Political Commentary

Tory policy and state intervention

Patrick Cosgrave

Mr Michael Heseltine replied to the Prime Minister last week, on the subject of the Government's nationalisation of British Leyland. Mr Wilson and his colleagues had a good deal of fun at Mr Heseltine's expense — fun which the Tory Shadow Minister bore not without good humour, and which he did not let, pass without an aggressive response. Now, the fun which Labour enjoyed had, obviously, little enough to do with Mr Heseltine's adequacy as a performer — he has, in fact, been improving, though there are still rough edges — but was founded, rather, on the truth that the Tories. have no real policy on the subject of government intervention in industry. Mr Powell, of course, has; and he had no difficulty in declaring in a forthright fashion that the company should have been allowed to go bankrupt.

There are a number of Tories who feel the way he does; and that is the view that would have been taken had, say, the event occurred in 1969, by Mr Heath, who later became an apostle of intervention. Very naturally and understandably Mrs Thatcher has not committed herself on the matter yet. For one thing, the history of her party on this and similar subjects in the last six years or so has been an exceptionally confused one. For another, as the new leader, she is lacking in a good deal of the experience necessary to understand the making of major decisions of state — she knows this, and so do her admirers; and she appreciates that she will need time to formulate a philosophy and a policy. It may be said, however, that in facing Mr Berm, who has a fully prepared doctrine and philosophy on all such matters (and who will be wholeheartedly supported by the Prime Minister on the matter, so let us have no more nonsense about supposed divisions between Mr Wilson and the Secretary for Industry), the Tories need to make up their minds fairly quickly. Mrs Thatcher, speaking. very cautiously just after her election as leader, said she was not prepared to rule out industrial subvention as a matter of principle, but that such subventions as were made would have to be very selective indeed, and very cautiously entered into. At the same time she appointed Sir Geoffrey Howe rather than Sir Keith Joseph as her Shadow Chancellor; and a number of Tory radicals began to mutter that this was a sure sign that she was welshing on her image as a sensible Tory of the 1970 vintage.

The business, as I say, is extremely confused, and I want merely to look at some of the very obvious evidence relating to it. There are two qualifications that must be made first. In the ordinary and hard world of politics things that were easy five years ago may not even be possible now. Had Mr Heath's government allowed either Upper Clyde or Rolls Royce to go to the wall they might still be in power, and Britain a more prosperous country. Just before their surrenders, indeed, Mr Peter Walker — showing then a prevision that he seems to have lost now — was wont to observe to his friends that an unexpectedly high level of unemployment was, in fact, tolerable, if it meant getting the economy right; and if benefits were suitably generous. Once the first surrender was made, however, the government was in flight, with the unions and the socialists in hot pursuit. It would be far harder, and much more dangerous, for a Conservative government today to allow a major concern to go bankrupt, at least until their own reasons for doing so, and their tfiwn explanations, were very thoroughly worked out indeed. They are not, yet: hence Mr Heseltine was forced back on . criticism of the detail of the government's proposals.

The second qualification is this. The Tory Party is deeply split between those who believe that it is still possible to restore Britain to freedom; and those who believe that Conservatism is merely about the administration —

efficient and humane — of things as they are. Both positions are perfectly honourable, and the latter would chime well with the views of so distinguished a Conservative philosopher as Professor Oakeshott. (The quarrel with Mr•

Heath was that he was so collectivist in mind as to make any adherence to a Conservative Party pointless; and that he abused his authority so as to make life difficult for those who disagreed with him.) But Mrs Thatcher's difficulty, of course, is that she needs both to be sure she has the right policy, and of her ability to carry her party with her. In that her efforts

are helped neither by Mr-Heath's mutterings in the smoking room of the House of Commons, nor by what is rapidly coming to be called the 'Norman Shaw cabal,' a phrase coined to describe Mr Heath and his adherents who have offices in the Norman Shaw building, which serves as an extension of the House.

Let us try, first, to mount a Conservative critique of Mr Benn's position. The first and grand question is, of course, that of where the money to bail out British Leyland is going to come from. Even with the reductions made by Mr Healey the public sector spending deficit for the next year is going to be at least £7,600 million. This immediately involves us in the whole question of monetarism, and whether the Tories are or should be monetarists, in the • sense of whether they should believe in the doctrine of a balanced budget, with public spending never greatly exceeding government income from taxation. There is a doubt whether any Tory is a monetarist, in the sense of adhering to the philosophy of Professor Milton Friedman: even Sir Keith Joseph's qualifications in this respect have been challenged in a recent and intelligent leader in the Times. But we need not, surely, get ourselves involved in the more abstruse points of Professor Fried man's philosophy to grasp the fact that the nation has seen bad housekeeping for many a day; and that even the most well-secured overdraft cannot be available for ever, especially if the funds required to service its interest are not forthcoming.

