Austerity Britain, 1945–51 (23 page)

He also was well aware that his combative attitude would strike a chord among working-class patriots – so much so that George Orwell noted in the spring of 1946 that ‘the public opinion polls taken by the
News Chronicle
showed that Bevin’s popularity went sensationally
up
after his battle with Vishinsky [head of the Soviet delegation at the first meeting of the United Nations General Assembly, held in London], and went up most of all among Labour Party supporters’. Moreover, Bevin’s strongly anti-Russian stance, typified by his statement to the UN that ‘the danger to the peace of the world has been the incessant propaganda from Moscow against the British Commonwealth as a means to attack the British’, also played extraordinarily well with his natural political opponents, possibly to his consternation but possibly not. Within a week of VJ Day, making his first major parliamentary speech as Foreign Secretary, he was, according to ‘Chips’ Channon, ‘cheered and applauded by our side’ for ‘almost a Tory speech, full of sense’. Mollie Panter-Downes observed in October 1945 that ‘people who three months ago were horror-stricken at the thought of Ernest Bevin negotiating England’s foreign policy are now admitting, handsomely and unexpectedly, that they admire him’. Even high society welcomed the rough-tongued West Countryman, with ‘Jennifer’ recording how at a West End function a few weeks later Lord and Lady Rothermere had been spotted ‘chatting to Mr Ernest Bevin, who was in great form with a fund of amusing stories’.
^5.

Where Bevin and the rest of the Attlee government were less realistic was in their deep reluctance to accept that post-war Britain could no longer afford to enjoy great-power status. Admittedly there were retreats in these years from Greece, India and Palestine – with the granting of Indian independence a genuinely major if flawed achievement – but the illusion stubbornly persisted that Britain’s rightful and permanent place was at the top table. Perhaps if Bevin had been at No. 11 (as Attlee had originally intended before being dissuaded by the King), fighting the financial battle for overseas retrenchment in a more tough-minded way than Dalton managed, it might have been different – but probably not. After all, assumptions of British superiority, and the rightness of large swathes of the globe being coloured red, were deeply rooted in the national psyche – and continued to be inculcated. ‘The Empire Day celebration at school was absurd,’ Gladys Langford noted disapprovingly in May 1946: ‘Watts [presumably the headmaster at the north London school where she taught] had had posters made bearing names of Dominions and children held these aloft reciting doggerel rhymes – presumably of his composing – relating to their flora, fauna, and products. A few hymns were sung – quite out of tune – and we were exhorted to tell tub-thumpers to pack their bags and go away – that Russians were unpleasant people and Arabs wicked slave-dealers.’ In such a climate it seemed only proper that Britain should have its own independent nuclear deterrent – in short, a British bomb – an objective agreed by the government in January 1947. This very secret decision was ‘not a response to an immediate military threat’, Margaret Gowing would write in her definitive study, ‘but rather something fundamentalist and almost instinctive – a feeling that Britain must possess so climacteric a weapon in order to deter an atomically armed enemy, a feeling that Britain as a great power must acquire all major new weapons . . .’ Or as Bevin had put it a few months earlier at a meeting of the relevant Cabinet committee, ‘We’ve got to have the bloody Union Jack on top of it.’
^6.

What, in the generally difficult circumstances, was the economic way ahead? ‘I find myself,’ John Maynard Keynes privately reflected in April 1946, ‘more and more relying for a solution of our problems on the invisible hand [ie of the market] which I tried to eject from economic thinking twenty years ago.’ He died a few days later, but Keynesianism – seeing that invisible hand as at best a regrettable, to-be-circumscribed necessity – was poised to enter into its inheritance. First, though, there was the playing out of the new government’s commitment, explicit in its election manifesto, to socialist planning.

For at least two years, the rhetoric that planning from the centre was the key to a prosperous economy rarely faltered. ‘Planning as it is taking shape in this country under our eyes,’ declared Herbert Morrison, the minister responsible for co-ordinating the planning machinery, in October 1946, ‘is something new and constructively revolutionary which will be regarded in times to come as a contribution to civilization as vital and distinctly British as parliamentary democracy under the rule of law.’ Not long afterwards, there appeared a new edition of Douglas Jay’s
The Socialist Case
, first published in 1937. Jay himself was now an economic minister, and he not only reaffirmed the immortal maxim that ‘the gentleman in Whitehall really does know better what is good for people than the people know themselves’ but argued that, within the context of a properly planned, centrally run economy, ‘economic freedom – the freedom to buy or sell, to employ or refrain from employing other people, to manufacture or not manufacture – is a secondary freedom, often approaching a luxury, which can and should be limited in a good cause’.
^7.

Yet the reality was very different. ‘Nebulous but exalted’ was how one of the government’s economic advisers, Alec Cairncross, would in retrospect caustically describe central economic planning during these immediate post-war years, while according to Kenneth Morgan, probably the most authoritative historian of the Attlee government, the ‘attempt to plan private industry through the Treasury and the Board of Trade was half-hearted, indirect, and in many ways unsuccessful’. Indeed, he contended, ‘so far as Labour had a strategy of planning it was largely to renew and continue the physical and financial controls of wartime, to help exports, to direct industry towards development areas, and to direct the use of vital raw materials’ – in short, ‘nothing that resembled the
dirigiste
economic strategy of de Gaulle’s “popular front” government in France in 1945–6’. No output targets (even for industries identified as key), no way of fitting together manpower and cash forecasts, above all no powerful, autonomous institutional mechanism to give muscle to vague nostrums: the planning deficit was insurmountable.
^8.

