Industrial efficiency and state intervention: Labour 1939-51

Tiratsoo, Nick; Tomlinson, Jim Book Industrial efficiency and state intervention: Labour 1939-51 Provided in Cooperation with: Taylor & Francis Group Suggested Citation: Tiratsoo, Nick; Tomlinson, Jim (1993) : Industrial efficiency and state intervention: Labour 1939-51, ISBN 978-0-203-99112-1, Routledge, London, https://doi.org/10.4324/9780203991121 This Version is available at: https://hdl.handle.net/10419/251170 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc-nd/4.0/ Industrial efficiency and state intervention In Industrial Efficiency and State Intervention Nick Tiratsoo and Jim Tomlinson describ e and assess the Labour Party's development of a policy for improving industrial efficiency between 1939 and 1951. The authors concentrate on the debates and initiatives of the wartime period and on the subsequent implementation of policy aimed at raising productivity under Attlee. The book provides two major modifications to existing historiography. First, it shows that the prevailing view of Labour between 1945 and 1951 , with its emphasis on the creation of the Welfare State, is wrong. Labour saw the correction of social ills as vital, but it also recognised the crucial need for industrial modernisation. Second, this reading demands the re-evaluation of wider theories about Britain's economic decline. If the key difference between Britain and, say, Japan is Britain's lack of a 'developmental state', then, as the book shows, any explanation of this situation is impossible without consideration of the country's political parties and the context within which they have operated. Given this twin purpose, the book should appeal to both specialists intereste d in party politics and those who are interested in wider questions about Britain's overall contemporary history. Nick Tiratsoo is Lecturer in Social History at the University of Warwick an d Visitor in the Business History Unit at the LSE. Jim Tomlinson is Reader in Economic History at Brunei University and Visitor in the Business History Unit at the LSE. Books published under the joint imprint of LSE/Routledge are work s of high academic merit approved by the Publications Committee of the London School of Economics and Political Science. These publications are drawn from the wide range of academic studies in the social sciences for which the LSE has an international reputation. Industrial efficiency and state intervention: Labour1939-51 Nick Tiratsoo and Jim Tomlinson First published 1993 by Routledge Published 2017 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN 711 Third Avenue, New York, NY 10017, USA Routledge is an imprint of the Taylor & Francis Group, an informa business Copyright© 1993 N. Tiratsoo and J. Tomlinson Typeset in Times by LaserScript Limited, Mitcham, Surrey The Open Access version of this book, available at www.tandfebooks.com, has been made available under a Creative Commons Attribution-Non Commercial-No Derivatives 4.0 license. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library. Library of Congress Cataloging in Publication Data has been applied for. ISBN 978-0-415-08810-7 (hbk) Harold [Wilson] said he had invented the concept of output per man-shift an d even the concept of productivity which had been a theoretical concept before but he had got it extended over all industry. A terrible thing to have on his conscience. (Tony Benn, Against the Tide: Diaries 1973-76, London: 1989, p. 506) instead of fussing about glaring and conspicuous evils, squalor and injustice and distressed areas ... [democratic socialists] have to fuss about the balance of payments, and incentives, and higher productivity. (C.A.R. Crosland, The Future of Socialism, London: 1956, p. 99) Contents List of tables ix Acknowledgements x 1 British industry, state intervention and Labour politics 1900-39 1 2 The production crisis, productivity and the rise of the management question, 1941-4 21 3 Debates and initiatives, 1944-5 44 4 Early post-war efforts, 1945-7 64 5 Human relations and productivity, 1947-51 90 6 The management question again, 1947-51 111 7 The'Americanisation'of productivity, 1948-51 131 8 Evaluation and implications 153 Notes 17 1 Index 201 Tables Table 2.1 Joint Production Committees at establishments in engineering an d allied industries, 1942-4 28 Table 5.1 Firms with Joint Production Committee machinery, 1949 sample 102 Table 5.2 Management assessments of Joint Production Committees i n 216 engineering firms, 1950 104 Table 7.1 Estimated savings from increasing batch size of bushes and bearings 147 6 Industrial efficiency and state intervention slump of 1929-32. The enforced amalgamation of the railways in 1921 might b e seen in this context, though it basically made permanent the wartime arrangements. More innovatory was the creation of the Central Electricity Board (CEB) in 1926, which very much reflected the idea that industrial efficiency required cheap large-scale generation of electricity.22 The most active body in the area of rationalising the staples was the Bank of England, drawn in by the problems of its own customers and by the threat posed to the banking system of bad debts arising in the older industries. The Bank had also acted to pre-empt more radical action by an incoming Labour Government in 1929P As in the pre-war period, the Conservative Governments of the 1920s were hardly laissez-faire in attitude, and were not averse to expanding the frontiers of state intervention in certain directions (e.g. industrial transference). But rationalisation suggested a direct role in the private sector and its prerogatives which most Conservatives still found anathema. Hence, for example, intervention in the coal industry in the 1920s, a prime industry for rationalisation, allowed for state compulsion in amalgamations, but only if the initiative came from a majority of owners in an area. The impact was quite limited.24 A more radical measure of state intervention was embodied in the cartel and compulsory amalgamation provisions of the Coal Mines Reorganisation Act of 1930, the product of a parliamentary alliance between Labour and the Liberals, but again its results were limited.25 The collapse of the gold standard and the ending of free trade in 1931 mark a kind of watershed in the development of British economic policy. The liberal, cosmopolitan arrangements of the pre-1914 era had rested on three pillars - the gold standard, free trade and low and balanced budgets. 26 Two of these were now defunct. At the same time the caus e of their demise - the world slump - gravely exacerbated the problems of the staple industries, problems which had largely initiated the tentative movements to state intervention in the 1920s. There was now both an economic and a political 'space' for a more dirigistic role from government. But this role took a largely defensive form. The tariff imposition obviously shielded British industries from competition and so reduced the need to reorganise. The Government proved unable to replace such an incentive by any other, so that in iron and steel, for example, official enthusiasm for rationalisation as a quid pro quo for protection in the end achieved very little.27 Overall, the picture of the Conservative Governments and industry in the 1930s is one of support for cartelisation and market sharing within a protectionist framework. This British industry, state intervention, Labour politic s 7 is not to argue either that protectionism is always harmful to industrial efficiency or that cartelisation combined with forced amalgamations might not have yielded some benefits. But in the circumstances of the 1930s it is difficult to escape the conclusion that the administration's role was largely unhelpful to any notion of a state-sponsored industrial modernisation.28 First, these were Conservative Governments which drew substantial support fro m owners in the private sector, who were not only ideologically an unlikely source of proposals for major state intervention but, perhaps more important, ill-organised to produce any consistent policy positions. The impression that employers presented, even within individual industries, was usually one of fragmentation and disagreement rather than unity. This seems to have led to a persistent 'lowest common denominator' attitude of defensiveness and minimal change, with which the politicians went along in the absence of a viable alternative.29 This 'safety first' stance was reinforced by the Tories' conception of overall economic policy. Alan Booth has persuasively argued that the Conservatives had a fairly coherent approach to economic policy in the 1930s, which involved managing the economy in a new way. The party's package revolved around taking advantage of the departure from gold b y using a programme of cheap money and maintaining a low exchange rate for the pound. These measures were (eventually) envisaged as means of reviving the economy by raising the price level, and hence profits, but this required, in the Government's eyes, tight fiscal control to prevent any loss of confidence which would threaten the compatibility of the two central policies.30 This strategy not only ruled out Keynesian-styl e fiscal 'extravagance' but also militated against any innovative policy on the economy. The defensiveness and negativism of industrial policy was, therefore, on a par with the general stance as regards economic policy. As a consequence of these factors, by the outbreak of the Second World War Britain had little more of a 'developmental state' than in 1900. Th e Government had intervened in new ways after the First World War exposed some of the shortcomings of British industry. Certain 'key' industries had been given protection, and this was extended to all of manufacturing and some of agriculture in the 1930s. But whilst protection may have been a necessary condition to allow space for the reorganisation o f certain of Britain's industries, or the growth of new ones, it was not a sufficient condition. The simple fact was that the Government remained reluctant to intervene directly and systematically 8 Industrial efficiency and state intervention in industry. There were examples of such intervention - railways, electricity an d coal have been noted above. There were also such cases as the official encouragement given to the creation of ICI, particularly stimulated by the strategic significance of some of its products. But in no sense could this be said to amount to an industrial strategy, and it only added up in the end to a set of ad hoc interventions which failed to address the real magnitude of British manufacturing weakness. Furthermore, thoug h some general 'supply-side' initiatives were made, such as the wartime creation of the Department of Scientific and Industrial Research (DSIR), their impact was insubstantial. Typically, the DSIR focused its efforts on prodding the private sector to expand research, rather than acting as a major player itself. It does not seem to have succeeded in shifting the low levels of R. & D. prevalent throughout British industry.31 In sum, whilst by the 1930s there had been a decisive break with the political economy of Victorian liberalism in the sphere of international economic policy (the gold standard and free trade), confidence in the capacity of private industry to deliver efficient production and employment had been replaced not with an aggressive programme of modernisation but with a defensive, even defeatist, alignment, which arguably managed to combine the worst features of private enterprise and state intervention. What of Labour's role in this story? Up until 1939 the party never achieved a parliamentary majority. It became the main challenger to the Conservatives afte r the First World War, but was only able to form two short-lived governments in 1924 and 1929-31. Hence Labour's direct impact on state policy was limited. But the party's views on industry and industrial policy were undergoing significant changes, and these form an important background to its later role in the 'years of influence', 1939-45, and years of power from 1945 to 1951. These developments also deserve some detailed consideration as there is currently a striking dearth of material on this important topic. From its foundation in 1900 (as the Labour Representative Committee) until 1918 the Labour Party was a body whose programmatic an d policy-making side continued to be extremely underdeveloped. The basis for the foundation of a distinct Labour Party was a desire to form a body to represent the interests of the working class, where that representation was seen largely in sociological terms (i.e. giving a voice to a class) rather than as involving a distinct set of policy objectives. Initially this situation even precluded political goals beyond working-class representation. In 1908 common ownership of British industry, state intervention, Labour politics 9 industry became a general objective, but was simultaneously rejected as a programme. The dominant view was that the party consisted of a fragile alliance of trade unionists and socialists, a unity which would not survive detaile d statements of intention. The most that should be done was to establish principles, and let the Parliamentary Party turn them into practical activity. Policies that did emerge were largely ad hoc responses to events of the day.32 Alongside this programmatic vacuum there was the development of a definite approach to industry, largely from Fabian sources. Whilst the Independent Labou r Party dominated the 'ethos' of Labour at this stage, it was the Fabians who seemed to give the most serious consideration to policy issues, on industry as in so many other areas.33 In the first significant Fabian publication, the Fabian Essays of 1889, two chapters were devoted to industry, the most substantial by William Clarke, the other by Annie Besant. Both had a similar line. Above all they shared a highly evolutionary analysis of industry, describing an ineluctable movement from handicraft to machine production, and an ever increasing massing of capital and grouping of workers. This process was now reaching a new stage in which the 'ring' and the 'trust' more an d more replaced previously free competition. Such developments were seen as both inevitable and efficient: 'Those combinations can be shown to be the most economical and efficient methods of organising productio n and exchange. They check waste, encourage machinery, dismiss useless labour, facilitate transport, steady prices and raise profits.' The socialist aim should therefore be not to break up the combinations but to 'absorb and administer' them: Instead ... of attempting to undo the work which the capitalists are unconsciously doing for the people, the real reformer will rather prepare the people, educated and organised as a true industrial democracy, t o take up the threads when they fall from the weak hands of the possessing class.34 Annie Besant carried the argument a logical step further by noting that the developmen t of industry had separated the industrial population into a proletarian majority and a tiny owning class, and that this laid the basis for a straightforward expropriation of the trusts' owners. In addition she spelt ou t a further highly significant practical consequence of the new configuration of industry: There is no practical difficulty in the way of management of the ordinary productive industries, large or small. The Trusts and 10 Industrial efficiency and state intervention Co-operatives have, between them, solved or put us in the way of solving, all problems connected with these.35 These two essays defined a position which was both widespread and long-lived. Other Fabians wrote on similar lines, and the approach seems to have become close to an official Labour position.36 But the perspective employed clearly drew on much wider Left traditions. Besant's essay, especially, employs an almost Leninist tone, whilst on the other hand closely paralleling the views of the most important 'New Liberal' economic theorist, J.A. Hobson.37 In other words, this position on industry illustrates the pervasiveness of evolutionary modes of thought across the ideological spectrum at this time, with Fabians and Labour sharing a common intellectual heritage. Such views remained the bedrock of Labour's thinking on industry up to the First World War. Whilst such an approach, as already noted, was not translated into a programme during these years, it was compatible wit h the largely ad hoc policies which did emerge at this time. In particular, Labour's accretion of commitments to nationalise particular areas, such as the railways, was fully in line with the judgement that this would represent a further step along the path which industry was already following, rather than a fundamental break in its development. Thus, the case for railway nationalisation (parallel to that for land) was founded upon the belief that the employers in this industry were currently exacting a monopolistic surplus which distorted the distribution of income, rather than any allegations about their supposed inefficiency.38 In other words, nationalisation did relate to efficiency but not in the sense of the efficiency of industrial organisation. The private ownership of land, railways and mining royalties was seen as imposing inefficiency on other sectors by exacting monopoly rents from them. Secondly, the maldistribution o f income which resulted from such monopolies, it was argued, lowered the incomes of workers, and so made them inefficient. This latter sense of efficiency, relating to the physical health of the worker, was a predominant one in discussions of this period, again uniting Labour and the New Liberals. But such a focus highlights the absence of attention to the details of corporate performance, an absence explained b y the continuing popularity of the evolutionary view that private ownership, whilst it might be a problem in some respects, did not involve any problems as regards efficiency. This is also evident in the programme of the 'Co-Efficients' whose concern with efficiency involved no criticism whatever of current forms of industrial organisation.39 British industry, state intervention, Labour politics 11 Faith in the productive efficiency of current capitalist forms of industrial organisatio n remained pervasive until the First World War. Then, like many across the political spectrum, Labour thinkers were shaken by wartime revelations of British incapacity and lack of organisation. In later writing, the Webbs pointed to the Board of Trade Reports as demonstrating 'the gross inefficiency in processes, mechanical plant and organisation within each of the staple trades'.40 Whilst many were unwilling to give up entirely the idea of the advantages of economies of scale made possible by industrial concentration, the overall view of the capabilities of industry soon became vastly more qualified than pre-war. Thus, in the Constitution for a Socialist Commonwealth of Great Britain of 1920, the Webbs argued that 'it was one of the unexpected discoveries of government during the Great War that the system of capitalist profit-making, as a method of producing commodities and services, habitually fell so enormously short of the maximum efficiency of which it was capable'. Accordingly, they came to the conclusion that there was need for a 'Standing Committee on Productivity' as part of a new scheme of government, to aid all industries to conduct themselves more efficiently. 