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Chapter 4

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Chapter 4 Early post-war efforts, 1945–7

 

 

 

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The election campaign in 1945 revolved around a number of issues, but Britain's industrial future was certainly at the centre of debate.¹ The electorate was confronted with a fairly clear-cut choice. Labour was pessimistic about the state of industry, and therefore stressed the need for drastic measures. Some sectors, it was true, had performed well during the war, and could be left to develop on their own. But others had ‘wholly or partly failed’ and would therefore need careful attention. Policy prescriptions here ranged from outright nationalisation in a minority of cases to ‘constructive supervision’ in the majority, the aim being always to increase efficiency.² The Conservative approach also stressed the need for greater productivity, but there was a much greater belief in the Tory ranks that private enterprise could rise to the challenge. The essential condition, the party argued, was that entrepreneurs should be allowed to operate freely. Controls must be dropped as quickly as possible. There could certainly be no question of long-term state involvement, as Mr Churchill's Declaration of Policy to the Elector emphasised:

As against the advocates of State ownership and control, we stand for the fullest opportunity for go and push in all ranks throughout the whole nation. This quality is part of the genius of the British people, who mean to be free to use their own judgement and never intend to be State serfs, nor always to wait for official orders before they can act.³

Given this division in approach, it was inevitable that Labour's final triumph on 17 July would provoke intense speculation amongst the owners of industry. Was Britain now headed down an entirely new industrial road, featuring wholesale nationalisation and coercion? In the business press, some stressed Labour's realism and essential moderation. The party had a distinctive approach, and it would deal with industrialists gently but firmly. However, there would be no rush to impose ideology for its own sake; the ‘wiser heads in the party’ were ‘keeping policy in line with the brittle facts’.⁴ Yet such soothing opinion did little to calm nerves in the boardroom. The Financial Times noted that the new government's arrival was causing ‘apprehension’ across ‘a wide area of private enterprise’.⁵ A journalist writing for Business was also struck by the fear and hostility that existed in some quarters, noting that ‘our investors and business leaders’ could now be divided into three categories:

1 The Defeatists, who are living partly on capital, clamouring for higher dividends, and exclaiming ‘Après nous le deluge!’.

2 The Die-hards, determined to fight to the last ditch for the return of the ‘good old’ order of society.

3 The Progressives, who, with faith in the country's future, are striving to reach a compromise with the new spirit of our times.⁶

Within the incoming government, the lead role in promoting industrial policy was immediately given to Cripps, appointed President of the Board of Trade. Cripps had, of course, guided MAP's initiatives on productivity during the war and was certainly the Minister most clearly identified in the public's mind with industrial modernisation, being described, for example, by one periodical as ‘a fanatic for business efficiency’.⁷ Moreover, the Board of Trade's general remit gave plenty of scope for innovation: it had responsibility for about 70 manufacturing industries outside of engineering, which covered nearly half of the factory workers in the country.⁸

Cripps certainly recognised that he faced a challenge and immediately set out to brief his department on Labour's policy objectives. The new administration would have to play a more interventionist role: ‘It is the policy of the Labour Government to take a much closer interest in the performance of British Industry than has been done hitherto.’ No Board industries were to be nationalised, so this meant effective supervision. The aim had always to be improved functioning: as Cripps emphasised, ‘We must in every possible way, staff, buildings, machinery, management, research and design, make our industries as comparatively efficient as possible.'⁹ Specifically, the immediate focus was to be on setting up Working Parties, reactivating the idea of a central management institution and ensuring the continuation and broadening of MAP's efficiency advisory service.

In initial discussion at the Board on Working Parties, it was agreed that a small number should be set up as quickly as possible, in order to provoke a quick improvement in actual industrial practice and at the same time provide a factual basis for determining longer term policy. Cripps was in favour of a common format — equal number of employers and workers under an independent chairperson — and it was agreed that an initial batch of target industries might include pottery, wool, footwear, furniture and hosiery, all sectors that would be vital in providing exports. Consultation with both the FBI and the TUC revealed that neither body was immediately hostile, though Board officials recognised that they would have to move carefully if any kind of consensus was to be maintained.¹⁰

In discussing the immediate aspects of this policy, Cripps became aware that he needed to be thinking about where tripartite investigations might lead in the longer term, and he therefore asked his officials to inform him about previous Board thinking on this theme. This inquiry revealed that a group of civil servants had been working on an Enabling Bill for Coalition Ministers, under which there was provision for Industrial Boards (on the lines of the Cotton Board) to assist in the co-operative development of, for example, research. But the big problem here had been the attitude of industry itself: when a circular soliciting views on the idea had been sent to over 100 employers’ associations in late 1944, only about a dozen were in any way positive, with the majority not even bothering to reply. Moreover, the FBI had clearly indicated that it was against this type of legislation.¹¹

This latter point reinforced Cripps's perceptions about the conservatism of much of British industry, but he indicated that if Labour was going to set up some kind of permanent machinery in various sectors, it would not be of the kind envisaged in previous Board proposals. Labour, he emphasised, did not agree with ‘so called "self-government" for industry’ and wanted much more democratic structures. Officials were therefore instructed to do some further thinking on the whole subject, ‘bringing the workers fully into the picture’. Indeed, Cripps's determination on this point was so strong that he was not even willing to consider any qualifications. Thus, when Raymond Streat of the Cotton Board urged him to be more flexible, he would not relent, leaving Streat to record in his diary: ‘He seemed to be quite set on his tripartite conception and nothing I could say moved him.'¹²

The Board's recommendations on Working Parties were put to the Lord President's Committee on 27 August, exactly one month after Labour's election triumph. Cripps based his case on the perception that ‘a high degree of industrial efficiency’ was ‘a national interest of the first importance’. In the light of this, he argued that a useful starting point would be investigations into various trades, with the object of generating ‘agreed and considered’ statements about how practice might be improved. These enquiries should be conducted by joint teams and should focus only on ‘major questions’, so that they would be completed very quickly. Cripps repeated the list of industries that he felt were suitable for treatment (all ‘highly important from the point of view of consumer needs’ and perhaps ‘export significance'), adding that he now favoured handling cotton in a similar fashion. The President also included some indication of his thinking on longer term policy, suggesting the establishment in each industry of ‘a permanent advisory body which would be the channel through which the Government would keep in touch with the progress of the efficiency plan’. These bodies would be tripartite and advisory, like the Working Parties. Compulsory action might be necessary in extreme cases, but it would be for the government, and the government alone, to exercise such powers.¹³