It is unlikely — once the June referendum is over, and whatever its result — that our international creditors will continue to subsidise Britain to the extent that her government can finance such moves as the takeover of British Leyland. Nor, even if every income over E50 a week (including Mr Benn's private income, and those of his children) were confiscated, could we afford such spending. It should be an important point of Tory honesty to bring that fact home. We cannot afford Mr Benn.

But there is another aspect of the Secretary of State's argument. Both on Mr Peter Jay's Weekend World last Sunday, and on the BBC's World This Weekend he again used what I call the false rhetoric of unemployment. It is all right — so runs Mr Benn's argument — for those in secure jobs (by implication rival politicians and journalistic critics) to say that so many men should be thrown out of work in the manufacturing industries; they would not show the same courage if their own jobs were threatened. The comparison is very obviously false: in the winter about to come upon us no • journalist or politician or tycoon will be secure. But Mr Benn goes on to suggest that, if British Leyland were to go under, a million jobs would be at risk (i.e. both those in the company itself and those in smaller component companies dependent on British Leyland contracts). This is manifest nonsense; and it is made evermore manifest when he goes on — as he did to Mr Jay, with surprisingly little critical response from his interviewer — to argue that this would happen because contracts and production schedules would be destroyed immediately by the bankruptcy of this major company.

Mr Benn seems not to realise that there is a very efficient bankruptcy law in this country, and that it is the duty of a receiver to settle the affairs of a company with the maximum expedition and commercial efficiency — this indeed happened at Rolls. Nobody would, for the moment, lose their jobs: and the receiver would turn a far more searching and .critical eye on the value of British Leyland than did Sir Don Ryder's absurd little committee. Indeed, the first duty of the receiver is to continue to administer a company on its existing footing, until he sorts out its affairs, and it would be in the interests of all concerned to co-operate with him. The assets of British Leyland do not, after all, vanish into thin air once the company is declared bankrupt.

There is still a deeper part of Mr Benn's argument. His thesis is that British manufac turing industry has been starved of investment in recent years, and that it is this fact that has produced our low productivity and low rate of success. Since the private capital market will not come forward with the sums required, he insists, the state must do so — in spite of the fact, as I mentioned above, that the state does not have the funds, and has no means of acquiring them. There are several answers to this. The first is that it would be morally wrong for any stockbroker, accountant, or financial adviser to anybody who possessed capital — large or small — to advise his clients to invest in British industry at the present (or, indeed, the earlier), penal rates of taxation, for they would not be handling funds entrusted tothem with the correct degree of concern for their future growth. The second is that ministers of a like mind to Mr Benn — and, indeed, Mr Benn himself, in an earlier incarnation as Minister of Technology — have been trying out public investment on a large scale, and especially the encouragement of conglomerates such as British Leyland, for many years now, and the economy continues to founder. There is a law of state intervention — I have forgotten who first adumbrated it — to the effect that when state intervention fails what is sought by its disciples is more state intervention, which leads to more failure and so on.

Understandably, given his ambitions, Mr Benn wholly exculpates the trade unions from any responsibility in the downfall of Britain's greatest motor company. But everybody with the slightest knowledge of British industrial relations knows perfectly well that the motor workers are among the most bloody-minded of the lot. Even if one were to accept — and I do not — that their activities had played no major part in the downfall of the industry, they have certainly played some part. Moreover, it should be said that, while a higher theology of politics can exculpate the unions, it would instantly indict Mr Benn and his like. No band of human beings — let alone motor workers — can expect to be shielded from the consequences of their actions indefinitely without becoming corrupted. Some time ago the Prime Minister warned Leyland workers that, unless they moderated their activities and their demands no more government money would be found for their subsidisation. Mr Benn has just given the lie to Mr Wilson — indeed, Mr Wilson gave it himself when he made the nationalisation statement. Now every militant shop steward in the motor industry — and in many other industries as well — knows that there is likely to be no penalty for irresponsible militance, at least until the country goes bust.

There is no philosophy and no doctrine, Tory or otherwise, in any of these arguments. They are all plain commonsense. We do not have the money for large scale subsidisation or takeovers; bankruptcy does not involve immediate or large-scale unemployment; state intervention in industry has not — save in rare individual cases — been a success; and trade union militancy we cannot expect to become other than rampant as long as politicians are determined to feed it fool's gold. Even while the wide-ranging policies that the Conservatives need now to prepare are on the drawing board, commonsense is worth the utterance.

In time, of course, there will have to come a measure of moral and philosophical agreement within the Conservative Party. I note, for example, that Labour politicians are trYing might and main to replace all their ogre words of the past — 'state' and 'socialist' and 'control', for examples — with one formulation, 'Public', especially in the phrase, 'public accountability'. t. or 'public' read `bureaucratic'. Every step taken by an intervening government involves a larger and larger bureaucracy, whether in the civil service, in management, or in trade unions, and the decisions which may once have been those of doctrine — and perhaps even, like Mr Benn's, theoretically admirable — become the decisions of inefficient administration, That is the dead hand on Britain. In lifting it, the Tories may find their soul, and something to believe in.