41 This was not just Fabian eccentricity. A loss of faith in the conduct of industry was part of the whole recasting of the Labour Party's political and ideological orientation at the end of the First World War. As is well known, in 1918 the Labour Party adopted a new constitution, which embodied Clause Four, committing it to a programme of common ownership as the central long-term goal. In some ways the significance of this latter goal can be exaggerated. On the one hand, it was not seen as a major issue in the Labour Party at the time, attention being paid much more to other parts of the constitution. On the other hand, it can be seen as simply a logical development of the pre-war stance, coupled to an invigorated desire to give Labour a distinct political position.42 Perhaps more important than the new constitution and Clause Four was th e adoption by Labour of a new programmatic statement, written by Sidney Webb, called Labour and the New Social Order. This included some sections very much following pre-war assumptions, including an argument for nationalisation because private ownership involved a 'perpetual private mortgage on the annual product of the nation'. But beyond this, and marking a new departure, was a case for public ownership based on the inefficiency of the private sector. Webb put this as follows: 12 Industrial efficiency and state intervention the Labou r Party refuses absolutely to believe that the British people will permanently tolerate any reconstruction or perpetuation of the disorganisation, wast e and inefficiency involved in the abandonment of British industry to a jostling crowd of separate private employers. ... What the nation needs is undoubtedly a great bound onward in its aggregate productivity . But this cannot be secured merely by pressing the manual workers to more strenuous toil, or even by encouraging the Captains of Industry to a less wasteful organisation of their several enterprises on a profit-making basis. What the Labour Party looks to is a genuinely scientific reorganisation of the nation's industry no longer deflected by individual profiteering, on the basis of Common Ownership of the Means of Production.43 This emphasis on the pursuit of efficiency as a basis for nationalisation was carried over into particular cases. For example, the advocacy of railway and electricity nationalisation was related to the importance of efficiency i n these industries for the economy as a whole, and the obstacle presented by private ownership to the realisation of the economies of scale available in each of the two cases.44 In sum, the war had significantly shifted Labour's approach to the economy. It had increased belief in the efficacy of government planning, as Oldfield emphasises. Conversely, it had reduced the evolutionist faith in general, and especially in relation to industry. Nationalisation was nothing new, but the grounds for its advocacy had significantly shifted, and was coupled to a new 'productionist' emphasis in Labour thinking. At the June 1918 Labour Party conference, Ramsay Macdonald put forward what seems to have been the first ever resolution calling for increased production as a priority. This was amended, not to deny the objective but to stress that it was acceptable only in the context of public ownership.45 How did this position develop between 1920 and 1939? Most discussion o f Labour's economic policies during these years has been dominated by questions about the party's resistance to adopting wholehearted Keynesianism as a response to the mass unemployment of the period.46 During the post-1945 boom, which was assumed to have been caused by the adoption of such Keynesianism, it was perhaps natural to assume that this might well have been the path to solving the inter-war slump. More recent work has distanced itself a little from such perspectives, though still tending to focus on macroeconomic rather than industrial policy.47 Unemployment did dominate Labour's economic agenda in the British industry, state intervention, Labour politics 13 interwar period , but overall the record of policy ideas from the party on this issue is not an impressive one. Skidelsky's suggestion that there was an 'obvious' solution, which only Labour's combination of Utopian rhetoric and practical conservatism obscured, requires substantial qualification.48 But his point that the Labour Party, especially in the 1920s, wa s not geared up to formulate a plausible reformist strategy for economic management is surely right. Labour's continued adherence to pre-1914 radica l internationalism, involving support for free trade, the gold standard and financial conservatism, was not a framework likely to produce the necessary re-orientation of British economic policy. Equally the leadership of the Labour Party desired neither to overthrow capitalism nor to lose its claims to political responsibility by adopting unorthodox economic doctrine.49 The orthodoxy of the Labour Party was challenged by elements within it. Most importantly, the Independent Labour Party in the 1920s continued to produce impressive initiatives on unemployment. The most detailed o f these was the 1925 Revolution by Reason, which embodied neo-Keynesian proposals for an expansion of demand via a nationalised banking system coupled to a floating exchange rate. The following year another group of ILP members published The Living Wage, which drew much on J.A. Hobson's underconsumptionist theories to argue for a minimum wage and large-scale redistribution of income via steeply progressive taxation. Such views were widely debated on the Left, and restated in a weaker form by Oswald Mosley in his famous memorandum of 1930. But their impact on official Labour policy, whether the party was in or out of government, remained minimal.50 During Labour's first period in office in 1924 the watchwords were financial orthodoxy and general economic caution. Labour still looked to the revival of the international economy as the only sure way of guaranteeing trade regeneration and a fall in unemployment.51 But the concern with unemployment was also reflected in Labour's approach to industry. Whilst carefully eschewing any strong commitment to nationalisation in its 1923 Election manifesto, in government Labour did reviv e the idea of much greater expenditure on and standardisation of electricity generation, with many arguing that this could be secured only by nationalisation. Nothing directly came of this during the period of office, though it gave impetus to the pressures which eventually led to the creation of the Central Electricity Board in 1926. Here was a classic case where private enterprise seemed simply incapable of achieving the potential economies of scale, and where a technical and non-political case for nationalisation could have wide appeal.52 14 Industrial efficiency and state intervention Labour's approach to industry also developed in the context of the debates about rationalisation during the late 1920s. One way of viewing these debates is as signalling a loss of faith in the revival of trade as the only real remedy for unemployment, and a desire to see greater industrial efficiency as a way of expanding Britain's markets. Before the election of the second Labour Government in 1929 enthusiasm for rationalisation was more apparent in the Trades Union Congress (TUC) than in the Labour Party. For example, in Labour's 1928 statement of policy, Labour and the Nation, rationalisation was urged as a solution to 'the waste and inefficiency of private ownership in industries which, whether called private or not, are essentially public in character'. But beyond this rhetoric there was little in the way of practical policy proposals, and the extent of the government's role in efficiency remained, to say the least, obscured by the statement that 'employers ... will be well advised to begin by setting their own house in order, to modernise their organisation, improve their technique, eliminate waste, and apply more intelligently the resources which science has revealed'.53 Labour's reply to Lloyd George's We Can Conquer Unemployment in 1929 argued that unemployment necessitated 'drastic reorganisation' of the staple export sectors, but it also recognised that unemployment was being caused by rationalisation of other industries. The potential difficulty i n advocating a policy which was at once both apparently a cause of, and a panacea for, unemployment was not, however, addressed. Rather, there was just a broad statement emphasising the need for the state to be involved in the necessary industrial reorganisation, 'not by uniform measures applied to them all, but by a variety of steps^designed to eliminate waste and wasteful competition, to improve and co-ordinat e methods of marketing, purchase of materials, and production, and to adapt business structure to the changed economic conditions of the post-war world'.54 The TUC involvement in the debate over rationalisation came about essentially because of its involvement in the Mond-Turner talks, which flowed from a general desire on both sides of industry to move on from the conflict of 1926 and seek a more consensual pattern of industrial relations (Mond was the head of ICI, Turner a Trade Union leader and the TUC president in 1927). A major incentive to talk here was the issue of rationalisation. The employers involved mainly represented 'progressive' firms which wanted to rationalise but were worried about union opposition. On the union side there was a significant fear that rationalisation would go ahead without them and at their cost.55 Initially British industry, state intervention, Labour politics 15 the talk s achieved some success, with the participants outlining an agreement which included a 'deal' on rationalisation, where the unions would offer to assist the process if they were given a role in designing it. But this agreement ultimately came to nothing, essentially because of opposition from many employers to giving unions an enhanced role either in wage negotiation or, even more, in discussing firms' policies.56 Nevertheless, it is significant that the unions, as distinct from the Labour Party at this stage, were willing to countenance substantial industrial reorganisation as a way of trying to restore the fortunes of British industry. The 1929-31 Labour Government is chiefly remembered for its failure to deal with the unemployment problem, and for its ignominious collapse in the face of the counter-claims of financial 'prudence' and the living standards of the unemployed.57 Reasonably enough, perhaps, these events have obscured other aspects of the economic policy pursued by the Government. In particular it is important to recognise that the Government did attempt to raise efficiency in both the public and private sectors. In the former case, the major monument that was created was the London Passenger Transport Board (LPTB) which, like the CEB, reflected the view that private competition was inefficient and that significant economies of scale could be achieved by an amalgamation under public ownership.58 The LPTB owed much to Herbert Morrison, whose work on it reflected what were to become the dominant themes in Labour's nationalisation programmes of the 1930s and 1940s. The Morrisonian corporation, as it came to be called, would be largely autonomous of government, run by experts, and bereft of workers in any direct managerial role. This was a model which was grounded on a technocratic belief in the efficacy of large-scale administration and an ethos of public service. In economic terms it represented the belief that efficiency sprang largely from a combination of economies of scale and technical expertise, though Morrison himself also held that public ownership would unleash an enthusiasm for production from the workers.59 A similar set of ideas underlay the Labour Government's support for the rationalisation of coal. Here the 'rationalisation' of forced amalgamations with consequent increases in unemployment clashed with the 'rationalisation' of allowing the industry to create a cartel and hoping this would protect output and jobs.60 As noted above, the outcome was an amalgamation of both approaches, but one which essentially emphasised the protection of the industry against competitive pressures . 22 Industrial efficiency and state intervention insufficient'. A few weeks later, it returned to this theme, arguing that 'Notwithstanding th e remarkable results which have been achieved in the face of many difficulties, production... is not as high as it might be. Every test reveals deficiencies which can be remedied.'3 By the beginning of 1942, The Times, too, was becoming anxious, with a widely reported leader backing 'competent judges' who assessed Britain's output of arms as 40 per cent below the amount possible. It could not be denied, the paper declared, that 'the ever broadening stream [of war production]... flows less strongly and widens less quickly than it could and should do'.4 Over the following months, this theme both dominated press discussion and acquired a sharp polemical tone, as Mass Observation succinctly reported: All is not well in our war-production at present. Something is seriously wrong somewhere. Different people point the accusing finger at different wrong points and potential strong points. The amount of pointing, especially in all types of printed matter, adds up to a veritable forest of inked fingers.5 Some targets for blame seemed essentially to be dictated by political prejudice. Diehards of the Right were obsessed with the supposed defects of the labour force: there was widespread 'deliberate slacking, deliberate idleness and shameless agitations for higher wages', at the very time when the 'flower of our land' had been 'mown down at two shillings a day in Crete and elsewhere through lack of arms'.6 For the Left, Capital was the obstructive vested interest. 'All too frequently', one investigative journalist contended, 'the needs of total war and the interests of influential sections of the community do not coincide.'7 On the other hand, there was also a strong strand of technical criticism, which took existing patterns of ownership and control as largely given, but suggested that within them much better results could be achieved. One problem, for this lobby, was the Government's organisation of procurement. All too often, specifications were changed needlessly or orders not matched to the actual capacities of firms.8 Yet improving this situation alone would not, it was asserted, solve the problem. Anothe r obstruction to efficiency lay, all too often, within the firm, in out-dated attitudes and practices. The Select Committee on National Expenditure was particularly vocal in making this point, arguing i n one much reported enquiry, for example, that: 'Management is one of the most important factors affecting output. The evidence shows that idling is frequently due to bad management or want of The rise of the management question 23 supervision.' The Economist concurred here, believing that the course of events i n 1941-2 had 'proved' that good management was 'the scarcest of all factors of production'.9 The Government's eventual reaction to this welter of criticism centred, i n the first instance, on organisational and administrative measures, with a new Ministry of Production, created in February 1942, being perhap s the key innovation.10 Nevertheless, members of the Cabinet recognised that, as some of their critics were arguing, this type of action alone would not be enough. The administration's first responsibility, certainly, was to fashion a system which could mobilise resources for war production as fully and as efficiently as possible. Mistakes had been made over this in the early years of the hostilities, which were now being rectified by the various reforms enacted. Yet once this process was completed, and Britain's manufacturing industry was on a total war footing, it would still be necessary to keep on increasing output if the strategic plans of the military were to be fulfilled. Extra capacity could hardly be brought in from abroad. Nor could further resources be switched from home consumption, as civilians were already judged to have made enormous sacrifices.11 The only hope, therefore, as Ministers gradually recognised, lay in improving productivity: more would have to be obtained from each unit employed. Cripps, the new Minister of Aircraft Production, and perhaps the keenest Cabinet advocate of industrial efficiency, described the logic behind this conclusion during a broadcast at Christmas 1942: We have now reached the time when the inflow of fresh labour to our aircraft industry will gradually dry up and yet we must continue to expand ou r production so as to expedite our victory. How are we to do it? Not by longer hours; that only leads to exhaustion and inefficiency. . . . No, we must improve our methods and cut out all waste of labour - and, let me say, of materials too.12 The task must increasingly be, in The Economist's paraphrase of official thinking, 'to extract the last ounce from the resources already harnessed in the war factories'.13 Accordingly, Ministers of production departments began to spend more and more time attempting to ensure that this was done. Of course, consciousness of the productivity issue in relation to the war effort had always been present to some extent since the rearmament programme o f the late 1930s, and a number of schemes to promote efficiency were already in existence. Thus, the Ministry of Labour had 24 Industrial efficiency and state intervention long encouraged the appointment of personnel officers in munitions factories, an d had in fact made grants available so that suitable candidates could receive the required training in this field at various universities.14 The same Ministry's welfare schemes - providing doctors and canteens at the works - were also designed, ultimately, to make labour more efficient.15 However, from mid-1942, the drive for productivity was very much transformed, in both scale and content. The watchword of efficiency now became accepted as of great importance in most production departments. At the same time, there was a growing awareness that the greatest gains would be made only if the scope of official initiative were broadened. Training schemes, such as those already established, were clearly important. But there was also a need for more direct intervention, to ensure, for example, that individual firms' production processes were as well organised as was possible. All of this added up to a significant departure in government-industry relations. One indication of the changed atmosphere was the progress that was made with establishing Joint Production Committees (JPCs).16 The idea of expanding local consultative machinery to advise on matters relating to production had been extensively discussed during 1941, with attitudes ranging from the enthusiastic (Communist shop stewards) to the downright hostile (many employers). Bevin was sympathetic, but the Government as a whole remained cautious, anxious to maintain consensus in the face of boardroom antipathy and trade union leadership unease. By the end of the following year, however, the situation had been almost entirely transformed. In February 1942 the Ministry of Suppl y approved the setting-up of JPCs in the Royal Ordnance Factories. The following month an agreement between the Engineering Employers' Federation and the unions provided for the creation of JPCs in engineering establishments with over 150 workers. Subsequently, similar arrangements were concluded in shipbuilding and iron and steel, so that by December 1942 there were over 2,000 JPCs in existence, covering plants employing some two million workers. In each case, the motivations of the different parties involved were, of course, often different: some union activists saw the JPCs as a way of increasing industrial democracy, while some employers were more impressed by their potential for containing and disarming discontent. Yet what excited the Government, and ultimately proved decisive, was the contribution that the local committees might make to improving productivity. Cripps was the most enthusiastic proponent of JPCs in the Cabinet, but his observation that 'in a happy factory where there is good The rise of the management question 25 co-operation ther e is also efficient production'17 was broadly shared by the majority of his Ministerial colleagues. However, if the JPCs represented the most visible side of the new official concern, equally important innovations were occurring in less publicised areas, as various Whitehall departments sought to galvanise private industry into more efficient methods. The new Ministry of Production, for example, was from the first very much concerned with promoting bes t practice and by the end of 1943 had constructed a network of committees, panels and agencies to achieve this end. One initiative involved the creation of an expert advisory service in each region, which could be consulted by client firms and was qualified to offer information on, amongst other things, 'production layout and method, casting, designing, planning, rate-fixing, machine loading, office organisation , inspection and general administrative and financial problems'.18 Another scheme, the Mutual Aid by Technical Experts or MATE facility, was aimed