Who commands the heights? MONEY
NICHOLAS DAVENPORT
The final veriion of the controversial Industrial Expansion Bill, which has now had its first reading in the Commons, may sound as dull as an archbishop's sermon on the parable of the talents but the fact that it has been presented at all—and not dropped or postponed as seemed likely a few weeks ago—may be regarded as the throwing of another bone to the ravenous and disgruntled left. The chief casualty in this long- drawn-out struggle between left and right for the soul of the Labour party is the morale of the businessman in the encroached-upon private sector. Until this vital issue is decided—whether the mixed economy is to be run by the right as a fair experiment in public and private enterprise or by the left as a first instalment in its march towards the complete socialist state—I fear there will be no normal investment growth in the divided British society.
It is extraordinary that in the White Paper presented to the House on these `industrial expansion' proposals there is not a single men- tion of `the mixed economy' or any attempt to define the limits of the private and public sectors, so that when the Government takes powers to acquire shares in industrial com- panies the private sector should not feel that it intends to extend the province of the public sector permanently. Yet it is this very question which is upsetting the cat and Sir Paul Cham- bers and all. The impression they get from the Bill is that the Government is not really trying to make a mixed economy work.
The Bill as drafted purports to be politically innocuous. It does not confer on any govern- ment department compulsory powers to acquire shares or other interests in private enterprise companies or to buy shares freely on the open capital mallet. There must be a voluntary agreement between the two sides before the Government makes a move. It is also not in- tended to displace existing sources of finance. The powers are only deeded to enable the Government to help projects which are in the national interest but would not be undertaken by private enterprise for financial reasons. But we all know that the influence of a government with ready cash to-spend can be very powerful and can be used to bring part or all of an in- dustry under public control. It is significant that Clause 3 empowers the Government to set up an 'industry board' when it advances the money.
While the Bill pretends to be politically harm- less it could be industrially harmful. Why should civil servants who have had no industrial or commercial experience be relied upon to say whether an enterprise is economically viable?, The Lord President himself has drawn atten- tion to the ignorance of the Civil Service and its faulty processing of information. The Government is sensitive to this criticism and has taken powers to set up an advisory committee, including members of the Industrial Reorgan- isation Corporation and the National Research Development Corporation to advise on indivi- dual projects and to consider whether any pro- ject would involve unfair discrimination between existing companies. But commercial doubts will remain and it is difficult to see how discrimination in favour of one company against another can in fact be avoided under this Bill. That view is strongly held by the cm.
The Bill happily is not intended to provide departments with powers to duplicate the work of the Industrial Reorganisation Corporation. Originally it might have been so—I gather Mr .Ronald Grierson resigned as head of the IRC on that anxiety—but lately the IRC has been more active and pleasing to the left. Having pushed through the merger between English Electric and Elliott-Automation with a `soft' loan of £15 million and set about tying up the computer interests of English Electric with those of icr and Plessey the IRC has now helped the merger of British Motor and Leylands with a loan' of £25 million. The 'restructuring' of „British industry, which is part of the grand design of the Prime Minister, is undoubtedly gathering pace and strength. This is no doubt welcomed by the left as preparing the way for an eventual takeover by the state. The Industrial Expansion Bill is for them a half-way resthouse.
There are currently a number of cases where government financial support for industry is being planned—£1 million for the acquisition of the Beagle Aircraft Company, £15 million for the reorganisation of shipbuilding, £24 million additional loan for the completion of the new Cunarder 'Queen Elizabeth H,' not to mention £25 to £50 million additional capital for the National Research Development Cor- poration. The new Industrial Expansion Bill• with financial provisions for £100 to £150 mil- lion will cover these commitments and will be ' u.sed by the Minister of Technology and other ininisters with reponsibilities for industry -to oover other- projects 'designed to promote - efficiency, to support technological advance and to create, expand or sustain productive capa- city.' It could, in fact, be the stalking horse for state takeovers later on. That is how the left sees it. And the left, having been maddened by the Wilsonian deflationary package and by the reimposition of the prescription charges, is not - in the mood to stand further frustration.
- Now all this might be made acceptable to the British electorate if the frontiers between the public and the private sectors were clearly defined and if the ideals and objectives of the mixed economy were clearly explained. But there is no evidence that the electorate wants to have a socialist Britain as defined by Clause 4 of the Labour party constitution. There is, on the other hand, plenty of evidence that the minority who get themselves elected to the trade union seats of power—because only about • 25 per cent of members bother to vote—do
want to introduce Clause 4 socialism and do want to make use of ttt Industrial Expansion Bill for their socialist purposes. This is not to suggest that the Prime Minister agrees. I am sin- that his, motives are technological and not ideological and that he desires to work a mixe,' economy as much as I do. But Mr Wilson is the prisoner of his party, the leader who is pledged to preserve the unity of his party at all costs. The trouble goes back to 1960 when Hugh Gaitskell failed to get Clause 4 removed from the party's constitution. A new `Statement of Aims' was then published reiterating that the party objectives could only be achieved `by an expansion of common ownership substantial enough to give the community power over the comdianding heights of the economy.' The statement recognised that 'both public and private enterprise have a place in the economy' (i.e. a mixed economy) but it is obvious that the left minority only accepted it as a passing phase. That simply is why the CBI remain suspicious of the Industrial Expansion Bill.
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