- ment to 200 million tons (all credit, by the way, to the Plan for its much greater realism in this particular respect) and we saw the process in reverse with the quite unpredicted breakthrough of the gas industry. Had a five-year plan been launched in 1955 or even 1960 the gas inthistry's prospects would have been underrated and the underestimate would have made it that much

harder for them to have got the necessary capital out of the Government to respond to their new opportunities. Who knows indeed that the same error is not being made again?

The planners deny that any such restrictionism is intended and maintain that the Plan is highly flexible—what they call a rolling plan. But they cannot have it both ways. If the Plan is likely to be continually amended, this will seriously detract from its supposed therapeutic value as far as expectations are concerned. For why should any industrialist invest on the basis of the present estimate of demand in 1970, if it is liable to be drastically reduced even before his new plant comes into operation? , If the Plan was the price we had to pay for the many necessary reforms mentioned in it—the pro- posals for retraining, for reconstructing our ports. rc.ducing defence expenditure and other items in the somewhat comically-named check-list—I suppose we would have to bear with all this in- tellectual skulduggery. But have we really reached such a pass that we are no longer capable of taking any action in this country without reference to a more or less illusory picture of the future?

This craving for certainty is no doubt some- thing deeply human. Psychologists would see it as having a lot to do with the belief in an after-life, and the popular papers have long ago learnt to exploit it with their horoscopes. Is it really neces- sary for the Government to indulge us further and do so moreover in a thoroughly ambiguous manner? It is as if newspaper proprietors, not content with exploiting their readers' frailties, actually told their Old Moores what they had to say.