at getting efficient firms to share their knowledge as widely as possible. Panels of experts were recruited from the larger companies and then used, like a fire-brigade, to help smaller employers i n difficulty.19 At the same time, the Ministry also reserved the right to make its own investigations where it felt that this would be helpful. A special Industrial Panel, consisting of employers and trade unionists alongside the civil servants, was created for this purpose.20 Meanwhile, productivity consciousness was also transforming more mundane aspects of the Ministry's operations. Typical here were a number of innovations on standardisation, such as a case involving welding equipment of 1943: the Directorate of Industrial Electrical Equipment of the Machine Tool Control found that one of the principal obstacles to the rapid expansion of welding - a conspicuous saver of labour - in shipbuilding and repairing and in tank production was the lack of standardisation of welding plant, components, plugs, sockets, etc. In co-operation with the Admiralty and the BSI [British Standards Institute] the Directorate worked out British Standard 1071:1943, which covers the complete range of multi-operator A.C. welding equipment from the incoming supply of current to the electrode holder. As no user can obtain new welding equipment without a purchase certificate from the Control, and as a certificate will normally b e issued only for the purchase of standard equipment, the result will be that modern high-speed high-voltage welding will quickly become universal in all work for which it is appropriate.21 26 Industrial efficiency and state intervention Alongside the Ministry of Production, the Ministry of Aircraft Production (MAP) was also very active over the productivity issue, particularly afte r Cripps had taken over control of its operations at the end of November 1942. Especially noteworthy here were the contributions made by the Production Efficiency Board (PEB) and the Technical Costs Branch (TCB). The PEB was created by Cripps in the month of his appointment and consisted essentially of four key figures - Sir C. Bruce-Gardner (the Chairman of the Society of British Aircraft Constructors), F.E. Chappell (an Amalgamated Union of Engineering Workers [AEU] official), A.G. Shaw (one of the country's leading experts in personnel management and motion study) and Sir J. Buchanan (a secretary from within the Ministry) - plus back-up staff.22 The Minister's idea was that the PEB should deal with production efficiency in both its capital and labour aspects. It would serve as 'a small, highly qualified advisory body to carry out investigations in the field, as distinct from the usual administrative work of the headquarters and regional staff of the Ministry'23 and would report direct to the top. In fact, the PEB came quite quickly to be regarded as an outstanding success. On e substantial achievement was the fillip it gave to personnel management, through, for example, specially sponsored courses at universities. At the same time, the PEB fulfilled its brief to carry out various detailed investigations of its own, which led to improvements in areas such as methods of machining and salvage of scrapped work. Finally, there was also a strong effort made to popularise motion study. Shaw had worked for Metropolitan-Vickers, a pioneer in this area, and she and Cripps persuaded that organisation to lend teaching staff and premises i n order to train nominees from various other aircraft factories. The result was a number of courses from 1943 onwards which did much to popularise this relatively new form of work study. The TCB had originally been part of the Admiralty, being transferred to MAP and then greatly expanded at the beginning of the war.24 By 1943 a considerable number of specialists were involved: 'rate-fixers, planning engineers, time and motion study experts ... as well as 100 cost accountant s and clerks'.25 The unit's central function was to measure costs accurately in order to fix suitable contract prices, but this inevitably led to a concern with efficiency. In fact, rather as with the PEB, the TCB soon began to be called in whenever MAP or other Ministries sensed that firms were performing below an acceptable standard, i n order to recommend realistic solutions. One of the principal officers involved described how the TCB operated as follows: The rise of the management question 27 The firms chosen for investigation are visited by trained rate-fixers who study the processes in the factory and spot the particular weaknesses in the system . These may be due to factors beyond the control of individual workers, such as faulty operational lay-out or uneven supply of materials, o r they may be due to a poor level of output on the part of the workers, sometimes caused by bad rate-fixing. ... In this way it is possible for the investigator to demonstrate not only to the management of a factory but to the Production Committee as well, the exact cause of the high labour cost of the work in question, and to obtain their agreement to the measures necessary to reduce this cost.26 How big, therefore, had the Government's machinery for improving industrial productivit y become by the end of 1943? This is not an easy question to answer for a number of reasons. There is, firstly, the question of definition, of deciding which civil servants and advisers were acting primarily t o an efficiency brief. The Ministry of Labour's 800 Labour Supply Inspectors were initially concerned solely with 'forwarding dilution' but, as the war progressed, some spent more and more time on the wider aspects of labour utilisation, which clearly contributed to the drive for productivity. Unfortunately it is impossible to evaluate in any more detail what this may have contributed to the overall equation.27 At the sam e time, it is clear that the key agencies which were charged with pursuing productivity were sometimes actually weaker than they formally appeared. One continual problem for all of the institutions involved was how to recruit sufficient qualified staff. Industry itself had been a n important source in the early years of the war but, by 1943, this option n o longer existed. The end-product was that some parts of the Government apparatu s often struggled to cope. It was noted of the TCB in early 1944, for example, that: 'Its studies tend to be retrospective (i.e. made after contracts have actually been placed) and are now heavily in arrears. This is due to lack of staff.'28 Nor, finally, can Government estimates of the forces being deployed do very much to clarify the issues at stake here. The following reply to an enquiry about the scale of MAP's activities on productivity is typical in its vagueness: I am afraid that we cannot give you even a guess at the full cost of the steps taken ... to improve efficiency of firms ...[.]... the costs of the specialist services represent only a fraction of the total. For what the figures are worth, you may like to know that PEB salaries . . . amount to £9,000 per annum.... The Technical Costs Branch costs in salaries about £240,000 per annum.29 28 Industrial efficiency and state intervention Nevertheless, acceptin g these various qualifications, it is clear that, by late 1943, the Government-created apparatus to improve efficiency had reached quit e impressive proportions. Thus, the JPC network was largely flourishing, as the figures in Table 2.1 illustrate. Moreover, the situation within Ministries had been substantially transformed. Departments reacted to the productivity drive with varying degrees of enthusiasm, but all accepted the goal of promoting efficiency, and some had shown themselves prepared to pursue it with some persistence. Nowhere was the new spirit more in evidence than at MAP. Indeed, as one civi l servant noted, 'the activities of most branches' of this Ministry were aimed 'in greater or less degree ... at improving industrial efficiency'.30 Some idea of the scale of what was involved here can be gained from the fact that the PEB alone had advised nearly 300 factories by the end of its first year of full operation.31 Reviewing the progress that was made obviously gave advocates of the productivity drive considerable pleasure, but it also provoked several questions. By late 1943, it was clear that Britain would be on the winning side of the war, whether victory came sooner or later. What lessons could be drawn from the productivity policy being pursued, especially in terms of the future, post-war relationship between Government and industry? In attempting to answer this question, civil servants recognised, first of all, that the record proved that government intervention could make a positive difference. Some experiments, of course, had failed. Thus, the Munitions Managemen t and Labour Efficiency Committee, set up in late 1942 to 'put into effect measures for increasing the productive efficiency of the munitions industry', seemed to have been almost Table2.1 Joint Production Committees at establishments in engineering and allied industries, 1942-4 Date covered Total no. Total no. of Total no. of ofJPCs JPCs in firms workers with 150+ workers Dec. 1942 2,644 2,037 1,914,000 Dec. 1943 4,427 2,843 2,676,000 June 1944 4,567 2,959 2,666,000 Source: BT171/210 'Origin of Joint Production Committees', p. 3, enclosed with Note by G. Calder, 13/5/1946. The rise of the management question 29 wholly ineffective, a consequence both of its unwieldy constitution and of its lack of influence in supply departments.32 However, against this, many other initiatives could be justifiably regarded as considerable successes. Comment on the JPCs, for example, had been on the whole quite positive. An AEU enquiry of 1943 noted that the smooth running of the consultative machinery was not universal, but ended with a generally very favourable conclusion: 'the committees have fully justified their existence an d have proved themselves a factor of incalculable value in the war effort.'33 Business journal was also enthusiastic about what had been achieved. A survey during the winter of 1942-3 led it to conclude that th e JPCs were a 'success' and had 'come to stay'. In June 1943 a more detailed investigation into employer attitudes towards the committees was equally positive. Business now found that, though some owners of medium-sized firms continued to regard JPCs with suspicion, the vast majority of both big and small employers were a good deal more favourable. Moreover, it was generally felt that JPCs were valuable in the pursuit of productivity: when asked by the journal whether their own committee had 'contributed towards increasing efficiency and production', no less than 70 per cent of the employers questioned had answered in the affirmative.34 More direct kinds of intervention also seemed to have yielded important results. MAP staff kept close track of those who had attended motion study training courses and generally found that they had produced significant innovations on return to their respective factories. The increases in output per employer that resulted were variable, according to the type of job and the efficiency of previous methods, but there was usually considerable progress: The average increase in output of the jobs studied . . . was 140 per cent, th e lowest figure being 30 per cent and the highest 800 per cent. This latter result was rather exceptional, though there were two jobs ... which were about this figure.35 TCB staff, too, could point to a range of successful investigations, in which cost data had been used to break price cartels or as leverage in improving the performance of less efficient units.36 On top of this, it was impossible to ignore some less tangible benefits that had flowed from the overall policy. An example was the situation with personnel officers. Relatively few companies employed such staff in the 1930s, but during the war numbers increased substantially, encouraged (as has been noted) by the joint efforts of various Ministries. 30 Industrial efficiency and state intervention By 1943, indeed, it was estimated that there were around 5,700 personnel officers working in factories with 250 or more employees - probably a fourfold increase on pre-war days. Yet the change involved here was more than just a question of numbers. There had also been appreciable improvements in the whole way in which the profession saw itself and was seen by others. As one authority put it in 1944: In spite of the fact that industry as a whole failed to grasp and apply these essential principles [of personnel management] in the early days of the war, there has since been a notable development both in the quality of personnel management and in the extent to which it is practised. . . . The experience of the last five years has shown that industry will emerge from the present war with a greater appreciation of the value of personnel work, and a higher level of technical application than ever before.37 However, if officials could be reasonably pleased with the progress that had resulted from some of the productivity initiatives, they had to recognise, a s well, that there was little room for complacency. Close contact with industry had revealed a scale of inefficient practice amongst manufacturers that the civil servants found deeply shocking. Thus, many firms were found to have little idea about a rudimentary question such as how long it took for raw materials to move through their plants. 38 Even more seriously, few could produce even near accurate costings data. The scale of this problem was revealed during an investigation of 3,000 Ministry of Supply contractors in 1943-4. This concluded, amongst other things, that: (a) Comparatively few firms have efficient costing systems; (d) Many small firms have no system at all; (e) There is an apathy towards costs by British manufacturers; (f) American controlled companies have costing systems far in advance of most British manufacturers, appear to be more costminded and use the information available to a greater extent.39 Clearly, as officials recognised, in analysing these kinds of finding some allowance ha d to be made for mitigating circumstances. Many firms had been asked to expand very fast in the early part of the war, using whatever resources, methods and locations were most easily to hand, and this had hardly encouraged streamlined working. Many contractors, too, remained short of key personnel because of the call-up, so that it was hardly surprising if, for example, accounting practices were The rise of the management question 31 somewhat deficient. However, accepting all of this, the civil servants concluded, did not explain away the problem. Day-to-day contact with industry and special enquiry alike revealed not just sub-optimal working but man y instances where industrial efficiency could only be described as actually below what it was 'reasonable to expect'.40 To officials, therefore, the conclusion had to be that employers themselves were often partly culpable: they were either oblivious to some productivity issues or too conservative to adopt any but very simple ameliorative measures.41 In the light of this, civil servants in production departments were increasingly persuaded that government initiatives on productivity could not end with the war. Britain's economic position would obviously be precarious in the early years of peace, with efficient manufacturing the condition of survival. Some employers might be able to meet this challenge unaided, but it appeared from wartime experience that many would simply have to be pressured into adaptation. However, accepting this broad conclusion, there was still the question of what precisely should be done in practice. Officials recognised that their current successes were being obtained in a peculiarly favourable environment, where departments enjoyed both enhanced legal capabilities and the considerable leverage which went with their positions as sole purchasers. Yet this situation, it was generally assumed, would be hardly likely to outlive the war; indeed the pressure for a relaxation of controls, the moment that peace was declared, seemed to be growing with each new Allied victory. What needed to be decided, therefore, was how policy should be modified to cope with the likely, very different parameters of a peace-time society. What could the government do to encourage productivity growth once its specia l powers had disappeared?42 A variety of civil servants commented on this question, but discussion was most animated in the Board of Trade, the department at the heart of more general industrial reconstruction matters. Here some officials favoure d solving the productivity question within the context of a much wider package of macroeconomic measures.43 Others, however, argued that, though such an approach might no doubt yield benefits, overall success would not be achieved unless there were parallel interventions at a micro level, particularly over what was seen as the key question of management. The case put forward by this latter group and the policy initiatives that followed form the subject of the rest of this chapter. The Board of Trade first began to examine the management question 38 Industrial efficiency and state intervention answer, once again, was to leave industry to sort out the problem itself, on the basis that the 'art of management' was in any case 'a highly practical thing'. 78 More seriously for Weir, the peak associations also made it clear that they were not really interested in what the Board was suggesting. R.B. Dunwoody, representing the Association of British Chambers of Commerce, told the Committee that 'he regarded the principle of government grants to be a dangerous one to establish, since so many organisations could claim to be of national importance'.79 The FBI was equally negative. One of its representatives stated that 'his members felt that it had not yet been proved that there was a body of doctrine behind management as there was in technical subjects'. Sir Guy Locock, Director-General of the FBI, was more circumspect though in the end just as damning: Sir Guy said that the opinion of industry was that some instruction [in management] was needed, though there was a strong feeling that management wa s a subject that could only partly be taught, and it was felt that exchange of information between firms would greatly help in the right direction. He added a personal belief that encouragement must come through some central body, but noted that 'the FBI were unable to give their views on this matte r since it had not been fully considered'.80 Such attitudes were depressing and prompted Weir and the Board to do some stocktaking, to decide how best to proceed. A confidential memo revealed that 'staunch supporters' of the Board proposals were few and far between: the National Institute of Industrial Psychology, B.S. Rowntree, J. Ryan (an influential director of Metal Box who was active in MRG 1), L. Urwick, the IIA 'possibly' and the BMC 'possibly'.81 The need was clearly to win over some of the doubters. It was therefore decided that Weir should hold a meeting of representatives of all of the interested associations in order 'to get their general co-operation on the project'. This occasion could be stagemanaged, with some exhortatory speeches and an intervention from a trusted 'plant' on the floor rallying those present behind a suitably worded resolution. It was agreed that an ideal statement of intent should read: That this meeting would welcome the setting up of a central organisation, sponsored by the Government, to stimulate the development an d adoption of good management practice in The rise of the management question 39 association with industry and with the existing organisations interested in management questions.82 The date fixed for this meeting was 9 February 1944, and invitations were issued accordingly. However, it was very soon obvious that things were no t going to go as planned. Most of those invited to attend, including the TUC, responded positively, but this was not true of the employers' organisations. A National Union of Manufacturers representative told Weir that he would be unable to come, 'but would be interested to see a note of what had taken place'. The FBI, too, reacted negatively, with Locock informing Weir 'that he would be most interested to hear the outcome of the meeting next week' but that 'Unfortunately none of his members would be able to be present as they had another engagement'.83 All of this was something of a blow, but worse was to follow at the meeting. Weir himself opened the proceedings with a speech outlining the need for what he now termed 'the British Institute of Management'. He was followed by a number of generally positive contributors, including Lord Leverhulme, Marchand, Ryan, Urwick and Rowntree. Things seeme d to be going well, and so Marchand and Ryan introduced the agreed resolution from the floor. However, this did not have the desired effect, because many of those present still felt uneasy about the degree of government intervention that seemed to be implicit in what was being proposed. One speaker suggested that the words 'sponsored by' b e amended to read 'associated with', while another felt that the right formula here was 'initiated and supported by'. After some debate, those present accepted this second amendment, passing a resolution that read: this meeting would welcome the setting up of a central organisation, initiated and supported by Government, to stimulate the development and adoption of good management practice, in association with industry and with existing organisations interested in management questions.84 This outcome may have pleased some of the less progressive elements present, but it angered those who actually wanted to get the whole problem resolved. P. Lindsay, of Morgan Crucible, wrote to Weir complaining that the sole result of the meeting was a decision 'to put old wine into a new bottle'. He added, T presume the greater and much more vital question as to how industry is to be persuaded to partake of the wine, will be debated on another occasion.'85 Harry Ward, closely 40 Industrial efficiency and state intervention associated with MRG 1, was even more critical. He recorded that the whole proceeding s had been carried out 'in an air of naivete', with the real problem being neither formulated nor remotely resolved. He appended a list of specific complaints: 1 There was no real representation of industry.... No FBI representative wa s there. . . . The relation of the new body to these organisations was not even realised. 