The public service unions now started. From 1961 to 1975 central government employment had risen by 27 and local government by 70 per cent. The NUPE (National Union of Public Employees) grew, from 265,000 to 712,000 between 1968 and 1978, and in 1973 came the first National Health strike, which included consultants. Jack Jones became a figure of power, as head of the TGWU, the largest of the unions, pushing for an extension of union power over Labour. It was he who produced the idea of a ‘social contract’, an echo of the ‘social partnership’ of consensus-minded Catholics. There would, he promised, be moderation in wage claims as a consequence. There followed some preposterous calculations as to permitted wage rises. As in the United States, these were soon shown to be imbecilic. Jack Jones apparently dictated academic salaries, and some deluded dons, unable to believe that an enlightened government could do this to them, demonstrated in mortarboard and gown outside Downing Street with the electric slogan, ‘Rectify the Anomaly’. By June 1975 weekly wage rates had risen by up to one third, and by summer 1977 inflation stood at 13 per cent and wages rose by 14 per cent, the better-paid workers now paying marginal rates of income tax. In fact taxation was wicked, in the sense that it was destroying the good. A married man with two children had take-home pay of £70 per week in December 1973, but £63 in 1977; by 1979 the incidence of taxation was growing, such that there were 2.5 million more taxpayers than in 1974, but the government’s own poverty figure was £55 per week for a married man with two children. There was every incentive, therefore, for said married man to abandon his family and sue for ‘benefit’. A million people earned less than £55, the lowest 10 per cent of earners in the National Health Service earning £48, and the overall average itself was now low: £80 in industry generally or, for the 2 million local government workers, less (dustmen earned £56). Anthony Crosland, the ideologist of modernized Labour, became a near alcoholic. His final contribution to the country’s future was to destroy the selective grammar schools that had been a great glory, and a means to inspire and promote bright children from poor backgrounds. This was done in the name of equality: schoolchildren were all now to be brought up in the same huge ‘comprehensive’ schools, and examinations were increasingly rigged to demonstrate that these unlovely places were a success. As ever, in England, when equality was in question, all that happened was the proletarianization of the lower-middle class.
England had the dearest labour and the cheapest management, and a spiralling down began. The public debt was added to, by over £10bn in 1975-6, and at the same time the GDP fell (by 1 or 2 per cent in the middle seventies). This compared badly with the German or Japanese experience, and even the American, because inflation in those countries was much less (in Germany even in 1975 6 or 7 per cent). England could only compete by selling London property to the new oil money, and was not exporting goods; the ‘pump-priming’ strategies of the era meant that none-too-good manufacturers were able to sell indifferent goods to the domestic market. The balance of payments deficit increased to £1.5bn in 1975 and a sterling crisis broke early in 1976. Healey himself decided boldly on a new programme of cuts in spending, and recognized that wage demands and inflation (plus an exchange rate of $2 to £1) made the country uncompetitive, and the government was divided (Wilson himself resigned in March 1976). In the latter part of 1976 the IMF was called in, to reinforce Healey’s existing strategy, and the cuts went ahead - the first and in some ways the only truly serious cuts made. A humiliating ‘Letter of Intent’ had to be signed by the British government, one of the founders of the IMF. By the autumn, Wilson’s successor, James Callaghan, was publicly warning his own supporters that they would have to give up the idea of spending their way into employment: ‘Higher inflation, followed by higher unemployment. That is the history of the last twenty years.’ By 1976 the Treasury itself was somewhat converted to the idea of monetarism, a limitation of the quantity of money such that inflation could be contained. But the conversion was not enthusiastic. The Bank (and the City) expressed greater enthusiasm.
It was an unhappy time, the country winding down, and a slow crisis started. In 1976-7 the world economy did pick up, as the oil-shock money was recycled back to the industrial and exporting countries (which grew overall at 5 per cent). But the British economy was by now too fragile to gain much more than a respite, and inflation still ran high - 25 per cent in 1975, 16 per cent in 1976 and in 1977 (earnings keeping apace until 1977). As the pound was now a petrol currency, it naturally rose; keeping it down meant selling it, and that made for inflationary pressures, compounded by the inrush of Arab money. Still, there was a respite, unemployment not much above a million, and inflation down below 8 per cent in 1978. The respite did not last long.
