Austerity Britain

by David Kynaston

  What really stirred the interviewees’ emotions was being asked about their attitude towards their own sons entering the industry. Of those giving an opinion (the overwhelming majority), only 18 per cent expressed definite approval, as against the conditional approval of 33 per cent and definite disapproval of 49 per cent. Pervading many of the replies was a more or less resentful sense of the inferior status accorded in modern society to the building operative (whether tradesman or labourer) and indeed the manual worker more generally:

  No. A collar and tie job for him.

  No. Any boy that dons overalls is a fool.

  The trade is too casual. He’s got a horror of the tools because he knows what his Dad’s life has been.

  I wouldn’t like them messed around as I have been.

  I shall try to prevent them. It’s too hard work.

  I wouldn’t let him. Grandfather and me had too hard a time.

  Tellingly, men with a family tradition in building were more than 9 per cent more likely to express that heartfelt disapproval.

  Overall, the survey leaves an impression of a rugged, socially cohesive, probably fairly bloody-minded culture on the nation’s building sites. It was not so different in another great nineteenth-century British industry: the railways. ‘Job is utterly filthy,’ noted a young middle-class Communist, Charlie Mayo, in October 1952 soon after getting a job at King’s Cross:

  Engines are covered in grease, dirt, soot, inches thick . . . Prevailing picture one of utter drabness & dirt, oil, grease, black soot, oily water underfoot, the air dogged with steam . . .

  A large part of the time is wasted. We hang about the canteen. I’m getting sick of bloody tea. It’s like a drug, the drivers & firemen are permanently brewing tea. Even, I found, in the middle of shunting . . .

  The drivers were the elite group – the long-haul drivers anyway – but Mayo found them sadly limited in outlook: ‘They say a lot of the old feeling of companionship has gone out of the industry. The older ones still talk in terms of “The Company”. No one has a clue what nationalisation should mean. They all just know from their own experience that what they’ve got hasn’t benefited them at all. Yet I’d say they were solid Labour voters.’ Mayo’s most poignant encounter, though, was with a driver on his 65th birthday. ‘Small & worn away’, with ‘tired & dim’ eyes, the man’s compulsory retirement fell that day:

  ‘They’re mean, mate,’ he said, ‘mean as arseholes. This is my last day here, & they want me to work it. 48 years, & they can’t give me half a day.’ He shrugged. ‘Well, fuck ’em, I’m taking it. They won’t pay me for it, but I’m taking it. The missus won’t be expecting me, but I’m clocking off at two.’

  ‘I don’t think I shall be staying here for life,’ I said.

  ‘Don’t you, mate. Get yourself a job with a pension. When I was a lad, I didn’t think about it, but from this end of the run it’s a big thing.’

  I said, ‘Still, by the time I’m due to retire, I expect we’ll have won our pension. It’s up to us to get the Union to fight for it.’

  ‘Right, mate. Right enough,’ he said. But there was no belief in his voice.

  ‘You must have been in the general strike,’ I said.

  ‘Yes, I was in all of them. But the men haven’t got the feeling for it. Even less now . . .’

  Just before two o’clock, the man came to say goodbye. ‘“Goodbye, mate,” I said, “& all the best.” He walked off across the tracks, carrying in his hand his tea can.’

  In the course of the winter during which Mayo kept his King’s Cross journal – a winter that saw the young Communist having his idealistic assumptions about the working class challenged almost daily – one episode had a particularly brutal clarity:

  We were in the mess room when one of the shunters brought in a pigeon. It had got oil on its wings & was unable to fly. One of its eyes had been missing for a long time. Charlie took it and put it on the table, right between us. He held its wings out & examined it. Someone made a joke, & I was half smiling.

  ‘It’s a goner,’ said Charlie. He hit it suddenly on the back of the neck, but it only struggled. So he took its neck in his fingers and pulled its head off, neck & all. It was so sudden & savage, right there among our cups of tea & sandwiches, that I’d hardly time to take it in before I witnessed the next nightmare. He just tossed the body onto the open fire. But the nervous reaction in the body made it jump out again, wings on fire. Then it fluttered & scrambled about on the floor among our feet – a headless flapping horror.

  ‘Oh fuck it,’ said Charlie, getting up from his seat, ‘look out, mate.’

  He cleared a space & then he stamped on it with his big heavy boots; stamped & stamped until it was a flat, squashed still mess. Then he picked it up, slung it out the window, sat down again & took a large bite at a sandwich.

  With a shock I found I was still half-smiling.17

  7

  Stiff and Rigid and Unadaptable

  In November 1949, less than two months after the humiliating devaluation of sterling, Picture Post published a letter from Mrs C.M.J. Jackson of Preesall Avenue, Heald Green, Cheshire. ‘Wanted: A New Britain’ was the title of her cri de coeur:

  I am a housewife desperately trying to understand the present critical situation in this country. The Socialist Government seems to be unable to make the workers realise the seriousness of the present situation. Why wasn’t a return to a 5½ (if not a 6) day week decided on at least two years ago? We should by now have started on the road to recovery. There is no remedy in increased wages, they only raise the cost of goods made (and sold) in England, and, worse still, they close the overseas markets to our exports. An immediate return to a 5½-day week at the same wage is imperative – with added incentives for those who will work a 6-day week. I can hear the cries of the Saturday afternoon sports fans, but isn’t it time we put ‘self’ aside and worked for an ideal? After all, we are England and if she goes down we go down with her . . .

