Political Commentary
The choice for Mrs Thatcher
Patrick Cosgrave
The most entertaining and acute comment on the Government's economic package came from a Tory who said that, since it had provoked no Cabinet resignations it had to be bad. But the fact that no Conservative, of whatever section of the party, seems to have any real objective belief that the Prime Minister's new controls will have any long term beneficial effect on the economy in no way lessens the extremely difficult tactical problem Mr Wilson has set for Mrs Thatcher. Her own instinct appears to be to oppose the measures, both in the hope of demonstrating their fraudulence thereby, and in order, by sustained criticism, to weaken the public goodwill which the Prime Minister has evoked. But there are strong arguments being made against this course, principally from those Conservatives who either fear damage to the Opposition's standing in the country; believe that the Government having taken some measures to tackle the national crisis should be sustained; or dread the risk that, if the Government fell, either a Thatcher Administration would be prevented by the unions from governing or Mr Wilson would sail to a massive electoral victory on the strength of the general welcome his new policy has been accorded. Contrary to popular belief there has not been a great deal of theological dispute within the Shadow Cabinet over the presence in the package of a statutory (and that is what it is, in spite of Mr Wilson's._ semantics) incomes policy: those who follow Sir Keith Joseph are reasonably content to await what they see as the inevitable failure of the incomes control provisions, while those who are convinced of the necessity of such a policy are reasonably content to give Mr Wilson a fair wind. The likely result of all these considerations is that the Tories will first table a reasoned amendment which will stress in particular their concern at the failure of the Government to undertake radical cuts in public expenditure and then abstain the second time around in order to demonstrate that, while they welcome the fact that the Government has at last taken some action, they have no faith in the measures taken.
Whatever Mrs Thatcher does there are likely to be some Conservative defections. If she were to oppose the Government there is every possibility that a number of left wing Conservatives would either support the Government or abstain. If she were to support Mr Wilson a larger number would undoubtedly — and probably in the company of the Liberals — vote against, though Sir Keith Joseph, it is now clear, would be content with a reasoned amendment followed by abstention.
It is my own conviction that Mrs Thatcher should take her courage in her hands and oppose Mr Wilson with every vote she can muster. There are both reasons of principle and reasons of tactics for advocating this course, but it is first best to look at the present economic situation and the likely consequences of the package. The Government have made almost no attempt to reduce public expenditure and, indeed, in one or two areas have undertaken to increase it. At present the Rate of suspension of the money supply (in the MI definition) is extremely high and, if the present measures are to have any chance of success, they will almost certainly have to be followed, early in the autumn, b./ another package, this time one involving cuts in government spending. Mr Wilson and Mr Healey will both strive, might and main,to
avoid any such further action: their hope is that this new incomes policy will have the same temporary success as its predecessors and that it, combined with the delayed effect of earlier measures increasing taxation and contracting spending will reduce inflation (even at the cost of a continuing high rate of unemployment) and leave Mr Wilson free to go for a general election either in the Autumn of next year or the Spring of 1977. The main plank in his platform at such an election would be that he had finally conquered inflation. This would be a spurious claim, but it would be very difficult for a Conservative Opposition which had either supported the initial measures or failed to register sustained and detailed disapproval of them, to make the argument. The claim would be spurious because the most that the present measures can achieve is a transitory reduction in the rate of inflation — a hiccup, as one critic put it to me — at the cost of yet a further dislocation in the economic system. Like all previous incomes policies this one is likely to demand ever more energy and attention from ministers as its life is prolonged, so that we end with a Cabinet doing very little else except trying to sustain that aspect of its policy, in order to postpone for as long as possible the explosion of wage claims which is certain to follow its certain, eventual extinction. Mr Wilson, moreover, has a long and effective memory, and he has shown in his tactics over the past year or so that he will always use his very considerable skills to avoid getting into any kind of pickle similar to the pickles he got into between 1966 and 1970. Commenting on the 1970 election some months after his defeat he confessed to having grievously underestimated the effect of the explosion of wage demands which followed Mr Jenkins's period of tight control of both incomes and spending. He should, he said, have either gone to the country earlier, or held on much longer, keeping public spending on a very tight rein until the natural but delayed effects of what Mr Jenkins had done worked their way through the economy and replaced the deflationary effect of control of incomes even at the cost of increased unemployment. He is facing a very similar political problem now. He dare not appeal to the electorate too early, for he is in no very obvious difficulty in the House of Commons, and the public are considered to be thoroughly fed up with general elections. But he dare not wait so long that a wage explosion recreates the inflation which he is then claiming to have conquered. However as long as he keeps his nerve, and as long as circumstances do not compel Mr Healey to introduce too stringent a second package of cuts, all the odds are in his favour.
To some extent, of course, there is not a great deal the Conservatives can do about this, nor a great deal any Opposition in their circumstances could do. It is fair to say that those who favour the tabling of a reasoned amendment followed by abstention would appear to have a good deal of common sense on their side. Such a course, though it would probably ensure the defection in the division lobbies of a number of right wingers who have the great virtue of being among Mrs Thatcher's most faithful supporters, would maximise unity within the party. Mr Whitelaw, for example, is known both to entertain severe doubts about whether the Tories could — as they will be heavily pressed to do — present a palatable selection of expenditure cuts to the country, and to fear the consequences of an early general election, even if the Conservatives won. And Sir Keith Joseph and Sir Geoffrey Howe seem convinced that, since the Wilson-Healey package is bound to collapse under the weight of its own contradictions and inadequacies anyway, the Tories can safely wait to pick up the pieces at a fairly early date.
Mrs Thatcher therefore seems to have the choice of risking charges of lack of patriotism by opposing Mr Wilson outright, or charges of pusillanimity if she opposes the Government or abstains.
The one point to seize on if one is discussing the matter of principle is that Tories of all colours are generally convinced of the inadequacy of this package. Even some of the City advisers who have urged Conservative support for a statutory incomes policy defend support of Mr Wilson's measures only on the general grounds that something is better than nothing, and that the City and foreign investors alike must have some evidence that something — it scarcely seems to matter what — is being done. But any measure of support for the Government, or any failure to oppose things in the package, like the statutory incomes policy, which are redolent of all the failures of efforts at control both by the previous Wilson government and by that of Mr Heath, will soil Mrs Thatcher's hands and may well tie her irrevocably to an economic philosphy of proven danger and inadequacy.
Nor are the tactical arguments against outright opposition to the government as strong as they may seem at first sight. It is as certain as these things can be that the Labour left are neither strong enough nor determined enough to bring the government down, even if the Tories were able to muster their full strength in the division lobbies. However early a general election there is, and however savage and sustained Mr Wilson's attack on an unpatriotic opposition might be in a campaign, Mrs Thatcher would have a clear three weeks or more in which to expound a policy the intelligence and consistency of which would be as undeniable as its toughness, and the evidence of the last three elections is that the public are perfectly capable of understanding and supporting serious arguments, and of penetrating the fallacies of unsound policies. Nor, in such circumstances would any of Mrs Thatcher's Tory critics dare to break ranks with her on an economic policy based on reduced public expenditure and a determination to depoliticise industrial relations. Best of all, outright opposition to this package would demonstrate to party and country alike the new leader's determination to break with the failures and confusions of the past and strike (nil in a new direction offering hope for sustained economic recovery, rather than yet another brief pause in the national economic dec,line.
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