2 No mention of trade and employers' associations was made ... 3 The relation of the organisation to the Ministry of Labour, the Ministry most concerned, was not touched upon ... 4 It was clear from Sir Cecil Weir's comments that he was not well briefed, and that he has no real appreciation of the job to be done.86 Weir himself saw the meeting as a partial setback, though in many ways an inevitable one. He had come to the conclusion that industry would only be converted to the measures proposed in the medium term. The first priority was therefore to win over the specialist management organisations; they had 'done useful work... and naturally they should be given an opportunity of contributing to the work of any new central body'. If the meeting had achieved nothing else, it had at least allowed this process to begin. The aim now, which the Board agreed with, was to write a report which would be sufficiently persuasive to convince the Treasury that the British Institute of Management deserved to be supported - an essential precondition if any further progress was to be made.87 The Weir Report on Industrial Management was forwarded to the President, Hugh Dalton, on 23 February 1944. It began from the premise that management was a crucially important function which had all too often been inadequately developed. Indeed 'some' large firms and 'many' of their smaller competitors were inclined to be 'self-satisfied' about the quality of their management.88 This situation demanded both 'carefully planned propaganda' and 'a growing volume of information and advice' on modern management methods. Existing professional bodies had done good work in propagating ideas, but they were not up to what was now required, for a number of different reasons: The professional character of many of these bodies limits the extent of their propaganda and precludes the participation of the firms not large enough to employ highly specialised managers. Small firms, even if they were willing to subscribe to a sufficient number of the The rise of the management question 41 twenty or so specialist bodies to cover the range of their operations, would rarely employ managers qualified for membership. Further , the ability of the organisations to undertake research ... is severely limited by lack of funds.89 The answer was to set up a new body supported at least partly by Government financ e which 'would be the central stimulating force for raising the standards of management in the United Kingdom, and... the authoritative spokesman for British management at international conferences and discussions'. This, it was suggested, might be called the 'British Institute of Management' (BIM).90 Having justified this key proposal, Weir next went on to sketch out in detail what the new organisation might look like. The Committee felt that membership of the BIM should be open to everyone who could pay a modest fee, and not conditional on involvement in an existing functional association, as some of those bodies wanted.9' As regards finance, Weir unsurprisingly came down in favour of government assistance. The success of the whole venture would only be likely if there were some large-scale activity very quickly, which a newly created organisatio n could hardly be expected to fund. Consequently, the Committee recommended that the Treasury be asked to make grant-in-aid of £75,000 for each of the BIM's first five years, with the hope that subscription income would be increasing all the time as the organisation established itself.92 Finally, Weir moved on to look at the wider aspects of the BIM's relationship with the Government. The Committee recognised that some kind of supervision from Whitehall would be necessary, to make sure that public money was being spent properly and that the organisation was evolving on the right lines. But beyond this, it was stressed, 'the Institute should be free to work out its own policy and programme'. A similar perspective informed Weir's recommendations on how the BIM should actually be run: the Minister responsible (probably the Lord President) would appoint the first 12-person governing Council, but in later years some of this body were to be provided by elections of the membership.93 In presenting this report, Weir did his best to convince Dalton that the management issue was now fully resolved. The specific recommendations in the document, he wrote, had been endorsed by 'a unanimous resolution at a very representative meeting of Management and other organisations'. In addition, it appeared that large sections of Whitehall were equally in favour. As Weir observed: 42 Industrial efficiency and state intervention We hav e discussed the matter with representatives of interested Government Departments, and while the officials whom we met made it clear that they would not commit their Ministers, it seems more tha n probable that our recommendations and the general lines of the report will be warmly supported.94 However, it was quite evident that many others of those who had been involved in the discussions did not share this view. Thus, opinion in departments of state remained quite divided, whatever Weir believed. The Board of Trade was, of course, behind the proposals, as were the Ministry of Labour and the Board of Education. But officials in the Ministry of Production made it clear that they were by no means necessarily sympathetic. A typical reaction came from N. Kipping, who felt that the BIM might easily be 'yet another management organisation', albeit 'one perhaps of higher quality than the others'. The real answer, in this view, was for the Government to 'stimulate the existing organisations to set up a Council themselves'.95 Outside Whitehall, too, doubt lingered on. The specialist management associations felt that their prestige was threatened, especially given Weir's insistence that membership of the BIM should be open to all and not just confined to accredited experts.96 Moreover, it was an open secret that the FBI's position remained essentially unfriendly. After the completion of the Weir report, Sir Guy Locock had thought it advisable to seek the views of Sir George Beharrell from the Dunlop Rubber Company, who was the FBI's acknowledged expert on management matters. Beharrell's reply urged caution: he supported the resolution passed at the February meeting but wanted more details before makin g a further recommendation. It was essential, he added, 'to prevent the new Institute, if formed, from becoming the plaything of the so-called "efficiency experts'". Furthermore, interference from Whitehall or Westminster must be sharply curtailed: I feel that the success of the proposal will depend on the limitation of Government interference.... If the Institute were to be run as a kind of Government Department I would not expect it to be very successful. It must be run by Industry and th e sooner Industry could run it without Government help, the sooner would be its great success.97 Such advice was very similar to that provided by the MRG's Harry Ward, who had already urged FBI opposition to the Weir report on The rise of the management question 43 the basis that it was 'wrongly conceived and base d on errors of judgement'.98 All of this left the Board of Trade in a rather difficult position. Dalton was convince d by much of the Weir argument, and in fact wanted his department to be the link with the BIM if it were formed. On the other hand, he recognised that, given the opposition, if a strong enough case were not made out for the new initiative, then the crucial element of government support - finance from the Treasury - would not be forthcoming. To avoid this outcome, Dalton decided that the Board's next move must be the collection of further information on the poor level of British management, with the emphasis on concrete examples. Only when this task was completed would the whole question be put to the Cabinet." To conclude, how did the productivity question stand at the beginning of 1944? As this chapter has shown, interest in productivity had first been stimulated by the production crisis of 1941-2. This had generated ameliorative measures and at the same time changed attitudes. Most importantly, it had encouraged the belief, at least in Government circles, that the key variable in relation to productivity was management. Without better management, it was believed, all other possible reforms would fail. The end-product was the train of initiatives which led, as has been shown, to the Weir proposals. In all of this, the key players had been, of course, a small group of Ministers and civil servants. However, it was becoming obvious that others held views on the subject - sometimes strong views - and that these would almost certainly have to be taken into account during the reconversion period. The following chapter looks at what happened in the final year of the war, as outside interests began to play a more prominent part in influencing events. Chapter 3 Debates and initiatives, 1944-5 Until 1944, public discussion of Britain's post-war industrial future was fairly muted.1 During that year, however, and in the early months of 1945, thi s situation changed considerably, as many came to recognise the severity of the country's economic circumstances. All sides accepted that Britain would need to export well above the pre-war level once peace was declared, and that consequently home industry would have to become very much more efficient. But there was far less agreement when it came to proposing how exactly this latter objective should be attained. The Labour Party believed that Britain's plight was desperate - so stark that Morgan Phillips could declare before the 1945 election, 'We must modernise or perish'2 - yet doubted if private enterprise alone was up to leading a recover}'. The answer was for the state to become involved in industry and to force the adoption of up-to-date methods. The Conservatives, on the other hand, argued that capitalist entrepreneurs were, for the most part, more than fit to conduct the reconstruction process; the main danger was of Whitehall's bureaucrats stifling native initiative. In peacetime Britain, the Tories asserted, the state might be the servant of industry, but never its master. This chapter looks in more detail at these contrasting approaches; examines how they were received by others involved in the debate; and concludes by considering what the widening political divide meant for policy formation in the Coalition Government's final year. It is appropriate to start with Labour thinking on production and production-related issues because, of all of the participants in the argument about Britain's industrial future at this time, it was Labour that more often than not made the running. The party's ardour here stemmed from a number of different factors. One influence was a growing understanding among its leaders and supporters that desired welfare reforms would not be possible in a bankrupt country. At a more prosaic Debates and initiatives, 1944-5 45 level, there was, too, the hard experience of key figures such as Cripps, Bevin, Morrison and Dalton, Coalition Ministers who had seen Britain's industrial ills at first hand and in some detail. Out of these influences came a distinct and coherent set of policies, designed above all else to boost economic efficiency as soon as possible once the war had been won. Labour approached the peace, of course, with a long-standing commitment to a range of social reforms. Yet its leaders recognised that the economic foundations on which welfare policies would be built had become distinctly shaky. There was, most obviously, much bomb damage, and a greater amount of war-related disruption. Moreover, a crippling lack of recent investment meant that even relatively untouched facilities often seemed dilapidated and wholly unsuited to efficient production, as Cripps reported in early 1945: Our factories are many of them completely out of date, and we are years behind in their equipment with . . . up-to-date machine tools and machinery of all kinds.3 It was clear, certainly, that Britain's trading pre-eminence had gone forever, even if Germany and Japan were temporarily removed as competitors. The country, to quote Cripps again, was 'no longer the workshop of the world, but merely one of many workshops' .4 This mean t that, for Labour, economic and social objectives became more and more related and intertwined. Morrison could thus tell readers of the Daily Herald during May 1945: Social security and social reform and a permanent advance in the economic life of our people can only proceed with greater efficiency in industry, greater production and a greater national directive to national economic ends.5 Lord Latham made the point even more bluntly when he argued in the same paper that 'Socialism will only succeed if we make it pay in a greater national income'.6 In such circumstances, it was inevitable that for many in Labour's ranks the key questions were increasingly about how the desired measure of economic growth could best be engineered. One line of thinking here focused on various macro policies.7 Nevertheless, it was also widely accepted that there would have to be micro interventions, too. Labour argued that this was inevitable because private enterprise was simpl y not up to the tasks at hand, whatever the wider framework: one could not gain, as Morrison put it, 'a quart of Socialist prosperity out 46 Industrial efficiency and state intervention of a miserable pint capitalist pot'.8 The reasoning employed here was coloured partl y by ideology, but mainly by experiences gained in conducting the war. Thus, at an abstract level, Labour believed that some important branches of industry were dominated by monopolists, who were essentially interested only in preserving their own bloated earnings.9 Yet even if this argument were put on one side, the weight of evidence still came down against unregulated private enterprise. The war had revealed starkly, for example, that many small capitalists were indifferent to technical innovation. The simple fact, as Cripps, a veteran of over 500 wartime factory visits, constantly reiterated, was that the typical entrepreneurial outlook remained profoundly conservative, revealed most damagingly in a deep suspicion of 'so-called-newfangled methods'.10 Moreover, the existing type of employer would, it was felt, find it particularly hard to adapt to changes that were taking place in popular attitudes on the shop floor. Labour analysts believed that workers were now, largely because of the war, better educated and more confident than ever before. If full employment were achieved in the first years of peace, these characteristics would be greatly reinforced. There could be no going back, therefore, to the kinds of harsh industria l discipline prevalent in the 1930s, and new, more progressive methods would have to be tried. Again, it looked as if private enterprise , if left to itself, would be neither willing nor able to make such a change.11 In the light of these difficulties, Labour suggested that optimal reconstruction would only be achieved through, in Morrison's idea, a 'ladder of control'.12 The party was determined to regulate some sectors directly, through nationalisation, and others very closely, using anti-monopoly legislation.13 On the other hand, it accepted that these types of policy would only be feasible or applicable in a minority of cases - wholesale nationalisation, for example, was simply politically impossible, even if in fact really desirable.14 Further down the ladder, therefore, Labour would have to develop strategies which, while respecting private ownership as a fact, nevertheless tried to move industry in a progressive direction. Given the wider resource position, such strategies could not mainly be about, for example, pumping in subsidies to aid re-tooling. Measures were needed which could boost efficiency a s quickly as possible and as cheaply as possible. This inevitably meant some reliance on techniques that had been used in the war. The package that Labour finally proposed included several different components.15 One idea, which had first been proposed by Morrison in Debates and initiatives, 1944-5 47 March 1943, 16 was for a set of enquiries into various backward industries. These investigations would hopefully facilitate thinking about what Whitehall interventions would be most beneficial in each circumstance and in parallel contribute to the spreading of good practice, by identifying techniques used by the more efficient firms in each sector. 