The Retrenchment and Reinvigoration of Industrial Subsidies (1970–4)

By June 1969 it had become apparent that the government had at last achieved a substantial balance of payments surplus, but this was as much due to devaluation as to any consequence of industrial policy. The Conservatives inherited this position a year later, but also inherited sluggish economic growth, wage inflation which reached 12–13 per cent during 1970 and unemployment at more than half a million (see Figure 5.1). The pre-election pledge was to transform the economy through increased efficiency in public services and by placing the onus on employers to resist excessive wage demands. The government also sought to reduce non-discretionary assistance and profitability supports, and this was made abundantly clear by the then Secretary of State for Trade and Industry, who in Parliamentary debate in 1970 stated that ‘the vast majority lives and thrives in a bracing climate and not in a soft, sodden morass of subsidised incompetence … We believe that the essential need of the country is to gear its policies to the great majority of people, who are not lame ducks, or do not need a helping hand’.1