The Budget: administering catastrophe
The most remarkable moment in Mr Healey's Budget speech was when he announced, after he had been on his feet for nearly two hours, that he was going to give a general judgment on the economy; and the benches of the House of Commons emptied. Left-wingers left, and right-wingers left, and reporters left. For the effort Mr Healey made on Tuesday made up quite the most boring and irrelevant Budget speech for a generation. Mrs Thatcher's contemptuous reply to it — which lasted for only a few minutes — showed quite clearly how the Chancellor's latest effort will be judged by anybody who is both serious and intelligent.
There were two points vital to Mr Healey's argument. The first was that wage increases were now running so high that the terms of the social contract are, in practice, void. The other was that the terms of world trade will improve during 1976; and that, therefore, nothing much needs to be done until the hoped-for boom takes place. For at least ten years now the Treasury has been trying to adjust its forecasts to a prediction about the behaviour of the world economy. Mr Healey is only the latest of Chancellors to present Treasury views in the form of a supposedly intelligent prediction about what will actually happen. More straightforwardly than most, the Chancellor has admitted his complete helplessness in the face of a public sector spending deficit of unprecedented proportions, a work force totally unprepared to make any sacrifices to the national interest, and a world trading position certainly unpredictable but probably unfavourable. Mr Healey has promised us that he will reduce the public deficit to some £7,600,000,000. The figure of reduction is far too low; and the Chancellor hopes that he will not have to face an idiotically small reduction in the Government's overdraft to the nation, because he may be rescued by the behaviour of other countries rather than our own.
He is wrong. Unless the nation's income and the nation's expenditure are brought into some reasonable balance we have no future. That is the central point of economic management. Mr Healey said he would not give a "Budget judgment" — the traditional assessment of the economy by a Chancellor halfway through his speech. He preferred, rather, to offer a "strategic" and a "tactical" assessment of the likely short-term future course of the economy. The words he chose were appropriate, coming from a former Secretary of State for Defence, but they were in no way relevant to government spending in the British economy. In other words his judgment was in no way strategic, and involved the same flannelling with words that has marked the performance of most Secretaries of State for Defence, as well as of most Chancellors, in the past decade. Mr Healey has, as his supposed strategy, an increase of taxation during the next year, and reduction in public expenditure thereafter. That policy simply will not do.
The fundamental judgment on this Budget speech, and this assessment of the economy, is that it is irrelevant to the nation's problems. The late lain Macleod used to say that Budgets judged favourably were found to be bad; and Budgets judged unfavourably were found to be good. If he were alive today Macleod would have found a new way of looking at Budgets and Chancellors. For all that Mr Healey has done, in his persecution of the consumer, as much as in his attack on the investor, is to postpone the moment of decision for the economy. We now await a Budget speech by Mr Healey, which will probably come after the June referendum on membership of the EEC, which faces up to the very nearly desperate state of the national economy. All Mr Healey did last Tuesday was to administer catastrophe: he has held the line for a moment before we do downhill. No Chancellor since Lord Butler has used the Budget speech to point the way to a future national policy. Mr Maudling, Mr Barber and Mr Healey have, each in their separate ways, tried to administer a policy determined by the Treasury which is without vision and without any political purpose. No wonder the Labour as well as the Conservative benches emptied when Mr Healey came to his judgment of the economy: he had nothing useful to say.
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