The British Labour Government 1945-51

The Labour government of 1945-51 was a watershed in British political history. It effected widespread nationalisation and founded a comprehensive and universal welfare state. It is credited with founding an economic "middle way" of social democracy, often misleadingly labelled "corporatism". In fact, the essential features of Labour's programme were born out of a consensus forged in war. From May 1940 to May 1979, despite the clashes between unions and management, the British political elite enjoyed a remarkably cosy form of consensus politics. This hub explains more. Please note this is an academic and history related hub and is not seeking to advance or promote any political viewpoint.

The Labour government of 1945-51 was not simply a new beginning for the United Kingdom. It was the culmination of the Labour movement's aspirations since 1900. The Labour Representation Committee had been founded at the Memorial Hall, Farringdon Street, London in 1900. It renamed itself the Labour Party in 1906, securing an electoral pact with Herbert Gladstone, Liberal Chief Whip, which allowed it to target un-winnable seats. Labour formed an uneasy coalition of trade unionists and middle class socialists, with the Independent Labour Party adding an ideological cutting edge.

Arthur Henderson and Sidney Webb laid down the 1918 Constitution and this set the tone of policy in years to come. For all the visionary talk of Clause Four, Labour was a defensive and cautious party, committed to ameliorating the lot of the worker within a capitalist economy. After the idea of a capital levy was jettisoned in 1924, any ideas of forcibly redistributing capital wealth were abandoned. The party was bereft of concrete plans and with the willing collapse of Ramsay MacDonald into the National Government in 1931, Labour appeared a spent force.

Clement Attlee, as leader from 1935, changed everything. This mild-mannered Oxford graduate had been radicalised by his experience working with poor orphans in Limehouse. He strongly believed that the state should take an active role in eliminating poverty and destitution and as Mayor of Stepney in London he fought against exploitative slum landlords. Now, as Labour leader, he gave the party a clear identity that avoided the twin dangers of Marxism on the left and New Liberalism on the right. By 1939 the Labour Party had effectively renewed itself in opposition.

War is an agent of change, and World War Two changed everything. It laid the parameters for a consensus politics - the idea of a nation pulling together to achieve great things - that was to endure until the Seventies. The war familiarised Britain with state planning and the guiding hand of Whitehall in economic management. Shared sacrifices generated higher expectations for the post-war world. Had not the hope of a "land fit for heroes" been so cruelly dashed by Lloyd George after 1918? This time there was to be real change.

The post-war world was born of cross party ideas from the wartime consensus. It was after all a Liberal, William Beveridge, who first proposed a National Insurance scheme in November 1942. This required a single weekly flat-rate contribution and in return the unemployed would receive enough benefits to provide a minimum standard of living. The first plans for a national health service were actually drawn up by a Conservative minister for health, Henry Willink. The war saw unprecedented co-operation between trades union and managers - a form of corporatism. Revisionists delight in showing that behind the bonhomie and resilience of the Blitz was a world of spivs and profiteers, disillusion and weakness. Yet the overwhelming mood of shared sacrifice and the traditional British belief in "fair shares" certainly played into Labour's hands.

The Labour Party fought a healthy General Election campaign, with its numbers swollen from 2.6 million to 3 million during the war. The General Election of 1945 was not a betrayal of the greatly revered once and future Prime Minister, Winston Churchill; rather it was a positive vote in favour of a dream - the New Jerusalem that so many wanted to build. This was a more naive and optimistic world and socialism presented an appealing and untested alternative for many, not yet undermined by the later experience of stop-go economics and industrial conflict. For a moment, people truly believed in a New Britain.

Labour won 393 seats, or 48% of the vote. The Conservatives languished with 210 seats, or 39.8%. On 27 July 1945, with the war in the Pacific yet to be won, Attlee formed his government.

The war had permanently weakened the UK economy, and taken a quarter of its national wealth (£7 billion). The foundation of the welfare state was only possible because of a U.S. $3.75 billion loan to be repaid at 2% interest for fifty years from December 31, 1951. The programme of radical reform began almost immediately. On May 2, 1946, by 359 votes to 172, socialised healthcare was set up in the form of the National Health Service (NHS). Hospitals were nationalised, new regional boards were set up and doctors were redistributed in line with population. The NHS was popular among ordinary people from the start, although costs soon spiralled and prescription charges were re-instated before long.

Widespread public housing construction was another priority after the bomb damage of the war. This was a cross-party goal serving a demonstrable public need. It was only several decades later that the poor construction quality and socially brutalist quality of much post war tower block architecture became evident.

Labour also stood for nationalisation - the idea that the "commanding heights" of the industrial economy should be taken into public ownership. The focus was on utilities and resource production - the coal mines, electricity, gas, railways and transport. The favoured form of public ownership was the Morrisonian corporation that allowed the adversarial character of labour-management relationship to continue. These were no workers soviets and the government had little interest in day to day management of the enterprises. The limits of nationalisation programme became clear when an attempt to bring the sugar and cement industries into public ownership were abandoned after 1950.

1947 brought a succession of crises. Exceptional winter weather led to coal shortages. Sterling convertibility with the dollar was established on 15 July 1947 and a debacle ensued. Given the background of UK economic failure, the currency plummeted. Hence a run on the pound, a stock market crash, near bankruptcy and government humiliation. The British economy's basic weaknesses - a trade deficit and balance of payments crisis - remained unresolved for decades.

The austerity regime of Stafford Cripps started biting from 1947 and in the general election of 1950, the Labour majority was reduced to just five seats. Foreign policy - the Korean war and the rejection of the Schuman initiative - took priority. Gaitskell's budget failed and the economic crisis worsened. Attlee called a general election for 1951 - and the Conservatives won.

While the NHS and the welfare state have endured as permanent, if occasionally battered, features of the British social and economic landscape, so many other features of the 1945 settlement have been reversed. Nationalisation led to overmanning and inefficiency and after the poor labour relations and woeful productivity of the British Leyland era, more radical solutions were considered. Margaret Thatcher's privatisation programme in the 1980s effectively reversed the Attlee settlement, with British Telecom, British Gas and British Airways - not to mention the water and power companies - returned into the private sector. The break-up of British Rail in 1996 returned the railway network to its pre-war model, except with track ownership and train provision separated. The results have been controversial to say the least.

The world of 1945 seems surprisingly distant in so many other ways. This pioneering Labour government, not afraid to be called socialist, appears socially conservative by today's political standards. This was the government that enthusiastically introduced grammar schools, vetoed any moves towards European integration, and ordered Britain's first nuclear bomb.

Historical and partisan debate still rages on the merits of the Attlee government. To some, this diffident yet visionary leader was the greatest of all British prime ministers. With a national health service and a welfare state, he achieved what centuries of dreamers and idealists could only hope for. Conservatives believe the rot began here in 1945: a final resort to fantasy, when a bankrupt country splurged on unaffordable schemes and the flame of national self-reliance fizzled away under the dead hand of the bureaucratic state.

Perhaps the truth lies somewhere in between; that behind the archaic words and naive, even misguided ideas, there was a fleeting but real moment of magic. Change was real, and a good deal of it proved valuable and enduring, lifting Britain into the sunlit uplands of the modern world.

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