Much of this was quickly endorsed by Cripps's colleagues, but there was one area of disagreement. Cripps had argued, to repeat, that Working Parties should be made up of equal numbers of trade unionists and employers, under an independent chairperson. However, other Ministers were doubtful of this formula, suggesting that, with only one outsider present, the two sides of industry might collude against considering any radical recommendations. The Working Parties should therefore be made up entirely of impartial members or at least with independents predominating. Cripps's reply to this was that he did not want sectors to feel that the government was ‘imposing schemes of reorganisation on them without full knowledge of the conditions in the industries’. Consequently, there could be no question of excluding those from the various trades involved. Nevertheless, the President agreed that an augmented independent presence would be acceptable, and it was decided that the final formula should involve each of the three constituencies in equal proportion.¹⁴

With his ministerial colleagues behind him, Cripps next turned to the task of convincing industry about the merits of the Working Party idea. He had, as mentioned, received indications of co-öperation from the FBI and TUC but, while the unions continued to support the new initiative, it was quite clear that employers were far more hesitant. The President's statement about the future of the cotton industry on 13 August, which promised no nationalisation if industry co-operated in modernisation, was designed to calm nerves and according to the Financial Times had something of the required effect.¹⁵ Yet it was quite evident that apprehension and even hostility still remained.

Thus, opinion in the upper reaches of the FBI turned out to be rather mixed. In discussions during August, Sir Clive Baillieu (President of the FBI) argued that Cripps was not to be feared. He had gained the impression from talking to the Minister ‘that the great bulk of industry … would continue to be run by private enterprise’. Moreover, even in relation to Working Parties, there was no suggestion that the government wanted to impose solutions, only stimulate industry to provide its own. As Baillieu concluded, Cripps's ‘primary purpose as regards these industries was to make private enterprise work more efficiently’. However, others were more suspicious. There was, for example, a feeling that the Working Parties would interfere with management's right to manage and would boost the trade unions. Worse, the new bodies might be the first stop on the road to nationalisation. In this situation, the majority concluded, the FBI should move with stealth. There were dangers in outright opposition on ‘purely political grounds’ both because it might alienate public support and because it might provoke the government into stronger action. The right strategy must involve two prongs. On the one hand, the FBI must use the ‘first class opposition’ to put the public case for unrestricted private enterprise. On the other, it should engage in a campaign of discreet lobbying to influence those at the Board. As Beharrell insisted, every effort should be made ‘to see that His Majesty's Government was carried out in accordance with what appeared to industry to be the wisest policy’.¹⁶

In the industries where Working Parties were scheduled to be implemented, opinions also varied. Private contacts which the Board had with the hosiery manufacturers suggested that, though they disliked being classified with the cotton industry (a notorious bastion of inefficiency) and being given only equal representation with the trade unions, majority opinion was ‘not unfavourable’ to the idea of the enquiry itself.¹⁷ Against this, the cotton employers continued to emphasise their opposition to the whole Working Party idea. According to The Times Trade and Engineering, there was ‘a strong feeling … [that it] was not desirable and … would not serve any useful purpose’.¹⁸ Similar views held sway in the Potteries. Thus, the Stoke Evening Sentinel warned that the Working Party plan was ‘insidious and sinister’ and added: ‘This is not nationalization, which purports to pay "fair compensation" for what it takes. It is pure and unadulterated confiscation. It is political brigandage.'¹⁹ Moreover, familiar fears surfaced when a Board emissary met the Pottery Manufacturers’ Federation. The employers claimed that they had nothing against an enquiry, but rejected Cripps's format. They argued that the suggested body had been deliberately designed to keep them in a permanent minority position. More seriously, it seemed to push the industry ever nearer state control:

The manufacturers … feared that as a result of the recommendations of the Working Party they would be committed to a permanent Board or Council which would, through the Government, impose unwelcome and undesirable interferences with the business of individual firms.²⁰

Given these attitudes, Cripps concluded that he ought to proceed with caution and diplomacy. He recognised, first, that as his advisers argued, the choice of chairpersons to lead the Working Parties might be crucial in determining employer attitudes²¹ and took care to ensure that the high profile appointment for cotton — Sir George Schuster²² — was a figure who would be acceptable to the Manchester employers.²³ At the same time, Cripps made something of a concession over the question of how the employers’ representatives on the Working Parties would be chosen, agreeing not to nominate as he saw fit but rather to accept the recommendations of manufacturer bodies, provided that at least one half of those put forward were under 45 years of age (a stipulation that would, it was hoped, curtail the influence of the older and more reactionary).²⁴ Finally, the President was also prepared to provide more direct reassurance, going out of his way to visit key manufacturing centres of the industries in question and to talk to those involved. In each case, Cripps emphasised that he did not aim to replace private enterprise and that the Working Parties were only temporary institutions. His speech at Stoke was typical:

Sir Stafford … told them that his plan did not mean nationalisation, and that he did not want to ‘boss’ the industry. He said that the Working Party was a device which had been used during the war and indicated that it would be dissolved when its work was accomplished.²⁵

These tactics seemed to bring results, so that by early autumn the Board felt that it could detect a definite softening in employers’ attitudes.²⁶ Thus, when Cripps came to announce the first five Working Parties (covering boots and shoes, cotton, furniture, hosiery and pottery),²⁷ in mid-October, he prefaced his remarks by stating that he had received ‘the most cordial co-operation from both sides of industry’.²⁸ Nevertheless, it was quite clear that industry did not see itself as a willing convert to the Minister's views. Indeed, some manufacturers believed that it was they, and not Cripps, who had emerged with most from the first round of negotiations. A leading figure in the Hosiery Manufacturers’ Association made this point clearly, and also revealed the extent of the inter-industry collusion that had been going on, when he told his members in private:

Many of the fears that we had in mind have been dispelled by the assurances which we have received and I think it is true to say that they are far removed from our original conceptions of the Board of Trade's intentions. We have worked closely with other industries and this approach has been fully justified and has contributed effectively towards removing some features of the original proposals to which we should have taken strong exception.²⁹

