From Free Life No 18, May, 1993

Just over a year ago, I welcomed the return of a Conservative Government at the General Election. I wish here to examine to what degree I was right in believing that things would not grow unexpectedly worse as a result.

Now, I doubt if any of my readers will deny that, as a group of persons, the present Government is among the worst in British history. To find the same smell of corruption, the same abuse of powers for private or party advantage, the same cynical disregard of insistently repeated promises, we must go back at least to the First American War, and perhaps to before the Glorious Revolution. When I contemplate the Ministers, individually and collectively, I cannot but fill with shame at the prospect to which this formerly most glorious of nations has at last been reduced.

Nevertheless, it must be accepted that a line can be drawn between the personality of a government and its essential acts. To be sure, it is in the public interest that the Ministers should comport themselves in a seemly manner, not bringing themselves and thereby their offices into disrepute. But the public interest is far greater to be served in the long term by their ensuring the prosperity and security of the British people. I will therefore examine the apparent course of policy with regard to the Economy and to European and other foreign affairs.

Beginning with the economy, I regret the withdrawal of Sterling last autumn from the Exchange Rate Mechanism. I see no reason to believe that, unconstrained by some external force, the British Government can maintain a stable currency. It has persistently failed to remain within its own monetary targets. To hope that it will privatise the issuing of money within the foreseeable future is about as vain as hoping for the discovery of intelligent life on Mars. The only available alternative is for Sterling to be fixed by international agreement to some other, less volatile currency.

To argue that the Deutschmark parity decided in October 1990 was too high is to miss the point of our having entered the Mechanism. The point was to bring down British inflation. Had the parity been set to equalise notional purchasing power here and in Germany, it would have been necessary to bring down British inflation to the German level, which at the time was rising. By setting a higher parity, it became necessary to force down British inflation below German levels, perhaps to zero, by which time the Germans, we may be assured, would have restored their own monetary discipline.

The sharp recession that followed entry to the Mechanism was properly an effect not of enslavement to the Bundesbank but of the need to correct the mistakes of the Lawson boom. Equally, the present recovery is little more than a reigniting of that boom. Sooner or later - and probably sooner - the same stern correctives will need to be applied. The "liberty" regained on Black Wednesday was strictly that of the spendthrift who reclaims the credit cards previously left in a friend's safekeeping and runs back into the shops.

Certainly, the Government's microeconomic policy is well- intended. Privatisation continues, with the railways and the Post Office certain to be offered for sale; and there are interesting reforms projected of the Police and of revenue collection. There is even serious thought of dismantling the Welfare State. But the ultimate judge of economic policy remains the rate of inflation; and if this returns a hostile verdict, these measures, valuable as they are, will be small mitigation.

Turning to Europe, I dislike the Maastricht Treaty. It will sanction a further mass of bureaucratic interventions that will more than compensate for the micro-economic reforms mentioned above. But Mr Major is probably right that it will not lead to a United States of Europe. This object was a surely frustrated by the 1989 revolutions in the East as Communism was destroyed. The Community is about to be joined by Sweden, Finland and Austria. While not notably liberal in their economic policies, these countries will even so be net contributors to the Community budget, and so will resist any extending of the subsidies now given to the poorer member states. And, once Austria has joined, the geographic and economic reasons for letting in the Czechlands may be irresistible. This being done, it may then be impossible to continue the exclusion of Slovakia, Hungary and Poland. Whatever federalist desires may survive an extension on this scale, I do not believe that they will be practicable.

We can therefore at least suspend our doubts regarding the Government's European policy. If the European Community seems set to become a free trade zone of reasonably independent nations, I see no liberal objections to our remaining within it.

I have already stated the arguments against military intervention in Bosnia. On this issue, I am pleased to note, the Government and I are for the moment in broad agreement: British troops will not be sent out to become the common targets of all participants in this vicious and uncontrollable civil war. I have many domestic reasons for loathing Mr Hurd. But, while he remains as Foreign Secretary, I have reasonable grounds to trust that British foreign policy will be conducted in accord more with British interests than with President Clinton's fatuous desire to prove that he has a heart and that the United States is now the World's primary power in any other sense than that Great Britain was in the 1920s.

On the basis of all this, I remain satisfied with the verdict of April 1992. Things have not on the whole improved, and will not improve - nor perhaps can they improve. But they have not grown greatly worse, and may not do so before the next election.

Sean Gabb