Leading Article: A deepening malaise

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The Independent Online
YESTERDAY'S announcement that up to 30,000 mineworkers are to lose their jobs could hardly have been worse timed. It follows a month in which one famous British company after another has announced substantial lay-offs. Of course John Major's government is not solely or even mainly to blame for the slaughter of the coal industry. That goes back to the notoriously cack-handed privatisation, under Margaret Thatcher, of the electricity generating industry, long British Coal's biggest customer. The two power generating companies that emerged have now made the questionable decision that British coal is uncompetitive.

The Government seems to have been as dismayed as anyone by the scale of the closures and lay-offs, in the mines and elsewhere. The mayhem in the pits goes well beyond even what is considered desirable for the eventual privatisation of British Coal itself. Mines that would by normal commercial criteria be profitable are being shut down irretrievably. It is, furthermore, hard to believe that the cuts could not at least have been phased in. Leaving aside the human grief involved, they can only aggravate the recession.

Tory MPs, let alone Labour ones, are becoming punch-drunk as one blow after another falls on their constituencies. Across the country there are fears that the recession is entering a deeper phase, one that threatens seriously to erode the productive capacity of manufacturing industry. The Government contributes to these fears by seeming not to understand the forces with which it is failing to grapple. With sterling's withdrawal from the ERM it has lost the cornerstone of its macroeconomic policy, the framework that gives stability to the industrial and commercial sector. Thus far, Norman Lamont has dismally failed to produce a substitute policy. Until he does, it will not just be financial markets which will suspend their belief, but every business and consumer in the country.

At the microeconomic or supply-side level, industry is no less in the dark over the Government's real priorities. An industrial policy is needed, involving not interventionism or second-guessing the market but a strategy that will give British industry the skilled, educated workforce and advanced infrastructure it needs. It is particularly shocking that government-sponsored training should be in a state of virtual collapse.

Three of Britain's main competitors, Germany, France and Japan, have evolved a steady business culture in which government decisions in all policy sectors are taken in full awareness of the needs of industry. True, they have all had too much protectionism, featherbedding and bureaucracy, which linger on in reduced form. Over the same period Britain has, by contrast, lurched from wholesale nationalisation and interventionism to the opposite extreme.

The first Thatcher privatisations were aimed primarily at improving performance, and did so. More recent ones belong to the wilder shores of ideological tinkering: witness the contortions being performed to carve up British Rail. At best they will produce minor benefits; badly handled, they could do far more damage than good. What is needed above all is to stop the sense of drift. It is part of the country's deepening malaise that on present form this government does not look capable of such a feat.

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