Seventies England finally fell apart over an absurd wrangle about Scotland. The vagaries of the electoral system had made the government dependent upon a few Scottish Nationalists. Theirs was a cause not worth discussion: careerist soft-profession mediocrities with no sense of their own country’s considerable history. They had to be placated, and a referendum was staged as to independence. It failed, and, without the votes of the few Nationalists, the Labour government collapsed. It did so as the economic strategy also collapsed: the comic arithmetic of the pay policy anyway fell apart because in far-away Teheran the Shah lost his Peacock Throne, and in the ensuing panic oil prices doubled. Iran was the second-largest oil producer, and revolution there affected 5 million barrels per day. Production was suspended for ten weeks after 27 December 1978, and then recovered only to 2 million. By June 1979 the price of Saudi Light Crude had risen from $12.98 to $35.40, and there was a very harsh winter in the USA and Europe; the spot price affected marginal, non-contracted oil, and some crude-oil prices - Nigeria’s for instance - even reached $40 per barrel. In Britain, with inflation rising, the barriers broke. The TUC wanted 22 per cent, not the 5 per cent they were supposed to accept, and various strikes began in the winter of 1978-9. Callaghan, who himself said that if he were younger he would emigrate, confessed that there was a strange new tide a-flowing, and he was right.
By this time, the government’s policies were spreading havoc. The headmaster of an infants’ school in a small Berkshire town wrote to parents whose children usually had school dinners that they would have to go home because of a strike. He added: ‘we cannot allow you to provide packed meals instead, as this could be regarded as a form of strike breaking’. The heart of the whole wretched problem was expounded by a valiant economist of the Right, Walter Eltis, who said that if at Oxford in 1965 the question had been asked as to whether an absence of growth, inflation, unemployment and a balance of payments crisis could coexist, the answer would have been yes, but only in an underdeveloped country. The Bank of England noted in 1975-6 that the real return on investment was now zero. By then taxation of salaries had reached 83 per cent and on interest or dividends, 98 per cent. The government was in no condition to face trouble from the unions again, and there was more panic; the City refused to buy government stock, mistrusting it; interest rates rose above 10 per cent again, to 14 per cent by May 1979, when the next election happened. The annual debt - ‘public sector borrowing requirement’ - almost doubled, to some £10bn, but even then some effort had to be made to control public sector wages at a time when the government was taking three fifths of the entire national income for itself. In the summer of 1978 the unions rebelled against the system, the Ford workers leading the way, and by the winter there were surreal strikes, including dustmen and even body-buriers. But England, messy as she was, was not without creativity, or even tissue regeneration. There was to be a reaction against all of this. Edward Heath had been dismissed as leader of the Conservative Party, to his own and his supporters’ great surprise. Margaret Thatcher replaced him, to his disbelief. She meant business, at last.
18
Europe: The Phoenix Flops
In the early 1950s Moscow had been frightened at the prospect of a Europe headed by a rearmed Germany, and in alliance with the United States. Stalin had tried to bully the Germans; in the early years of Khrushchev there had been fewer crude ploys, but then he too had become a bully, exploding huge experimental bombs and serving ultimatums over Berlin. The West only closed ranks, and NATO became quite sophisticated, with an intelligence network and, in some countries, even a shadowy, underground organization. But by the 1970s matters had changed. Nixon and Kissinger needed to stop the Vietnam War somehow, and had approached Moscow in May 1972 with proposals for détente. They were couched in terms of disarmament - SALT I, the Strategic Arms Limitation Talks - and the American bait was a credit deal over grain shipments, easings of conditions for Soviet visits to the USA,
etc.
The Americans’ threat was of a deal with China, and the context was a division that had been emerging since Khrushchev’s last years: he had withdrawn help and refused Mao the secrets of the bomb, and Mao responded with a sort of offended nationalism. In 1969-70 there were Chinese-Soviet armed clashes on the river Ussuri, a disputed border, and the Chinese responded to the American opening. But it was not just the Americans who appeared. West Germany launched her own probe, known as
Ostpolitik
, and she was offering hard-cash concessions. Was this the opening that the Kremlin had been looking for since 1952, and the ‘Stalin Note’ offering German unification in return for neutrality or, as it was called by now, ‘Finlandization’? Germany was after all vulnerable, and official Europe had no teeth.
