ON THE MARGIN
DEFENDING his administration's record to the 1922 Committee, the Prime Minister pointed out that the margin between what would pass for success, vindicating past policies, and what could be denounced as failure, demonstrating those policies to have been misguided, is very small— even smaller, proportionately, than Mr. Micaw- ber's. 'Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery': it is the ought-and-six on Britain's pro- duction costs, pricing us out of markets, that is doing the damage. Mr. Macmillan can also claim that the Government is not in complete control of its economic destinies. It cannot dictate, or even adequately forecast, economic changes abroad. And although in theory the Gov- ernment can do more to promote (or prevent) changes at home, Conservatives pledged to free enterprise cannot readily use some of the weapons available to a Socialist administration. In any case, there are not even the beginnings of agree- ment among its expert advisers on what courses to take: the remedies prescribed for our ills are grotesquely varied.
Still, there are certain points upon which it ought to be possible to agree; the first being the nature of the malady. And a significant illustra- tion of what has gone wrong with the country's economy, and why, was provided in the Com- mons last week by the Minister of Transport, in the debate on shipbuilding.
The shipbuilding industry is not, admittedly, wholly representative; but its weaknesses fairly reflect the weaknesses of the country's economy as a whole. For twenty years, Mr. Marples said, the industry has enjoyed the most prosperous time in its history; but recently there have been some very disturbing trends. In the last two years the tonnage of ships launched for export from the UK compares 'disastrously' (Mr. Marples's chosen word) with that of the UK's European competitors; and, in spite of the obvious advantages and convenience of getting ships built at home, ulc shipowners have found it increasingly 'necessary' (Mr. Marples, again) to go abroad to foreign firms. Foreign shipyards submit much lower tenders; they take less time to build the ships; and the British owner can have more confidence in their delivery dates.
These facts are not in dispute. There are, of course, some shipyards here with excellent records, and there has been some improvement lately in the industry as a whole; but on balance the industry's record is deplorable, and its prospects correspondingly gloomy. The reason is obvious: full order-books for the past twenty years have made for complacency here, at a time when the shipbuilders of Germany and elsewhere had to fight for their share of the market. It is tempting to put the blame on the Boilermakers and other unions with restrictive practices; but the existence of a Ted Hill is really more of a reflection on the employers than on the men who elected him. The employers, know- ing that their clients would pay more, were pre- pared to give way to the unions even on ridicu- lous claims; and the result is that restrictive practices are now so firmly embedded that British yards cannot hope to compete on level terms with shipbuilders on the Continent.
Yet what did the Government do with the report on the industry, produced by the Depart- ment of Scientific and Industrial Research? That report was suppressed, because the employers— the men mainly responsible for the state of the industry—did not like it : they thought it unkind. Instead, a bowdlerised version was published, designed to spare them offence—and also, presumably, to enable the public to sleep un- disturbed a little longer.
Now, the alarm clock has sounded in spite of the precautions: and next Tuesday Mr. Selwyn Lloyd has to tell an awakened community what can be done. It is a tribute to the staying power of discredited ideas that he is still expected to revert to some old remedies, tried and found wanting, such as pushing up prices of goods at home by indirect taxation, in the hope that this will reduce home demand and thereby encourage the manufacturers to export. What are needed, rather, are measures to lower prices: a reduction of the fuel tax would do more good for exports than any artificial restriction of the home market by indirect taxes. And there are several long- term projects which the Chancellor ought to initiate—some ot which he referred to in his Commons speech on Tuesday night.
1 he first is a new campaign against restrictive practices—among employers as well as in the unions. It is obviously pointless to tell a boiler- maker that he must not fuss over his demarcation rights, when he reads in the papers that the Imperial Tobacco Company, to avoid being criticised as a monopoly. has for years kept secret its holding in Gallahers. The Restrictive Trade Practices Court. worthy though it is, is too encumbered; the lesson learned by industries waiting to go before it tends to be that they need to modify, rather than to abandon. restric- tive practices of their own. Individual resale price maintenance, too, is still accepted. absurd anomaly though it is. Shop A gives the customer services, such as counter-advice and deliveries; Shop B offers self-service and no deliveries; naturally Shop A must charge more for its wares: how, then. can a manufacturer be justified in fix- ing a single price, regardless of the nature of the retail outlet?
The second need is for a more ruthless attitude to the community's lame-duck industries. The desirability of a Welfare State is generally con- ceded; but its continuance depends on the exis- tence of a steady surplus to pay for it—and a growing surplus, at that, for many branches of the Welfare State are currently undernour- ished: what they provide, as Professor Titmuss and others have been arguing, is often little more than a skeleton service, and much more needs to be spent if they are to be brought to reasonable efficiency.
The State, therefore, cannot afford to carry unnecessary burdens. It cannot afford to subsi- dise industries which ought to be contributing their own share to the national surplus, or at least paying their way. The railways are the main worry: there are as yet no signs that Dr. Beeching's promised purge is having effect. Coal, as we have been urging recently, is another industry which badly needs to be treated as an industry; not as a social service, a miners' benefit fund. And the time has come to let the marginal farms go out of production, rather than retain them at such cost to the taxpayer.
- A third restorative would be to take the plunge into Europe. In an admirable letter to the Times this week Lord Plowden and Sir Geoffrey Crow- ther point out that the central issue for Britain today is, quite simply, how to increase exports; and 'for a massive increase in our exports to be possible we require access to a mass market.' To argue that the Commonwealth countries provide an alternative to the Six is simply to ignore the acts- -even if they were willing to form a Com- monwealth Common Market, which they are not; he Canadians, as Mr. Marples mentioned in his leech, can Ouite blatantly discriminate against Britain, when it happens to suit their pocket, without consultation or even notice to the Government here; and the Australians have not hesitated to cut Empire ties when the ties hap- pen to be a nuisance. Besides, going into Europe wlild mean letting a gust of fresh competitive wind play around our protected industries, and though this might make things difficult for a time, it would help to shake up those which can meet competition, and shake down those which can't.
Some move, too, must be made towards the establishment of a national wages policy. There are obvious dangers; but even more obvious are the dangers of chronic wage inflation, which brings no benefit to the worker, makes life wretched for the pensioner, is a nuisance to the exporter and represents a chronic danger to the £. For a start, Lord Amory's proposal in the Lords this week is worth considering—that the leaders of employers and trade union leaders should form a joint standing council for industry.
Finally, there is a need for more realism on the Government's part. The Opposition have derived much savage amusement from the proof that the Conservative freedom does not work, and from taunting Mr. Macmillan with his old never-had-it-so-good slogan; and it is hard to blame them, even if there is no indication that their own record would have been any better. Knowing how close Britain was to the Micawber margin, Mr. Macmillan was unwise to nave tried to take political credit for the country's pros- perity two years ago. He would have been unwise even if there were no risk of recurrent crisis; there was too much poverty and misery in the world for such an attitude to be tolerable—it was something to be quietly thankful for, not to boast about from the hustings. Whatever the Chancellor may have in store for us. therefore, he should not try to excuse the Government for past complacent self-indulgence. Nor should he preach the glories of self-sacrifice : it is obviously going to be necessary, but it should be accepted as a penance for past mistakes, not as a spartan virtue. What is needed—and Mr. Lloyd will restore some of his Government's lost credit if he can provide it—is an infusion of plain, prag- matic economic common sense.
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