17 Secondly, Labour made it clear that it remained convinced about the merit of JPCs, and expected that they would have an important role to play in promoting productivity growth after the war.18 The party's position on this subject rested on several foundations. Observers on the Left generally believed that JPCs had been a success in the war, achieving what was expected of them.19 At the same time, the JPC idea fitted in with wider Labour ideals about how people should be treated, at work as much as in society. Bevin was a particular proponent of this view: Men will follow when they know they are getting a fair deal, and at this time in our development this means that they must be treated as equal partners and must be given the facts.20 On a more technical level, finally, the JPC could be seen as an institution whose time was very much just about to come. Labour observers, to repeat, believed that old forms of industrial discipline would most likely be inappropriate in the first years of peace, because of the impact of full employment. In this scenario, linking the worker to the enterprise through participatio n was one of the best instruments left for ensuring labour commitment. Cripps was not alone, therefore, in believing that the JPCs crucial role would be 'in stimulating the individual worker's interest in output, and thereby increasing his efficiency'.21 The third component in Labour's package was concerned with management. The war had, of course, focused attention on management as never before, and this was as true in the ranks of the Left as elsewhere. Amongst Labour Ministers, there was a growing awareness that managers could play a vitally important part in making or breaking an enterprise.22 What was needed for the future was a cohort of managers who were both technically competent and attuned to (once again) what were predicted as the coming industrial relations realities. This meant that there would have to be a departure from the 'old haphazard idea that anyone wit h some technical knowledge could be the boss'.23 In future, as Cripps in particular tirelessly argued, the function must be thoroughly professionalised. Anything else was unacceptable: 'there is really no more righ t for an unqualified person to manage a factory than for an unqualified doctor to perform an operation.'24 54 Industrial efficiency and state intervention It must modernise its processes, and it will have to change the use which it attempts and is permitted to make of its labour force and the relations whic h exist between employers and workers.58 Thus, the unions would be confronted with a new set of problems, and a choice as to how they should react to them. Cole hoped that the outcome would be fresh, more flexible and imaginative union strategies. Certainly, he warned, a refusal to change would be economically damaging and politically disastrous: I am afraid of the Trade Unions and the more restrictive type of employer coming together in such a way as to perpetrate [restrictionism] . . . and hold the consuming public to ransom by acting jointly in defence of standard margins of profit, standard wages, standard conditions.59 Different parts of the union movement reacted to these arguments in different ways. Nevertheless, at leadership level there was a growing acceptance of the Cole position.60 This meant, in terms of the industrial policy debate , that an older union rhetoric demanding public control of business on grounds of moral equity was now recast so as to reflect fully the importance of the efficiency issue. The end product was strong support for the type of policies in Labour's programme. The most authoritative exposition of this new union thinking came in the TUC's Interim Report on Post-War Reconstruction, which was accepted by the Blackpool conference of 1944.61 The authors of this document conceded that the union movement's primary purpose must be the pursuit of bread and butter issues - wages and conditions, full employment, perhaps an advance in industrial democracy - but went on to insis t that action here must be accompanied by activity on broader issues. This wider focus was necessary, they argued, because real advances in everyday standards for the membership would be unlikely so long as the entire economic system remained unplanned and to some extent dominate d by the whims of selfish monopolists. The need, therefore, was to reform industry in such a way as to promote expansion, which in practice meant adopting a package of measures similar (though not identical) to those proposed by Labour: nationalisation of key sectors, tripartit e boards regulating those industries that were left in private hands, and JPCs.62 Only these kind of policies would, it was claimed, be able to break the log-jam and thus guarantee popular gains: One of the strongest arguments for... forms of public control which we propose is that these changes are essential for efficient industrial Debates and initiatives, 1944-5 55 organisation and to ensure that industrial efficiency serves its proper purpose o f improving the standard of life of the community.63 The Interim Report represented quite a bold departure in trade union affairs, but its adoption was clearly the reflection of a trend rather than an isolated occurrence. In fact, new thinking was surfacing over a number of issues and in a variety of places. There were, therefore, several locally produced alternative industrial plans, in which individual unions attempted to apply the approach of the TUC document to their own particular circumstances.64 Typical of these was a National Society of Pottery Workers' reconstruction report which explicitly recognised both that growth in efficiency was crucial and that its achievement would necessitate institutional reforms which were designed to curtail the power of some individual entrepreneurs.65 Symptomatic, too, were changes in union views on management. A significant number of ordinary members continued to see managers as the enemy or, at least, as the visible representative of the enemy. But this hostility - as in the ranks of Labour - was no longer all pervasive and had been replaced in some quarters by more open attitudes, similar to those advocated by Cripps and Albu. In this view, it was 'no part of the responsibility of management to associate itself whole-heartedly with . . . private capital'; rather managers should come over and join 'the community against vested interests'.66 Nor was this merely a rhetorical commitment, as can be seen from the considerable growth of ASSET (the Association of Supervisory Staffs and Engineering Technicians) over the war years - from 1,786 members and 44 branches in 1939 to 11,000 members and 220 branches in 1945.67 It may be concluded from this brief examination that, when it came to industrial policy matters, Labour and the unions were marching for the most part broadly in step. On the other side of industry, however, the position was very different. Some managers and owners were, it is true, inclined to more liberal attitudes on issues such as state intervention and labour representation, often as a result, they claimed, of wartime experience. Yet this group remained a small (if vociferous) minority. The vast majority of business people wanted nothing more or less than a return to their pre-war prerogatives, especially to having the time and space to make a reasonable profit away from state or union interference. Exponents o f the progressive case first came to the fore with the production crisis of 1941-2. During this period, as has been shown, management was faced with problems on all sides and at the same time bombarded wit h criticism. These were traumatic circumstances, which 56 Industrial efficiency and state intervention provoked som e people into arguing that the real problem was the system under which they worked, with all that this implied about the future arrangement of industry. One manager could assert, therefore, that there was a 'spirit of revolution . . . abroad in England', epitomised by the 'great many young men of all ages in the ranks of... authority' who had decided that 'the old order must go'. In future, those at the top of industry should devote themselves not to profit but rather to 'the welfare of the country and ... its people'.68 Such a perspective might, of course, lead management into some strange alliances, but this would be no bad thing, as another executive candidly accepted: If Management.. . really does feel that its primary responsibility is to the community, it is marching towards the same ultimate goals as organised labour - even, with few exceptions, as extremist labour organisations. . . . Industrially, as well as politically, internecine warfare means national suicide.69 This kind of histrionic comment fitted the mood of 1941-2, but gave way to more sober reflection once Britain's victory seemed assured. Two themes dominated the later analyses. One related to the practical lessons that could be learned from the great industrial push. Here, the major propositions tended to be about labour and its management. Thus, E.F.L. Brech, a colleague of Urwick's, argued in an influential article that the production front had shown that 'effectiveness in work' tended to be essentially 'a function of personnel relations', and therefore correlated 'primarily with morale'. The logical consequence of this was that firms would in future have to take human relations very much more seriously, which, amongst other things, meant democratising decision-making: The only way in which full regard can be paid to the contribution which employees can make to the morale of their organisation is to invite them to share in its governance.70 Such speculation about intra-firm relationships fitted into a wider framework of propositions about ownership and control. These, once again, revolved around doubts about the suitability of unregulated private enterprise. The war had demonstrated at a general level, the argument ran, that capitalism would not provide for social or national objectives without strong state involvement. The partnership between industry and government so recently evolved must therefore be extended to the peace, a point emphasised by the general manager of Osram to readers of Industry Illustrated during mid-1944: Debates and initiatives, 1944-5 57 though I want to see private enterprise survive, I believe noblesse oblige is not a principle good enough to secure the harmony that we want. It is not enough to try to convince the people that private enterprise has had a change of heart and that it realises in a sort of feudal spirit its responsibilities towards its 'tenants'. I think whether we like it or not industry has got to be knit in with the State by some measure of Government control, which need not be hostile and need not b e harsh, but must be something which will to some extent. . . fortify the unaided consciences of those of us who are trying to manage industry.71 All of this added up to a fairly moderate package, yet it was not one that the reform-minded found easy to make popular. In part, this was simply a logistical problem. Most of the leading progressive figures were associated with the fledgling management movement, and could therefore easily reach a number of like-minded enthusiasts. On the other hand, to communicate with those outside this circle remained very much more difficult . Many employers were biased against anything even remotely connected with the management movement, because they feared that the arrival of a third grouping might easily disrupt a laboriously built up network of bilateral agreements linking them to labour.72 Moreover, the prevailing feeling in boardrooms tended to be that managers had no business dabbling in industrial politics anyway, since their only responsibility should be to their companies. Indeed, Scope went so far as to claim that: the majority of employers do not recognise the right of their managers or paid executives to exercise any independent influence on industry: they pay them (so they say) to carry out the policies of the employers. 73 This was not an environment that encouraged the spread of liberal ideas. But what made the reformers' task considerably more difficult was the fact that even when their voices were heard, they tended to be accompanied by a barrage of counter-propaganda. Typical, here, was material emanating from the National Union of Manufacturers (NUM), an organisation supported by Austin, Dunlop and Courtaulds, as well as many other firms in lighter branches of industry.74 The NUM's position was that private enterprise had not failed the nation, in the war or before 1939. Indeed, the suggestion of a 'decadent body . . . somehow galvanised into life by the lightning flash of war and by association with government departments' was mere propaganda. 'Most people' knew 58 Industrial efficiency and state intervention that Britis h industry was 'thoroughly sound at heart and full of life and vigour' durin g the 1930s, and that this explained why it had been able to play so successful a role in a 'war of machinery and production'.75 The inevitable consequence of all of this was that the larger slice of business opinio n remained wholly untouched by the reformers' case. Nowhere was the mainstream's conservatism more in evidence than over questions relating to reconstruction. The FBI's cautious position on post-war industrial issues had been signalled in its comprehensive report of 1942, and was now confirmed (as has been shown) in the jockeying over the Board of Trade's management initiative.76 Outside the employers' peak organisations, the key concerns were also of a highly traditional kind. Business opinion, observers noted, was usually quite complacent about post-war markets, and often most agitated by the kind of wage drift and extension of union power that had been a feature of the last two or three years.77 There was, certainly, no desire to experiment any further on issues such as control, and most employers, as an authoritative Ministry of Production survey found in 1945, saw little future even for the existing JPCs ("There is ... a pretty general opinion that th e workers really have very little to contribute... I do not think we should blink [from] the fact that unless ... encouragement is active the Committees will tend to fade out').78 Efficiency was sometimes mentioned as an issue - usually in terms designed to castigate government red tape - but more often than not was simply ignored. Thus, when The Times reviewed an FBI policy document on industry in late 1944, it was shocked to have to report: 'Searchers for a pronouncement from this authoritative source on the efficient modernisation of the mechanical apparatu s of British manufacturing . . . will look here in vain.'79 The conclusion that emerges from this survey is that there was no real consensus at this time when it came to discussion about future industrial policy matters. Labour had arrived at a fairly definite position, which seemed broadly congruent with statements emanating from the unions and from some progressive managers, but it was faced by a highly antipathetic bloc, consisting of the Conservatives and the majority of the employers. To complete the picture, it is necessary to ask how this political division was handled inside the Coalition Government. In practical terms, this means looking at the Board of Trade, since, of all of the departments, it was the one most involved over industrial reconstruction issues. The Board, as the previous chapter has shown, had already been converted to a measure of interventionism. How did it fare with this policy during 1944-5? Debates and initiatives, 1944-5 59 Board activity over this period was of two main kinds. Some of the department's effort went into intra-government politicking: the whole business, a s an official described it, of trying to make others realise how unsatisfactory the position was before the war, why it may be worse and not better after the war, the very great importance of increased efficienc y and, above all, the futility of expecting increased efficiency unless the Government takes energetic action'.80 On the other hand, it was always recognised that this battle would never be won unless the Board could come up with more than just general exhortation, and so great importance was placed on drawing up a realistic programme of ameliorative measures - 'a closely integrated policy for tackling and relating all the various aspects of efficiency and development'.81 This led officials to examine a wide range of possible options, relating to various questions of research, design, production and, as has been described, management.82 At first, the search for solutions appeared to proceed fairly smoothly, producing some valuable results such as the Weir Report. Nevertheless, by the beginning of 1945, it was becoming obvious that the Board had become bogged down, with all specific initiatives, as one senior participant complained, subject to 'continued delay . . . due to circumstances that we cannot control'.83 The position over a proposed reequipment subsid y was typical. The idea had originated in the Board and then been put to other departments, but the result was only endless prevarication, as a report of January 1945 indicated: Ministers decided in February [1944] that the Treasury should work out a scheme with an estimate of costs. There was some official discussion in March, April and May, but since then no progress has been made . In July, the Chancellor wrote to the President saying that he thought the proposal should be dropped. Draft reply awaits President's consideration.84 What had gone wrong? Clearly, part of the problem was that all civil servants at this time continued to be greatly over-worked, since too many proposals were being pushed at what was, in any case, very cumbersome reconstruction machinery. Nevertheless, it is also apparent that other, more deliberate factors were in play, notably a variety of pressures from elsewhere in Whitehall which were aimed at emasculating the Board's position. To illustrate what was going on here, it is apposite to focus once again on the management question, since, as Chapter 2 has shown, Board initiatives over this issue were from the first 60 Industrial efficiency and state intervention well developed, relatively high profile and quite controversial. What, then, ha d happened to the Weir proposals after their presentation to Hugh Dalton in February 1944? The President's first move on receiving the Weir Report, it will be remembered, was to ask his civil servants to contact other departments in order to collect hard information on cases where improved management had boosted productivity. The idea behind this exercise, Dalton explained, was to augment his hand if and when it was decided that the proposals on management should go before a full Cabinet committee.85 The Board's enquiries were completed by the middle of July, and confirmed the picture that Weir had already painted. Some businesses were efficient, while others had been made so with government help. On the other hand, the most striking finding was just how poor general standards were. As the report summarising the replies explained, 'the general experience of the Departments' was that there existed 'great scope for improvement in all branches of management'. Moreover, the 'deficiencies in the field of management' were not confined to 'particular aspects' but extended 'through the whole'.86 While considering exactly how to proceed in the light of these findings, Dalton decided that he should alert his ministerial colleagues about the Board's wider perspective on the crisis facing Britain. Accordingly he put together a paper which pulled no punches in describing the urgency of the situation. One of the great dangers, he wrote, 'perhaps the main danger', was that the country would not see 'clearly and easily enough' the grave difficulties that lay ahead of home industries in the transition. There was prevalent 'a hazil y optimistic assumption' that Britain could easily secure an increase in the export trade, but hard evidence to suggest that this would happen was minimal. In this scenario, an increase in productivity was plainly indispensable. As the paper concluded, 'If we achieve the American standard of efficiency, we can, on British wages, look to the future with some confidence. But if we fail, we cannot.'87 Dalton's analysis was presented to the War Cabinet Reconstruction Committee's Sub-Committee on Industrial Problems at the end of July, together with a note from him which underlined the 'pretty bleak' prospects before the country and the need for 'vigorous and varied' action.88 However, despite all of his effort, most of the Ministers present were not impressed. In fact, several Conservatives went so far as to question the very basis of the President's view. Since Britain would be faced by a sellers' market after the war, they argued, much of Dalton's Debates and initiatives, 1944-5 61 pessimism was misplaced. If industrialists were holding back now, this was onl y because they needed reassuring about the Government's intentions. Given the correct leadership, all would come right, as Lord Woolton's 'private conversations' with various entrepreneurs had shown him: 'There was no lack of enterprise in a number of industries and if an export drive were initiated by the Government there would be a ready response.'89 The message was rammed home further a few weeks later when Dalton presented a second paper, listing possible measures which could be taken to promote exports and productivity; this was met, once again, with almost total indifference from most of his ministerial colleagues.90 In the light of these setbacks, the President decided that he ought to move cautiously on Weir, and that his best tactic would be to collect official views on the Report itself, in order to identify any weaknesses in the proposals, and to rally support. Opinions were, therefore, collected from all of the departments concerned. This exercise showed that ther e was general backing for Weir in the Admiralty and in the Ministries of Works, Labour, Supply and Education.91 The Ministry of