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Chapter 3

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Debates and initiatives, 1944–5

 

 

 

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Until 1944, public discussion of Britain's post-war industrial future was fairly muted.¹ During that year, however, and in the early months of 1945, this situation changed considerably, as many came to recognise the severity of the country's economic circumstances. All sides accepted that Britain would need to export well above the pre-war level once peace was declared, and that consequently home industry would have to become very much more efficient. But there was far less agreement when it came to proposing how exactly this latter objective should be attained. The Labour Party believed that Britain's plight was desperate — so stark that Morgan Phillips could declare before the 1945 election, ‘We must modernise or perish'² — yet doubted if private enterprise alone was up to leading a recovery. The answer was for the state to become involved in industry and to force the adoption of up-to-date methods. The Conservatives, on the other hand, argued that capitalist entrepreneurs were, for the most part, more than fit to conduct the reconstruction process; the main danger was of Whitehall's bureaucrats stifling native initiative. In peacetime Britain, the Tories asserted, the state might be the servant of industry, but never its master. This chapter looks in more detail at these contrasting approaches; examines how they were received by others involved in the debate; and concludes by considering what the widening political divide meant for policy formation in the Coalition Government's final year.

It is appropriate to start with Labour thinking on production and production-related issues because, of all of the participants in the argument about Britain's industrial future at this time, it was Labour that more often than not made the running. The party's ardour here stemmed from a number of different factors. One influence was a growing understanding among its leaders and supporters that desired welfare reforms would not be possible in a bankrupt country. At a more prosaic level, there was, too, the hard experience of key figures such as Cripps, Bevin, Morrison and Dalton, Coalition Ministers who had seen Britain's industrial ills at first hand and in some detail. Out of these influences came a distinct and coherent set of policies, designed above all else to boost economic efficiency as soon as possible once the war had been won.

Labour approached the peace, of course, with a long-standing commitment to a range of social reforms. Yet its leaders recognised that the economic foundations on which welfare policies would be built had become distinctly shaky. There was, most obviously, much bomb damage, and a greater amount of war-related disruption. Moreover, a crippling lack of recent investment meant that even relatively untouched facilities often seemed dilapidated and wholly unsuited to efficient production, as Cripps reported in early 1945:

Our factories are many of them completely out of date, and we are years behind in their equipment with … up-to-date machine tools and machinery of all kinds.³

It was clear, certainly, that Britain's trading pre-eminence had gone forever, even if Germany and Japan were temporarily removed as competitors. The country, to quote Cripps again, was ‘no longer the workshop of the world, but merely one of many workshops’.⁴

This meant that, for Labour, economic and social objectives became more and more related and intertwined. Morrison could thus tell readers of the Daily Herald during May 1945:

Social security and social reform and a permanent advance in the economic life of our people can only proceed with greater efficiency in industry, greater production and a greater national directive to national economic ends.⁵

Lord Latham made the point even more bluntly when he argued in the same paper that ‘Socialism will only succeed if we make it pay in a greater national income’.⁶

In such circumstances, it was inevitable that for many in Labour's ranks the key questions were increasingly about how the desired measure of economic growth could best be engineered. One line of thinking here focused on various macro policies.⁷ Nevertheless, it was also widely accepted that there would have to be micro interventions, too. Labour argued that this was inevitable because private enterprise was simply not up to the tasks at hand, whatever the wider framework: one could not gain, as Morrison put it, ‘a quart of Socialist prosperity out of a miserable pint capitalist pot’. ⁸ The reasoning employed here was coloured partly by ideology, but mainly by experiences gained in conducting the war. Thus, at an abstract level, Labour believed that some important branches of industry were dominated by monopolists, who were essentially interested only in preserving their own bloated earnings.⁹ Yet even if this argument were put on one side, the weight of evidence still came down against unregulated private enterprise. The war had revealed starkly, for example, that many small capitalists were indifferent to technical innovation. The simple fact, as Cripps, a veteran of over 500 wartime factory visits, constantly reiterated, was that the typical entrepreneurial outlook remained profoundly conservative, revealed most damagingly in a deep suspicion of ‘so-called-newfangled methods’.¹⁰ Moreover, the existing type of employer would, it was felt, find it particularly hard to adapt to changes that were taking place in popular attitudes on the shop floor. Labour analysts believed that workers were now, largely because of the war, better educated and more confident than ever before. If full employment were achieved in the first years of peace, these characteristics would be greatly reinforced. There could be no going back, therefore, to the kinds of harsh industrial discipline prevalent in the 1930s, and new, more progressive methods would have to be tried. Again, it looked as if private enterprise, if left to itself, would be neither willing nor able to make such a change.¹¹

In the light of these difficulties, Labour suggested that optimal reconstruction would only be achieved through, in Morrison's idea, a ‘ladder of control’.¹² The party was determined to regulate some sectors directly, through nationalisation, and others very closely, using anti-monopoly legislation.¹³ On the other hand, it accepted that these types of policy would only be feasible or applicable in a minority of cases — wholesale nationalisation, for example, was simply politically impossible, even if in fact really desirable.¹⁴ Further down the ladder, therefore, Labour would have to develop strategies which, while respecting private ownership as a fact, nevertheless tried to move industry in a progressive direction. Given the wider resource position, such strategies could not mainly be about, for example, pumping in subsidies to aid re-tooling. Measures were needed which could boost efficiency as quickly as possible and as cheaply as possible. This inevitably meant some reliance on techniques that had been used in the war.