At the time Europe certainly seemed to the outside world to be a miracle of prosperity, without the concomitant crudities of the United States. However, she remained less than the sum of her parts. The European Community itself (to use the shorthand) was not particularly efficient: quite the contrary, it stumbled along drearily. Its institutions (and its flag) went back to the early fifties, and the Coal and Steel Community: a court, an assembly, and a High Authority to sort out the very technical technicalities of who was to produce what at which price. Jean Monnet himself had become bored with his creation, and its European outcrop was generally used as a parking place for failed politicians whose vanity needed to be salved. The first president of the Commission had been Walter Hallstein, possessed of negative charisma. Later on came heavy-lecturing worthies, the heaviest and longest-lasting a German Widmerpool, Günter Verheugen. It was all desperately uninspiring and even in some ways fraudulent. At the heart of this multinational community was Belgium, subject to the most absurdly provincial nationalisms; even Luxemburg dressed up its dialect, the Dutch equivalent of Liverpudlian, as a national language. In the 1970s, to give the Community some sort of personality and appeal, a parliament was set up, with direct elections. This was again, as with everything touched by the then French president, Valéry Giscard d’Estaing, lifeless and even ridiculous.
A British journalist of genius, Catherine Bennett, wrote an article about it in 1991. She had unearthed a British Labour member of the European Parliament, one Glyn Ford, who claimed to be so busy that he could not make appointments. ‘Anyone wanting a little of Mr Ford’s time must wait beside the telephones dotted around the bars and hallways, bleeping him now and again, for a gap to occur between the seven simultaneous meetings which Ford says he has “all day, every day”.’ He had been an MEP since 1984 and was ‘Chair of the Committee of Inquiry into the Rise of Racism and Fascism in Europe’, ‘which’, as he explained, ‘was pretty high profile,
and
I was made the Parliament’s spokesman on Star Wars’. By 1986 he had produced a report with fifty recommendations, and a Solemn Declaration. The grandiose ‘hemicycle’ had its ushers, its interpreters for (then) nine languages, its electronic voting gadgets (when they joined the EU the Finns learned how to jam their pencils into the ‘yes’ button and go and have a drink), and speakers had four minutes to address a variety of topics - bananas, mud flaps, cordless telephones, gay rights,
etc.
Committees would meet to draw up reports that might go to the Commission, be translated, presented to the Parliament, then ‘debated. Then amended. And translated. Votes are taken on amendments. Amended, finished proposals go to the Council of Ministers which meets infrequently, in secret. If they dislike the proposals, the Ministers discard them.’ As Bill Newton-Dunn explained, it was ‘very unsatisfactory, an enormous confidence trick’. The domestic parliaments had in effect given up power to the European Community, but had not been replaced by a democratic body with any power, either. Instead, talk. There was a Women’s Committee, which felt ‘that insufficient care is paid to the fact that women have to be fitted into working life differently from men’. As Miss Bennett says, ‘a selection of thick documents, one running to 75 pages, all available in all nine languages, all to be thrown away, suggested that this indeed is the kind of thing members of the Women’s Committee say to each other in their sessions without end’. This all went together with lavish offices, in Brussels and Strasbourg, with generous travel and daily allowances,
etc.
‘Tell them they’re lucky and the honest ones say, yes . . . Others snap, “You should see what the chauffeurs and interpreters get paid.” Or “The Italians get £70,000” . . . MEPs are freed, like the members of the Sealed Knot society, like the lions at Longleat, to act out their parts in a great, elaborate sham . . . Looking at them, listening to them, it’s hard to know what is worse: their expensive, conceited charade of a Parliament, or the prospect of it ever becoming the real thing.’
This reflected one of the great developments of the seventies, the rise of the ‘soft professions’. Deeper down, it also showed the increasing powerlessness of parliamentary bodies in general as bureaucracy and technology made semi-secretive committees and lobbies more powerful. The soft professionals, demanding a European policy for gays or women and the like, were expensively used to hide the shift of real power. Besides, the experience of any multilingual parliament was not encouraging, and Margaret Thatcher in a later speech made mock of such bodies as the Austrian before the First World War, where proceedings became chaotic and even budgets could be produced only by decree. The secretiveness of the Council and the Commission, the sheer loftiness of their civil servants, and the extraordinarily slipshod ways with money were notorious. In the seventies matters were made worse because the machinery worked almost ridiculously slowly. Creating a unified market was supposed to mean the ironing out of endless small differences. The bureaucracy was not in itself very considerable and did not amount to more than that of an English local government. However, it did involve far more people, in the separate countries, as they went through the European laws and had to apply them. The ways of these bureaucrats were, to outside eyes, very strange, and involved a degree of petty bullying noticed in every country. As an Italian said, it was an age of bureaucratic micro-persecution: no smacking of naughty children (a French father was imprisoned in Edinburgh) and increasingly no smoking. Europe became unpopular in England because shopkeepers could be arraigned if they went on marking goods in the old weights and measures, rather than in the metric system. There were stories as to the harmonization of condom sizes, the Italians claiming that they needed three millimetres more than the Germans, who took offence.