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24 June 2020updated 08 Jul 2020 8:18am

From the NS archive: The devaluation of Mr Heath

13 November 1970: An unsigned leader on Edward Heath’s failures and who might come to replace him. 

By Anonymous

In the autumn of 1970, a matter of months after winning the general election, the prime minister, Edward Heath, found himself presiding over a faltering economy. The choice he had to make was between deflation and devaluation – both of which would tarnish his reputation and both of which he refused to countenance. Heath’s intransigence and sense of denial had already led to restive grumblings from his own party, which led the writer of this leading article to look around at who might take over should Heath be ousted. His eye fell on one man only, Enoch Powell.

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It took the last Labour government just four months to proceed from the moment of its greatest triumph, the election of March 1966, to the nadir of its fortunes, the July austerity measures of the same year. History is now repeating itself. Mr Heath – the miracle worker of not yet five months ago – now resembles nothing so much as a shorn Samson standing blindly in the temple as the pillars crash around him. It did not really require the Prime Minister’s mulish performance on Panorama this week to demonstrate that the “free society” spell he so recently cast over the electorate has been broken beyond repair. With his own backbenchers warning him about the fate of Latin American banana republics, with even right-wing commentators freely invoking the memory of Weimar Germany, Mr Heath himself can only announce that he is “astonished” that the highly distinguished Scamp Committee should have presumed to criticise his recipe for economic salvation. The country, he continues to insist, has been offered “a change of course”: the fact that everyone else (including the Governor of the Bank of England) sees that course as leading straight to the rocks of either a massive deflation or a second devaluation leaves him, if anything, even more stubborn than before.

With incomes policy – and even a statutory wage freeze – still obstinately ruled out, only one choice now confronts Mr Heath: he must either deflate or he will have to devalue. What he cannot do is to go on blithely pretending that nothing has changed since 18 June. That way he will only end up by having to do both. At the moment, in suggesting sixpence off the income tax as the escape route by which the nation will eventually get out from under the very real inflationary challenge that faces it, the Prime Minister is deluding nobody and deceiving only himself. If sterling is to be saved, the real prospect is that, far from sixpence coming off income tax, another sixpence will simply have to be slapped on next April. By then the brokers’ men of the international monetary community will be demanding no less.

Of course the Prime Minister’s reluctance to act is understandable: the dilemma he stares at is a cruel one. It is not just sterling that is threatened with devaluation. So is his own political standing. Probably, indeed, by now the only way he can avert the first is stoically to accept the second. But no politician likes having to eat his words – and Mr Heath, who five short months ago gave some very specific pledges both in favour of tax cuts and against any form of statutory incomes policy seems to have even less appetite for the exercise than most. Forced to choose between sacrificing his own credibility and that of our currency who can be sure on which side he ultimately will come down?

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In that sense the whole Tory cabinet is involved in what looks like being a race against time. Some of them have, of course, been there before – with Sir Anthony Eden and his Suez policy in 1956. Then a great number of words had to be eaten; and as Sir Anthony could not bring himself to do it he was – in that quietly ruthless way the Tories have with their own – forced from office, never to return.

But this time the whole atmosphere would clearly be very different from that of Suez. It is not simply that nowhere in sight in the present cabinet is there a Macmillan (Iain Macleod was perhaps the one man who could have filled the role) ready to spot his chance and to seize it: there would also inevitably be a much greater mood of public panic than at Suez. In a situation not just of party crisis but of national fear, too, it is not hard to foresee for whose leadership the cry would go up. Of course Enoch Powell could not simply succeed Edward Heath – men who had sat round the cabinet table with the one could not the next day simply tamely assemble under the other. Yet there is a pattern to these sort of national confidence crises – and here at least no one should too carelessly disregard the lessons of the Weimar Republic. What the Tories would certainly take refuge in first would be a Von Papen figure; and in the present cabinet there is certainly no shortage of those. The esteemed Sir Alec, the respected Lord Carrington, even Geoffrey Rippon with his close lines of communication to the Right – the mantle would fit easily enough on any of them. The rest would follow with a kind of historic inevitability. The first move would be to bring Enoch Powell into the government. The second would be for him – as the one undaunted (and indeed undented) figure in it – to force his way forward as its leader.

“Time,” Mr Powell remarked in the course of the extraordinary television jest that he was treated to by ITV this week, “does not run against politicians in quite the same way that it does against other men.” He may well have given away more than he realised. Far from being the saviour speaking very much in the distance, his hour-long exposure on the national ITV network (unkindly coming the day after Mr Heath’s own pathetic BBC performance) at least had the merit of serving notice that he now regards himself as being within striking distance of his destination. Sir Oswald Mosley may have sat for 25 years in Paris dreaming his dreams of the economic crash that would bring him his opportunity. But to Mr Powell time has been kinder. He does not have to dream dreams: he can already see his hour and taste its richness. With luck, that may turn out to be about the one glimpse of the future that could yet stir Mr Heath from his torpor.

Read more from the NS archive here. A selection of pieces spanning the New Statesman’s history has recently been published as Statesmanship (Weidenfeld & Nicolson)

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