The Lights Are Going Out Again

In Britain, this will be a Christmas of extraordinary hardship. The country is staggering under a savage double blow: the oil shortage and widespread labor disruptions. Together, the two crises have left the nation desperately short of fuel for homes and industry. To combat the problem, Prime Minister Edward Heath last week ordered stern restrictions on fuel use and asked Britons to make their greatest belt-tightening sacrifices since World War II.

Heath's conservation measures:

> For the next two weeks, shops, offices and factories will be allowed to operate only five working days. Most will carry on business as usual this week, then close down for a Christmas holiday, from Dec. 21 to Jan. 2. Thereafter, unless coal supplies increase, most industries and businesses will be on a three-day week determined by a rota system--half working Mondays through Wednesdays, the other half Thursdays through Saturdays. Industries that depend on a continuous supply of power, such as oil refineries and steel furnaces, will have to live with 65% of their normal ration. The food industry will be exempt from the restrictions, as will such essential services as railways, airports, doctors' offices and newspapers.

> Television will go off the air at 10:30 p.m., trimming two hours from usual broadcasting hours.

> Householders who use electric heat are being asked to heat only one room. Says the government's Electricity Council: "If you have an electric heater in your living room, our understanding is that your bedroom goes without."

> New measures, possibly higher taxes, are being drawn up to deal with Britain's lopsided balance of payments deficit. Shortly before Heath's address, the government announced a preliminary November trade deficit of $621 million. This follows October's record $821 million deficit. There was speculation last week that the timing of Heath's announcement--on the eve of the Copenhagen summit of Common Market leaders--meant that he might seek EEC help to offset Britain's deficit. There is "an acute danger," as Heath has noted, that his deflationary measures could spread to Europe's industrial economies, all of which are struggling with inflation and the prospect of vastly higher oil bills. The result of that kind of domino-style deflation, Heath said, could be "a disastrous slump,"

For many Britons, the cutbacks mean a dim and chilly winter, with the prospect of massive power blackouts unless there is a wholehearted cooperative effort to turn off the lights and turn down the heat. The new measures will reduce electricity consumption by 20%; an earlier cutback of 10% had already darkened theater marquees and storefronts and cut street lighting by half.

Stark Choice. The nub of the problem is that Britain generates 60% of its electricity from coal; half is used by industry and half goes into homes. During the past six weeks, when coal miners have refused to work overtime, coal stocks at generating stations have dwindled to 14 million tons, only enough to keep the country going until late January. "The choice is stark," says Ronald Richardson, deputy chairman of the Electricity Council. "Either the public cooperates or complete cities could lose their supply of electricity at a stroke. It could even happen before Christmas."

In fact, it happened the very next night. Shortly after 10:30 p.m., large areas of London and the rest of the nation experienced the first blackouts of the energy crisis. Some 100,000 homes were affected in the Midlands alone. The loss of power was believed to have been caused by electric heaters and blankets being switched on for the night.

Unless the coal siege ends, the enforced holiday will lead to massive layoffs. The British Steel Corp. plans to cut production 50%; 100,000 of its 250,000 steelworkers will be laid off in the first week in January. As the effects of the cutback spread through the auto, machinery, and textile industries, the layoffs could extend into the millions.

Business and industrial managers huddled in board rooms last week to sort out their plans. Like many smaller London storekeepers, Harrods and Selfridges decided to stay open for Christmas shoppers through this Friday, then shut down until after New Year's.

Meanwhile, the miners were digging in their heels. The president of the National Union of Mineworkers, Joe Gormley, bluntly declared that the emergency cutbacks amounted to nothing more than "a big political ploy to put the problems of the country on the backs of the miners. This kind of talk only hardens the attitude of the men." Aggravating the situation were two other labor disputes: engineers in power stations and railway workers refused to work overtime and Sundays until they received substantial wage increases.

One result of this critical situation will be that Heath's grand economic strategy will be put on ice. Running his budget deficit to an unprecedented high and covering it by borrowing abroad, Heath gambled early in his term that the huge injection of cash into the nation's economy would force-feed British industry into speedy growth. But winning the gamble depended on two assumptions: first, that world commodity prices would come down from their record highs, and second, that workers would moderate their wage claims. Both proved to be false. By late summer it became obvious that world commodity prices were not stabilizing at a substantially lower level. The inflationary spiral of higher prices for raw materials, food and manufactured goods inevitably added to the pressure for a boost in wages. Food prices alone jumped 18% over the past year, and in October the minimum bank lending rate rose to a record 13%.

Dark Days. From London, TIME Bureau Chief John M. Scott reported: "Suddenly last week Britain seemed thrust back to the dark days of the 1940s. The lights were going out again--or at least they most assuredly would if the government's conservation measures do not prove successful. Once again summonses to a new national resolve and unity sounded in the rhetoric of the hour. Confronted like the rest of Western Europe with a shortfall in oil supplies and impossible prices for the oil it can still buy, Britain, unlike its neighbors, was beset by a crisis within a crisis--and one largely produced at home.

"The crisis flows from an unresolved flaw in British society of the '70s: the inequitable distribution of the rewards of labor. The inequalities have become all the more painfully abrasive during the Heath government's concerted drive to lift the British economy to a new plateau of sustained growth. It was a central part of Heath's strategy that Britain's labor unions could be persuaded to hold down their pay demands. But in observing the lavish profits that have accrued to Britain's financial and property speculators over the past year, the unions have not unreasonably wondered whose belt was being tightened most.

None have felt a stronger grievance than the traditionally responsible public-service unions, including the coal miners, the electric-power engineers and British Rail's locomotive engineers, who have tended to fall behind their more militant colleagues in the construction and engineering trades.

"By raising the calamitous scenario of hundreds of thousands of other union members being thrown onto short-time or out of work altogether, Heath is plainly playing high-stakes British roulette. He rigidly insists that if he gives in to the three angry unions, his Phase III wage-control program will be in tatters. But with the prospect of industrial Armageddon on the near horizon, he has left a door open for himself to work out a generous 'special case' settlement for the three. Such a solution would not resolve all the demands for equality of sacrifice, but it would undoubtedly win broad sympathy."

Public Blame. Meanwhile, secret talks were under way last week between the unions and Employment Secretary William Whitelaw, the man who worked out a coalition of Protestants and Catholics in Northern Ireland. Said one official: "Willie has been wheeling them in and out just as he did up in Ulster." Though the unions were publicly getting the brunt of the blame, the government was secretly asking other workers to allow the miners, railmen and power engineers to go to the head of the line for wage increases. If they still refuse to go back to work, the three-day week should have one salutary effect: the cooling of Britain's overheated economy. Thus, literally under cover of darkness, Heath will have covered his retreat from his economic gamble.

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