The decision to revive the idea of a central management institution attracted rather less controversy than had occurred with the Working Parties. Cripps was, of course, a long-term supporter of professionalising management and so, on taking office, he immediately wrote to Dalton, the new Chancellor, arguing for the creation of an Institute of Management ‘as soon as possible’. The new initiative would be crucial, Cripps declared; ‘an essential weapon of attack upon inefficiency in Industry’. The only outstanding decision concerned finance: while the Weir recommendation of £75,000 p.a. for five years seemed ‘excessive’, it might be necessary to provide a £150,000 start-up loan and then £25,000 p.a. to 1950.³⁰

Dalton's response to this estimate was caution. He knew by experience that ‘a lot of the bodies, individual and corporate, now active in this field’ were ‘very second rate’ and agreed that Weir's figure was far too high. At the same time, he was also under pressure from some of his officials, who still believed that ‘the Institute must be of industrial, not of Whitehall, paternity’.³¹ Nevertheless, in the end Dalton, too, felt that a fresh start was necessary and agreed to provide £150,000 over five years on the understanding that the Institute would then be self-financing.³²

Cripps's final initiative was the creation of the Production Efficiency Service (PES). The President had, of course, supervised MAP's Production Efficiency Board and Technical Costs Branch during the war and he felt that ‘the reception by industry of these services was co-operative, and the results were valuable’. ³³ It was an obvious step, therefore, to create a consultancy service in peacetime. Cripps's first move, once again, was to consult the TUC and FBI about their reactions to such a plan.

The TUC recognised that the position had changed somewhat with the ending of hostilities, because improvements in efficiency would now ‘in many cases, tend to increase private profits’. However, the country's perilous economic situation was such that a PES would be acceptable so long as it kept any joint consultation machinery informed of its activities and did not concern itself with piece rates or time studies.³⁴ The FBI's position was equally hedged in by conditions. Some employers were worried that firms might be pressured into accepting consultancy and stressed that the scheme would only be successful if it were voluntary ('It would be resented if it were supervisory or with a concealed baton'). Others argued that the whole scheme was misplaced: it would swallow up qualified experts who were already doing a good job in industry and perhaps sustain inefficient outfits that really deserved to die. The outcome was a resolution that expressed somewhat conditional support. The FBI was to recommend that employers co-operate with the Board over the PES, provided that the scheme was ‘voluntary and advisory’. At the same time, the President would be reminded of the staffing problem and the ‘danger of keeping the hopelessly inefficient alive’.³⁵

These reactions were hardly unexpected and did little to deter Cripps. He had always intended that the initiative should be built on consent and stressed to his colleagues that ‘the first incisions into any industry’ must be ‘through firms who would volunteer’. However, the President had already been contacted by many undertakings wanting assistance, and so felt that this was hardly a problem. In fact, the only point raised in relation to the President's idea when he presented it to the Lord President's Committee concerned the charges that the PES should levy, but Cripps's emphasis on the important role that the service might play convinced the Ministers that it must in fact be free.³⁶

Much of Cripps's early work at the Board was, therefore, about creating institutional structures. However, the President was also aware that his policies needed to be explained to the public at large, and so a part of his first few months at the job was spent in what was really public relations work. Typical of this was a keynote speech, widely reported in the press, to the Lancashire and Cheshire Federation of Trades Councils at Blackpool on 9 September. Cripps began his address on this occasion by reminding his audience of the ‘extreme difficulties that confronted the nation’. ‘They were not’, he emphasised, ‘on the eve of entering Utopia.’ Britain had fought a war which had effectively ‘destroyed’ its economy. The country might borrow its way out of its immediate predicament, but it was necessary to look further ahead than that and to opt for ‘the much harder but more honest and self-reliant way of working out our own salvation’.

On the basis of this sobering assessment, Cripps went on to outline what was required in practice. He emphasised that British industry was often very backward. Inefficiency, in turn, had led to a poor industrial relations climate. The end product was a ‘vicious circle’ of decline. What was needed, therefore, was for someone to break the circle, and this meant government action ('it was for the Government to see that it was broken, and broken quickly'). Cripps wanted the Board to be the agent that helped private industry to modernise. It was in these terms that his specific initiatives — the Working Parties, the management institute, the Production Efficiency Service — could be justified. However, there was no question of coercion or of taking advice only from manufacturers. The government wanted to proceed on a tripartite basis and hoped that ‘a great and important part would be played by trade unionists’.³⁷

This was a moderate and conciliatory message, and it gained from the fact that it was so obviously fully compatible with wider government policy. Thus, all Ministers were convinced that enhanced production was absolutely essential if there were to be any advance to socialism.³⁸ Moreover, there was also agreement with Cripps's key conception that the government should be ‘a helping partner’ to industry. Labour certainly wanted to nationalise some sectors, but it recognised that ownership in most of manufacturing would remain undisturbed. There could be no quarrel with private enterprise, only with, in Morrison's phrase, ‘private unenterprise’.³⁹ The need was to get all parts of each industry to work as efficiently as the best in their industry.

By October 1945, therefore, Labour had arrived at a definite set of policies in relation to what it wanted from industry and had made its objectives widely known. Neutral commentators remarked upon the administration's clear intent, with Industry Illustrated, for example, observing:

There can be no question of the present Government's serious determination to make British Industry the most efficient instrument possible for restoring the country to an early condition of solvency.⁴⁰

The next part of this chapter will look at how these intentions fared over the period to the end of 1947, looking in turn at the Working Parties, the management institution and the PES.

The first batch of Working Parties, to repeat, were created in mid-October 1945 and, in the wake of this launch, Cripps had immediately to decide how the whole scheme might in future develop. He had originally envisaged a rolling programme, telling the Daily Herald: ‘We propose month by month to pick out new ones [i.e. new sectors suitable for the working party treatment] until we have been through all the major industries … not dealt with by other Departments.'⁴¹ Yet he was now advised by some of his senior officials that such an agenda might be politically unwise.

