Political commentary
The end of the Wets?
Ferdinand Mount
rrhere is a tradition,' Sir Geoffrey's 1 script began, 'that the Budget should be composed rather along the lines of a novel by Proust'. Funny, never noticed it before. Still, never too late to raise one's sights. If the Chancellor intended to illustrate his Budget by projections of its effect on M.de Norpois's take-home pay or the Baron de Charlus's roll-over capital gains tax position or even the eligibility of Jupien, the dubious tailor, for the Small Business Start-up Scheme, the Duchesse de Guermantes's courtyard being declared an Enterprise Zone, that could only elevate the tone of the proceedings.
Unfortunately, something — the rough tones of Mr Denis Skinner perhaps, or the brooding presence of Mr Cyril Smith seems to have warned Sir Geoffrey off. Wrongly perhaps, he may have thought that Proust would not be box-office in Bolsover or Rochdale. And so Marcel was scratched, and Sir Geoffrey set off a la recherche des votes perdus, claiming Agatha Christie as his guide instead.
In fact, he would have done better to stick to his original script. For this was no thriller; suspense was minimal. It was a huge, diffuse work nearly two hours in length, occasionally inconsistent, always in- genious, sometimes stiflingly boring, but in the end triumphantly successful if not en- tirely honest with the reader. Like Proust, in fact. And here too the reader needed the silence and seclusion of a cork-lined room to keep on equal terms with the author.
The Chancellor was 40 minutes into the speech before we heard that first full- throated roar from the Tory backbenches — last heard three years ago — which always mark the announcement of an ap- propriately handsome bribe to the electors, in this case, the raising of old-age pensions by two per cent more than the rate of infla- tion. Many of the bribes that followed were extremely modestly priced — the two per cent uprating of unemployment benefit, the exemption of mobility allowance from in- come tax, the grants for double glazing and cavity wall insulation. This last was regard- ed as a particularly brilliant trumping of Shirley Williams who has been speaking for the Warmer Lofts Party.
These dodges are much appreciated by the Tory backbenchers who regard the Budget as a nationalised version of Eatanswill, in which statesmanship is to be measured by the cheapness with which votes are bought. And they themselves were fairly cheaply bought. By the end, Mr Geoffrey Rippon was waving his order paper and beaming; Mr Patrick Cormack was waving his order paper and beaming; Sir Ian Gilmour, having neither the fulness
of face nor the exuberance of temperament, was doing neither. But he, like the most in- transigent critics of the Government in other parties, had to admit, if only by implica- tion, that the Government had recovered a certain amount of political ground. `The parts are better that the whole' was his gloss. 'Making good some of the damage' was the Labour Party line.
This seems all back to front to me. Sir Geoffrey was able to reduce taxation a little only because he raised taxation last year and reduced the Government's spending plans (even if government expenditure ac- tually went on rising merrily) — thus steady- ing interest rates and bringing inflation more or less under control. To the true believer, last year's Budget was the one that mattered, the test of nerve; and if there are any rewards in this year's, they are Sir Geoffrey's reward for having refused to use a horrible slump as an excuse for further inflating an already appalling rate of inflation.
For the current year, it is hard to quarrel with the balance Sir Geoffrey has struck. The upshot is that most of us are likely to be slightly worse off. The increases lit Na- tional Insurance contributions and in the duty on petrol, drink and tobacco just outweigh the reductions in income tax.
On the other side, Sir Geoffrey had to demonstrate continued progress in reducing the Government's borrowing. And so he has. The Government will probably be bor- rowing just about the same next year as this year — which is a reduction in real terms. And he had to make a shot at continuing to reduce the rate of growth of the money sup- ply- The principal act of daring is on capital gains tax. From the start in 1965, it was a patent iniquity that no allowance should be made for inflation. But so long as inflation was running at five per cent or so, it was a minor iniquity. In recent years, with infla' tion at 15 or even 20 per cent, the tax has drained the tycoon of almost every incen- tive except the incentive to fiddle. With the further relaxation of capital transfer tax, it can now be said that Britain has taxes on both income and capital, not to mention the complete freedom of capital movement, which ought to attract any footloose entre- preneur or tax funk to our shores. And that, whether the Foot family like it or not, is an essential part of the only way known to history of making us all richer. Yet the Government is still left with the same old problem: the control of public ex- penditure and hence of the Government's own pay bill. Something like this year's cash limit of four per cent looks in prospect for next year — which, even if inflation does fall to 71/2 per cent, would mean a fur- ther slight fall in the real incomes of public servants. A discontent-free winter seems unlikely. And next year, the Exchequer Will feel the full force of the reduction in its net revenue — £3.5 billion in a full year, as op- posed to just under £2 billion in this finan- cial year. Once again, the risk is that Sir Geoffrey's sums could be upset by the profligacy of the nationalised industries and of national and local government. To that extent, we have never left Square One. So long as the public sector remains at its present size, no govern- ment ever can.
Yet for the time being, Sir Geoffrey has done his stuff. The Tory Party is more or less at peace with itself. The Wets are ex- tinguished as anything resembling a co- ordinated faction, although individual recusants remain. The City is happy enough. Industry grumbles, but grumbles more quietly.
Unemployment, however, remains, at three million, and according to the Treasury's own forecasts may go higher. I doubt whether the Government generally, or the Chancellor in particular, has done as much as it could to create jobs by direct subsidy or contract, particularly in the building and home improvement business.
As for the Labour Party. ...ah, the Labour Party. It is unfair to concentrate on that awkward half-hour for the Leader of the Opposition in which he is supposed to frame some instant, inspiring response to a long and complex Budget. Yet even by the standards of these things, Mr Michael Foot Was not at his best... 'it is still on balance a reflationary package...a deflationary
Package...a re-er-deflationary. Crouched over his script, interrupting himself, trying to tell the r's from the d's, the appearance of Mr Foot, no less than the disappearance of his fluency and wit, would have shocked Lobbyman Proust, himself no mean student of the ravages of time: `The amount of white hair was an index of depth in time, like mountain summits which appear to be on the same level as others un- til the brilliance of their snowy whiteness reveals their height above them... Old men whose features had changed attempted to fix on them permanently the fugitive ex- pressions adopted for a pose, thinking they would secure a better appearance or palliate its defects; they seemed to have become un- changeable snapshots of themselves.' Time is a nasty piece of work.
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