The package that Labour finally proposed included several different components.¹⁵ One idea, which had first been proposed by Morrison in March 1943,¹⁶ was for a set of enquiries into various backward industries. These investigations would hopefully facilitate thinking about what Whitehall interventions would be most beneficial in each circumstance and in parallel contribute to the spreading of good practice, by identifying techniques used by the more efficient firms in each sector.¹⁷ Secondly, Labour made it clear that it remained convinced about the merit of JPCs, and expected that they would have an important role to play in promoting productivity growth after the war.¹⁸ The party's position on this subject rested on several foundations. Observers on the Left generally believed that JPCs had been a success in the war, achieving what was expected of them.¹⁹ At the same time, the JPC idea fitted in with wider Labour ideals about how people should be treated, at work as much as in society. Bevin was a particular proponent of this view:

Men will follow when they know they are getting a fair deal, and at this time in our development this means that they must be treated as equal partners and must be given the facts.²⁰

On a more technical level, finally, the JPC could be seen as an institution whose time was very much just about to come. Labour observers, to repeat, believed that old forms of industrial discipline would most likely be inappropriate in the first years of peace, because of the impact of full employment. In this scenario, linking the worker to the enterprise through participation was one of the best instruments left for ensuring labour commitment. Cripps was not alone, therefore, in believing that the JPCs crucial role would be ‘in stimulating the individual worker's interest in output, and thereby increasing his efficiency’.²¹

The third component in Labour's package was concerned with management. The war had, of course, focused attention on management as never before, and this was as true in the ranks of the Left as elsewhere. Amongst Labour Ministers, there was a growing awareness that managers could play a vitally important part in making or breaking an enterprise.²² What was needed for the future was a cohort of managers who were both technically competent and attuned to (once again) what were predicted as the coming industrial relations realities. This meant that there would have to be a departure from the ‘old haphazard idea that anyone with some technical knowledge could be the boss’.²³ In future, as Cripps in particular tirelessly argued, the function must be thoroughly professionalised. Anything else was unacceptable: ‘there is really no more right for an unqualified person to manage a factory than for an unqualified doctor to perform an operation.'²⁴

In practical terms, therefore, there would be a need for what the Weir Committee had already recommended — a strong central institute of management, backed by the government, which could build up the necessary professional and educational standards.²⁵

This was a significant departure for Labour, and, within its own ranks, quite a controversial one. In the inter-war period, the party had done relatively little thinking about management, hazily assuming that the Webbs’ nouvelle couche sociale would play its part with competence and integrity should any industry ever actually be nationalised.²⁶ Perhaps consequently, there remained many in Labour's ranks who continued to see management as the enemy, merely the most clearly identifiable face of the capitalist class. In part this was nurtured by trade union attitudes, gut feelings against those who gave the orders on the shop floor. But there was also a more theoretical underpinning at play here, derived from James Burnham's recently published The Managerial Revolution?²⁷ This book, with its quasi-Marxist jargon, had caused quite a stir amongst Left intellectuals, and was viewed by some as a timely warning of the totalitarian consequences which would result from allowing managers too much power. Nicholas Davenport added an extra twist to such anxieties by predicting, in the columns of the New Statesman, that the managerial state was most likely to develop during a period of Labour rule, because of the party's stated intention of placing large blocs of industry under nationalised, and therefore bureaucratic, control.²⁸

Naturally, such propositions could only vex those of Cripps's disposition, and so there was a steady stream of counter-argument. Much of this came from the pen of Austen Albu, one of the few Labour supporters other than Cripps to have had management experience.²⁹ In Albu's view, the growth of the large-scale joint stock enterprise in the pre-war period had caused profound changes in the relationship between owners and managers, such that the latter had in many cases come to see themselves as independent experts, dedicated to efficiency rather than the narrow profit and loss mentality of the capitalist. The war had strengthened this trend if only because so much responsibility was now placed on management's shoulders. As a group, therefore, managers could not be seen as having inherent social and political interests. On the contrary, they could be won to Labour, given the right approach. One essential of this, for Albu, was that there would have to be a new kind of outlook in the Labour Movement. The days of purely oppositional politics were past; Labour and the unions must become involved in shaping the fate of the enterprise, and act in an intelligent and informed way, so as to complement management skills.³⁰