Civil service caution was founded upon the perception that the Working Party idea was provoking rather mixed comment in media and interest group circles. The Economist and the Financial Times generally welcomed Cripps's innovation, though each felt that the enquiries should have been given more of a co-ordinated focus (as the Economist put it, the Working Parties had been sent off ‘into the wilderness of industrial policy without any course to steer or any compass to assist them in holding to it'). Industry Illustrated, too, was broadly favourable, though rebuking the President for not including managers as a part of his conception.⁴² Yet there was also a bloc which argued that the whole scheme should be terminated. Thus, The Daily Telegraph talked of ‘committees of outsiders thrust upon industry from above’, a theme embroidered further by the Statist, which warned:

There is a strong possibility that working parties will in fact degenerate into groups of busybodies whose interference in the domestic affairs of industry will merely make for reduced efficiency and wholesale resentment.⁴³

More worrying still was the open hostility being shown by the National Union of Manufacturers. This organisation's position was founded upon general and specific logics. On the one hand, the Union did not accept Labour's basic premise that industry was often very backward: after all, Britain had ‘put up a magnificent show during the war’, and it could do so again in the post-war years ‘if our people are allowed to get on with the job’. Anyway, the Working Party idea as currently conceived was a poor one because it put the employers in ‘the position of a criticized minority’. In fact, the Union predicted that the new bodies would degenerate into ‘factions of sectional interest’ — ‘far too much like the ugly things which reared their heads on the Continent and which we have defeated with so much suffering and loss’. ⁴⁴

Given this variable comment, the civil servants concluded that Cripps would be wise to proceed with some care. The President could not ignore his critics; moreover, on the best reading, he could assume only that he had received ‘acquiescence, not full support, from industry’. The sensible course, as the Board's Permanent Secretary, Sir John Woods, carefully outlined, was to institute a pause:

Personally … I should prefer, before being publicly committed to particular enquiries in a second batch, to have seen a report or two and to have got the public reactions to those reports. This, it is true, might involve a delay of as much as two or three months. But this would not necessarily be an excessive premium to pay against the risks.⁴⁵

Cripps obviously considered this advice closely, but in the end decided to persevere with his original conception of the programme. As he explained, five industries did not provide a large enough sample on which to build a long-term industrial policy. Equally, there could be adverse political reactions from the Government's own supporters if there were any delay in setting up further Working Parties. The only option, the President decided, was to press on down the road that was already being followed.⁴⁶

Over the following few months, therefore, there was a considerable expansion in the dimensions of the programme, with Working Parties being established in a further twelve industries — carpets, china clay, heavy clothing, light clothing, rubber-proofed clothing, cutlery, glassware, jewellery and silverware, jute, lace, linoleum and wool.⁴⁷ This meant that by April 1946 the Working Party apparatus had reached quite impressive proportions. The new institutions covered industries employing over one million workers, a third of those in manufacturing industries other than metals and chemicals or a sixth of all Britain's factory population.⁴⁸ Moreover, Cripps had been able to draw in some fairly impressive names as chairs or independent panellists, including General Sir Ronald Forbes Adam (Adjutant General to the Forces), C.R. Morris (Head of King Edward's School, Birmingham), N. Pevsner (the architectural historian) and L.S. Sutherland (Principal of Lady Margaret Hall, Oxford).⁴⁹ However, none of this stilled the critics, and much antagonistic discussion of the Working Party idea continued inside and outside Parliament. Churchill was quoted as saying that Cripps was ‘putting Socialist nominees’ on to Working Parties, an unsubstantiated allegation but one that received much press coverage.⁵⁰ Lord Woolton told the Sunday Times that the President was almost daily acting ‘the schoolmaster to industry’, lecturing it on ‘the need for improving efficiency and management’. He concluded with a broadside at the whole Labour stance:

The truth is the Government has taken on more than it can do; the business of Government is to lay down the broad principles for the well-being and good conduct of a country. When it attempts to determine the detail of operations it is taking on a task for which it has neither competent staff nor the quick machinery that detailed commercial decisions demand. The great trade drive of Britain is being stifled at its birth.⁵¹

The first two Working Party reports were published at the end of May 1946. The document on pottery appeared first and contained thirty specific recommendations.⁵² The Working Party began from the view that the existing employers were still vibrant enough to solve the problems that they faced: ‘The present state of the … industry is not wholly satisfactory, but it has retained sufficient strength and enterprise to set itself on its feet without intervention by the Government in the operation of free competition.'⁵³ Nevertheless, a number of reforms were urgently required, and these the Working Party proceeded to identify. There should, it argued, be strict enforcement of the Factory Acts, statutory minimum wages and a much simpler remunerations structure, so as to improve the conditions of labour. Secondly, there was a clear need to modernise the manufacturing process in many establishments, in particular by introducing flow-production methods and reducing the number of lines on offer. Furthermore, most ancillary functions in the industry were inadequate: all firms should improve their research and art and design activities, and systemise their costings techniques. Finally, the Working Party turned to considering how these changes could be encouraged. Manufacturers had in the past, it was recognised, been involved in a degree of collusion and this would now have to be discouraged by public scrutiny of financial data. The specific recommendation here was summarised as follows:

Because of the existence of voluntary price agreements in the industry all firms should be required to supply the Government with regular information about their profits and, as soon as a costing system can be worked out, their costs of production.⁵⁴

In addition, the Working Party felt that there was a need for a ‘standing Pottery Advisory Board’, constituted, once again, on a tripartite basis under an independent chairperson. Such a body would, it was argued, be able to follow up points raised in the course of the existing enquiry; ‘initiate and pursue investigations to further the efficiency of the industry'; and ‘communicate to the Government matters that the industry [wished]… to put before it’.⁵⁵

The Working Party report on cotton was a much longer and more complex document, running to 278 pages and 34 recommendations.⁵⁶ It was also notably marked by a division of opinion: while Schuster, one employer and all of the trade unionists were fully behind the main report, three independents (led by John Jewkes of Manchester University) and three manufacturers accepted only a proportion of its recommendations and had added a 21-page ‘Memorandum of Dissent’.⁵⁷

The 28 points on which all agreed covered a number of different subjects. There was a need, it was stressed, for a comprehensive survey of existing plant and an independent enquiry into the textile machinery industry. Furthermore, many ancillary functions, as with pottery, needed improvement. Firms must introduce better and uniform methods of costing, and enhanced training schemes to improve the quality of their managements. Market research activity, too, needed to be expanded and focused around a newly created central marketing company, owned co-operatively. Moreover, some effort was required to make the industry more attractive to labour, with the minimum condition here being an immediate review of wage arrangements. Finally, all on the Working Party were also convinced that little progress on these specific recommendations would be made without some central body to chase them up. Accordingly, again as with pottery, there was backing for a new tripartite body, ‘The Cotton Council’, with specific responsibilities over, for example, the plant surveys, market research and training.⁵⁸

