MONEY Disengagement
NICHOLAS DAVENPORT
In 1918 when the workers were excited by the Russian revolution and the trade union leaders were in an activist, if not revolu- tionary, mood, the Labour party adopted a new constitution which contained the famous Marxist Clause iv. This committed them to secure 'the common ownership of all the means of production, distribution and exchange'. The first instalment of this socialist programme was carried out by the 1945-51 Labour government which nation- alised seven industries and the Bank of England. By 1951 Labour had run out of socialist steam and had lost the confidence of the nation. When honest Gaitskell became leader he realised that there was no hope of persuading a majority of the people to carry out the full socialisation progiamme, which would have meant turning the economy into a centrally directed communist state. So he • proposed the removal of Clause iv from the constitution. There followed an acrimonious debate—Mr Harold Wilson heading the left opposition—and Gaitskell was defeated. The party would not give up its sacred cow : it was, after all,' formed to abolish private capitalist enterprise. So Clause iv still stands.
Gaitskell, however, managed to get the party to agree to a new 'Statement of Aims' which recognised that 'both public and private enterprise have a place in the economy' and that 'further extension of common ownership should be decided from time to time in the light of their objectives'. But these objectives, it added, could only be achieved 'through an expansion of common ownership substantial enough to give the community power over the commanding heights of the economy'.
All this was in March 1960. One would have thought that this compromise had com- mitted the Labour party to a mixed economy in which private enterprise could work hap- pily along with public enterprise. But precious little was heard of a mixed economy from Mr Wilson. He not only proceeded to re-nationalise all the steel companies and take over the water companies (docks were to follow) but began to encroach upon the private sector in ways which made the au highly suspicious of his intentions. The IRC was set up to take interests in any companies it thought fit for merger and rationalisation. Mrs Castle's Transport Act extended state ownership in road transport and ancillary enterprises. The Expansion of Industry Act had vague powers for state intervention. The Coal Act gave Lord Robens power to drill for oil and gas in the North Sea—in com- petition with the Gas Councill—and to market oil products. Where was it going to stop? Only when the state had secured corn-
plete power, as Marx phrased it, 'over the commanding heights of the economy'? Now the Tory government has not said that it wants to dismantle the whole socialist fabric of the public sector. It has no mandate to do so. It recognises that the capital in- tensive public services—electricity, gas, railways, communications—must be carried on under state control; it only seeks to make them more efficient and less extravagant. For that reason it is asking a strengthened Monopolies Commission to advise whether the monopoly position of these public services is affecting their efficiency. But Mr John Davies has darkened the issue by talk- ing of 'disengagement'. If only the Tory leaders could master the art of com- munication and speak in language which the man in the street can understand! If 'disengagement' means what is politically possible it means hiving off the ancillary enterprises and cutting down the public boards to a more efficient size, which is a supportable and sensible economic policy.
But I also suspect that it means getting rid of the special encroachments on the private sec-
tor which their pet aversion; Mr Harold Wilson, made during his reign. Hence the abolition of the IRC and the repealing of the various Acts which furthered his Clause Iv ambitions.
As for the ancillary enterprises, there are quite a number which seem ready for the Tory high jump. There is really no good reason why the Gas Council and the Coal Board should embark on oil and gas drilling in the North Sea or why Gas and Electricity Councils should compete with one another in marketing heating systems for the home.
'The high speed gas' advertising of the Gas Council has been fatuous and wasteful. Why the Coal Board should want to compete with the oil companies is inexplicable. Logically the oil companies should take over the coal fields, as some of them have done in America, but coal remains a national or state problem. The fact that the miners feel they own the pits is no doubt responsible for the high degree of absenteeism. Whether the Coal Board should carry on all its coking, briquetting, chemicals, brickworks and farms is another question.
In transport there is clearly need of ra- tionalisation. Is there an economic case for state tourism in Thomas Cook or for state haulage in Pickfords? Should the railways keep control of all their land development or of their engineering workshops or the letting of their other non-operative properties? Should the Post Office retain its Giro and its National Data Processing Service? All these ancillary undertakings run into a capital of well over £400 million.
The most political of all the disengage- ment problems is steel. As it was only re- nationalised in recent years it is open for de- nationalisation now. But the case for selling off the profitable 'special steels' division is repudiated by both Mr John Davies and Lord Melchett. His lordship's plan is to turn the Steel Corporation into a National Steel Company with the state owning 50 per cent or 51 per cent as in the case of British Petroleum. In any case there is a huge devel- opment programme in prospect for steel, be- ginning with a £600 million plant on the north-east coast. If private capital could participate it would no doubt please the
Treasury. •
The Government is looking into all these problems and has promised to give us a White Paper before long. I hope it will not hurry but play it cool. And give time for the sacred cow to die a natural death,
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