No Wage Increase

As Parliament reassembled last week for a two-day debate of Britain's economic situation. Prime Minister Harold Macmillan's Conservatives were grim. Behind them was a series of defeats in by-elections; ahead of them, demands from 5,000,000 British workers, led by the railwaymen, for a new round of wage boosts. But Chancellor of the Exchequer Peter Thorneycroft doggedly stood the Tories' ground.

"Our measures are designed to make money scarcer and more expensive," he said, "to make it harder both to earn profits and to get wage increases." Thorneycroft announced that the government would veto all wage increases for its own employees in the ministries and nationalized industries, hoped thereby to set an example for private industry. Further wage hikes, warned Thorneycroft, "would be a disaster to this country." Snapped the Labor Party's economic spokesman, Harold Wilson: "A straight declaration of war" against the trade unions.

By last week Thorneycroft's austere measures (tightened credit, a ceiling on investment) were beginning to take effect. As he had planned, the pulse of the economy beat slower. The London stock market dipped to a three-year low. Bankers advised clients to postpone expansion plans. In some industries production had already begun to sag. Last week Thorneycroft slashed government investment still further by cutting back allocations for nuclear power plants, modernization of railroads and slum clearance.

Before the week was over, Thorneycroft got a chance to prove that he meant what he said. An arbitration board granted a wage boost to 32,000 white-collar employees of the Ministry of Health. The government promptly announced that it would refuse to pay the increased amount. Labor reacted instantly. "This is not the way to industrial peace," thundered Frank Cousins, boss of the Transport and General Workers' Union, Britain's biggest. "It is the way to industrial idiocy."

Despite their routine political sympathy with the clamor of union leaders for "More!", the Labor Party's top leaders agree on the necessity for wage restraint and monetary controls--but only when combined with price, rent, building and business controls to put the workers in a better mood for restraint. The Conservatives were betting that their intentional slowdown of the economy, without any of Labor's favorite controls, would curb inflation, restore confidence in the economy, the government and the Tory Party's leadership.

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