Labour’s programme of nationalisation was based on the concept of state ownership of industries, enabling the government to control the “means of production, distribution and exchange.” It began to be implemented in 1945 at the end of the Second World War, under the general direction of Herbert Morrison, with a primary aim of creating more efficient planning and co-operation between industries, whilst improving relations between workers and employers. Thus, for the purpose of this essay, the successfulness of the Labour programme of nationalisation will refer to whether or not it met the aim of making industries more efficient and integrated.
Labour faced major economic struggles at the end of the war and yet put its plans to restore industries straight into action. This may been seen as a mistake, with many claiming if they had waited until debts had been repaid, with the economy back on track, their attempts to make industries more efficient through nationalisation would have been far more successful. However, if Labour had waited many industries may have collapsed before they had the chance to introduce their plans and therefore I feel the immediate nationalisation was the right thing to do. Taking into account the problems the Labour government faced, I believe its achievements couldn’t have been greater.
Labour’s attempts at planning the economy surpassed all efforts previously seen in Britain and brought considerable success. By 1950 there was full employment, with exports increasing and inflation under control. Labour’s nationalisation programme bought about improved working conditions in many industries (with money being available whenever the government needed to invest after the nationalisation of the Bank of England in 1946), along with better relations between workers and employers within many industries, this may suggest that the programme was successful in making industries more integrated. However, this was not true. Each industry that was nationalised was controlled by a small board of experts (e.g. the Central Electricity Board); there were no workers on such boards, meaning the workers had no share in decisions. Thus the programmes plan for industries to be more integrated was not met, hinting that the programme was unsuccessful.
The nationalisation of the coal (1947) and railways (1948) prevented these industries from almost certain collapse. By nationalising the coal industry, the government took ownership of approximately 1500 collieries and 400 smaller mines, which were to be controlled by the National Coal Board. The Conservatives criticized this action stating that the industry had over three quarters of a million workers, and was simply too large to be controlled centrally. Although by nationalising the coal industry Labour prevented its collapse, the Conservatives were later proven correct, with the National Coal Board failing to deal with the coal shortage in its opening year.
Railways also faced problems after nationalisation. Although Labour’s plan had been to create a more efficient transport network, railways were criticised for many reasons including punctuality, cleanliness, cost and overall efficiency. Thus although Labour’s programme of nationalisation prevented both the coal and railway industries from collapse, it failed to make either of them efficient, and therefore was unsuccessful.
Nationalisation had further set backs. The government simply bought out the former owners of industries, whilst keeping the same management. As a result of this many years’ profits had to be used to compensate the former owners. Thus the little profit the government made was not going to proper use, and the industries remained inefficient on many occasions. Only approximately 20% of industries were nationalised within Labour’s programme, all of which, except for iron and steel, were either unprofitable (hinting at inefficiency) or in need of investment for development in order to improve efficiency. Moreover, the iron and steel industry was already prosperous when it was nationalised in 1950, therefore its nationalisation can not be held responsible for its efficiency, and thus it can not be seen as a success of Labour’s nationalisation programme.
The government was unable to provide sufficient investments in order to modernize or improve industries and therefore many of the nationalized industries, coal and transport in particular, continued an inefficient service, running up large deficits and proving the Labour’s nationalisation programme to be unsuccessful.
In conclusion, I feel that nationalisation was successful in the short term, helping industries to keep going. However, this was at the expense of the treasury and Labour’s resources were soon drained, supported by the fact that it later refused to subsidise the coal industry and it soon collapsed. In my opinion nationalisation was never going to work over a long period, thus I feel Labour’s aim to make industries fully efficient through nationalisation was impossible to meet. Although Labour’s nationalisation programme failed to make industries efficient, considering the vast amount of problems faced, it was the most successful effort possible. Moreover, nationalisation did help save industries from collapsing and therefore to an extent was successful as it allowed industry to continue. However, in the context of this essay, nationalisation failed to meet its aims of improved efficiency and more integrated industry and therefore was unsuccessful.