There were several main reasons for this anticlimactic outcome. The Treasury, not for the first or last time, gave a masterclass in institutional scepticism; there was much intellectual confusion as to what economic planning in peacetime actually meant and entailed, as epitomised by the muddle-headedness of Morrison, theoretically in charge of planning; and for more than two years there was the unwillingness of either the Ministry of Labour or the trade union leaders (for all their considerable goodwill towards the government) to countenance a wages policy, seen as a direct threat to the long, jealously guarded tradition of free collective bargaining – an unwillingness that more or less scuppered the chance of any meaningful manpower planning.

But ultimately, what really killed central economic planning was the lack of willpower on the part of government. In particular, the Labour Party’s commitment to
democratic
socialism meant in practice an aversion to either new, unaccountable administrative mechanisms or any form of tripartism (ie government, management and labour) that seemed to threaten the sovereignty of the familiar parliamentary system. As for either the compulsory allocation of manpower or the planning of wages, neither was consistent with the traditional ‘voluntarism’ of the labour movement, with its deep distaste for outside interference, certainly in peacetime. ‘If the maximum of persuasion and inducement fails to attract enough men and women into particular occupations to fulfil the plans laid down at the centre,’ Durbin insisted as early as September 1945, ‘then the plans must be changed.’ Just over a year later, Sir Stafford Cripps at the Board of Trade was publicly accepting that no comprehensive plan could be carried out completely ‘without compulsions of the most extreme kind, compulsions which democracy rightly refuses to accept’ – which was why, he hardly needed to add, ‘democratic planning is so very much more difficult than totalitarian planning’.
^9.

Not that planning would have been easy, even if the iron political willpower had existed. Quite apart from institutional and labour difficulties, there would have been intense resistance on the part of privately owned industry, which was hostile enough anyway towards such government schemes as Development Councils, intended to stimulate co-operation between firms in specific sectors. Given, in the words of the economic historian Jim Tomlinson, ‘the absence of a large cadre of potential industrial managers sympathetic to any form of socialism’, it was hardly surprising that the charge was sounded so faintly. The 1940s may have been the least unpropitious decade in the twentieth century for peacetime economic planning, but that did not make it propitious.

Yet another reason why such planning failed to get off the ground after 1945 was the continuing existence of important physical controls exercised by the government, including controls on labour machinery, building and materials allocations. Such controls helped explain the almost complete absence of anything significant by way of investment planning, seen at this stage as superfluous. ‘“The City” in the middle of a socialist state is as anomalous as would be the Pope in Moscow,’ Attlee had observed in 1931, just after (in instantly created Labour mythology anyway) a ‘bankers’ ramp’ had destroyed Ramsay MacDonald’s minority Labour government, but in practice, Attlee’s own government did remarkably little to undermine the functions of the Square Mile and its inhabitants. In particular, the proposed National Investment Board, billed in the 1945 manifesto as the way to ‘determine social priorities and promote better timing in private investment’, was never established. Instead, in its place there was an almost wholly lame-duck, purely advisory National Investment Council, of nugatory achievement.

There was also, looked at from a socialist or planning point of view, the feeble, half-cock nationalisation of the Bank of England in 1946. The minister largely responsible was Dalton, who despite his acknowledged expertise on public finance had a sketchy grasp of the City and by the time he became Chancellor still did not understand the functions of the government broker, let alone the difference on the Stock Exchange between brokers and jobbers.
¹⁰
Certainly he did not strike a great deal: the Bank kept its essential institutional autonomy, quite unlike that of a government department; governors were to be appointed for a fixed term of years and could not be dismissed; and the Treasury failed to secure the power to issue directives to the clearing banks, effectively putting it at the mercy of the Bank’s mediation. It is hard to resist the conclusion that the purpose of this particular piece of nationalisation was essentially symbolic – a way, in short, of appeasing the party’s demons after the 1931 fiasco.

Of course, the taking into public ownership of a sizable chunk of the British economy was integral to the planning dream. The Bank of England was followed in fairly quick succession by Cable and Wireless, civil aviation, electricity, the coal mines, transport (including the railways and road haulage) and gas. Between them these newly nationalised industries employed some two million workers, with the majority either on the railways or in the mines. And, together with the postal and telephone services that were already in state ownership, these industries would for the next three decades form the core of the public part of the ‘mixed economy’.

The principal architect-cum-draftsman of the 1946–9 wave of national isations was Herbert Morrison – usually depicted as the ultimate machine politician (especially in his capacity as leader of the London County Council through much of the 1930s) but also in fact a sincere believer in socialism’s ethical dimension. ‘Part of our work in politics and in industry must be to improve human nature,’ he would tell Labour’s conference in 1949, adding that ‘we should set ourselves more than materialistic aims’. He believed, as did the party as a whole, that the nationalisation of several key industries would generate a wide range of economic, social and political gains. These included helping to coordinate production, distribution, investment and pricing policies within and across industries; encouraging economies of scale that in turn would provide opportunities for modernisation of plant and equipment; creating a virtuous circle of a more contented workforce, improved labour relations and rising productivity; and making it harder for the despised
rentier
class to prosper through unearned income (memories perhaps of Aunt Juley in E. M. Forster’s
Howards End
and her tidy, predictable dividends from shares in Home Rails).