This was a powerful case, and it gained from being both optimistic (certainly in contrast to Burnham's prognostications) and apparently congruent with what was known of recent Soviet experience.³¹ Unsurprisingly, therefore, much of what was being proposed soon found its way into the official party view. Thus, ‘Licinius’, in Vote Labour? Why?, a propaganda booklet issued just before the 1945 election, could suggest that, of all of the parties, only Labour wanted the manager merely to be him/herself. Indeed socialism meant precisely ‘carrying the managerial revolution to its logical conclusion’.³²

The fullest exposition of Conservative views on the country's manufacturing prospects was the 1944 report, Work: The Future of British Industry, a document that had emerged, under Henry Brooke's guidance, from the Tories’ Central Committee on Post-War Problems.³³ The argument presented here was based on a sober assessment of the nation's likely post-war trading position:

When peace returns, for the first time in our history we shall find ourselves facing the prospect of an adverse balance of payments not likely to be less than £200,000,000 a year or nearly half the average annual value of our pre-war exports.³⁴

In these circumstances, it followed that the government had an over-riding duty to help industry in whatever ways were possible. Much effort would have to be put into perfecting international agreements which were capable of generating prosperity. At the same time, it was also accepted that Whitehall had a part to play at home. However, this was very different from the one outlined in Labour plans.

The Conservatives began from the belief that over ‘the whole broad field of industry, private enterprise generally best serves public service’.³⁵ Quick reconstruction and economic survival therefore depended upon giving entrepreneurs their head:

It was private enterprise that designed and built the Spitfire and the Lancaster. The same qualities of brain, hard work and courage are what we shall need most, when the time comes to turn Britain's great productive capacity back with all speed from war production to meet the world's peacetime needs.³⁶

Two observations followed from this. The first was that direct government control of industry must be avoided at all costs. Nationalisation remained deeply objectionable on ideological grounds, but its major fault was that it encouraged inefficiency. Nevertheless, and here was the second conclusion, accepting this did not mean that the state should simply be banned from the whole industrial sphere. The crucial point was that Whitehall should see itself in a supporting role, as the provider of the best possible climate in which private enterprise could thrive. There was no room for a repetition of the pre-war pattern, when the attitude of government towards industry had allegedly been ‘narrowly regulative, restrictive, [and] negative’.³⁷

In practical terms, therefore, the central focus of state-industry relations was to be around a new ‘Ministry of Industry and Commerce’, an institution ‘inspired by a more positive and constructive conception of its duty to help British industry to grow healthily, make good any weaknesses, sell its goods, and provide employment’.³⁸ In addition, state agencies might play a part in promoting scientific research and technical education; developing and enforcing a location policy; and policing monopoly abuse (though this was not seen as a major threat). The report recognised that unity of purpose within firms would be important during reconstruction and it endorsed joint consultation ('The principle inherent in Joint Production Committees … should continue to find a place in British industry in peacetime'),³⁹ though it implied that Whitehall should do no more than proselytise over such matters.

Brooke's document received a good deal of attention in Conservative circles,⁴⁰ and was broadly endorsed by leading figures such as Lord Woolton, who took up the refrain that a post-war Tory government would not intervene across the board, but merely ‘give such encouragement as properly felt within … [its] competence’.⁴¹ Nevertheless, the tenor of the analysis was felt to be too complacent by some on the left of the party, and efforts were made to develop an alternative set of proposals. The outcome was the Tory Reform Committee's Tools For The Next Job, published in early 1945.⁴² This document began with a much more pessimistic account of Britain's economic circumstances than had appeared in Work, focusing especially on the productivity gap which existed between home and US industries. Nor did it share the official document's great faith in unregulated private enterprise, suggesting that business was often slump minded and most interested in restriction.⁴³ The end product was a set of policy prescriptions which involved the state far more than Brooke had felt necessary.

The Reform Committee began from a belief that the country's problems were related essentially to its lack of up-to-date capital equipment and plant. The situation was so serious that it could only be resolved with some government involvement. What this meant in detail, the Committee argued, was that Whitehall officials should sit down with industry and decide upon a national programme of modernisation. Individual firms would then be expected to decide the details of how they were going to reach the specified targets, with the necessary expenditure financed partly from the centre (through a mixture of grants and tax concessions). Meanwhile efforts would be made to secure labour's co-operation by allowing workers to participate in the formulation of the overall policy, always provided that they dropped ‘arid political discussion’ and instead dedicated ‘their intimate knowledge of industrial practice … [to] the cause of expanding productivity’.⁴⁴ In this proposal, therefore, the government was to act as both facilitator and ringmaster. The Committee hoped that compulsion, though it might be necessary, would never become widespread. In the worst cases, recalcitrant firms might have to be forced to pursue national goals but, in normal circumstances, bolstering the entrepreneur's bank account and promising him or her full independence would be enough to ensure compliance.⁴⁵

