The battle for Jenkins' ear is on = and there cen be few who doubt who will win it. The victas made a brief pre~victory appearance in London last week, and readers of the Times were treated to a splendid picture of Messrs Rose, Duisenberg, Goode and Finch, the members of the International Monetary Fund mission to London on their way to consultations at the Treasury. In the same week, the other victors, the CBI, made strong demands concerning the Budget, The IMF mis sion was here for consultations; Peter Jay of the Times saw more to it tlen that. ‘Mr. Jeukins', he wrote, ‘has to corsider not merely the wishes cf the Lif team and the feelings of his fellow finence ministers at the OECD meeting...... in Paris, but also the need for some minimal political and dess consensus behind thatever measures he decides upone' 4nd to think that we had almost fa gotten the consensus? Not surprisingly, there was soon some restiveness in Perlienent about the amount of information given to the IMF team in contrast to the Chancellor's reluctance to give MPs any advance warning of his budget plans. The problem Jenkins hes confronted himself with is that of creeting a deflationary situation at home in order to'make devaluation wark' (I never noticed being told just for whom this devaluation ismeant to work’. Yet never since the war has the personal standard of TIVES crudely measured by overall consumer expenditure , not risen, still kss when output was rising at the fast rate of 2 LBibe As Peter Jay Ghdexved, given that profits end dividends are bound to rise very sharply indeed at 15-20%, compared with Iast year, the prospect for a ‘voluntary inoomes policy’ becomes: all the more daunting. Within the nerrow confines of his assumptions, Jenkins is left with two alternatives. He will probably play safe and use parts of both. He can increase personal and @nsumer taxation, or he can hold down wages. In any case, en increase of around £500m in budget taxation is in traditional Treasury balancing erreangements, necessary. If this fell on wusumer expenditure it would mem a 2? fall inpersonal consumption. nd, in spite of the rapid expected rise inrwfits, the Government has virtually pledged itself against en incresse in corporation tax higher thm the 25% alreaiy amnounced that would discourase the recovery of private investment; which of course it would, This des not mean, however, that corporation tax ecmnot be raised, it mars that investment should not be in private hands. The atermative is incomes policy. This is not an aternative to depress-~ ing woking class living standards, it is another way of doing it. ‘That, it Seems , is — is meant by ‘keeping the options open'. This, politically, is not 'a gocd thing’, but Maurice Corina argued that Jerkirs will be able to face opposition with demonstrations of the willingness of the CBI to accept a statutay prices freeze and even dividend limitations. (The jargon cames out again - the Cdl is asked if it is willing, the TUC is told what is going to happen’). But revelations were uncovered by Peter Jay last week. In an authoritive sounding story he reported that no price
freeze ne contemplated, no statutory limistion of dividends is planned
and & 33h ceiling will be put on all increases in income arising from new
bargéins. The TUC vote last week rave the Government ‘ust the green lignt
that it needed to strengthen its legal control over wares. Prices it seems
are assuned by the Treasury to *e roing to rise by at least 6% in 1968 :
The result must be, if we ere using the crude Treasury methods of total
a Sige as a wey of measuring rise in living stendards, that
ose standards 6n personal incor y j
— a oe Ds Pp me through wages is to mee by no more
As was commented by Maurice Corina, ‘at present the tide seems to he running
more ana more strongly the Chancellor's way'. That is, in the direction of
wage restraint. But let us not take credit away from the IMF and the CI.
And I bet that Messrs Rese, Duisenberg, Goode and Finch took th- ashtrays
from their hotel when they left.