Where opinion divided was over the issue of what to do with the industry's spare and out-dated capacity. Schuster and his allied signatories of the main report believed in a substantial degree of rationalisation, which was to be achieved using compulsory powers. Their recommendations therefore outlined schemes for amalgamation, the scrapping of redundant machinery and the provision of re-equipment subsidies. Jewkes's group, on the other hand, were completely against this kind of interventionist policy and felt that the free market should be left to ensure that the industry would reach an optimum size. Unwanted combination could only introduce the abuses attendant upon an oligopolistic market structure.⁵⁹ As the trade union members of the Working Party sourly observed, this boiled down to a pair of long-standing laissez-faire propositions:

Firstly: ‘You must trust each employer to know what is best for his own business and leave him to settle his course without any suggestion of fitting in to a common plan.'

Secondly: ‘If you want to get more production, the chief way to do that is not to improve mechanical equipment, but to get more out of the workers.'⁶⁰

Because these were the first two Working Party reports to appear, their publication generated much attention in the newspapers and periodicals. Both The Times and The Economist gave considerable space to the pottery document, praising its thoroughness. Each felt that the report was unlikely to prove contentious (indeed The Economist went so far as to call it ‘anodyne').⁶¹ Others were quick to emphasise the enquiry's apparent backing for private enterprise. The NUM Journal found the report ‘refreshing’ because it was ‘a complete vindication’ of the existing owners — it pointed to ‘deficiencies, but not inefficiencies’.⁶² The Financial Times made a similar point. The Working Party had done ‘a businesslike job’ and its recommendations were ‘without detectable political bias’. Employers could collectively feel much reassured: ‘Despite proverbs about single swallows, the fear that working parties necessarily foreshadowed radical Government interference in the affairs of non-nationalised industries should be slightly allayed by the first report to be published.'⁶³ The cotton report provoked even more comment. All were agreed that the enquiry had been worthwhile, with a correspondent in Industry Illustrated calling the report truly important and ‘justifying the Working Party mechanism in no uncertain manner’.⁶⁴ Perhaps surprisingly, there was also a measure of consensus against the Jewkes approach. The Economist, it is true, believed both cases on the issue of intervention to be not proven, and regretted the lack of agreement.⁶⁵ However, the New Statesman, Manchester Guardian and the Spectator were roundly critical of the ‘Memorandum of Dissent’, with the latter going so far as to characterise it as a ‘sentimental search for some Victorian elysium’.⁶⁶

In Government circles, most attention focused inevitably on the cotton report. Cripps had had to interrupt his Board duties and go on a mission to India, but he was kept fully informed of the position that was developing. His officials were upset by the dissent in the report, fearing that it would encourage ‘the recalcitrants’ in the industry and hide what had been agreed.⁶⁷ As they informed Cripps, the situation was now very delicate:

The employers, fortified by the independent members, have taken a stand in opposition to Schuster that probably goes beyond their real feelings. A wrong move now might harden the opposition into a continuing policy of non co-operation. Operatives naturally enough have moved in the opposite direction…. Stage is therefore set for a period of clash and antagonism, employers saying ‘Hands off the industry’, operatives saying ‘Nationalize’, moderate elements on both sides being submerged. The industry cannot afford the time for sterile and embittering controversy.⁶⁸

This left Cripps with very little room for manoeuvre, and he therefore decided to buy time. The Government, it was announced, would wish ‘before final decisions were reached, to have the opportunity of discussing some important aspects of the proposals with bodies representing employers and operatives in the industry’. Meanwhile, immediate action would be taken where there was no controversy, for example over the planned enquiries into existing plant and textile machinery supply. At the same time, recognition would be given to the Working Party's recommendation about a new tripartite body by asking the existing Cotton Board to take on new functions.⁶⁹ Here, Cripps was able to provide further reassurance, since he had managed to convince Sir Raymond Streat, widely respected on both sides of industry, to become both chairman of the Cotton Board and of any successor body.⁷⁰

With these immediate points settled, Cripps turned to consider what he should do about the Working Party strategy in general. All at the Board were agreed that as many people as possible should read the reports, and so each was issued at very modest price (the pottery document cost Is 3d, the cotton document 3s 6d). There was general recognition, too, that many of the recommendations needed to be followed up and so the Board formed a small but high-powered ‘Working Squad’ to monitor what was being done on each specific point and to encourage progress.⁷¹ More generally, the Government had to decide whether any new legislation would be required, now that both Working Parties had come out in favour of a centralised board with a degree of power. On this issue, however, Cripps turned out to be fairly determined. He had resolved that ‘a short four or five clause Bill empowering the Board of Trade to set up Industrial Boards etc’ would be included at the beginning of the next parliamentary session, in November 1946. All that now remained was to consult the peak organisations on their views about this, since the President ‘agreed on the importance of carrying the FBI, etc’ with the Board's thinking.⁷²

The FBI had played a waiting game during the early months of 1946 but, with the publication of the first two reports, its leadership recognised that the time was now right to come up with a definite policy statement. The FBI had, of course, always believed in trade associations administering trade interests, and it was obviously necessary to think closely about whether the suggested tripartite bodies would jeopardise what was really a rather fundamental principle. Accordingly, representatives from 13 Working Party industries were called together and questioned about their views on the enquiries and future developments. This consultation revealed that six groups of employers were favourable about the Working Parties and the rest lukewarm. More significantly, opinion about the next step was also divided. Some, including those from the furniture, glassware and pottery industries, argued that permanent tripartite bodies were desirable. They would carry weight in negotiations with the government and allow trade union officials to be educated about the real problems of doing business. Moreover, there was need for an ‘entirely different outlook if nationalisation was to be avoided’, and so the new institutions should be accepted for pragmatic reasons if no other. Against this, there were others present who could see no good in going down this road. The worry in this camp was about boosting the authority of the unions and allowing government officials a foot in the door. In addition, there was a gut feeling that the existing owners knew best and should not be hamstrung:

He deprecated the idea of handing over the responsibility for an industry to an outside body on the grounds that it was in the national interest that it should be done when in fact all the experience and knowledge of the industry were in the hands of those who, in the past, had built up the business of which the industry consisted.