Measured against previous Conservative policies, this sounded quite radical, and so there was a measure of debate within the party as to whether it was at all acceptable. Some critics of business conservatism were clearly impressed by the proposals, and even succeeded in getting a degree of support for them from the rank and file.⁴⁶ Nevertheless, at the top of the hierarchy, attitudes remained essentially unchanged, and so Conservative leaders entered the election campaign urging measures of a much more traditional type. Typical here was an article in July 1945 by Oliver Lyttelton, which accepted that Whitehall had some role to play in promoting productivity growth, but emphasised again that the mainspring of change must be private enterprise. Above all, the Minister concluded, the government ‘should not concern itself with the actual running of any industry, a function for which it has no aptitude or experience’.⁴⁷

Thus far, it has been suggested that in the last year or so of the war, there was a growing divide between Labour and Conservative Parties on future industrial policy, with the former proposing a much greater degree of state involvement. The following paragraphs extend the argument somewhat by looking at how other institutions, interest groups and commentators reacted to this polarisation. Could one or other political party claim to represent a wider consensus, or was the cleavage inside politics replicated without?

The press, to begin with, took quite a lively interest in industrial affairs at this time,⁴⁸ though much of the comment, in line with various long-standing allegiances, simply reiterated party positions. On the Right, therefore, The Daily Telegraph came down strongly in favour of the Tory approach. The paper was in no doubt about the severity of Britain's economic plight, even to the extent of questioning whether the country could really afford the Beveridge reforms.⁴⁹ Nevertheless, it was equally certain that private enterprise would rise to the challenge, as long as labour behaved itself (dropping forever the restrictive practices that had been suspended for the duration of the war) and the government provided the right kind of support.⁵⁰ This latter condition was crucial, since too much interference might smother initiative. To achieve the right balance, the Telegraph concluded, administrators must remember the principal lesson’ of the war: ‘that Government should be the active ally of industry, not its repressive tyrant, nor the conductor of one vast State monopoly’.⁵¹

Against this, on the Left, the News Chronicle broadly supported the Labour case. There should be, it warned, no ‘delusion’ about the state of British industry. Nor could plans for new kinds of welfare provision ‘conceivably fructify’ unless exports were increased. Entrepreneurs might be able to achieve this latter objective on their own, but the prospects were not encouraging. The government must therefore hold itself ready to intervene: ‘If our industries cannot themselves attain a reasonable degree of efficiency, there will be a strong public demand for State interference; and this demand Parliament will find it difficult to resist.'⁵²

Amongst less partisan commentators and publications the balance of support was more complicated, though there was certainly a drift to Labour as the Allied victory approached. The Economist was particularly concerned by the productivity gap which had opened up between Britain and America (quoting Rostas), and editorialised at some length about possible solutions. Efficiency, it argued, should become a national priority: ‘To the two existing slogans of "Full Employment" and "Social Security" there … needs to be added a third, "Productivity", on which the first two depend.'⁵³ This might or might not mean central government involvement, according to the circumstances; but Labour statements on measures to improve efficiency were ‘indeed welcome’ as at least pointing in the right direction.⁵⁴ Scope, the business journal, took a similar line, though concentrating on the narrower question of industrial management. There was, it argued, much to criticise in the way in which British firms were run, though ‘a highly trained, highly professional management’ would be the first essential if recovery were to be achieved. In these circumstances, Cripps's speeches on management were wholly laudable: what he had to say ‘needed saying’ and would bear ‘repeated emphasis’.⁵⁵

Finally, it is worth noting that the Labour case also received some backing from Edward Hulton, the influential publisher. Hulton observed that in pre-war days, it had been assumed, on the subject of growth, that the owner would be ‘the driver’ while the trade unionist would be ‘the guard and the brakesman’. The position was now very much more complicated, because big business tended to be run by a new class of managers. At one level, this was a wholly welcome development, because managers were primarily concerned with efficiency. Yet, Hulton insisted, the situation needed to be watched closely, because it might easily degenerate, as Burnham forecast, in a totalitarian direction. Given this danger, the argument ran, there was every reason for a prominent government and trade union presence in the administration of business.⁵⁶

Turning to industry itself, it is again evident that division rather than consensus was the most prominent characteristic in debate. Labour's plans received support from the unions, and from a number of progressive managers. On the other hand, the plans were strongly opposed by most employers, who wanted nothing less, when it came to issues such as the state's relationship with industry, than a quick return to the pre-war status quo. The reactions of each of these groups will now be elaborated on in turn.

In looking at what was going to happen once the war ended, there was a strand in union opinion that argued for what was seen as a return to basics. The unions had been drawn into all kinds of unusual arrangements because of the national emergency but, when the war was over, they would be best off returning to what they really knew, the fight for the rights of their members. Thus, the official-turned-MP Tom Fraser could argue, for example, that the management of industry was ‘not the function of the Trade Union Movement':

Trade Union leaders ought to be experts in their own industry, but their chief function must remain that of serving their members by representing their grievances to management and employers.⁵⁷

Against this, there were others who believed that the lesson of the war was that unions should become more involved in industry, building on their recent admission into the corridors of power to influence decision-making over a wide range of issues beyond mere wages and conditions. G.D.H. Cole was a particularly keen proponent of this latter view, because he felt that there was no real alternative. Britain would be in economic crisis after the war, necessitating an increase in efficiency ‘at a great rate’. Industry, in these circumstances, could not remain static:

It must modernise its processes, and it will have to change the use which it attempts and is permitted to make of its labour force and the relations which exist between employers and workers.⁵⁸

Thus, the unions would be confronted with a new set of problems, and a choice as to how they should react to them. Cole hoped that the outcome would be fresh, more flexible and imaginative union strategies. Certainly, he warned, a refusal to change would be economically damaging and politically disastrous:

I am afraid of the Trade Unions and the more restrictive type of employer coming together in such a way as to perpetrate [restrictionism] … and hold the consuming public to ransom by acting jointly in defence of standard margins of profit, standard wages, standard conditions.⁵⁹

Different parts of the union movement reacted to these arguments in different ways. Nevertheless, at leadership level there was a growing acceptance of the Cole position.⁶⁰ This meant, in terms of the industrial policy debate, that an older union rhetoric demanding public control of business on grounds of moral equity was now recast so as to reflect fully the importance of the efficiency issue. The end product was strong support for the type of policies in Labour's programme.

The most authoritative exposition of this new union thinking came in the TUC's Interim Report on Post-War Reconstruction, which was accepted by the Blackpool conference of 1944.⁶¹ The authors of this document conceded that the union movement's primary purpose must be the pursuit of bread and butter issues — wages and conditions, full employment, perhaps an advance in industrial democracy — but went on to insist that action here must be accompanied by activity on broader issues. This wider focus was necessary, they argued, because real advances in everyday standards for the membership would be unlikely so long as the entire economic system remained unplanned and to some extent dominated by the whims of selfish monopolists. The need, therefore, was to reform industry in such a way as to promote expansion, which in practice meant adopting a package of measures similar (though not identical) to those proposed by Labour: nationalisation of key sectors, tripartite boards regulating those industries that were left in private hands, and JPCs.⁶² Only these kind of policies would, it was claimed, be able to break the log-jam and thus guarantee popular gains:

One of the strongest arguments for… forms of public control which we propose is that these changes are essential for efficient industrial organisation and to ensure that industrial efficiency serves its proper purpose of improving the standard of life of the community.⁶³

The Interim Report represented quite a bold departure in trade union affairs, but its adoption was clearly the reflection of a trend rather than an isolated occurrence. In fact, new thinking was surfacing over a number of issues and in a variety of places. There were, therefore, several locally produced alternative industrial plans, in which individual unions attempted to apply the approach of the TUC document to their own particular circumstances.⁶⁴ Typical of these was a National Society of Pottery Workers’ reconstruction report which explicitly recognised both that growth in efficiency was crucial and that its achievement would necessitate institutional reforms which were designed to curtail the power of some individual entrepreneurs.⁶⁵ Symptomatic, too, were changes in union views on management. A significant number of ordinary members continued to see managers as the enemy or, at least, as the visible representative of the enemy. But this hostility — as in the ranks of Labour — was no longer all pervasive and had been replaced in some quarters by more open attitudes, similar to those advocated by Cripps and Albu. In this view, it was ‘no part of the responsibility of management to associate itself whole-heartedly with … private capital'; rather managers should come over and join ‘the community against vested interests’.⁶⁶ Nor was this merely a rhetorical commitment, as can be seen from the considerable growth of ASSET (the Association of Supervisory Staffs and Engineering Technicians) over the war years — from 1,786 members and 44 branches in 1939 to 11,000 members and 220 branches in 1945.⁶⁷

It may be concluded from this brief examination that, when it came to industrial policy matters, Labour and the unions were marching for the most part broadly in step. On the other side of industry, however, the position was very different. Some managers and owners were, it is true, inclined to more liberal attitudes on issues such as state intervention and labour representation, often as a result, they claimed, of wartime experience. Yet this group remained a small (if vociferous) minority. The vast majority of business people wanted nothing more or less than a return to their pre-war prerogatives, especially to having the time and space to make a reasonable profit away from state or union interference.

Exponents of the progressive case first came to the fore with the production crisis of 1941–2. During this period, as has been shown, management was faced with problems on all sides and at the same time bombarded with criticism. These were traumatic circumstances, which provoked some people into arguing that the real problem was the system under which they worked, with all that this implied about the future arrangement of industry. One manager could assert, therefore, that there was a ‘spirit of revolution … abroad in England’, epitomised by the ‘great many young men of all ages in the ranks of… authority’ who had decided that ‘the old order must go’. In future, those at the top of industry should devote themselves not to profit but rather to ‘the welfare of the country and … its people’.⁶⁸ Such a perspective might, of course, lead management into some strange alliances, but this would be no bad thing, as another executive candidly accepted:

If Management… really does feel that its primary responsibility is to the community, it is marching towards the same ultimate goals as organised labour — even, with few exceptions, as extremist labour organisations…. Industrially, as well as politically, internecine warfare means national suicide.⁶⁹

