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Salient. Victoria University Student Newspaper. Volume 37, Number 1. 6th March 1974

Après Heath - le déluqe? — Anthony Ward outlines the background of the British Election

page 9

Après Heath - le déluqe?

Anthony Ward outlines the background of the British Election.

When Britain's Prime Minister Heath announced a General Election for February 28, he put the blame for it, as he has put the blame for most of Britain's recent misfortunes, on the coal miners. However appealing this simple view may appear, and however electorally potent for Heath, it is seriously misleading. To gain a fuller picture of the background to the election, and to Heath's measures such as the three day working week, it is necessary to consider the Conservative record over the last four years.

Edward Heath won the 1970 election with a platform preoccupied with economic growth. For his grandiose plan to propel England into a self-sustained yearly real growth of 3½% he borrowed heavily overseas, floated the pound and let inflation run rampant. In late 1971, despite election promises to the contrary, he introduced a statutory incomes policy with more moderate price restraint. Three stages of this policy have occurred since then: Stage 1, 1971-2; Stage 2, 72-3 and;Stage 3, 73-4, each with maximum wage increases of about 8%. Unlike New Zealand where an automatic wage adjustment to the consumer price index change occurs every six months, Heath has never agreed to such a plan, making renegotiation between unions and management necessary each year. With this and inflation at 12% for 1973 (food prices up 18%) it is hardly surprising that unions have become more militant.

The Conservative Government's first year saw a large number of industrial troubles—including electricity workers' and teachers' strikes. By the start of Stage 1 workers were on the average somewhat ahead in real (allowing for inflation) terms of previous incomes. That advantage has been steadily whittled away by inflation and wage restraints since then. Despite this, unions during stages 1 and 2 were cooperative with the Government in the belief (long fostered by both major parties) that economic growth would lead to greater social wealth and equality. However, as with most cases, growth led to a redistribution of income towards the wealthy. Heath was not prepared to take severe counter measures against this process—in fact his injection of massive government funds into industry tended to support it and bolster profits. Prices increased and despite Heath s platitudes on "the unacceptable face of capitalism", property speculation ("gazumping") drove up land values some 75% over three years, with rents not far behind.

Not surprisingly, British firms at the end of stage 2 announced some of the largest profits ever—directors fees were often doubled and dividends boomed. In a country where 50% of the wealth is owned by only 2% of the population and much of the country is aware of class stratification (a NOP opinion poll in 1972 showed 90% recognised classes and from a Gallup Dec 1973 poll 60+% saw class struggle) such revelations and actions were hardly likely to make for industrial harmony.

Industrial unrest grew throughout Britain in later 1973 and reached a new peak with electricity workers, railway engineers and coal miners all beginning work-to-rules or overtime bans in November. It is a remarkable comment on the situation of British workers that these actions caused so much disruption while stopping well short of striking. Heath reacted with his fourth national state of emergency (which is still in force) and promptly and predictably started red baiting. Despite support of the aims of industry propaganda Heath's criticism savagely backfired with the 81 % miners vote for a strike early this month with wide popular support. Even The Economist commented from its right-wing stance that most people seemed to think a higher wage for the miners', appalling conditions was justified (see below). While the Prime Minister has blamed the present situation on the miners, there are five major factors influencing it beyond and partially stemming from the outline above.

Photo of Edward Heath

1973 saw the end of the "Barber boom"—by July growth rates were slacking as inflation overtook them. To further hamper things, Heath had gambled heavily on his growth policy to the tune of borrowing thousands of millions from foreign bankers (a tactic that, with all its repercussions for policy 'independence', will be forced upon the 'winner' of the election). There is now little foreign exchange left to pay the interest, let alone repay the loans/Remarkably large trade deficits became common in 1973, each month from May on vying to have the record for the largest monthly deficit ever (December eventually won but became insignificant besides January 1974's $(NZ)600 million). The overall balance of payments deficit for 1973 was some $(NZ) 3,800 million, far more than double the worst Wilson with Labour did.

Cartoon of Edward Heath flying a city

'No, that's not Concorde, that's Ted Heath'

A third factor was the boom in world commodity prices, helped by intense international specualtion, in 1972-73. On The Economist index prices jumped from 138 August 1972 to 270 a year later. This added considerably to the import bill as Britain is heavily dependent on imported primary produce. This year the bill will be up another $(NZ) 3,200 million due to increased oil prices. The one bright spot on the horizon was the discovery of North Sea oil off the Scottish coast. In an astute political move Heath signed away two thirds of the profits to foreign oil companies. As Paul Johnson in the New Statesman observed in awe: "Mr Heath we can be sure, will somehow contrive to lose the rest." (1 5.2.74)

The fourth problem arises from the one success Heath has had—taking Britain into the Common Market. This move has led to Britain paying considerable sums to inefficient French farmers through the massive common agricultural policy and little else. Some observers are beginning to see through the rhetoric to the true nature of the EEC—giving protection to French industry and secured markets to French farmers while France goes its own sweet way in politics and finance. 1973 may in future be regarded not as the start of an expanded, reinvigorated EEC but as the start of the end—certainly the vital German enthusiasm is fading.