These were feelings that, at any rate, found favour with those from boots and shoes, linoleum and heavy clothing.⁷³

In this situation, the FBI leadership had little alternative but to set up a committee to examine the whole question further, and this started meeting in mid-July.⁷⁴ By mid-September, it was agreed that another meeting with Working Party representatives would be opportune, and the different groups were once again called in to face the leadership. However, the intervening months had hardly healed the division of opinion. No one was in favour of a single model of tripartite body, applicable in all situations, and all agreed on the need for keeping the government's influence in whatever transpired to the absolute minimum. But there was, as before, disagreement about whether any kind of new body was necessary. Some again repeated warnings about the unions and argued that the existing trade associations would be perfectly able to organise initiatives, such as boosting research, which the Working Parties had suggested be devolved on to the tripartite boards. Others felt that to do nothing would be politically inept. A member of the Hosiery Working Party underlined the case for tactical concessions:

The hosiery industry had found it impossible to resist the setting up of a Working Party but the dice were somewhat heavily loaded against the employer members. Unless they were prepared to make certain concessions in regard to a continuing body, they would have been looked upon as completely reactionary, a view which the public would have been taught to share. If the employers had stood out against a continuing body, the … majority of the Working Party would have favoured a very different kind of continuing body than … was now recommended. … By conceding a continuing body, the employers had been able to secure that it was relatively innocuous, and possessed no statutory powers.⁷⁵

The consequence of this was that when the FBI finally came to deliver its verdict to Cripps in early October, expediency seemed very much in evidence. Baillieu stressed to the President that his organisation continued to believe that trade associations should remain the fundamental institutions in representing the needs of industry to government. They were, he insisted, ‘over a large area of industry, adequate for the purpose’ and, in consultation with the Board, could ‘carry through any developments which … [were] needed to meet the present and future situations’. However, he admitted that other solutions might on occasion be justified, particularly in cases where the trade association was weak. There might be need in some situations for advisory councils, though these should never have executive powers: ‘I was asked to underline the fact that these bodies should be advisory and not executive. Any executive action that is needed should be left to the established organisations in the industry.’ There might be cause even, in a ‘very small number of cases’, to go further and create a ‘Statutory Supervisory Board with executive powers’. But, Baillieu warned, pursuing this latter course would be impossible unless the employers in question had already sanctioned it. Implementation without consent would render impotent whatever was created.⁷⁶

This declaration left Cripps in a rather difficult position. Board opinion did not rate trade associations highly. They had, after all, done little in the past to aid modernisation. Furthermore, their essential character did not encourage the belief that they could be transformed into engines of progress. As one Board official noted on reviewing the FBI's policy:

The emphasis on Trade Associations completely ignores the extent to which they are governed and their activities limited by trade politics and personalities, and the influence of large firms. So long as their officials are directly dependent on voluntary contributions for their salaries and on this or that manufacturer's backing for their chances of advancement, I do not see how one can hope to get very far with real co-operative enterprise.⁷⁷

Yet Cripps was also aware that simply ignoring the employers’ opinions might provoke significant political difficulties.

Some factors did, it is true, seem to encourage persistence with the existing strategy. Press coverage of the FBI position was in some important cases rather critical.⁷⁸ All of the next batch of Working Party reports — covering boots and shoes, hosiery, furniture and heavy clothing⁷⁹ — once again recommended some form of continuing tripartite body. Moreover, there was now increasing pressure from the TUC not to back down. From the trade union point of view, the Working Party reports were by no means perfect, but they did at least seem to represent an advance.⁸⁰ On the other hand, the FBI policy was understood to be nothing more than an attempt to scare the government into submission.⁸¹ Cripps must therefore stand firm: as the TUC emphasised to him, he should prepare legislation which would allow the creation of what were now being talked of as Development Councils with statutory powers, regardless of whether those in an industry felt that such a body was desirable or not. If necessary, ‘various methods of persuasion’ should be used to bring the employers into line.⁸²

However, it was also clear that the employers were becoming more hostile the nearer the Minister came to introducing legislation. Pressure was being exerted at two levels. One line of attack involved attempting to influence the Board about the final shape of the Bill, by, for example, insisting on a clause ensuring that a Development Council could never be imposed.⁸³ More generally, employers’ organisations continued to argue that legislation was quite superfluous, since Working Party recommendations could be carried out by current institutions. A Board official recorded in early 1947:

It looks as if the BEC are working with the FBI in their opposition to the Bill. The idea is … to show that many of the functions proposed for Development Councils are unnecessary because they are being or could be performed by existing joint machinery … [or] Trade Associations; therefore there is no place for Development Councils at all and the Bill should be dropped.⁸⁴

In fact, some groups of manufacturers in Working Party industries had taken this tactic a stage further by setting up allegedly joint organisations to deal with, for example, the recommended expansion in research.⁸⁵ What made all of this even more serious, as Cripps had to recognise, was the fact that because employers were spending so much time and effort on trying to thwart legislation, progress with implementing the technical changes that were highlighted in the enquiries remained in most cases very slow.⁸⁶

This was clearly a rather disheartening scenario, but Cripps decided in the end that the best course of action was to proceed as planned, and during February 1947 the Industrial Organisation Bill was presented to the Commons. In introducing this legislation, Cripps returned to many of the themes that had marked Labour policy since the end of the war. The Working Party reports, he noted, showed once again that much of British industry needed to be modernised. Big firms were often very efficient, but smaller units required help in improving their standards. The state needed to play a part here because industry's performance was a national question. Moreover, no other institution or set of institutions could do what was necessary. Trade associations were certainly not acceptable substitutes:

Trade associations are, essentially, bodies representing employers only, just as trade unions represent employees only. For the purposes which we have in view, and which the working parties had in view, it is essential … that both employers and employees … be represented. … It is, therefore, out of the question for anyone with an up-to-date realisation of the development of relationships in industry to imagine that any body could be acceptable for such a purpose, unless it included both employers and employees.⁸⁷

The legislation was designed to ‘provide methods for enabling private enterprise industries to bring themselves up to date’.⁸⁸ But it was framed so that new initiatives would be introduced with the agreement of all sides and not, as in the past, at the whim of employers.