Aircraft Production, too, was in favour, with Cripps writing that he was 'extremely anxious ' that something should be done about the report 'as soon as possible'.92 On the other hand, Lyttelton's Ministry of Production registered its opposition. The disagreement here was not with the substantive proposal (there was 'room for a properly constituted central organisation to study the problems of management') but rather with the suggested level of government involvement. As a Ministry official explained: we feel that an attempt to set up an organisation of this kind under direct Government auspices would be foredoomed to failure since a Government sponsored organisation would start with so serious a handicap of suspicion and distrust that it might never succeed in making good however sensibly and conservatively it were run. A better option, in the Ministry's view, was that there should be 'an endeavour . . . made' to establish an independent organisation on a voluntary basis, capitalising on the experience and wealth of large firms that were already involved in the management movement.93 Much more worryingly, the Board's enquiries also revealed that the Treasury positio n was far from helpful. It had always been recognised that support from this direction would be crucial, and so, when the Board put its case to the Treasury, it did so in very moderate terms. The Board noted that a management institute would not be viable if left to 62 Industrial efficiency and state intervention private enterprise , since, as Weir continued to emphasise, industry in the main ha d still to be convinced of its usefulness. What was needed, therefore, was government start-up money - perhaps £50,000 - which could b e added to subscriptions from big firms (possibly £5,000) to get the new institution functioning. Exchequer resources should only be provided, the Board emphasised, on the understanding that they would be temporary, and that the Government expected industry to respond and quite quickly take over funding altogether. This was a carefully argued case, but it proved inadequate to shift the Exchequer's scepticism. The Treasury's central objection was that 'the financial balanc e of the proposals' seemed 'wrong': In our view, the efficacy of the scheme very largely depends on the degree to which Industry itself is prepared to finance it. It follows that the Government's contribution should be a minor, not a major, proportion of the expenditure of the Institute; and should be conditional on funds being found from industry for whatever additional sum, on close and realistic consideration, is agreed to be the minimum necessary to make the project worth pursuing. The Treasury was therefore prepared to provide £5,000-£ 10,000 per annum, and to see the Board 'active in encouraging the promotion' of the proposed institute; but it wanted industry and the management movement to make the detailed arrangements about getting the project started, and the same sources to provide the bulk of the funding.94 The extent and character of this opposition made it difficult to see what should be done next; in some frustration, Dalton asked Sir Charles Bruce-Gardner, on e of the Board's most senior industrial advisers,95 to review possible options. The end product was a report, delivered in mid-January 1945, which essentially came down in favour of the Ministry of Production's earlier advice. Bruce-Gardner agreed that management had often been weak during the war, though he emphasised several mitigating factors such as the very rapid expansion of production and a loss of capable men to the forces. The need for the future must be to reach medium and small-sized firms (the most inefficient), but it also had to be recognised that these would be loath to involve themselves with any government-backed body. The Board, therefore, should forget the Weir proposals (which Bruce-Gardner felt to be poorly formulated) and instead do all it could to get industry involved in helping itself, which i n practice meant encouraging big, progressive firms to share their knowledge and resources.96 Dalton, beset by other problems at the Board,97 told his officials that Debates and initiatives, 1944-5 63 he was inclined to accept this advice. However, a last-minute intervention from Cripps led to the Ministers agreeing that they should make one fina l effort on behalf of Weir and should submit his proposals to the Cabinet Reconstruction Committee's Sub-Committee on Industrial Problems.98 Accordingly, Dalton drew up a paper detailing the different possibilities over the management institute and underlining his own support for Weir." This was presented to the Sub-Committee in early March 1945 but did little to change existing attitudes. Cripps recorded his support for Dalton bu t ran into sustained opposition. Indeed some (un-named) adversaries among the Ministers present were now prepared to argue not only that state intervention in management matters would be pernicious but also that management was not, in any case, a science that could be perfected. The end product was an instruction to Dalton that he should explore possibilities within the following highly conservative guidelines: A better course than that proposed in the [Weir] Report would be to suggest to employers' associations that the Government would welcome the combination in a central body, with council, of the more valuable of the existing management organisations. . . . This would provide the advantages of a central focus for study of management problems, a library and other needed facilities.. . . There would ... be no question of the Government providing finance.100 Some days later, when this outcome was discussed in the Treasury, a senior official minuted that the Weir Report's condition was now 'grave', while another added the written comment that it should 'R.I.P.'.101 In the light of this, it seems reasonable to conclude that the Coalition Government was as divided on productivity related issues as interests in the rest of the country. Again, the key issue concerned intervention. Labour Ministers such as Cripps and Dalton argued that the state should be used to force change, but they were continually frustrated by their Conservative colleagues, who took a more laissez-faire approach. The next chapter looks at what happened once this impasse was resolved with the resumption of electoral politics. 70 Industrial efficiency and state intervention 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 whic h 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. Cripp s 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' wer e '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 Early post-war efforts 71 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, onc e 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 s o 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 onl y 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 72 Industrial efficiency and state intervention the nation' . "They were not', he emphasised, 'on the eve of entering Utopia.' Britain had fought a war which had effectively 'destroyed' its economy. Th e 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 governmen t 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 Early post-war efforts 73 the perio d 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 midOctober 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 advise d 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 grou p 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 ha d '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 thing s which reared their heads on the Continent and which we have defeated with so much suffering and loss'.44 74 Industrial efficiency and state intervention Given this variable comment, the civil servants concluded that Cripps woul d 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 enquirie s 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 no t 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 bein g 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 Early post-war efforts 75 schoolmaster to industry', lecturing it on 'the need for improving efficiency an d 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 stifle d 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. Ther e 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, bee n 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 al l 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 Advisor y Board', constituted, once again, on a tripartite basis under an independent chairperson. Such a body would, it was argued, be 76 Industrial efficiency and state intervention 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, an d 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 mor e 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 spar e 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 Part y sourly observed, this boiled down to a pair of long-standing laissez-faire propositions: Early post-war efforts 77 Firstly: 'You must trust each employer to know what is best for his own busines s 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 i s 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 backin g 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 t o 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: 78 Industrial efficiency and state intervention 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 polic y 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 shoul d 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 o n their views about this, since the President 'agreed on the importance of carrying the FBI, etc' with the Board's thinking.72 Early post-war efforts 79 The FBI had played a waiting game during the early month s 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. Th e 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 weigh t 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 tha t 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 86 Industrial efficiency and state intervention periodical pres s was equally positive. Favourable editorials appeared in Industrial Welfare and the Engineer, while Industry Illustrated was enthusiastic enoug h 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 a s 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 t o 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 Early post-war efforts 87 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 88 Industrial efficiency and state intervention Department channel ; at the other end one or more officers have sometimes bee n 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 Ministr y 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 a t 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 a s 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 increasingl y 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 Early post-war efforts 89 this effort would be wasted unless there was some mechanism to ensure that suc h 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. Chapter 5 Human relations and productivity, 1947-51 Much of the change in emphasis about the productivity issue that became evident during 1947 stemmed from, and was shaped by, the growing influenc e of the 'human relations' approach to industry and its management. The term 'human relations' embraced a number of different perspectives and was in some ways nebulous, but its central thrust hinged upon an admonition that the workers needed to be treated as more than just a factor of production, especially if real gains in efficiency were to be made.1 This chapter looks in detail at why the 'human relations' approach surfaced in 1947, and then examines how it shaped government policy over the ensuing years. Particular emphasis is placed on two official initiatives - the Committee on Industrial Productivity (CIP ) and the relaunching of Joint Production Committees - though some attention will also be given to the question of incentives, seen by some contemporaries as very much a related issue. The turn to 'human relations' as a key to the productivity question occurred for a number of reasons. One general factor that encouraged the change was the fact that many people were increasingly inclined to talk of productivity in general as if labour productivity were its only component. This stress on the workers' efficiency was partly conditioned by wartime experience, when manpower planning had been so important. However, it was also encouraged by current economic circumstances: everybody recognised, after all, that in the post-war world, with resources constrained, growth must depend to some extent on how well the existing workforce did its job. What made the idea of labour productivit y all the more appealing was the fact that it seemed to be fairly easily quantifiable, as Rostas's work for the Board of Trade apparently demonstrated. 2 More specifically, the growing popularity of a 'human relations' perspective was also linked to a particular perception of what was going Human relations and productivity 91 on in the workplace. Most on the Left believed that labour discipline had traditionally bee n enforced by the fear of unemployment. Moreover, it had long been predicted that once this 'stick' was removed, workers would respond positively, intensifying effort as a mark of gratitude for 'their' government's wider reforms. Unfortunately, however, there was little real evidence that this was actually happening. In fact, reports from the production front seemed often to suggest that apathy rather than a new zeal was the most common condition. Of course, some of this comment could be dismissed as Right-wing exaggeration, but there were enough authoritative observations on this theme t o indicate that it was not all the product of uninformed prejudice. Some credence had to be given to a Times Review of Industry report in April 1947, for example, which described 'many managements' as feeling that 'the actual effort put forward by the individual worker' was 'less than . . . before the war'. Nor was it possible to ignore a Nature editorial on incentives which concluded: 'while fear is happily disappearing as a goad to work, no positive enthusiasm is taking its place'. Indeed, Government Ministers could hardly fail to be aware that there wa s some substance here, since their exhortatory 'Work or Want' campaign in the spring of 1947 had achieved so little that it was openly being described as disastrous.3 For many on the Left, therefore, the important questions about production were increasingly to do with topics such as motivation. The general consensus was that 'capitalist discipline' had broken down; workers were, in other words, no longer afraid of their bosses' power, largely becaus e unemployment had ceased to exist. In this situation, as G.D.H. Cole explained, there was 'no adequate feeling in the factories in favour of reaching the highest possible level of efficiency'; indeed, there could well be reasons why workers might be becoming more attached to a type of 'unconscious, or half conscious, restriction'. What Labour needed to do, therefore, was to encourage the growth of a new understanding, which would provide those on the shopfloor with self-discipline. For Cole, this meant talking to the workers directly: the administration must give 'clear indications' to workers that it wanted not just their 'acquiescence' but also their 'positive collaboration in organising to achieve the required result'.4 Inevitably, Ministers reacted to these promptings in somewhat different ways . Cripps had long been an enthusiast for involving the worker, though others were certainly less positive on this score. Nevertheless, during 1947 there was growing agreement in all quarters that, as one periodical put it, the 'peculiar circumstances' that affected 92 Industrial efficiency and state intervention productivity in Britain related 'as much to human relations as to technical efficiency'.5 In these circumstances, it was inevitable that the Government should begin considering what it could do to ameliorate the situation. One decision was to launch a formal investigation into the whole question of the human factor. The origins of this development lay with a committee that Morrison had formed in early 1947. The Advisory Council on Scientific Policy, under Sir Henry Tizard, was charged with finding the 'most appropriate form of research effort to assist the maximum increase in ... national productivity during, say, the next ten years, including research in natural and social sciences'. The Tizard Committee, as it was popularly known, was not considered to have been very successfu l in general, but it had come up with one significant finding, that the human factor was extremely important. Indeed, a sub-committee of the main Committee had gone so far as to argue: Current fundamental research in physical and biological sciences is unlikely ... to have any material short term effect on increasing productivity.... The blunt fact... is that the problem is essentially psychological in the short term.6 Clearly such a conclusion fitted the mood of late 1947 and so Ministers began discussing what it meant in practical terms. Officials reported that quite a number of organisations were already working on aspects of human relations - the Tavistock Institute, the National Institute of Industrial Psychology, etc. - but their efforts tended to be uncoordinated. In these circumstances, Ministers agreed that their best option would be to form 'a good steering body', a central organisation, to be named the Committee on Industrial Productivity, with several offshoots examining specific questions. Crucial amongst the latter would be a panel on human factors, which might be headed by Sir George Schuster.7 Schuster was in agreement with this proposal, and, as the year ended, approached both the FBI and the TUC to gain their co-operation. The TUC was generally acquiescent, though the General Secretary, V. Tewson, emphasised that he did not want all of the emphasis in the new enquiry t o be on labour. Nor should public statements on what was intended lend themselves 'to misrepresentations, such as that the workers were to be psychoanalysed'.8 The FBI, on the other hand, was more cautious. It was not prepared to obstruct Schuster in public, but behind the scenes remained highly suspicious. The FBI's leadership felt that it should have been consulted at an earlier stage and did not really Human relations and productivity 93 like the whole idea anyway. An enquiry might perhaps be useful, but there wer e great dangers, particularly with the subject Schuster was tackling, 'of doing harm', particularly if 'theorists' became too involved.9 Given this climate of suspicion, those involved in an official capacity clearly felt that it was their duty to 'talk up' the whole project and so, during 1948, both Tizard (by now in charge of the whole CIP exercise) and Schuster were to be heard singing its praises. The former felt that he was directing a 'survey on survival'. Britain must catch up with best overseas practice, or perish: 'We've got to do it quickly, too I've set a time limit of two years. If we haven't got results in that time we shall have failed.' Schuster made much the same kind of point, arguing that something mus t be done 'to bring the laggards into line': 'You will be starting a new era if you can get British industry to depart from its old traditional methods of secretive individualism and join in co-operative effort.'10 This was a powerful message, and it at first seemed to bring results. Thus, Schuster's panel was quickly operational and boasting a prestigious membership, including L. Russell from the BIM, J. Tanner and E.P. Harries from the TUC, and representatives from the National Institute of Industrial Psychology, the Medical Research Council and the Tavistoc k Institute.11 This, in turn, allowed a quick start with actual investigations, the majority being joint ventures directed by the panel and carried out by teams of experts drawn from existing organisations.12 Within a relatively short time, therefore, enquiry was being undertaken on such diverse subjects as work load and machine control (involving the Cambridge Psychological Laboratory); morale (involving the Medical Research Council's Industrial Psychology Research Unit); and human relation s within particular settings (for example, the Glacier Metal Company project run by the Tavistock Institute).13 This was an