Political Commentary
Economic policy the crucial argument
Patrick Cosgrave
-Very pretty," Lord Milner used to say to his bright young men when they were together remaking South Africa, "but it won't work!" That, in essence, is very often the attitude of politicians, and especially of ministers, to the intellectuals among their supporters who come forward with great schemes for the remaking of the party, or of the economy, or of the country. Sometimes, of course, the practical men, who find ideas and intellectual schemes too pretty to work, themselves fail to achieve either their ends or even simple stability. The Conservative government which came to power in 1970 was probably more influenced by ideas than any other recent British government since that of 1945. Many of its members, however, and its leader especially, were not as deeply committed to the ideas which made up its platform as they might have been and, indeed, abandoned them only two years after they had been elected. Nonetheless, as the event showed, these practical men failed in at least one essential political task — they were not elected again.
We thus have, in Conservative politics in recent years, a particularly interesting argument. The people who supported the ideas of 1970 — the outsiders — insist that Mr Heath and his colleagues might have been more successful if they had remained faithful to the manifesto of 1970. But the insiders — those in or around the Heath government — argue that lack of fidelity to the Selsdon programme was not a crucial factor in the eventual destruction of the Heath government. The argument, which is of an intellectual intensity rare in British politics, will go on for some time, and it has just been given particular point by the publication of a work of unusual distinction — British Economic Policy 1970-4: Two Views, published by the Institute of Economic Affairs and written by its Director, Mr Ralph Harris, and by the former Director of the Conservative Research Department and Special Assistant to Mr Anthony Barber when he was Chancellor of the Exchequer, Mr Brendon Sewill.
Reviews of this book which have so far appeared have been marked neither by distinction nor by acumen, for they have concentrated essentially on only one of the two contributions, that of Mr Sewill; and they have been focused on only one of Mr Sewill's arguments, that which blames the trade unions for the downfall of the Heath government and insists, in almost apocalyptic terms, that no government can succeed in restoring peace and prosperity to Britain which does not succeed in defeating the militant trade union movement. Mr Harris's contribution to the argument has been, so far, almost wholly ignored, which demonstrates merely how stupid most reviewers so far have been. One thing about the book can be said with absolute certainty: the individual contributions of Mr Sewill and Mr Harris, and the tension between them, make up the most important contribution to the history of 1970-4 that has yet appeared, or is likely to appear for some time. When the historian looks back on that strange time — which may yet be described as the strange death of Conservative Britain — this short book will be regarded as a seminal, perhaps the seminal, document.
As it happens, I have a certain degree of involvement with both writers. When the economic policies which formed the core of the Conservative appeal to the electorate in 1970 were being formulated I was one of Mr Sewill's desk officers at the CRD. Mr Sewill was certainly the best director the CRD has ever had, and he had a special gift for motivating the people who worked for him. Small, puckish, bespectacled, he dashed about the place encouraging and exhorting people and covering with fine ironic phrases the wilder speculations of the young men who worked for him. He was less happy, I think, when he worked for Mr Barber at the Treasury, for irony was not favoured in Great George Street, and the doubts he had about the way things were going had too little effect either on himself or on the government of the day. Nobody can doubt, however, that Brendon Sewill is one of the most important Conservatives of our day: he was shabbily treated by Mr Heath and his colleagues after the defeat of February 1974, when no opposition job was found for him; and it is to be hoped that Mrs Thatcher will see the usefulness of repairing that failure.
Mr Ralph Harris is my friend and, since 1971, when I left the Conservative Research Department, I have been more and more influenced by his ideas. He, too, is bespectacled, and he is as frenetically energetic as Mr Sewill and has, further, a finer academic mind. He is, in Britain, the proponent of the free market system, believing that maximum freedom, and minimum intervention in all our affairs by the state, is most conducive to human happiness and the prosperity of the country. Mr Harris's ideas are — to quote Lord Milner again — very pretty indeed, for he believes that if government is only sensible enough to leave citizens alone, and to stop meddling in their affairs, citizens can save the country. Every phrase he uses, however — and especially the phrases he uses in support of his argument that the main cause of all our ills is the inability of successive governments to stop spending money they do not possess in 8rder to further wilder and wilder schemes of social improvement — is academic. Even in this critical document he is found to be saying, "Amid all the disruptive consequences for the British economy, and society [of the inflation generated by the over-spending of the Heath government] might there be a compensating gleam of hope that economists can get nearer to agreement on the virus which causes this potentially lethal economic fever?". Mr Sewill is more practical, and more inspirational,
as becomes a political functionary rather than an economic scholar. But the best he can find to say about the aspirations and career of the 1970 government is — having commented on the fact that the 1970 political strategy was excessively materialist — ". . . there were many who saw in the .creation of new prosperity the means of achieving not only social and environmental improvement but also a revival of national purpose and self-confidence. This aim was not ignoble." Already, therefore, we can see Mr Sewill moving in the area of high moral argument which is the essential stuff of politics. His words and phrases suggest the human and practical difficulties that attend the implementation of a political policy, however pretty, however well conceived. They also suggest the high sense of purpose that moves most politicians, and probably moved the 1970 government more than any other we have had since the war. Mr Harris is more mechanistic: he wants to discover how things work, and feels it is his proper province to attempt to do so by finding areas of agreement between economists. The political advice Mr Harris would offer sounds almost utopian: he believes that, if the right policy is adopted — and especially if a policy of limiting government expenditure and intervention is adopted — the good of the country will follow.
But, while the event — the great arbiter of political judgement — has demonstrated that Mr Sewill and Mr Heath were wrong, it has passed no such judgement on Mr Harris. Outsider — as he describes himself — he may he, but the close texture of his critique of the spending policies of the Heath government has a finer and surer logic than Mr Sewill's account of its (to him, necessary) shifts and manoeuvres. Mr Sewill's crucial chapter is that on the return of Mr Heath to incomes policy in 1972, yet nowhere in that chapter does he examine seriously either the moral problem of a government which chooses — or is forced to choose — to reverse its most important domestic policy commitment. Mr Harris, with a sharper scorn, would argue that, from that moment, the Heath government was doomed, not merely because — as I myself believe — it lost its sense of intellectual direction and roots at that moment, but because the adoption of the new policy represented an abandonment of common sense and consistency for another, utopian adventure in government control 0' citizens. Looking back on it all, on the bravest experiment in government we have seen for more than a generation, and on its sorry failure, I fancy that the real turning point was not 1972 and the re-adoption of incomes policy, but the House of Commons public expenditure debate of October 1970. Mr Heath and Mr Barber and Mr Sewill knew that public expenditure had t°, be cut, both in order to bring monetary sense, c:t the kind Mr Harris favours, into the nation s business, and also to create the freedom for tax cuts which, it was believed, would re-create a sense of enterprise in Britain. But expenditure, quite simply, was not cut enough, for Mr Heath and his ministers were not intellectually certain enough about the rightness of the 1970 policies to face the hard choices which really heavY entAs would have involved. That moment past — an given the sheer lack of political finesse of the
Heath government, which is a subject for separate discussion — the right road could
never be found again. In a strange way, Y,Ir Sewill senses this, when he denounces. Iv!r Heath and his colleagues as overly materialistic for, in order to pursue a difficult policy, one which is wholly against the fashionable consensus of the time, one has to have the most profound sense, not merely of its technical value, but of its use in creating the kind of society in which one most deeply believes lvl. r
Harris has a clearer view of the kind of Britain he wants to see than has Mr Sewill: the epitaph of Mr Heath may well be that his ideas were not pretty enough.
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