  Undeniably, there was gloom in the air. ‘What is Wrong with the British Economy?’ was the title of the first of three radio talks given by Geoffrey Crowther (editor of the Economist) in the early weeks of 1950. ‘Our system is stiff and rigid and unadaptable,’ he declared. ‘We all know what happened to the brontosaurus because he could not adapt himself to new circumstances. The fear that I have about the British economy is that it is getting a little into the state of the brontosaurus.’ Or put another way, as he strove for the homely, topical touch: ‘What we are suffering from is like a lack of vitamins. You can call it Vitamin C for cheapness, or Vitamin A for adaptability, or to sum up the whole thing you can say that we are short of Vitamin E for economic efficiency.’

  Arguably, though, the British economy was not doing too badly. Mollie Panter-Downes, visiting a big textiles exhibition at Earl’s Court in May 1949, may have heard foreign buyers ‘frequently complain about the high prices and slow delivery dates’, but the fact was that in 1950 Britain’s volume of exports was running some 50 per cent higher than in 1937, with its share of world trade having increased from 21 to 25 per cent. Moreover, whatever the immediate post-war problems of dollar shortage, high taxation, reduced purchasing power and non-availability of goods, there did not exist any general sense that, beyond these problems, Britain was somehow locked into a perhaps irreversible cycle of long-term decline. Even Crowther, for all his warnings, was at pains to insist that there was ‘plenty that is right’ with the economy.1. ‘Declinism’, in short, had still to set in.

  Yet by any objective criteria there was no shortage of causes for concern about the underlying health of the British economy at the mid-century point – causes for concern all the more legitimate in that potentially serious competitors (including Germany, France and Italy as well as Japan), temporarily knocked out of contention, were by this time visibly starting to pick themselves up from the floor. The under-appreciated truth – at the time if not subsequently – was that circa 1950 there existed a unique but fleeti
ng opportunity. The historian William D. Rubinstein (summarising and broadly endorsing the high-profile work of Correlli Barnett) has perhaps expressed it best: ‘In 1945 Europe was in ruins; as it recovered and living standards rose, British export industries were in a position to become the powerhouse of Europe. Britain was also in a position to take an important slice of the markets of other countries around the world, including the United States. By the early 1950s, it ought to have begun a successful assault on the world’s markets.’

  Taking a realistic view of Britain’s place in the geopolitical scheme of things would have been a good starting point. Barnett himself (in The Lost Victory, published in 1995) justifiably makes much of a baleful Treasury memorandum written just before VJ Day in August 1945 by none other than John Maynard Keynes. It was, contended Keynes, a serious ‘over-playing of our hand’ to ‘undertake liabilities all over the world’; he referred specifically to how ‘we have got into the habit of maintaining large and expensive establishments all over the Mediterranean, Africa and Asia to cover communications, to provide reserves for unnamed contingencies and to police vast areas eastwards from Tunis to Burma and northwards from East Africa to Germany’. Moreover, he added, ‘none of these establishments will disappear unless and until they are ordered home; and many of them have pretexts for existence which have nothing to do with Japan’. Then came the policy crux:

  Very early and very drastic economies in this huge cash expenditure [some £725 million annually] overseas seem an absolute condition of maintaining our solvency. There is no possibility of our obtaining from others [ie the United States] for more than a brief period the means of maintaining any significant part of these establishments . . . These are burdens which there is no reasonable expectation of our being able to carry.

  Put baldly, there was a clear need to make a peacetime strategic economic decision to, in Barnett’s words, ‘shrink Britain’s war-bloated world and imperial role’.

  It did not happen. The course of the war may have graphically demonstrated that there were now two superpowers, neither of which was Britain, and Britain’s industrial base may have been palpably in need of modernisation, but neither the governing elite (including most Labour ministers) nor popular sentiment generally was yet ready to face up, coolly and unemotionally, to the idea of Britain no longer being able to afford the luxury of acting as one of the world’s leading policemen. When Attlee in 1946 did call for such an appraisal, in particular questioning the necessity of the Mediterranean Fleet, he was quickly shot down by Ernest Bevin, who throughout his foreign secretaryship never deviated from his ‘world role’ assumptions – assumptions predicated in large part on the fear of Russia filling any ‘vacuum’ created by British retreat. Typically, when in June 1949 the Minister of Defence, A. V. Alexander, accepted that there was a ‘problem’ – which he defined as ‘whether, after the economic exhaustion of the war years, we have the power and the resources to maintain the armed forces equipped to modern standards required to permit us to play the role of a Great Power’ – he felt unable to avoid the conclusion that any ‘wholesale abandonment of commitments’ was ‘unthinkable’. In the end, it is hard to evade the basic psychological point that long-term realism was unlikely from a nation that had just won its second world war in less than 30 years. It would not have been easy for Britain to shed at all quickly a major portion of her accumulated global commitments, but there was a dismal absence of grown-up public debate about the question.

