Foreign News: Butler in the Kitchen

At a time when a majority of Britons are producing more, eating better, living in better houses and earning higher wages than ever before in history, Tory Chancellor of the Exchequer Richard A. (“Rab”) Butler had an unpleasant duty to perform. On the first day of a new parliamentary session, he had to submit a supplementary “crisis” budget which hustled out a summer of prosperity and ushered in a winter of what looked dismayingly like oldtime austerity, as practiced by Sir Stafford Cripps. Britain is not bust but suffering from too much boom, yet Butler’s nostrums bore the same cramping old labels (Higher Taxes, Lower Consumption) as those prescribed by Old Austerity himself.

Doing Too Much. Butler seemed wan and tired as he stepped up to the dispatch box amid Labor jeers and Tory silence. He started with the good news, pointing out that his “credit squeeze” (TIME, Aug. 8) had strengthened sterling and “effectively halted” the loss of Britain’s reserves. British industrial production is still growing at the rate of almost 6% a year, yet “in spite of new production records, we are faced with a shortage of steel . . . For every individual unemployed there are now more than two vacancies . . . Imports have been 11% higher than they were in corresponding months in 1954.”

The heart of Butler’s problem is that expanding British industries are sucking in more and more costly raw materials from abroad at a time when the British themselves are using up the machinery and woolens which they should be sending abroad to pay for higher imports. The result is classical inflation: demand for goods and services far exceeds supply; prices and wages are spiraling. Britain, in a word, is trying to do too much—to keep up its armaments, invest in its Commonwealth, renovate its economy and increase its living standard, all at once.

Going Without. In such a situation, Butler had a clear-cut choice. He could aim his budget either at mightily increasing production (enabling supply to catch up with demand), or at limiting consumption. Butler’s disappointing decision was “to restrain demand.”

Given that decision, a Tory Chancellor dedicated to free enterprise might normally have been expected to concentrate his fire on governmental spending, i.e., on the welfare state. Yet to the dismay of his strongest supporters, Butler’s heaviest blows fell on private spending. His budget called for:

¶A substantial increase in telephone and postal charges. Local calls in Britain will go up 30%.

¶A drastic boost in purchase tax, mostly on necessaries. Ironing boards, pot scourers, pastry boards, kitchen scales and shopping baskets, untaxed for the last nine years, will henceforth pay 30%. Items formerly taxed at 25%, e.g., bicycles and toothpaste, will now pay 30%; those at 50%, e.g., cars, TV sets and refrigerators, will now pay 60%.

¶A 5% hike in the tax on dividends paid out by private companies. This was Butler’s sop to the trade unions, which had promised to hold back on wage demands if dividends were restrained.

Only on one big segment of government spending did the Chancellor’s ax fall heavily. While the Labor benches resounded to cries of “Resign! Resign!”, he slashed housing subsidies, except for slum clearances, and shelved the government’s plans to build new offices for the British embassy in Washington (saving $2,800,000).

Squeezing Wives. That evening, in a television address, Chancellor Butler dryly explained why he had deliberately spread the burden. “We must consume less,” he said. “It’s better really to make the feel of this go over the whole field.”

The reaction next day made it clear that the whole felt hurt. “Butler squeezes the wives,” complained the conservative Daily Mail. The Tory Daily Express and Liberal News Chronicle were two minds with but a single pun: “Butler Raids the Kitchen.” From miners and railwaymen came demands for higher wages to match higher prices. Said the Conservative Daily Telegraph, usually one of Butler’s stoutest supporters: “His strategy is disappointing because he has not made any frontal attack on government expenditures.”

In Parliament, the angry Socialists rose to the attack. Butler’s crisis budget had accomplished what Attlee and his squabbling lieutenants could not do themselves: it united the opposition and gave them a flaming issue. A Laborites’ censure motion roundly accused the government of “incompetence and neglect.” The man chosen to lead the attack was But ler’s opposite number: former Chancellor Hugh Gaitskell, 49, a brilliant Oxford don whose economic philosophy is so similar to Butler’s own that Britons lump them together in a single word: Butskellism. Cold, handsome Hugh Gaitskell is tipped by insiders as Attlee’s probable successor, and his followers were plainly expecting a rousing electoral tirade.

The Prosecutor. Gaitskell reminded his hearers of the optimistic tax-cutting budget which Butler introduced last spring, a few weeks before the general election which returned the Tories to power. “The real point of the April budget,” he thundered across the aisle, “was not the incentive to people to produce more, but it was an incentive to vote Conservative.” He pressed home the attack: “Having bought his votes with a bribe, the Chancellor is forced—as he knew he would be —to dishonor the check.”

Gaitskell accused Butler of deliberately misleading Britons with his talk of Tory prosperity. “Always an expert on evasion, he has become an addict of the easy half-truth.” The Socialist’s peroration was one of the bitterest personal attacks the House of Commons has heard since the Churchill-Bevan feuds. “I bear [the Chancellor] no personal animosity,” Gaitskell said. “But his record in this past year is frankly deplorable . . . He began in folly, he continued in deceit, and he has ended in reaction . . . Let him go to the Prime Minister and . . . lay down the burden of his office, which he is so plainly unable to carry with credit any longer.”

Unfair as much of it was. Gaitskell’s attack hit home. Butler’s face flushed, and one or two of his back-bench supporters deserted him and voted with the Laborites when the division came. In the end, the Tories had the votes, and Butler’s budget would be accepted; yet his remedies were not only unpopular, they were also, to many minds, inadequate.

At week’s end the highly respected 17-nation Organization for European Economic Cooperation roundly criticized Butler’s policies as “basically incorrect.” For Rab Butler, who once looked like a Prime Minister in the making, an austere winter lay ahead.