This kind of histrionic comment fitted the mood of 1941–2, but gave way to more sober reflection once Britain's victory seemed assured. Two themes dominated the later analyses. One related to the practical lessons that could be learned from the great industrial push. Here, the major propositions tended to be about labour and its management. Thus, E.F.L. Brech, a colleague of Urwick's, argued in an influential article that the production front had shown that ‘effectiveness in work’ tended to be essentially ‘a function of personnel relations’, and therefore correlated ‘primarily with morale’. The logical consequence of this was that firms would in future have to take human relations very much more seriously, which, amongst other things, meant democratising decision-making:

The only way in which full regard can be paid to the contribution which employees can make to the morale of their organisation is to invite them to share in its governance.⁷⁰

Such speculation about intra-firm relationships fitted into a wider framework of propositions about ownership and control. These, once again, revolved around doubts about the suitability of unregulated private enterprise. The war had demonstrated at a general level, the argument ran, that capitalism would not provide for social or national objectives without strong state involvement. The partnership between industry and government so recently evolved must therefore be extended to the peace, a point emphasised by the general manager of Osram to readers of Industry Illustrated during mid-1944:

though I want to see private enterprise survive, I believe noblesse oblige is not a principle good enough to secure the harmony that we want. It is not enough to try to convince the people that private enterprise has had a change of heart and that it realises in a sort of feudal spirit its responsibilities towards its ‘tenants’. I think whether we like it or not industry has got to be knit in with the State by some measure of Government control, which need not be hostile and need not be harsh, but must be something which will to some extent… fortify the unaided consciences of those of us who are trying to manage industry.⁷¹

All of this added up to a fairly moderate package, yet it was not one that the reform-minded found easy to make popular. In part, this was simply a logistical problem. Most of the leading progressive figures were associated with the fledgling management movement, and could therefore easily reach a number of like-minded enthusiasts. On the other hand, to communicate with those outside this circle remained very much more difficult. Many employers were biased against anything even remotely connected with the management movement, because they feared that the arrival of a third grouping might easily disrupt a laboriously built up network of bilateral agreements linking them to labour.⁷² Moreover, the prevailing feeling in boardrooms tended to be that managers had no business dabbling in industrial politics anyway, since their only responsibility should be to their companies. Indeed, Scope went so far as to claim that:

the majority of employers do not recognise the right of their managers or paid executives to exercise any independent influence on industry: they pay them (so they say) to carry out the policies of the employers.⁷³

This was not an environment that encouraged the spread of liberal ideas. But what made the reformers’ task considerably more difficult was the fact that even when their voices were heard, they tended to be accompanied by a barrage of counter-propaganda. Typical, here, was material emanating from the National Union of Manufacturers (NUM), an organisation supported by Austin, Dunlop and Courtaulds, as well as many other firms in lighter branches of industry.⁷⁴ The NUM's position was that private enterprise had not failed the nation, in the war or before 1939. Indeed, the suggestion of a ‘decadent body … somehow galvanised into life by the lightning flash of war and by association with government departments’ was mere propaganda. ‘Most people’ knew that British industry was ‘thoroughly sound at heart and full of life and vigour’ during the 1930s, and that this explained why it had been able to play so successful a role in a ‘war of machinery and production’.⁷⁵

The inevitable consequence of all of this was that the larger slice of business opinion remained wholly untouched by the reformers’ case. Nowhere was the mainstream's conservatism more in evidence than over questions relating to reconstruction. The FBI's cautious position on post-war industrial issues had been signalled in its comprehensive report of 1942, and was now confirmed (as has been shown) in the jockeying over the Board of Trade's management initiative.⁷⁶ Outside the employers’ peak organisations, the key concerns were also of a highly traditional kind. Business opinion, observers noted, was usually quite complacent about post-war markets, and often most agitated by the kind of wage drift and extension of union power that had been a feature of the last two or three years.⁷⁷ There was, certainly, no desire to experiment any further on issues such as control, and most employers, as an authoritative Ministry of Production survey found in 1945, saw little future even for the existing JPCs ('There is … a pretty general opinion that the workers really have very little to contribute … I do not think we should blink [from] the fact that unless … encouragement is active the Committees will tend to fade out').⁷⁸ Efficiency was sometimes mentioned as an issue — usually in terms designed to castigate government red tape — but more often than not was simply ignored. Thus, when The Times reviewed an FBI policy document on industry in late 1944, it was shocked to have to report: ‘Searchers for a pronouncement from this authoritative source on the efficient modernisation of the mechanical apparatus of British manufacturing … will look here in vain.'⁷⁹

The conclusion that emerges from this survey is that there was no real consensus at this time when it came to discussion about future industrial policy matters. Labour had arrived at a fairly definite position, which seemed broadly congruent with statements emanating from the unions and from some progressive managers, but it was faced by a highly antipathetic bloc, consisting of the Conservatives and the majority of the employers. To complete the picture, it is necessary to ask how this political division was handled inside the Coalition Government. In practical terms, this means looking at the Board of Trade, since, of all of the departments, it was the one most involved over industrial reconstruction issues. The Board, as the previous chapter has shown, had already been converted to a measure of interventionism. How did it fare with this policy during 1944–5?

