Government and business

HAROLD LEVER, MP

Harold' Lever is Financial Secretary to the Treaility.

The psoblem the businessman has tt$ live with is thatfoday the government makes the market or islIfleast one of the most powerful of all the markgit forces.

This is a comparatively new situation. Nobody who is middle-aged is quite used to it. Once business was blessedly free from govern- ment intervention, apart from pinpricks such as entertainment tax or excise duties on a very limited range of goods. Now the hand of the government is everywhere. The critics com- plain that the government is always playing about with credit, messing about with taxes on consumption goods, finding fiendishly ingenious ways of taxing services, telling the business- man where he may not build his new factory and then bribing him to build it in some government-favoured spot, urging him to ex- port more and to raise his productivity and denying him the right to pay what he likes to attract • scarce labour, and latterly even en- couraging the merger of his firm with a rival.

One can understand the businessman's nos- talgia for the simple age of which he has dim boyhood memories. Then governments did not interfere. But he should remember that they stood helpless before prolonged slumps which devastated huge highly populated areas of the country and watched great industries rot away.

Business was often a nightmare; and for many bankruptcy was always round the corner.

The new world, with Keynes's ideas domin- ant, was born in the last years of the war-time coalition government by the all-party decision that the postwar aim must be full employ- ment. This was the vital fact on which the Tory Lord Woolton and the Socialist Ernest Bevin could agree. It was a revolution in Tory thinking and a clarification of Labour think- ing. It was a Labour government which suc- cessfully put the theory into practice but it was a Tory government which continued the policy.

Businessmen, I suggest, should take less notice of the rhetoric of extremists and con- centrate on the realities of policy. The Labour party's commitment to full employment is based on a successful mixed economy which necessarily involves the fullest opportunities of the private sector.

All this implies a demand for high and con- tinuous economic growth. The Labour govern- ment has assigned a role of vital importance to the private sector within the social structure of the country as a whole—the production of the greater part of the increasing wealth we will need to provide a rising standard of life for our people and to put into practice ever higher concepts of social justice. Because the private sector is assigned this role, the govern- ment must take responsibility for the general development of the whole economy, both pub- lic and private sectors. In this way, the private sector has a defensible role in a modern society; anarchic independence would no longer be acceptable. The government's aim for the private sector must be pursued not by impair- ing the profit relative or bringing it into dis- pute but, on the contrary, by sharpening it and increasingly relating it to efficiency and well- directed investment.

The fundamental difference in attitude to the function of the private sector between the two parties is reflected in the different style each brings to the running of the mixed economy. The Tories set up NEDC as an instrument of indicative planning for growth, and NIC in the hope of planning wages by consent. But such influences on the private sector were not suf- ficient for a Labour government. We believed that reorganisation and restructuring were called for, involving positive intervention: the IRD and the powers proposed under the Indus- dustrial Expansion Bill are specific examples. The Department of Economic Affairs and the Ministry of Technology have more general in- fluence. And the government has fortified its Prices and Incomes Board with legislation.

The point is that modern government is up to the neck in business and business is inevitably involved day and night with government. The modern Utopian must long for the day when this partnership works more smoothly. Before it can do so, however, there must be great reform in governmental administration involv- ing both Parliament and the civil service; there must, too, be reform of the trade unions and business itself.

This politically turbulent year of 1968 could be a historic turning-point. The mergers creating giant industrial units in the private sector, the struggle of the industrial nations to evolve a monetary system which will permit ever-widening world trade, the opportunities for reform shortly to be offered by the reports of the Fulton Committee and the Royal Com- mission on Trade Unions—all are hopeful in- dications that the turning-point has come.

More important is the new sense of reality abroad in politics about what Britain has to do in pursuit of its objectives of economic growth and full employment. Since the war we have been engaged in a series of national ex- periments to this end. We began by hoping that we could have growth, full employment, free wage bargaining, a stable pound with ster- ling playing its traditional role in the world, and a healthy balance of payments.

Each experiment, begun by Tories or Labour, has failed or succeeded inadequately. We have, however, learned a lot. We know now the scale of the problems we have to solve if we want to achieve continuing growth and full employment.

First we have had to give up unlimited free wage bargaining—there must be an incomes policy. The old parity of the pound has been a casualty. We saw, too, that we could not retain our overseas commitments and the drain they make on our balance of payments. We see now that we have to find a solution of the whole sterling problem.

In 1968 we have not only seen the reality. We have devised a budget and a set of ancil- lary policies—incomes policy is one of them— in full accord with- our clearer conception of our objectives.

Our first aim must be to get the balance of payments right and preserve the strength of the pound at its new parity. This means hold- ing down consumption at home and it also implies not deflation but controlled growth. The new system has great opportunities for business, as many businessmen have begun to recognise; it also has headaches. The domestic market will not be soft. The profitability of many firms will depend upon the energy and skill they put into exporting and on their suc- cess in holding down their prices at home so that their foreign competitors on the domestic mar- ket are held off.

But no businessman should believe that a fundamentally different solution is available; that there is some simple laissez faire solution of slashing public expenditure, reducing taxes and taming the trade unions by legislation, and thus turning every gnome into a bull of sterling.

The slogans of the right—that all will be well if we cut our taxes and restore incentives— are as empty as those which suggest that by just pressing a button for growth we can achieve both greater social justice and a solution to our balance of payments problems.

To sum up, one can see that a Labour gov- ernment presents new problems to the private sector, but also new opportunities. It is no accident that under the Labour government the greatest erosion has taken place of Britain's traditional attitudes towards business—aristo- cratic disdain and entrenched amateurism. In taking responsibility for planning the frame- work in which the private sector operates, the government has given private enterprise a re- warding and defensible role in a modern society.