The Lollipop Budget

First the gas workers walked out, cutting service to 4,000,000 homes. About 3,500 business firms, 1,700 schools and 400 hospitals were shut down--either because of lack of heat or because their own employees were also on strike. Some hospitals even had to burn their soiled bedsheets because their laundries were closed.

As the strike for higher wages spread, stoppages and slowdowns seemed to succeed one another almost at random. The customs inspectors at London's Heathrow Airport returned to duty within 24 hours, but the rail strike that was supposed to last one day dragged on for four. Queen Elizabeth II herself had to rearrange a train trip to Wales (she went by plane instead). Scotland Yard warned travelers: "Do not come into London unless your presence is absolutely essential." In some areas there were already shortages of fruits and vegetables.

At this season of chill and exasperation, Chancellor of the Exchequer Anthony Barber arrived in Parliament last week to perform that ancient British rite of spring, the presentation of the annual budget. The document that he produced from the traditional red leather box was a curious one. Barber himself described it as "broadly neutral," and it was a sort of plea for economic truce. Most noticeably, it dispensed an assortment of minor gifts for practically everybody. Unemployment and sickness benefits were raised by $2.46 a week and pensions by $3.94 (at a total cost of $1.4 billion). Taxes on children's clothing, candy, ice cream, soft drinks and potato chips were removed--inspiring newspapers to dub Barber's concoction a "lollipop budget."

Beneath the lollipop blandness, however, the new budget represents a long gamble on the part of the Conservative government. Prime Minister Edward Heath is determined to continue his fight against inflation by maintaining what Nixon-watching officials call his "Stage II" controls on wages, prices, profits and dividends. At the same time, he wants to stimulate the economy to maintain the present growth rate of 5%. To achieve this, he is prepared to increase government spending by 14%, without increasing taxes, and to accept a budget deficit of $11 billion next year.

The London Times called the budget "more valorous than prudent" and added: "It is certainly incautious, and we fear that it is ill-judged." To most political observers, it seemed to be a stopgap tactic for holding consumer support while the government tries to make its stern economic controls work. As one economist put it, "The budget is really a piece of fiscal sugar to sweeten public acceptance of Stage II."

If the gamble works, the government will deserve credit. It it fails, the Chancellor can always take refuge in less hallowed tradition: he can return in the fall to take from his red leather box a proposal for higher taxes to pay for the lollipops.

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