Turning to the details of the Bill, Cripps noted that what he proposed was enabling legislation, since proceeding by introducing specific statutes for each industry would only mean disabling delay. The new Bill allowed for the government to be able to create Development Councils after consulting with everyone in an industry. The new bodies would be charged with increasing efficiency and improving the service which the industry could render to the community. Each was to be made up of members drawn from three constituencies — employers, employees and independents. Much of the work to be done would be essentially advisory. Nevertheless, the Development Councils were to have some statutory powers, so that, for example, they could maintain a register of persons carrying out business in the industry and raise levies to cover their expenses. Parliamentary control would be ensured because the House was to vote on each specific order for setting up a Council. Moreover, the Councils themselves would have to present annual reports to the Minister responsible.⁸⁹

The Conservatives’ reaction to Cripps's proposal was not favourable. Lyttelton explained that his party, too, wanted British industry to be efficient but did not believe that this was the way to go about ensuring progress. The Conservatives were anxious about the form of the legislation — they felt an enabling bill gave too much power to the Ministers — and the new bureaucracy that it might help to create. Most of all, they opposed the basic assumption involved, that the government had a direct role to play in modernising industry. As Lyttelton saw it,

The fundamental question is whether we abandon the voluntary method of negotiation, and undermine the voluntary organisations which exist in this field, in favour of State machinery such as the development councils.⁹⁰

For Conservatives, therefore, the issue was at bottom about preserving employers’ rights to determine their own futures. Mr Sidney Shephard, MP for Newark and a hosiery manufacturer, made this point very clearly. After calling the Bill ‘thoroughly bad and mischievous’, and arguing that it would not increase productivity, he went on to note that it would ‘perpetuate permanent control':

I was always a little suspicious that this was what would happen. When the President… set up his working parties, I thought that there was a little more in it than mere efficiency of industry. I thought he was after closer control over industry, and I think we all realise that by this Bill he has achieved his object.⁹¹

Given such feelings, it was not unexpected to find the Conservatives opposing the Bill on its second reading and harrying it through the committee stage. During the final reading, their tactics changed somewhat, with the focus now on the introduction of modifying amendments. The most important of these was presented by Lyttelton and involved restricting the Minister's right to form a Development Council: he was not to be allowed to make an order if ‘a large majority of the persons carrying on business in the industry, representing the greater part of the production in that industry, and a large majority of the workers in that industry’ were opposed to it. This quite clearly struck at the heart of the Bill, and was thus unacceptable to Labour. Cripps had always stressed that orders would be issued only after consultation, but he was not prepared to drop the right to proceed as he saw fit if circumstances demanded it. What could be achieved, after all, if the least progressive elements in the industry were actually in the majority?⁹² With such opposition brushed aside, the Bill now became law.⁹³

Nevertheless, even with legislative backing, the Board still found that making progress over this issue was extremely difficult. Cripps faced problems in obtaining adequate numbers of trained staff to prepare Development Council legislation,⁹⁴ but his biggest obstacle remained the attitude of the employers. The Board agreed that its best chance of success would be to pass orders for only one or two sectors at first, in order to put pressure on the more recalcitrant,⁹⁵ but it was soon clear that even this rather modest objective would be rather difficult to see through. Some groups of manufacturers (for instance, those in pottery) simply refused any kind of co-operation, insisting that their industries did not need the new institution.⁹⁶ Others continued with the tactic of developing apparently alternative forums for activities such as research, in the hope that this would undermine any kind of case that the Board was putting together.⁹⁷ By the end of 1947, therefore, the situation remained essentially deadlocked. The TUC was reportedly becoming restive, fearing that the Board might finally retreat from its original purpose.⁹⁸ Yet the Board recognised that it had little room for manoeuvre. As one official explained, ‘in one industry after another’ the civil servants were meeting ‘the same opposition from the Employers’ Associations’. Moreover, to those officials involved it was quite clear that the resistance was being co-ordinated and that, in fact, ‘the FBI were behind it’.⁹⁹ All that the Board could do, it seemed, as Harold Wilson replaced Cripps in the President's job, during the autumn of 1947, was to pledge that it would ‘have a go’ again at ‘particular industries’.¹⁰⁰

What of the other two Board initiatives? Taking the question of the management institute, first, it will be remembered that Cripps and the Cabinet had quite quickly agreed after the 1945 General Election that the Weir recommendations should go ahead on the basis of a £150,000 five-year grant. Soon after this decision, Cripps determined that his next move must be to consolidate support amongst industrialists. He felt that an influential committee was needed in order to examine exactly how Weir should be implemented. To head this committee, Cripps turned to Sir Clive Baillieu, President of the FBI.¹⁰¹ Baillieu accepted, and in ensuing discussions it was decided that his committee should be composed of as many leading businessmen as possible, in order to diminish the scope for the kind of wrangling — with management consultants, management associations and small business interests -that had been evident to some extent in previous discussions.¹⁰² In the end, 15 of the 23 appointments came directly from the world of big business (they included the Deputy Chairman of ICI, the General Manager of Barclay's Bank, the Chairman of Courtaulds and the Vice-Chairman of Morris Motors), while several others were indirectly connected in that they held high office in various employers’ associations.¹⁰³

The Baillieu Committee reported in early March 1946. It accepted that the need for a central institute was urgent'¹⁰⁴ and then went on, as requested, to outline what the new institution should look like. Since, as Baillieu emphasised, the suggested British Institute of Management (BIM) was not to replace existing management bodies, one of its prime responsibilities would obviously concern co-ordination. But the BIM was also to have wider duties, especially in relation to research, education and propaganda.¹⁰⁵ Moreover, it would, as a professional body, be able to offer an appropriate system of qualifications.¹⁰⁶ However, the Committee did not want this latter function to mean that the BIM should only service an elite, and it underlined the fact that the membership base must be as wide as possible, encompassing the management associations, industrial and commercial firms, trade associations and trade unions, and interested individuals.¹⁰⁷ Finally, on finance, it was agreed that the Cripps/Dalton formula was the right one, though a rider was added that if the BIM were still not self-financing in year six but if it had proved its worth, ‘Government aid on a moderate scale for a further period would be warranted in the national interest’.¹⁰⁸

Cripps generally welcomed these recommendations and took them to the Lord President's Committee, where they were accepted with very little comment.¹⁰⁹ Outside the government, much of the interested periodical press was equally positive. Favourable editorials appeared in Industrial Welfare and the Engineer, while Industry Illustrated was enthusiastic enough to claim:

The plan is far and away the most shapely and robust so far produced. … It has a positive air about it, it is sponsored by a very determined member of the Government and above all it has substantial Treasury backing.