While not as important as Heath would like them to be, the miners are definitely a catalyst in the movement towards an election. In early 1972 the coal miners went on a seven week strike, complaining about conditions, low pay rates and government attitudes. Heath offered the maximum 8% under stage I to the miners who requested 25%. Eventually a special commission awarded 21% wage hikes, inspiring miners hopes that a new era of cooperation was beginning. Such hopes were quashed in the months after April last year when the first representations were made to Government for new rises and better conditions. The wage rates now and the movements requested are subject to considerable diversity from mining area to mining area and so average figures must be treated with caution (the UK Pay Board on Feb 23 announced that the figures Heath had been using for his discussions with the unions had probably been overvalued), but some guide can be given. There are three grades of workers: surface unskilled who get about $(NZ)50 and want $(NZ)65 per 60 hour week; shaf semi-skilled who get about $(NZ)55 and want $(NZ)70; and workers at the three foot high pit face who get about $(NZ)65-$(NZ)70 and want $(NZ)80 (these are basic wages—some, though not many, allowances, can be added). Improvements in conditions are also wanted such as better washing facilities and more frequent safety checks. Heath attacked the miners as all wanting 33% wage increases and claimed his offer was a general 16%, both of which claims were incorrect.

After frustrating delays in negotiation, the miners announced an overtime ban in November. Despite attempts at conciliation from the Trades Onion Congress Executive and the Labour Party. Heath moved into a full scale confrontation with the miners, a confrontation which he worsened by claiming the miners were responsible for most of his woes.

With the state of emergency Heath announced harsh electricity cut backs and warned that if a compromise (i.e. a miners' surrender) was not reached a three day work week would start from the beginning of January. Since then, the three day work week has cost per week about $(NZ)250 million in lost production and some S(NZ)65 million in extra social security payments. The difference between the Government's offer and the miners claims was no more than $(NZ)80 million per year. Most firms predicted heavy losses and many reckoned on failure if the three day week lasts through the spring.

Caught between Christmas goodwill and New Year resolution, Barber, the Chancellor of the Exchequer, presented a heavily deflationary mini-budget, cutting Government expenditure by $(NZ) 2,300 million—the biggest cuts of $(NZ)430 million from capital investment in nationalised industries. The expenditure that will be necessary to get Britain out of the slump has been axed by Heath's insistence on getting into it. Even so, the cuts were not harsh enough for the foreign bankers who have been so important in Britain since 1960 and who felt education and health could well be cut back more than a paltry $(NZ)400 million

Undoubtedly realising the enormity of the problems he was facing, and the small chances of the situation improving before his term ran out in spring 1975, Heath called for an election on February 28. The Mirror edged its front page in black and postered "And now he has the nerve to ask for a vote of confidence."

While the election is undoubtedly largely influenced by traditional voting patterns, the Government's record and the effectiveness of party leaders in the media, the party manifestos are of considerable interest. Conservatives, titles "Firm Action for a Fair Britain" made few attempts to cover its class bias, appealing for: "A Britain united in moderation, not divided by extremism" (i.e. do what we say); "A Government that is strong in order to protect the weak" (i.e. we feel threatened); "A people who enjoy freedom with responsibility" (i.e. freedom to do everything except strike). "Let's work together—Labour's way out of the crisis" was a little more hopeful. It pays lip service to nationalising (and bringing increased worker control of) many major industries, more social security, more redistribution of income, and support for South African liberation movements. Specific policies, such as a wealth tax, are not outlined and a charming disarmer "it's going to take some time and won't be easy" suggest the old Wilson touch of talking left and acting right is returning. The Liberals' "You can change Britain" pushes the old ideas of humane decentralised government without extensive changes of industrial structure—a seeming contradiction to many, but still a far better alternative (unless one believes that an increasingly fascist Heath is necessary to further the revolutionary situation) to the Conservatives.

In the event, the electorate took neither firm action nor Labour's way out. It did however change Britain dramatically by, in the BBC phrase, "adding a political crisis to the economic and industrial crisis". By acting against the prognostications of the political commenters suggesting a possible Liberal-Conservative or Liberal Labour coalition, the country has made its government even more difficult. Even with the Liberal's 14 seats, neither Labour (301) nor the Tories (296) could reach the necessary 3 18 seats for a majority. Which way the independent 23 others will go is anyones guess, but undoubtedly they will be aware—as everyone is aware—that another election by the end of the year is highly likely—and seek to preserve their independence accordingly. In view of this probability it is surprising in the least that both Wilson and Heath seem so eager to form a minority government a government damned to foster disillusionment -in its party by the extent of the mess and its own inability to do anything about it. Possibly their meglomania outweighs their political wisdom a frightening conclusion many observers of British politics find in no way strange.

In January Heath overeacted to a rumou, ed Arab terrorist threat at Heathrow Airport by surrounding the area with tanks. It no solution to Britain's economic and political problems is found shortly, those tanks could well be needed in the streets.