  It was much the same in the financial domain, where the continuing existence of the sterling area, accompanied by sterling’s position as one of the world’s leading reserve currencies, likewise resulted in overstretch. The sterling area, operating in those parts of the world where the writ (whether formal or informal) of the British Empire still ran, had been a creation of the Bank of England during the 1930s, and although Keynes had bitterly observed in 1944 that ‘all our reflex actions are those of a rich man’, the conventional wisdom remained that it was desirable for sterling after the war to play a leading world role. ‘The Sterling Area, and the countries which were linked with it, included about 1,000 million people and could therefore be associated with the United States and the dollar area on a basis of equality’ was how Bevin saw it in July 1949 – notwithstanding that he was in the middle of a balance-of-payments crisis more or less directly caused by an overvalued pound. Devaluation was just round the corner, but it would not be long before there began a new cycle of quasi-fetishistic defence of the parity of sterling, on which it was widely believed that Britain’s national prestige – and the prosperity of the City of London as an international financial centre – rested.2.

  Overall, most historians are agreed with Correlli Barnett that a more modest appraisal of Britain’s place in the world, accompanied by lower levels of taxation, would have been beneficial to the productive economy – especially in terms of investment at a time when so much plant and machinery was rundown or even destroyed. Where his case becomes much more controversial is in his often polemical attack on what he sees as the unnecessary twin burdens of full employment and the welfare state.

  ‘The Pervasive Harm of “Full Employment”’ is one of the chapter titles in The Lost Victory – a doctrine embodied in the strongly Keynesian White Paper of 1944 and typically castigated by Barnett as ‘not so much a Schwerpunkt as a shackle’. He argues vigorously that it was a doctrine that owed everything to faulty perceptions of the inter-war years, when in fact, ‘except during the hurricane of the world’s slump in 1930–3’, unemployment had ‘never constituted a general problem . . . but a local and structural one’. Yet in reality, such was the folk memory of that time, involving an incredibly emotive set of images and associations (epitomised by the Jarrow marchers), that it would be many years before the fear of going ‘back to the 1930s’ lost its policy-making resonance. ‘Full employment is practically dead as a political issue,’ flatly stated a Treasury memorandum in November 1950. For the next two and a half decades, virtually no mainstream politician questioned the assumption that the automatic price of high unemployment was political suicide. It was much the same with the welfare state. It may or may not, in a strictly economic sense, have been a profligate waste of money – Barnett’s figures to that effect have been sharply disputed – but what is surely incontestable was the prevailing political context. Whatever the precise detail about the scope, cost and funding of the welfare state, often a matter of intense debate, there was, put bluntly, no political mileage at all in advocating a wholesale return to the previous dispensation. Moreover, as state-provided welfare spread across a reconstructed Western Europe during the 1950s, it was soon clear that this was far from being a uniquely British constraint.3.

  In any case – irrespective of the economic consequences of the prevailing assumptions about Britain’s world role and the creation of a New Jerusalem at home – the fact was that the British economy that emerged from the war was suffering from a far more important inherited burden: namely, a notably uncompetitive environment in which to operate.

  A handful of main factors determined this non-Darwinian state of affairs. The first was the considerable if perhaps overestimated extent to which there existed for the British manufacturing industry an array of easy, undemanding, semi-captive export markets, usually linked with the Empire and/or sterling area. Such markets represented a comfort zone – a zone which, not unnaturally, few industrialists were inclined to leave voluntarily. The awareness that several other major manufacturing economies were temporarily hors de combat, not least in terms of exporting to Britain, merely added to the mental tranquillity. A further source of reassurance was the existence of exchange controls, meaning that the economy was not exposed to potentially unsettling movements of international capital. Introduced at the start of the war, exchange controls were made seemingly permanent by 1947 legislation which was, The Times reported, ‘received with sober approval in the City’ and more or less with indifference everywhere else. Similarly e
ncouraging to a quiet life was the almost complete absence of a tradition of contested takeover bids, though here the 1948 Companies Act, insisting on more stringent financial disclosure, did at least in theory signal that things might change.

  Above all, in terms of perpetuating a stagnant economic environment, there was the sheer extent of price-fixing (mainly in the form of resale-price maintenance), collusion and even cartelisation. The precise extent is the subject of debate, but one estimate is that by the end of the war there existed ‘a proliferation of collusive agreements covering perhaps 60 per cent of manufacturing output and frequently sustaining inefficient producers’. It was an issue not without resonance. ‘All parties in this Election are concerned about Monopolies,’ noted the Financial News in July 1945, while Labour’s manifesto condemned outright ‘bureaucratically-run private monopolies’ and promised that these would not be permitted to ‘prejudice national interests by restrictive anti-social monopoly or cartel arrangements’.4. In fact the government-encouraged merger movement of the inter-war years, followed by the intimate relationship between government and industry during the war, meant that there was a huge amount to be done before the economy could return to anything like its rawer, more competitive, pre-1914 character. It was a moot point, moreover, whether a Labour Party properly in power for the first time represented a plausible saviour of tooth-and-nail capitalism.