Commentary (The Times)

Conservative Party: "The Kamikaze Tory Rebels" (Ronald Butt article) [firing arrows into backs of their own side]

Document type: Press
Source: The Times , 10 Dec 1981 (p12)
Editorial comments:
Importance ranking: Major
Word count: 1p

The kamikaze Tory rebels

Ronald Butt

With the Government’s economic policy under vehement attack from Tory backbenchers, Mrs Thatcher and Sir Geoffrey Howe obviously have a serious credibility problem. The implicit message to the electorate is clear and damaging: if so many Conservatives think the policy fallacious in concept and unjust in consequence, how can it not be both technically and morally wrong, particularly in face of three million unemployed and damaged industrial output?

The difficulty is not that a policy with high unemployment as its short-term by-product, and bringing electoral unpopularity, falls right outside the range of received beliefs held by the broad band of “moderate” (or common denominator) opinion which stretches from the Labour Right through the SDP-Liberal Alliance to the Tory Left. It is the instinctive response of such opinion that the Government must be seen to be doing something, must intervene with public spending, and must always prefer the risk of inflation later to unemployment now.

It is, of course, as a result of the long hegemony of such “moderate” opinion, with its propensity for the easy option, that the economy fell into the state which requires the harsh remedies the Government is applying. But the Government’s challenge to the consensus ideas flies in the face of years of intellectual self-conditioning by the so-called moderates. The rebellion led by Sir Ian Gilmour this week was a cry of pain from the old orthodoxy and the crying will go on until, or perhaps one should say unless, a new orthodoxy is established by the Government’s eventual success.

The rebels, however, do not make that success easier by persistently firing arrows into the backs of their own side. After the meeting of the rebel “cell” on Monday, followed by Chris Patten’s article in The Times, and another by Sir Ian in The Guardian, 14 Tories abstained in the vote on the Chancellor’s expenditure announcement. Others have indicated that if they do not get the budget they want, they may or will (Mr Patten’s position) vote against the Government.

None of this means that the Government’s life will be in danger at any time from Tory revolts. After all, one of the principal reasons for the hardening rebels’ attitudes is their fear that the Government will cost them their seats at the next election. Most of them are particularly vulnerable to the Alliance.

Sir Ian (Chesham and Amersham) and Mr Patten (Bath) hold seats where a Liberal came second last time and which (assuming the Crosby voting pattern by which the Social Democrats took roughly a third of the Tory vote and two-thirds of the Labour) they would lose. Sir Ian’s majority of 20,295 would turn into an Alliance majority of about 6,000; Mr Patten’s majority of 9,112 into an Alliance majority of around 14,000.

Of course, in a general election many of these potentially lost votes would be clawed back, but in such seats where the Alliance already runs second, the Tories are particularly vulnerable, and there were six of them among Tuesday’s rebels. The present incumbents will do nothing that might precipitate the election they dread.

Sir Ian has said that if the main parties were doing their job properly there would be no need for a centre party, and that the other parties should now move to the centre, squeezing out the SDP. What this ignores is that the SDP is precisely the consequence of the centrist inflation-permitting economic management favoured by previous Tory and Labour governments which created our present plight.

The failure of such policies to make a mixed economy work encourages the left to its successful attempt to capture the Labour Party. This made it impossible for Mrs Thatcher’s Government to seek centre ground. Instead she has had to find new and more radical means of making the mixed economy work and the chance of a new centre ground and a workable consensus depends on her success.

Mrs Thatcher’s Tory critics fear that her cure will be so painful that it will unleash the kind of social change and disturbance that all their past policies have sought to avoid. But they, as much as Mrs Thatcher, should also fear that their propaganda against the Government will destroy all of them.

Meanwhile the rebels cannot accept Sir Geoffrey s quiet confidence that recovery is in sight. In addition, many anxious Tories outside the rebel band would, as I wrote a fortnight ago, like the Chancellor to be more flexible with public borrowing to assist the flow of investment private, or public, to state industries. So far as private money is concerned Sir Geoffrey’s position is that if borrowing can be arranged on a proper risk basis, that is fine. If not, it is no use letting nationalized industries borrow from the market.

It is the private sector where he sees growth and recovery. Sir Geoffrey has produced various statistics to support this view, and the other day Lord Harris of High Cross drew attention in the House of Lords to another. Despite nearly three million unemployed, the Manpower Services Commission has shown that in 1980 there were no fewer than seven million changes of job - an amazing million new engagements a month. This suggests that the three million is far from an immovable heap but that it conceals a highly “dynamic” labour market, which is symptomatic of industrial change.

Even so, the private sector needs stimulus and Mr Michael Grylls, chairman of the Tory backbench Industry Committee, recently took to Sir Geoffrey Howe and to Mr Patrick Jenkin, Industry Secretary, a plan to promote private capital investment produced by a study group of banking and industrial representatives. The principal suggestion was that companies should be allowed to pay their interest to the banks for medium and long-term loans net of the corporation tax against which interest is eventually chargeable. Thus the companies would have the benefit straight away instead of having to wait 18 months, and the banks would reclaim the money from the Inland Revenue.

The cost to the Treasury would have been small, but even so the Chancellor looked at it pretty beadily as a “subsidy”. So the study group has amended its idea to make the lending institutions and not the Treasury carry the cost of the 50 per cent corporation tax deductible by borrowers, until their own tax liability is settled. The scheme should therefore cost the Treasury nothing.

It may be true that industry suffers more from the lack of a profitable return on capital. Nevertheless, if the Government can accept this scheme it could be some help towards the industrial recovery in which the Chancellor believes and his critics do not.