impressive performance but, in the end, it proved difficult to sustain. Schuster's relationship with bodies such as the Medical Research Council remained less than easy, complicated by administrative and funding problems.14 Moreover, the condition of the wider CIP organisation continued to be unsatisfactory, undermined by, amongst other things, a rapid turnover of personnel.15 In fact, Tizard's first report was given an almost universally poor reception, with Industry concluding that it did 'not inspire confidence'.16 The final blow to the whole initiative came as a result of the success of the AngloAmerican Council on Productivity: as that body blossomed, the CIP was left requesting its own liquidation, convinced that the work that it had 94 Industrial efficiency and state intervention started could best be finished by others.17 The CIP had bequeathed a legacy of detailed studies and had reinforced some general points about productivity. It could not be said, however, to have galvanised either the public or the two sides of industry. The second major development on human relations came with the relaunching of Joint Production Committees. The initial impetus here came from the TUC, and reflected that organisation's perception of the role tha t JPCs had played during the war period. The committees' contribution had been 'uneven', but there was 'little doubt that when they were worked with enthusiasm by both management and labour they produced excellent results'.18 This appreciation was the basis for an approach to the employers that together they should recommend to the National Joint Advisory Council (NJAC) - the major 'peak' tripartite body for industrial relations - that it should encourage the relaunch of JPCs. At the NJAC such a policy was agreed in the following terms: Th e NJAC approved the principle of the setting up of joint consultation machinery, where it does not at present already exist, for the regular exchange of views between employers and workers on production questions provided it was clearly understood that: (a) The machinery would be purely voluntary and advisory in character; (b) It would not deal with the terms and conditions of employment; (c) It would be up to each industry to decide the appropriate form of machinery.19 In advocating this policy, S. Bagnall from the TUC argued that 'JPCs were fundamental if the workers were to be made to feel that the state of the nation was their personal concern'.20 As this suggests, the TUC had come to put a great deal of weight on JPCs. In part, this resulted from the TUC's general support for the Government's campaign to increase output. The organisation's commitment here was demonstrated in a number of ways. For example, in response to the production crisis in 1946, the TUC called a conference to encourage trade union executives to pursue the production drive; in 1947 it agreed to the partial rein traduction of labour direction under the Control of Engagements Order.21 Thus, the TUC was willing to go a long wa y with the Government's production policies. At the same time, the TUC saw JPCs giving rein to the workers' perceived desire to be involved in production issues, as they were thought to have been in wartime. There were worries about the scope that JPCs might give to 'disruptive' behaviour by Communist shop stewards but, by and large, Human relations and productivity 95 the TUC nailed its colours firmly to the mast of extending the joint committees. Successive Congresses in the late 1940s saw calls for JPCs to be made compulsory, a demand that was accepted by many unions and b y Labour Party Conferences.22 Employers' views on JPCs were mixed. Even whilst accepting the TUC proposal for their expansion, Sir Alexander Ramsay of the FBI played down their role: 'While agreeing that JPCs were valuable [he] could not agree that they were fundamental and that their general adoption would solve the problem of the productivity of labour.'23 This scepticism was grounded on a number of worries about what JPCs would do. First, employers were concerned to prevent the emphasis on JPCs directing attention away from their own view that the constraints on productivity were primarily excessive taxation, too many controls and other features of government policy. This was the agenda of issues which they emphasised when asked what could be done to raise output and productivity. 24 Second, employers were worried that JPCs would tend to trespass on areas of managerial prerogative, hence the emphasis on their purely advisory character. Employers bridled at the productionist rhetoric of some of the unions, believing that JPCs were seen in some quarters as the thin end of the wedge of workers' control.25 Nevertheless, many employers' organisations in this period took up the urging of the NJAC to come to agreements on JPC machinery with the relevan t unions. By 1949, employers and unions in ten industries (including engineering, iron and steel, shipbuilding and woollens) had recommended JPCs with a model constitution, while in another sixteen industries (including chemicals, furniture and tobacco) recommendations without a model constitution had been made.26 By and large, employers' national bodies were willing to endorse the extension of joint consultation. But this support was subject to clear conditions. These included the three that were listed in the original NJAC agreement, noted above. In addition, employers were very concerned to keep JPCs as purely factory-level bodies , and resisted any wider role for them. In particular, they rejected the idea that JPCs might be involved in inter-plant visits, or might form part of local or regional networks. Hence employers opposed the idea that Regional Boards for Industry should do any more than encourage JPCs where a national agreement on their role already existed. They were wholly hostile to the view that JPCs might become part of an official system transcending the gates of the factory. This was commonly expressed by saying that joint consultation was a purely 102 Industrial efficiency and state intervention Table 5.1 Firms with Joint Production Committee machinery, 1949 sample Joint Production Committee Sector In practice Never Discontinued operated Engineering Shipbuilding Iro n and steel Other heavy industry Textiles Building Clothing Food and tobacco Printing Other Overall % 216 3 11 36 15 3 31 24 13 87 73 12 5 5 28 8 7 9 8 0 38 20 7 1 0 4 1 6 0 0 0 20 7 Source. W. Robson-Brown and N.A. Howeil-Everson, Industrial Democracy at Work: A Factual Survey(London, 1950), pp. 7-9. (see Table 5.1). This was perhaps unsurprising. Wartime JPCs had been concentrated i n this industry, and the employers and unions in engineering had been the first to agree to revive them in 1947. Another estimate suggested that JPCs covered 782,000 out of a possible 1.25m workers in the industry. On the other hand, some sectors almost entirely lacked JPCs - perhaps most notably cotton, where they were favoured by neither employers nor unions.46 Elsewhere, finally, though both sides were willing, progress was delayed because of disagreement on the terms on which the bodies would function. Especially controversial was the issue of whether all of the workers' representatives should be union members. This led to a long wrangle in the chemical industry, eventually settled on the employers' terms.47 Whilst substantial progress was made with the creation of JPCs, from the point of view of Ministers this occurred too slowly. Who was to blame here? Unsurprisingly, perhaps, each side criticised the other. Trade union leaders pointed out that insistence on the participation of non-unionists inhibited expansion, while there were also general complaints about employer resistance. Nevertheless, union leaders, too, Human relations and productivity 103 recognised tha t rank and file workers often lacked enthusiasm for JPCs. Employers' organisations bemoaned the apathy of local union officials and rank and file workers, though it is clear that their own members were often quite hostile as well.48 The Ministry of Labour's opinion was that both of these views reflected an element of the truth. As Lloyd Roberts noted: My general conclusion is that the basic reason for the slow progress being made in establishing joint consultation machinery is the apathy of the general body of workers and district and local trade union officials, an apathy of which employers are quite willing to take advantage. These attitudes were explained in the following terms: Some employers still feel that joint consultation has a political aspect and is the thin end of the wedge, leading to joint management or workers' control . Probably there are not many workers who understand the principle of joint consultation. If they are militant they may regard it as a step toward further control; if they are of a more average type, they may regard the idea with suspicion as a means of earning profits for the employer. In other cases both employers and workers confuse joint consultation with ordinary wage negotiating machinery.49 Independent sources, whilst bringing out regional and sectoral variations, also suggest that, broadly speaking, enthusiasm for joint consultation was inversely related to status in the hierarchy on either side of industry (though with the TUC always more enthusiastic than the BEC), so that national agreements were much easier to reach than those at factory level. If JPCs were established this usually arose from management rather than worker/union initiative.50 The BEC survey of 1950 also analysed the level at which employers and unions had agreed to implement joint consultation. The evidence from this confirms that almost all of the arrangements were for factory level bodies, perhaps with national councils as well. Most clearly excluded regional or district machinery. The only agreement relating to the regional level was in building, where a major stimulus to this kind of organisation seem s to have been material shortages. This was coupled to an absence of agreement on site committees, which the BEC strongly resisted. Furthermore, district agreements were entirely absent except in the very special cases of farming and ports.51 What did the JPCs do? Here evidence is even more sparse and difficult to interpret. A large-scale survey by the National Institute of 104 Industrial efficiency and state intervention Industrial Psycholog y found, like other studies, that welfare issues occupied a large part of the deliberations ('all tea and toilets' was a popular, dismissive view), though this survey also noted that such an emphasis was disliked by the workers* representatives on JPCs, who were critical of rank and file concerns.52 This focus did not seem to draw objections from the employers. They did not like JPCs degenerating into 'complaints committees', but a more common problem from their point of view occurred when the forums became mere platforms for the political propaganda of subversive elements. This latter situation worried Ministers as well, though there is no way of telling whether it was ever really prevalent.53 Perhaps more significant was the complaint by employers that workers and unions tended to try to get the JPCs to encroach on the sphere of collective bargaining. This fits in with some independent evidence, which reported workers as viewing the joint consultation forum as a suitable medium for negotiating benefits.54 That employers (and union leaders) so strongly resisted this cannot have helped to offset the very rank and file apathy that was so frequently diagnosed. Did JPCs succeed? The BEC survey of 1950 found a generally favourable response from employers, though presumably those who had established the committees were predisposed to see their benefits. The nature of those benefits was impressive - 'In the main replies indicate that the Committees have been of general utility' - with some firms reporting a better team spirit, a fall in absenteeism and an improved flow Table 5.2 Management assessments of Joint Production Committees in 216 engineering firms, 1950 Issue Output Morale Discipline Absenteeism Turnover/personnel Reduced friction Favourable 129 183 131 117 72 196 Verdict No Effect 87 33 85 99 144 20 Source. W. Robson-Brown and N.A. Howell-Everson, Industrial Democracy at Work: A Factual Survey(London, 1950), p. 42. Unfavourable Human relations and productivity 105 of informatio n to the workers.55 A survey of 216 JPCs in engineering examined management assessments of their effect; the results are shown in Table 5.2. These figures certainly suggest a positive outcome from JPCs, though the emphasis on morale-raising effects perhaps gives some substance t o the Ministry of Labour view that the committees had their greatest impact as an element of improved personnel management. Certainly, by 1950 the Ministry believed that: A noteworthy feature is that a number of firms are now displaying interest in joint consultation not as an aim in itself but as one of the techniques of modern personnel management and therefore helpful in attracting and retaining the better type of employee.56 Looking at the question of assessment in a wider context, it is clear that against the history of claims for industrial democracy and workers' control, the joint consultation movement in Britain in the 1940s was really a fairly conservative programme. Compared to the claims of guild socialists in the early years of the century, or to the Bullock proposals of the 1970s, this was a mild policy. Similarly, in comparison with what happened in, for example, France and Germany during the 1940s, the JPCs hardly appear radical. In France, a 1945 decree established Comites d'entreprise as compulsory in enterprises with more than 100 workers, with a remit which covered both welfare and production issues (though, a s in Britain, they were to be essentially consultative, and fenced off from questions of wages and conditions). In Germany, the British Government pushed through even more radical measures, establishing a system of co-determination, with a parity of workers' representatives on company supervisory boards and a sub-structure of compulsory works councils.57 In Britain, however, the doctrine of human relations acted as a blockage to such radicalism. It ruled out compulsion as inappropriate, because the machinery of joint consultation was not an end in itself but essentially th e representation and reinforcement of a pre-existing consensus in the workplace. In fact, the Ministry of Labour went so far as to refuse to collect systematic data about the existence of JPCs on the grounds that the 'criteria of success in joint consultation lies in the degree to which it assists in the development of a sense of co-operation and mutua l responsibility, rather than in the mere existence of works committees'.58 Perhaps even more significantly, such a doctrine cut across notions of industrial democracy in any strong sense of the word 'democracy'. 106 Industrial efficiency and state intervention Radical solution s here must always to some degree challenge managerial/employer legitimacy, in that they stake a claim for workers as by right having a say in running enterprises. Such rights can be grounded in different ways. They may be based on the Marxist labour theory of value (as in much syndicalism and guild socialism), or on a notion of democratic rights as in political democracy (the Bullock Report's position). But, however argued, they always dispute the unfettered right to manage. By contrast, huma n relations doctrine and its institutional representation through forms of joint consultation explicitly endorsed the right to manage, albeit in a particular way. As one of its leading ideologues in the 1940s and 1950s expresse d this, the fundamental problem was 'how to combine authority and participation - leadership and co-operation'. And this was at bottom a problem for management. Such a view was accepted quite explicitly, too, by the TUC: Joint consultation machinery is essentially advisory as distinct from executive in its scope. In the last resort, and after full discussions with their employees, the responsibility for policy decisions must rest on the Boards concerned. The limitation, which is inherent in the policy of Congress, must be recognised and accepted and joint consultation machinery must not be expected to give executive power to worker representatives.59 Trade union acceptance of this doctrine was not, of course, just a question of 'ideology'. It was founded on the well-entrenched practices of adversarial collective bargaining, which had become the raison d'etre of British trade unions. There could not be any blurring of the lines of responsibility between the rights and duties of workers and those of employers. This had long been the major basis of union objections to any form of industrial democracy, and it remained well entrenched into the 1940s (and beyond).60 The impact of human relations and joint consultation have, therefore, to be seen in the context of the absence of fundamental change in the structure of industrial relations during the Attlee period. Whilst some traditional features of those relations were suspended over these years - for example, by the continuation of compulsory arbitration, bans on strikes and the pursuit of an incomes policy (albeit non-statutory) - little was permanently altered.61 As noted above, 'wage planning' was never accepted, and the attempt continued to maintain a sharp distinction between wage bargaining and productivity issues. In the long run this latter distinction was probably fatal to joint consultation. A s Alan Flanders wrote: Human relations and productivity 107 The strict separation of joint consultation from collective bargaining is difficult to maintain in practice, certainly within individual establishments. Moreover the attempt to do so invariably destroys the workers' interest in it. The really successful experiments in joint consultation appear to have developed in firms where the close connection between the subject matter of consultation and negotiation has been recognised, and the same or similar committees have bee n used for both purposes.62 Flanders's diagnosis is supported by what happened in the 1950s. Despite continue d enthusiasm for joint consultation under the Conservative Governments after 1951 the evidence is reasonably clear that the machinery involved suffered a serious decline during that decade. By 1957 a Ministry of Labour official felt 'chastened' by a survey which suggested that less than one third of firms with 250 or more worker s had mechanisms of joint consultation. The cause of this decline had much to do with the growth of shop stewards as a potent force at workplace level. With an alternative focus for shopfloor trade unionism, joint consultation simply withered away.63 As noted above, in the 1940s joint consultation had been pressed from 'on high', the TUC being notably more committed than local officials o r the rank and file. The shop steward movement had been weakened by demobilisation and conversion to civilian production at the end of the war, and there is some evidence that where stewards survived a s a force in the late 1940s this inhibited the growth of joint consultation, though undoubtedly some shop stewards did try to use the consultative machinery.64 The attempted severance of wage issues from joint consultation not only affected the enthusiasm of the workers for the latter but also narrowed the range of productivity issues which consultation could encourage. Perhaps most importantly, it curtailed the possibility of using wage incentives as a means of obtaining higher production and productivity. As has been shown, much of the emphasis on human relations derived from the view that, in the absence of the 'stick' of unemployment, high production and productivity would require the 'carrot' of better treatment for the worker in the factory. Such an approach could be endorsed from a managerial perspective, and also remained compatible with the Leftist belief concerning the intrinsic desirability of better treatment for the workers; in fact, in the 1940s there was a substantial rapprochement between these two views. But this did 108 Industrial efficiency and state intervention not answer questions about the other obvious 'carrot', higher pay by wage incentives. For some on the Left, wage incentives were inappropriate in the new post-war regime : raising production and productivity