The Prime Minister's gamble
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It is very likely that the next six months will determine the result Of the next general election. The recognition that this is so clarifies the minds of politicians wonderfully. The Government's electoral strategy has become very clear it is determined upon encouraging a sustained period of economic growth, calculating that the nation, in the euphoria of boom, will put up with the inequities produced by the inflationary process. The Opposition can do little to influence the course of events, and must instead concentrate upon pulling itself together so that it looks like a credible alternative government with a set of economic policies suited to the situation it is likely to inherit from a defeated Tory administration. At the same time, the Opposition must also look , further ahead, for if the Government's electoral gamble succeeds (and it might well do so), then the Labour Party could remain in, , the wilderness for another six or seven years or more. There is no .1 sinnilar need for the Conservative Party to think so far ahead: 'Illy if it is defeated at the polls will it have to sit down and iiPonder' its failure and its future, and there will be time enough for that after the event. Nothing succeeds like success; and the Con;*---servative Party will forgive its leader anything, provided, only k that he wins elections. Mr Heath won the last election and he looks like winning the next one: and if he does, the pragmatic oPportunism which has now come to characterise his style of 1 goyernmenCat least as much as it did the style of Mr Wilson will have excluded doctrinal considerations from the politics of the :seventies as much as they were excluded from the politics of the sixties. Put otherwise, the next general election will not be about • conservatism, but about Mr Heath and his Cabinet; it will be about men, not measures.
It is in this light that the Chancellor's sudden and unexpected cuts of £500 millions in public spending are to be viewed. There is Illuch to be said for a determined effort to bring down public expenditure across the board. The amount the state spends is a rough and ready guide to the amount the state controls and intervenes, and everyone who takes the view that there is too rnuch state control and intervention will be inclined to support the Barber cuts. Also, those who take the view that the chief cause of the inflationary process is the spending by government ,a.gencies or at governmental behest of more moneys than are uelng received in taxes will regard any reduction of public expenditure as a step in the right direction. But it would be foolish t° suppose that the Chancellor's latest proposals have been trotted out because the Cabinet, as a matter of principle, wants to duce state intervention; or because the Treasury Ministers :lave at last become convinced that the state ought to balance its s;xPenditure against its income. Mr Barber's proposals have nothMg to do with the application of conservatism to the running of the ,tiOuntry. They have, however, everything to do with the gamble ;Ile Government is engaged in, which is to sustain growth and the PIPre.ssion of boom at least until the general election. Dark :,uspicions that the Barber cuts have been forced upon the k'e overnment against its will consequently cloud the welcome the Luts would have received from conservatives had they been seen to r the consequence of the application of conservative principles 'Ind convictions. The cuts have a whiff, a very slight but undeniably ferceptible whiff, of excessive urgency about them. They do not °°k like panic measures; but they do not look like calmly considered and contrived measures either. They raise a doubt whether the boom can, in fact, be sustained. It is a measure of our ignorance of the behaviour of complex national economies that economists no more than politicians, financiers no more than industrialists, socialists no more than conservatives, have any very firm certainty whether or not the boom will last. There remains a very real lack of confidence, a lack which Mr Barber's cuts will not remove. We possess, however, a Prime Minister who neither fails in courage nor falters in his own outward expression of confidence and determination. Mr Heath is, in fact, his own best asset; and if his gamble does succeed then he will be entitled to the credit.
This is fortunate in one extremely important practical respect. There is one decision which the Prime Minister can take, and which he is being pressed very hard to take, which could easily imperil his entire enterprise and plunge the country back into the old stop-go routine. It is clear that during his talks with President Pompidou, Mr Heath was vigorously and urgently pressed to end the pound's float and return to a system of fixed parity. For the time being, the Prime Minister has resisted the French President's mixture of blandishment and implied threat and it is good that he has done so. In the cock-eyed world of the Common Market, the French President's agreement that the decision on the pound was one for the British Government to take, can be construed as a French concession and a British triumph. How long France will continue to tolerate the floating pound remains to be seen. It is most unlikely that Britain will manage to persuade its Common Market partners that the common agricultural policy should be radically revised and that Britain should benefit exceptionally from the Common Market's regional policies without having, as its quid pro quo, to make its sacrificial contribution towards a common European economic and monetary union by joining a common European float. Mr Heath has not shown the same verve in changing his mind on European policies as he has on domestic ones: he has been most constant in his European devotion, and on past form, he would make any sacrifice to preserve the structure of the Common Market. However, he has been resolute in pressing British interests within the Market, and there is no way of being sure which way he would jump, if faced with a choice between putting growth and electoral success at risk by abandoning the float and keeping the float at the risk of breaking up the Market. No doubt he will be hoping never to have to make this choice and will want the Chancellor to provide him with an economic position from which he can, without risking growth and elector defeat, fix the parity of sterling against the main continental currencies and thereupon embark upon a common external float.
This gamble is in a game of very high political stakes. The public can contribute little. It looks on, fascinated and impotent. Its own opinion counts for nothing as the game proceeds. But at the end of the game, the public's opinion will count for everything; indeed, the public will decide whether this particular game has been won or lost at the next general election, the campaign for which has now opened. Mr Heath and his men are playing against the situation, as it were. If they master the situation, they will win the game; but if they turn out to have been mastered by events, then it will be Mr Wilson's turn to try again.
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