‘The establishment of this new body’, the journal predicted, would ‘give an immense stimulus to scientific management’.¹¹⁰

However, elsewhere old prejudices remained potent. N. Kipping (now Director-General of the FBI) warned Cripps that the Baillieu Report, whatever the composition of the Committee, was a ‘compromise’. In the management field, he reiterated, there was a profound cleavage between the ‘operative side and the Institutional side’, with the former viewing the latter as ‘of little value’. Baillieu's conclusions were seen by the institutions as on balance against their interests, and so Cripps could expect considerable opposition from this direction. Furthermore, Kipping added, it was by no means certain, again in spite of the way in which the Baillieu Committee had been put together, that industry would in fact provide the required support, and so the government should be prepared to have to continue funding after the fifth year. Kipping ended by advising that Cripps should stand firm but that he could not expect an easy next few months as far as this project was concerned.¹¹¹

More worrying from the Board's point of view was lobbying that continued to emanate from the secretariat of the old Management Research Group 1, now renamed the Industrial Management Research Association (IMRA). This involved a series of ‘confidential reports’, circulated to members and to non-members such as the TUC, and reaching as far as the USA, which ridiculed the Baillieu recommendations and condemned the ‘quackery’ that would arise from them.¹¹² What made this particularly serious was the fact that IMRA was known to have close links with the FBI. Not all FBI leaders agreed with the kind of criticism being offered — indeed one went so far as to call it ‘ridiculous'¹¹³ — but it remained unarguable that the IMRA line had found considerable support amongst many of that organisation's major industrial subscribers.¹¹⁴

The upshot of all of this was that when the Board came to begin implementation of Baillieu's scheme, it found it extremely difficult to make much progress. The first task was to form the BIM's ruling Council, but the Board was hindered here by a lack of willing volunteers.¹¹⁵ In the end, Cripps had to settle for a group that was essentially a permutation of long-term Board contacts: a few consultants alongside such veterans of state-industry deliberations as Baillieu, Kipping, Schuster, Streat and the new Industrial and Commercial Finance Corporation Chairman, Piercy.¹¹⁶ This was clearly a set-back, and it reflected a wider sense of drift, commented on by Industry Illustrated in July 1947:

What has happened to the much-vaunted proposals for a central Institute of Management? It is now over 15 months since the President … made his statement in the House … accepting the recommendations of the Baillieu Committee, and it is more than 6 months since the appointment… of the Council…. The only sign of life that has since appeared was a recent advertisement for a Chief Executive.¹¹⁷

Indeed, even when a Chief Executive was finally appointed in the autumn of that year, the nomination did little to raise spirits. The man picked to do the job, the Hon. Leo Russell, no doubt had many fine qualities — being an ex-Etonian, veteran of Montgomery's staff and then Assistant Secretary at the Board of Trade and gentleman farmer¹¹⁸ — but he could hardly be presented as the obvious choice to galvanise a new management institution, since he had not even applied for the job. The BIM, like the Working Parties, seemed to have become bogged down in intrigue.

Cripps's third area of interest, the PES, by contrast developed fairly smoothly. The service was launched in March 1946 and had built up its establishment to nearly thirty by April of the following year.¹¹⁹ The approach taken remained strongly influenced by human relations. The PES, Industry Illustrated reported, could give ‘technical assistance in connection with any production difficulty’ but, as its Director F.E. Chappell remarked, technical efficiency alone would not necessarily produce the desired results. There must be ‘special attention … accorded the human problem’.¹²⁰ This was clearly a message which some firms were interested to hear, and so the PES found itself almost continually busy, handling, for example, 121 major and 254 minor enquiries over its first eight months of operation. The type of work undertaken varied enormously:

At one end of the scale the function of the Service has been to steer a problem that has been worrying … [a] firm into the appropriate Department channel; at the other end one or more officers have sometimes been involved in days or weeks on the factory floor.¹²¹

This was hardly sufficient to transform the economy, as a later FBI assessment recorded; but it did nevertheless represent clearly ‘useful activity’.¹²²

Cripps would, therefore, look back on his years at the Board of Trade with some frustration. The President had been able to raise the productivity issue in front of many different audiences but he had found it much more difficult to create dynamic institutions with which to tackle Britain's real problems. Indeed, two out of his three initiatives were proceeding only very slowly, opposed at every turn by various groups of employers. Had other Labour Ministers been able to make any better progress on the productivity issue?

This is not an easy question to answer because all of the non-Board of Trade strategies to improve efficiency were essentially small scale and therefore not subject to much publicity. Nevertheless, it is clear that other departments were not without their successes. Thus, for example, the Ministry of Labour was continuing to gain some notable results with its Training Within Industry (TWI) programmes. TWI, which originated in the USA, was aimed at supervisors and involved showing them how to be better communicators. The advantage of the scheme was that it could be completed very quickly, since it usually involved only five two-hour training sessions. Moreover, TWI seemed to bring results. Thus, almost as soon as the Ministry of Labour had set up its TWI facilities at the end of the war, the technique was being described as ‘arousing … extraordinary enthusiasm amongst managers’. Soon thousands of supervisors were being shown TWI each month, and in fact as many as 100,000 may have been schooled in the method by the end of 1947.¹²³ Like the PES, TWI did not transform Britain's productivity position, yet neither can its impact be described as negligible.

This largely concludes the discussion of Labour's policies on productivity in the first two post-war years. But it would be wrong to conclude this chapter without drawing attention to a fresh emphasis that was increasingly evident in the Government's approach to productivity as the period drew to a close. Labour's initial programme, to repeat, had mainly been concerned with creating new institutions in order to raise standards. As the months of 1947 passed, however, there was growing recognition that such an approach alone might well be inadequate. It was all very well to open up the production process and to educate managers, supervisors and workers as to how things could be done better, but all of this effort would be wasted unless there was some mechanism to ensure that such people would want to work in the improved ways. What the Government needed, the argument ran, was more knowledge about motivation and incentives and a set of policies to match. This change of approach is explored in all of its dimensions during the course of the following chapter.