Board activity over this period was of two main kinds. Some of the department's effort went into intra-government politicking: the whole business, as an official described it, of trying to make others realise

how unsatisfactory the position was before the war, why it may be worse and not better after the war, the very great importance of increased efficiency and, above all, the futility of expecting increased efficiency unless the Government takes energetic action’.⁸⁰

On the other hand, it was always recognised that this battle would never be won unless the Board could come up with more than just general exhortation, and so great importance was placed on drawing up a realistic programme of ameliorative measures — ‘a closely integrated policy for tackling and relating all the various aspects of efficiency and development’.⁸¹ This led officials to examine a wide range of possible options, relating to various questions of research, design, production and, as has been described, management.⁸²

At first, the search for solutions appeared to proceed fairly smoothly, producing some valuable results such as the Weir Report. Nevertheless, by the beginning of 1945, it was becoming obvious that the Board had become bogged down, with all specific initiatives, as one senior participant complained, subject to ‘continued delay … due to circumstances that we cannot control’.⁸³ The position over a proposed re-equipment subsidy was typical. The idea had originated in the Board and then been put to other departments, but the result was only endless prevarication, as a report of January 1945 indicated:

Ministers decided in February [1944] that the Treasury should work out a scheme with an estimate of costs. There was some official discussion in March, April and May, but since then no progress has been made. In July, the Chancellor wrote to the President saying that he thought the proposal should be dropped. Draft reply awaits President's consideration.⁸⁴

What had gone wrong? Clearly, part of the problem was that all civil servants at this time continued to be greatly over-worked, since too many proposals were being pushed at what was, in any case, very cumbersome reconstruction machinery. Nevertheless, it is also apparent that other, more deliberate factors were in play, notably a variety of pressures from elsewhere in Whitehall which were aimed at emasculating the Board's position. To illustrate what was going on here, it is apposite to focus once again on the management question, since, as Chapter 2 has shown, Board initiatives over this issue were from the first well developed, relatively high profile and quite controversial. What, then, had happened to the Weir proposals after their presentation to Hugh Dalton in February 1944?

The President's first move on receiving the Weir Report, it will be remembered, was to ask his civil servants to contact other departments in order to collect hard information on cases where improved management had boosted productivity. The idea behind this exercise, Dalton explained, was to augment his hand if and when it was decided that the proposals on management should go before a full Cabinet committee.⁸⁵

The Board's enquiries were completed by the middle of July, and confirmed the picture that Weir had already painted. Some businesses were efficient, while others had been made so with government help. On the other hand, the most striking finding was just how poor general standards were. As the report summarising the replies explained, ‘the general experience of the Departments’ was that there existed ‘great scope for improvement in all branches of management’. Moreover, the ‘deficiencies in the field of management’ were not confined to ‘particular aspects’ but extended ‘through the whole’.⁸⁶

While considering exactly how to proceed in the light of these findings, Dalton decided that he should alert his ministerial colleagues about the Board's wider perspective on the crisis facing Britain. Accordingly he put together a paper which pulled no punches in describing the urgency of the situation. One of the great dangers, he wrote, ‘perhaps the main danger’, was that the country would not see ‘clearly and easily enough’ the grave difficulties that lay ahead of home industries in the transition. There was prevalent ‘a hazily optimistic assumption’ that Britain could easily secure an increase in the export trade, but hard evidence to suggest that this would happen was minimal. In this scenario, an increase in productivity was plainly indispensable. As the paper concluded, ‘If we achieve the American standard of efficiency, we can, on British wages, look to the future with some confidence. But if we fail, we cannot.'⁸⁷

Dalton's analysis was presented to the War Cabinet Reconstruction Committee's Sub-Committee on Industrial Problems at the end of July, together with a note from him which underlined the ‘pretty bleak’ prospects before the country and the need for ‘vigorous and varied’ action.⁸⁸ However, despite all of his effort, most of the Ministers present were not impressed. In fact, several Conservatives went so far as to question the very basis of the President's view. Since Britain would be faced by a sellers’ market after the war, they argued, much of Dalton's pessimism was misplaced. If industrialists were holding back now, this was only because they needed reassuring about the Government's intentions. Given the correct leadership, all would come right, as Lord Woolton's ‘private conversations’ with various entrepreneurs had shown him: ‘There was no lack of enterprise in a number of industries and if an export drive were initiated by the Government there would be a ready response.'⁸⁹ The message was rammed home further a few weeks later when Dalton presented a second paper, listing possible measures which could be taken to promote exports and productivity; this was met, once again, with almost total indifference from most of his ministerial colleagues.⁹⁰

