The least likable inhabitant of No. 11 Downing Street, official residence of Britain’s chancellor of the exchequer, is Sir Geoffrey Howe’s Jack Russell terrier, a small and snappish animal with the habit of sinking its teeth into tempting targets. Aptly, it revels in the name of Budget, and last week its owner proved that he too had a terrier’s bite, despite once being likened to “a dead sheep” by his Labor predecessor.
After sporting with the dog for the benefit of some visiting students, the benign-looking Howe, in sober grey suit and Tory-blue tie, went down to the Commons to present a tough monetarist budget aimed at progressively squeezing Britain’s borrowing and public spending over the next four years. In the process he imposed taxes for the first time (though not immediately) on sickness and unemployment payments, hit strikers’ families in the pocketbook by sharply reducing their welfare benefits, raised excise duties on gasoline, alcohol and tobacco and more than doubled the charge for drug prescriptions under the National Health Service to $2.50 by the end of the year, effective in two stages.
This last measure roused MPs to a clamorous fury rarely heard on budget occasions. To Opposition Laborites, the ideal of a low-cost, if not totally free, health service has been sacred since the
heady days of Britain’s post-war social revolution. But by nailing his colors to such an emotive target Howe, whose budget also contained minor taxthreshold reliefs for individuals and rather more substantial incentives for entrepreneurial businesses, demonstrated that he, for one, firmly identified with Prime Minister Margaret Thatcher’s hard-line philosophy of economic discipline. Its object, despite the risks it entails of even greater unemployment than the current 1.4 million,
is to reduce inflation—expected by many economic pundits to approach 20 per cent by year’s end—to five per cent by the mid-1980s.
Yet rarely has a government appeared so divided in allegiance to its leader. In a party that traditionally prides itself on keeping a stiff upper lip whatever the backstage disagreements, the cabinet has been bitterly split in recent weeks, members who feared the social consequences of too harsh a monetarist dose being widely labelled as “wets” (Thatcher’s favorite term of disapproval for anything smacking of woolly liberalism or failure of nerve).
And their torn loyalties have been freely leaked to the press—as indeed were most of the budget secrets, an offence that used to be punished with the utmost severity (one post-war chancellor was forced to resign because of a chance indiscretion).
The Observer recently lined up the cabinet opponents, with Thatcher’s hard-liners including Chancellor Howe, Industry Minister Sir Keith Joseph and Treasury Chief Secretary John Biffen, who recently predicted three years of austerity for Britain—a revelation Thatcher felt impelled to repudiate publicly. The “wets” do not command such economic control. Led by Employment Secretary Jim Prior, the buffer between Thatcher and the unions, they include Foreign Secretary Lord Carrington, his deputy, Sir Ian Gilmour, and arts supremo Norman St. John Stevas.
Disagreement has hinged on three interlocking areas: the 14-week-old national steel strike, which was sparked by Joseph’s insistence that management settle wage demands within strict cash limits; the scale of public spending cutbacks ($2.25 billion this year, another $1.75 billion in 1981); and Prior’s attempts to reform trade union law, which some see as too soft and too slow.
The discord broke open when a rebellious back-bencher, Julian Critchley, burst into print—anonymously, though his cover was soon blown—accusing the government of elevating economics above politics, especially in its handling of the steel strike. Astoundingly, Critchley lambasted his leader as “didactic, tart and obstinate” and quoted another rebel as likening the Tory high command to “Florence Nightingale leading the Charge of the Light Brigade and Lord Cardigan [the rash leader of
that doomed military adventure] tend4 ing the wounded.”
Public confidence in Thatcher is certainly on the wane. A recent poll in the London Evening Standard showed that satisfaction with her performance had dropped four points since January to 59 per cent. The same poll gave Labor an eight-point lead. That followed hard on a byelection hammering in solidly Conservative Southend-on-Sea. In a result that rattled the government’s teeth, -the Tories’ Teddy Taylor, who lost his 3 Glasgow seat in last May’s national election and was accordingly dubbed a “tartan carpetbagger” in Southend, just squeaked home by 430 votes.
Thatcher, as if to stiffen weak backbones, declared that she would sooner lose the next election than backtrack on her tight-money targets. And last week Howe proved that at least he toed the Iron Lady’s line. Opposition leader James Callaghan described the swaths he proposed cutting through the welfare state as “the meanest budget since
1931” and said it would shift the burden “from the healthy to the sick and from the rich to the poor.” Trade union chief Len Murray declared it was “back to the 1930s with a vengeance.”
But Howe, who gloomily predicts that Britain’s economy will grow by only one per cent a year—and that including North Sea oil—sees his strategy as a long-run bid to “beat inflation, encourage enterprise and get us back where we
belong.” It would probably be “at least two years,” he told a national TV audience, “before things start coming right.” Cynics might calculate that will just about allow the Tories to start planning pre-election goodies before their full term expires in 1984. But a lot could happen between now and that year of Orwellian ill-omen to blunt the present steely resolve of Thatcher’s treasury hawks.
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