The key aims of the Labour government in 1945 were to take industry into public ownership, to bring in universal State welfare provision, and to set up the NHS. These aims were both ideological and practical. State control of the economy would not only carry out the principles of Clause IV of Labour’s constitution, it would also ensure ‘national efficiency’. With nationalisation the State would be better able to control essential industries so enabling it to plan the economy and ensure full employment. In a planned economy and with full employment, it would then be possible to make Labour’s social ideals become reality.
What was new in 1945 was not so much Labour’s aims but the practical political possibilities. Unlike Ramsay MacDonald’s earlier Labour governments, Attlee’s had able politicians with experience of government and a large overall majority so it could get its policies through parliament.
It could also count on popular support. Six years of total war had left a widespread belief in the advantages of State planning, ownership and control. These factors made the nationalisation of industry politically possible in a way it could never have been before. By 1945, nationalisation was no longer a strange, theoretical idea. The State had already virtually nationalised key parts of British industry between 1939 and 1945. After the war, not only traditional Labour supporters but many in the middle classes and even in business believed that nationalisation of some industries was desirable.
There was very little opposition to the nationalisation of industries like coal and the railways even by the Conservatives. Civil aviation had been closely associated with the State since the 1920s. Nationalisation of the Bank of England was not contentious since it had, in effect, been the government’s bank since its foundations in 1694. However, the Conservatives and other did strongly oppose the nationalisation of road transport and steel. They argued that these would be run more efficiently under private ownership and when they came to power in 1951 they denationalised these industries. The national mood in the mid-1940’s, however, accepted most of the nationalisation programme; debate at the time was more about its extent and cost.
Between 1946 and 1951, the post-war Labour governments succeeded in taking into public ownership 20 per cent of economic enterprises, employing 10 per cent of the workforce. The State, in the name of the people, now owned and controlled most of fuel and power productions, transport, the steel industry and the Bank of England.
Nationalisation brought improvements in some industries. The supply of electricity and gas was expanded. There was a growth in civil aviation and in cable and wireless communication. Electrification was extended to more and more remote parts of the country. Although when the Conservatives came to power in 1951 they reversed the nationalisation of road transport and steel, they left the rest of the nationalised industries in State ownership until the late 1980s.
However, the nationalisation programme cost a lot of money. Private owners had to be compensated and this cost £2,700 million, money which some have argued, both at the time and since, could have been better spent. Labour had also burdened taxpayers with some seriously run down, unprofitable industries which would have to be subsidised indefinitely, such as coal mining and the railways. Nor did the nationalised industries always benefit from State control. The administrative system adopted by Labour did not directly involve workers or consumers in the decision making and running of these great industries. Coal miners often found that they had the same managers after nationalisation as before. Some industries were in competition with each other – such as gas with electricity. The pay and conditions of the workers in nationalised industries did not improve much.
One important debate about Labour’s nationalisation programme is about the extent to which it brought radical change. Typically, critics on the right saw it as extreme socialism; many critics on the left thought it was not nearly radical enough.
Between 1945 and 1948, Labour passed a range of major welfare and social reforms through parliament. In addition to their own reforms, Labour also implemented welfare measures passed by the wartime coalition government, the 1944 Education Act and the 1945 Family Allowance Act.
Taken together, these reforms formed the basis of the welfare state. Labour was building on welfare reforms passed between the wars and even before 1914, but it did bring some of its own distinctive approaches to the social and welfare reforms of 1945-51. It is important to note that wide-ranging reforms were introduced at a time of severe financial and economic crisis.
Although welfare reforms had taken place in Britain since before the First World War, welfare provision was still inadequate in 1945. The system was uneven in its coverage. The majority of workers were covered by the national insurance scheme, which gave some protection against unemployment and sickness, but many thousands of workers remained outside the scheme. Although insured workers had access to a doctor, their families did not. Most of the unemployed received 26 weeks of benefit under the national insurance scheme and could then claim a dole after that, but 40,000 workers in non-insured occupation had still to fall back on the old 1834 Poor Law. There were no child allowances, maternity benefits or death grants. The Emergency Medical Service had been set up during the war but there was no guarantee this would continue in peacetime. Doctors and hospital bulls still had to be paid out of private provision. There were still great differences in health and living standards between social classes and regions.
Attlee’s government was committed to making welfare provision universal (open to everyone) and free of charge. This commitment was partly due to ideology – Labour had been committed to free education, a free health service, abolishing the old Poor Law and means testing for decades. Labour interpreted socialism as providing collectively for the needs of all people regardless of the ability to pay. Labour was building on a series of welfare reforms going back at least to the Liberals’ reforms of 1902-12. This provision of old age pensions, national insurance and other benefits had been steadily expanded by coalition, Conservative and Labour governments during the inter-war period. Britain was already a ‘welfare society’, if an incomplete one, before 1939.
The experiences of the war generated a strong sense of community in Britain and persuaded people of all classes of the need for reform through collective action. There was widespread support for the idea that, having won the war, Britain would have to ‘win the peace’ by making a fairer society and ensuring that there was no return to the dark days of the 1930s. The war had already prompted increased welfare provision. Fears of mass aerial bombing led to the creation of the Emergency Medical Service which was a kind of national hospital service. The mass evacuation of children revealed the extent of deprivation amongst children. From 1942 onwards there was public support for Beveridge’s ideas on social insurance ‘from the cradle to the grave’.