In the light of these setbacks, the President decided that he ought to move cautiously on Weir, and that his best tactic would be to collect official views on the Report itself, in order to identify any weaknesses in the proposals, and to rally support. Opinions were, therefore, collected from all of the departments concerned. This exercise showed that there was general backing for Weir in the Admiralty and in the Ministries of Works, Labour, Supply and Education.⁹¹ The Ministry of Aircraft Production, too, was in favour, with Cripps writing that he was ‘extremely anxious’ that something should be done about the report ‘as soon as possible’.⁹² On the other hand, Lyttelton's Ministry of Production registered its opposition. The disagreement here was not with the substantive proposal (there was ‘room for a properly constituted central organisation to study the problems of management') but rather with the suggested level of government involvement. As a Ministry official explained:

we feel that an attempt to set up an organisation of this kind under direct Government auspices would be foredoomed to failure since a Government sponsored organisation would start with so serious a handicap of suspicion and distrust that it might never succeed in making good however sensibly and conservatively it were run.

A better option, in the Ministry's view, was that there should be ‘an endeavour … made’ to establish an independent organisation on a voluntary basis, capitalising on the experience and wealth of large firms that were already involved in the management movement.⁹³

Much more worryingly, the Board's enquiries also revealed that the Treasury position was far from helpful. It had always been recognised that support from this direction would be crucial, and so, when the Board put its case to the Treasury, it did so in very moderate terms. The Board noted that a management institute would not be viable if left to private enterprise, since, as Weir continued to emphasise, industry in the main had still to be convinced of its usefulness. What was needed, therefore, was government start-up money — perhaps £50,000 — which could be added to subscriptions from big firms (possibly £5,000) to get the new institution functioning. Exchequer resources should only be provided, the Board emphasised, on the understanding that they would be temporary, and that the Government expected industry to respond and quite quickly take over funding altogether.

This was a carefully argued case, but it proved inadequate to shift the Exchequer's scepticism. The Treasury's central objection was that ‘the financial balance of the proposals’ seemed ‘wrong':

In our view, the efficacy of the scheme very largely depends on the degree to which Industry itself is prepared to finance it. It follows that the Government's contribution should be a minor, not a major, proportion of the expenditure of the Institute; and should be conditional on funds being found from industry for whatever additional sum, on close and realistic consideration, is agreed to be the minimum necessary to make the project worth pursuing.

The Treasury was therefore prepared to provide £5,000-£ 10,000 per annum, and to see the Board ‘active in encouraging the promotion’ of the proposed institute; but it wanted industry and the management movement to make the detailed arrangements about getting the project started, and the same sources to provide the bulk of the funding.⁹⁴

The extent and character of this opposition made it difficult to see what should be done next; in some frustration, Dalton asked Sir Charles Bruce-Gardner, one of the Board's most senior industrial advisers,⁹⁵ to review possible options. The end product was a report, delivered in mid-January 1945, which essentially came down in favour of the Ministry of Production's earlier advice. Bruce-Gardner agreed that management had often been weak during the war, though he emphasised several mitigating factors such as the very rapid expansion of production and a loss of capable men to the forces. The need for the future must be to reach medium and small-sized firms (the most inefficient), but it also had to be recognised that these would be loath to involve themselves with any government-backed body. The Board, therefore, should forget the Weir proposals (which Bruce-Gardner felt to be poorly formulated) and instead do all it could to get industry involved in helping itself, which in practice meant encouraging big, progressive firms to share their knowledge and resources.⁹⁶

Dalton, beset by other problems at the Board,⁹⁷ told his officials that he was inclined to accept this advice. However, a last-minute intervention from Cripps led to the Ministers agreeing that they should make one final effort on behalf of Weir and should submit his proposals to the Cabinet Reconstruction Committee's Sub-Committee on Industrial Problems.⁹⁸ Accordingly, Dalton drew up a paper detailing the different possibilities over the management institute and underlining his own support for Weir.⁹⁹

This was presented to the Sub-Committee in early March 1945 but did little to change existing attitudes. Cripps recorded his support for Dalton but ran into sustained opposition. Indeed some (un-named) adversaries among the Ministers present were now prepared to argue not only that state intervention in management matters would be pernicious but also that management was not, in any case, a science that could be perfected. The end product was an instruction to Dalton that he should explore possibilities within the following highly conservative guidelines:

A better course than that proposed in the [Weir] Report would be to suggest to employers’ associations that the Government would welcome the combination in a central body, with council, of the more valuable of the existing management organisations…. This would provide the advantages of a central focus for study of management problems, a library and other needed facilities…. There would … be no question of the Government providing finance.¹⁰⁰

Some days later, when this outcome was discussed in the Treasury, a senior official minuted that the Weir Report's condition was now ‘grave’, while another added the written comment that it should ‘R.I.P.’.¹⁰¹

In the light of this, it seems reasonable to conclude that the Coalition Government was as divided on productivity related issues as interests in the rest of the country. Again, the key issue concerned intervention. Labour Ministers such as Cripps and Dalton argued that the state should be used to force change, but they were continually frustrated by their Conservative colleagues, who took a more laissez-faire approach. The next chapter looks at what happened once this impasse was resolved with the resumption of electoral politics.