Political Commentary
Government, business and the monster of the DTI
Patrick Cosgrave
It is not my own opinion that Mr Heath was at all reasonable or fair in suggesting that the Lonrho contretemps had something or other to do with the attractiveness or otherwise of the face of capitalism: if governments feel that the use of tax havens and the payment of, generous-sounding consultancy fees is Wrong, then they should legislate against them. Until they do so, and if they continue to complain, their own moral sense must be Judged to be as least as deficient as that of those they condemn. Nonetheless, for almost the whole of the life of this Government there have been business stories of one kind or another which have given rise to public and Press concern. And, even if in every case it could be shown that everybody behaved with the utmost propriety, the concatenation of events should properly cause worry, if only because of the general principle that there is no smoke without at least a spark.
Only the other day Sir Geoffrey Howe rose in the House of Commons to explain why the Government had chosen not to refer the Sla ter Walker-Hill Samuel merger to the Mono Polies Commission. True, by then the two Parties had decided not to go ahead with the business, but Sir Geoffrey nonetheless spent Suite some time analysing the situation, and that in a very interesting way. " I applied my Mind to the question whether the merger re quired consideration by the Monopolies Com mission," he said, " I reached the conclusion that it did not so require.. . . It amounts to a decision within the framework of legislation and whether it requires consideration in that
context." But Sir Geoffrey was prepared to admit that there were "wider questions and he spoke of forthcoming legislation on companies both in the context of the desirability of shareholders knowing more; and of the necessity of reforming insider trading Practices. Now, it is not disputed that Sir Geoffrey had the power to refer the merger to the Commission; and, indeed, the Department clf Trade and Industry sought assurances about their future business conduct from both Sir Kennetla Keith and Mr Slater before the negative decision was finally taken. If there are "wider questions," and if the DePartment were sufficiently concerned to ,Xtract assurances which could have had no legal or enforceable basis, surely Sir Geoffrey Would have been wiser to take investigative action, particularly as the Secretary of State, t'it* Peter Walker had very properly decided to „eeP away from the whole business because ,u1 his previous business partnership with Mr later?
, It seems to me that muddle marked the !Jandling of the whole business: and, though .9ne can say with some confidence that it was r2Olhing more serious than muddle, muddle often be very serious indeed. Moreover, ine DTI has already been involved in highly competent handling of an insurance crash; ',1 has moved with a good deal of obscurity. Pd uncertainty in both the Pergamon and Lt-nnrho affairs; and it has handled other mat With less than finesse. Finally, what was Illven originally a vast and practically onmanageable industrial industrial and trading departRent has now had added to its responsibilities (:":3se of consumer protection, for which Sir s'e_offrey is the main spokesman. it, I he two modern monster departments are s"ee.IDTI and Environment; and there must be . ttl'ious doubts about the capacity of the forer to operate efficiently, and handle with
dispatch the peculiarly contemporary problems which are being create cl by the development of the City, business and industry. One reason lies in the history of the origins a the DTI; another in the doctrinal, ideological and intellectual confusions which have attended its growth.
The true origins of the DTI lie in the creation by Sir Alec Douglas Home in 1963 of a new big department charged with trade (and including the old Board of Trade) and region al development. Mr Heath took it over (and it is useful to remember that running it from then until the 1964 general election con stitutes his only experience of major departmental administration). By the time he left office the department was a fairly typical — but, within its limits very well run — institution for politics.
Mr Wilson chopped and changed his heritage a lot. But it ultimately emerged in the form of the Ministry of Technology under Mr Benn. Mr Heath found himself, in opposition, frequently criticising the behaviour of his for mer charge. From his attacks and those of his colleagues a general impression was gained that the Tories were hostile to subsidisation of regions, and deeply opposed to what they considered to be excessive aid to industry. These attacks were honed to a fine point by Mr Benn's shadow, Sir Keith Joseph, and he and a large and forceful opposition team began to gain attention and respect for a free enterprise doctrine more sharply and clearly defined than ever before. There were two difficulties about this doctrine. First, it was based on a very strong belief in the virtues of free enterprise for restoring economic vigour to the nation; and also on a belief that the
best protection for the consumer was competition, so little attention was paid to company law as a means of restraining capitalists. Second, Mr Heath did not himself subscribe to its tenets. He has been saying so quite often recently, but the distinction between different wings of the Tory Party was perhaps best put in a judicious paragraph in The British General Election of 1970 by David Butler and Michael Pinto-Duschinsky: 'Although Mr Heath agreed with the interventionists on the one hand that there was a continuing need for a voluntary incomes policy and, on the other hand with the free marketeers that individual enterprise was being stifled and industry harmed by ' over-government,' he had comparatively little interest in their controversies. For he looked for the solution to the problems of the economy in a different direction which, can conveniently (if inadequately) be termed ' techcratic.' Like the advocates of laissez-faire, he wished to allow individual enterprise to flourish; but unlike them, he did not see drastic reductions of governmental activities as the best way of doing this.
Thus the situation at the end of January 1970, when the famous Selsdon Park seminar ,took place. Before the seminar Mr Powell let rip with one his denunciations of overgovernment and, at about the same time Sir Keith Joseph embarked on a series of addresses spelling out the new free market position of the party. No post-Selsdon pronouncement was, however, made and the Leader insisted on referring back the papers on industrial management and intervention for further consideration.
This was not really completed by election time. After the victory, moreover, Mr Heath did not give the new DTI to Sir Keith but, briefly, to Mr Rippon (who was sympathetic to the free marketeers, but not of them) and then to Mr John Davies. The DTI team did, however, contain two enthusiastic ideologists of the free market, Mr Nicholas Ridley and Sir John Eden. Both men struggled hard for the free market ideal, but rapidly dis,covered that their new Secretary of State's free enterprise sounding speeches were a poor guide indeed to his real thinking. Mr Davies was an interventionist, a subsidiser and a statist first, last and all the time. The department was consumed by intellectual rivalry, and the junior ministers lost the battle the moment Upper Clyde and Rolls Royce presented formidable challenges which seemed to require quick action, rather than the ruthless application of Tory doctrine. Mr Ridley shortly departed for the shadows, and Sir John for the Post Office. Mr Tom Boardman and Mr Christopher Chataway shortly appeared to administer entirely different policies; and they were joined by Mr Peter Walker, who had already learned to love interventionism at the Department of the Environment. He was joined in turn by Sir Geoffrey, charged with consumer affairs, as the DTI rapidly became the hold-all department, lumbered with every conceivable extra responsibility arising out of government relations with the citizen which could conceivably be put under the umbrella of trade and industry.
Any one or several of these actions could be justified alone. But all together, on top of one another in a sort of king of the mountain game, they have served deeply to confuse the thought and action of an already overgrown department. Even now the tension between Mr Walker's principal desire — to improve the quality of management, partly by developing the capacity of management to earn rewards similar to those of proprietorship — and that of Sir Geoffrey, to protect the consumer, pulls the, department in different directions, even though relations between the two men are excellent. The coming company legislation is a Civil Service creation, confused and logically imprecise.
The origins and the intellectual development of the trade and industry monster have created a fearsome tangle at the heart of the government machine; and the monster is now incapable of reacting quickly and clearly to events, because of its multiple hangovers, contradictions and confusions. It is nobody's fault really: it is just a mountain of happenings. But Mr Heath really ought to take the opportunity of his autumn reshuffle to redesign the Frankenstein monster at whose birth he presided.
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