was to be seen as a social duty, not something fuelled by individual payments. However, such a view was always confined to a small minority. Ian Mikardo voiced the typical attitude of both the political and union wings of the Labour Movement in 1947 when he attacked 'extremists' who believed either social duty or wage incentives would alone encourage better output.65 Mikardo went on to argue that traditional piece rate systems had been discredited by their arbitrary, complicated and often regressive character. He also tried to bridge the gap between 'human relations' and wage incentives by arguing that piece rates often affected output not because they directly raised incomes, but rather because they set the workers a clear task and informed them how well or badly they had achieved it. His attempted 'middle-road' thus included favouring small group incentive s as against those that were individually oriented.66 Whilst Labour's ideologues and management experts conducted a long debate about material versus moral incentives,67 in practice the extension of incentive schemes seems to have met with little resistance. For example, discussion about the issue between employers and the TUC at the NJAC found both sides resisting a direct role for the Ministry of Labour in propagandising such schemes, but only on the grounds that these things should be done by collective agreement without government interference, not because of any hesitancy about principle.68 The Government's direct role in wage payment systems was therefore rather limited by employer and union hostility. However, the problem also came up in other areas of official policy. For example, during the wage freeze of 1948-50 it was accepted that wage increases linked to such incentive schemes would be exempt from control.69 At the same time, the Government remained sensitive to the claims that high income tax rates acted as a deterrent to effort, and various ideas were floated on this, including the exemption of overtime pay in some industries from income tax (though such breeches in the general character of the income tax rules were successfully resisted, not least by the Inland Revenue).70 Finally, the Government also worried that the rationing and the general shortage of consumer goods was a disincentive to effort, though here its hands were substantially tied by the macroeconomic imperative to divert the bulk of resources into exports and investment.71 Human relations and productivity 109 Ministry of Labour figures suggest that payment by results did increase in this period. Calculations for 1951 demonstrated that 28 per cent of adult males and 32 per cent of all workers were paid in this way, compared wit h 18 and 25 per cent respectively in 1938. In some industries, too, there was evidence of a concurrent, significant shift in union attitudes towards piecework.72 But this change largely took place on a separate track from the issue of joint consultation. This separation of discussion about incentive issues and the joint consultation machinery gave an air of unreality to the proceedings of the latter. Here was an area where workers were most likely to be highly interested in the implications of raising productivity, yet it could not be discussed in the consultative mechanism. A similar point can be made about restrictive labour practices. In Chapter 8 we argue that the importance of these practices in inhibiting productivity growth has been exaggerated in much recent literature, without warrant from contemporary evidence. But whatever the importance o f restrictive practices, they, like wage incentives, had to be primarily addressed in the context of wage bargaining, separated off from most of the debate about productivity. Typically, it was the BEC which produced a report on these practices, whilst the FBI's discussions of productivity explicitly ignored them.73 Thus, coupling the productivity drive so strongly to human relations was far from an unqualified success. It highlighted certain themes - consultation, works information, the role of the foreman - whilst tending to sideline others, such as the array of issues under the heading of 'Americanisation' that is discussed in Chapter 7. That the drive was pursued in the context of a largely unreformed industrial relations system also raised tensions, by excluding certain pertinent issues from the debate on productivity. Moreover, whilst not wishing to over-emphasise one facet of the problem, it is surely plausible to say that a more radical policy to raise productivity could have been pursued if wage issues had not been regarded as 'off limits'. Finally, it should be noted that emphasis on human relations also caused tensions within Labour's ideology and politics. The attractions of human relations to certain Labour positions at this time is surely clear. It provided the basis of a rapprochement with 'progressive' managerial circles in a context where Labour gave a high priority both to consensus and co-operation in general and to its links with progressive middle-clas s opinion in particular. Thus, for example, a Labour Party document on industrial democracy of this period cited G.S. Walpole's Management and Men, a classic 'progressive 110 Industrial efficiency and state intervention management' text , as embodying exactly the right approach to social relations i n the factory.74 Yet this posture was problematic for Labour. Human relations ideology was based on a 'unitary' notion of the enterprise, as the (potential) site for the pursuit of common purposes between workers and owners. N o doubt more sophisticated versions of the doctrine could accept the inescapability of some conflict of interest in the enterprise, but the basic thrust was clear.75 Yet this emphasis on co-operation and consensus in the factory co-existed with an undiminished commitment to an adversarial form of wage bargaining. In the immediate post-war period, with the trade unions willing to go a very long way to accommodate government policy, this tension remained containable. But with the revival of shop-floor trade unionism in the 1950s, the 1940s 'package' proved to be an unsustainable basis upon which Labour could even consider building a new politics of the enterprise. Chapter 6 The management question again, 1947-51 A centra l part of Labour's approach to the productivity issue was an almost entirel y new concern with management. As shown in the previous chapters, during the later years of the war and after there was a widespread belief that British management was inefficient and that something must be done to remedy this. Prominent in the attempts at reform were leading Labour figures such as Dalton and Cripps. These Ministers were central to the Attlee Government's decision to create the British Institute of Management, and this is highly significant as a symbol of Labour's new relationship with management. But there were other important features of that relationship. Not all government activity on management was channelled through the BIM. In the late 1940s there were a range of other institutional expressions of concern, such as the Personnel Management Advisory Service and the Urwick Committee on Management Education. A desire for reform was also expresse d in the context of the newly nationalised industries which posed almost unprecedented management problems. Outside government, the unions, too, were called upon to play a part in management improvement. But above and beyond these specific initiatives was a general process of reflection on the status and meaning of management and Labour's relation to it. Was there a 'managerial revolution', it was asked, and, if so, what were its implications for Labour's traditional view of the economy and how it should be reformed? This chapter looks at the institutional aspects of Labour's concern with managemen t in the late 1940s and reflects on the content of that 'managerialism', before finally considering the wider ideological significance of Labour's evolving conception of management. The BIM was officially inaugurated by Cripps, supported by Harold Wilson (President of the Board of Trade) and the leaders of the FBI and 118 Industrial efficiency and state intervention should be different from that in the private sector, even if they were vague o n what this meant, and they also hoped that this change would bring about a significant improvement in productivity. Much of the discussion of 'workers' assistance' focused on the question of whether consultation should take place using existing channels or through new machinery specifically devised for the purpose. Morrison and the official committee which he appointed to consider the matter looke d favourably on the idea of separate machinery, with the Minister suggesting that a single structure tended 'to mix up questions of wages with questions of organisation' and seeing a case for different people being involved over different issues.26 As s o often, change in this direction was resisted strongly by the Ministry of Labour, which feared any diminution in the authority of the trade unions, always felt to be a possibility with new or specialist machinery. Such a line was sustained, seemingly successfully, throughout the Attlee government period.27 As the official committee considered the merits of the various arguments, the members demonstrated how discussion of the workers' role i n the nationalised sector was to be dominated by the rhetoric of human relations, very much as in the private sector (dealt with in Chapter 5). As the committee saw it, the objective of consultation was 'to create within the organisation the particular kind of atmosphere or climate which will make the workers happy in their jobs'. So intangible an objective was unlikely to be produced 'merely by any institutional feature, such as a system of statutory committees'. Crucial to creating a suitable climate would be proper personnel management and works information.28 At the same time the committee stressed that matters of management, and the precise role for workers in it, were for the Boards of the nationalised industries to deal with. This was a constant refrain in these discussions, which was accepted by all of the Ministers involved as a principle (though Morrison in particular saw the doctrine of Board independence and responsibility as compatible with a degree of ministerial prodding).29 This approach was, however, very much a weapon against more radical proposals. For example, when a group of managerial 'progressives', including Urwick, Wilfred Brown of Glacier Metals and George Dickson of the London Regional Board for Industry, urged the formation of advisory councils of managers, workers and consumers, emphasising the case for the involvement of workers on human relations grounds, Morrison was willing only to concede that existing The management question 1947-51 119 managements were 'unduly cautious and conservatively minded in their approach t o the problems of enlisting the assistance of the staff. There was, he emphasised, no call for new measures: 'He doubted whether any corporate identity could be created out of the rather divergent interests of the workers, management and consumers' and 'whether any advisory council should be raised to a degree of responsibility which would derogate from the responsibility of the executive board.'30 This argument rumbled on throughout the Labour Government's period in office. Any proposals for increasing the workers' role which appeared to threaten the responsibility of the nationalised Boards were firmly rejected - such as happened with the schemes put forward by the National Union of Railwaymen, consistent opponents of the Morrisonian method of organisation, and the Union of Post Office Workers.31 On the other hand, Ministers remained highly conscious that the existing forms of management in the nationalised industries were failing to generate the kind of enthusiasm and support from workers which had once been envisaged. In 1950 Morrison circulated to his colleagues a report about a London conference of employees in nationalised industries, which , he contended, showed 'a most disturbing situation'. He worried that a 'continuance of large-scale misunderstanding and discontent among the employees of the socialised industries' might have 'the most serious consequences for their efficiency and for the success of policy of socialisation'. Certainly the evidence cited at this conference bore out the report's statement that in many cases no attempt was being made on the part of managements to inform employees of what they were doing or why.32 The fears voiced by Morrison seem to have been shared by his ministerial colleagues, and so a sub-committee was established to look at the issue of 'Relations with Workers in Socialised Industries'. This accepted that these relations were not good. Whilst active discontent was unusual , passive unenthusiasm was widespread: there is a widespread sense of frustration coupled with disappointment at the results of socialisation. Sometimes labour relations are good by any standards, but even where this is so there is rarely, if ever, any positive enthusiasm for the new order of things. The Committee linked these attitudes to a number of features which marked th e socialised industries - the continuation in office of the old private sector management, over-large 'perks' for managers, excessive bureaucracy, and a 'lack of concern for efficiency on the part of 120 Industrial efficiency and state intervention management'. I t then raised again the issue of separate mechanisms for joint consultation , suggesting that, in single structures, the salience of wage issues tended to mean that 'consultation about wider questions of policy and management will take a subordinate place'. The Committee also criticised the unions for falling short of expectations in 'educating officers and members in their responsibilities under public ownership'. But despite these quite tough comments, nothing practical seems to have resulted before the Government fell.33 The search for improved human relations in nationalised industries led up some eccentric paths. None was more bizarre, but also perhaps symptomatic of a strand in Labour's politics, than the burst of activity which followed a memorandum from Attlee to Morrison at the end of 1948. In this the Prime Minister recounted a discussion which he had had with General Slim in which both agreed that there was a parallel between good officers in the army and good leadership in industry. The lesson to be learnt, according to Attlee, was clear: There is need in industry of the kind of spirit and leadership which obtains in a good regiment, an esprit de corps not only of the regiment but of the company, and the platoon. I am sure that this is necessary in, for instance, the coal industry, where you want the esprit de corps of the pit.34 However, Ministers resisted Attlee's idea that General Slim might have any role in spreading the word in civilian life, 'because the impression might be given that the Government thought that the military spirit should be introduced into industry'. Nevertheless, Attlee's memorandum led to a new round of activity on human relations, with the Minister of Labour suggesting an enquiry into what was occurring in the nationalised sector. This was resisted by the Chairmen of the Boards, but the Ministry of Labour pursued the matter informally, most notably convening a conference on the issue.35 The focus of this conference was on good 'leadership', this being the perceived message of Attlee's original memorandum. The occasion was chaired by Lloyd Roberts from the Ministry of Labour, and the central concern, as so often in discussions of this kind, was with the role of supervisors and junior management, seen as in the 'front line' of the human relations offensive: The inquiry was prompted by the belief that the development of harmonious relations between managers and workers can be materially influenced by the appointment to managerial and The management question 1947-51 121 supervisory position s of those who, in addition to the necessary technical and intellectual qualifications, possess or will develop those intangible qualities which indicate a capacity for leadership. The conference also discussed some (unnamed) private sector models of supervisory training, which mainly differed from those in public industries because of their stress on the need for 'human relations' skills rather than simple technical proficiency.36 All of this indicates the ways in which 'human relations' ideas were floated a s relevant to the nationalised sector, just as Chapter 5 showed how, as a result of the productivity drive, they became so prominent in discussions about the private sector. Allowing for the different circumstances of ownership, was the discussion of management in the public sector simply the mirror of that in the private? On the evidence of the deliberations of the Socialisation of Industries Committee, the answer is clearly that it was not. Whilst human relations did to some extent dominate the agenda for discussion on management in the socialised industries there was an alternative theme also present, which focused on the degree of centralisation or decentralisation that was appropriate in both the main administrative pattern used in the socialised industries, and the associated management structures. This issue first arose in relation to the coal industry, which soon after its nationalisation was deemed to have adopted an overly centralised structure. In a memorandum of late 1947 Hugh Gaitskell, the Minister of Fuel and Power, stressed that the history of the industry was one of fragmentation, and that a big problem for the efficient management of the sector was the lack of managers with experience of running a large-scale organisation . (He backed this up with the assertion that the one exception to this was coal selling, which had been centralised under the Coal Mines Reorganisation Act 1930, and which, he said, was by no accident the most efficient part of the Coal Board.) This criticism was linked to the argument that the make-up of the Board was wrong, consisting largely of functional heads rather than directors with general responsibilities. Such a situation, Gaitskell argued, led to an imprecise chain of command on general management issues.37 This analysis seems to have been widely shared. Morrison, in particular, supported Gaitskell's views, which led him to a search for appropriate model s of decentralised large-scale firms. He proposed a working party which, amongst other things, should look at how ICI and General Motors (GM) ran themselves. He himself circulated extensive extracts from P.F. Drucker's book on Big Business (1947) which was 122 Industrial efficiency and state intervention largely concerne d with GM, presenting it as an 'essay in federalism' which offere d the important message that the operational units of the company were 'run much like the units in a planned economy'.38 The proposed working party came to grief because of opposition from the Board Chairmen to any outside scrutiny of their efficiency (see below). But Morrison continued to pursue the issue, for example circulating a Treasury O. & M. discussion of 'Examples of Industrial Organisation', which focused on centralisation and decentralisation, with appropriate instances along with organisational charts. Morrison linked this material to a general argument that one of the main problems facing an y large socialised industry was 'the determination of the right degree of decentralisation to adopt'. He was sensitive to the usual economies of scale arguments for centralisation, but again pointed to GM and ICI as examples of how efficient big companies decentralised.39 In the event, such discussions seem to have had little immediate effect, above all because of the continuing saga about government 'interference' in the activities of the nationalised industries. Morrison was keen on setting up an efficiency unit which would scrutinise the Boards' activities. One reason for this proposal was to pre-empt the idea of Parliamentary Select Committees on the nationalised industries, which Morrison opposed as likely to 'take up a great deal of the time of the senior officers of the boards', an attempt at compromise which failed to persuade the Board Chairmen.'10 But this was not Morrison's only consideration. He seems to have been genuinely concerned to evolve appropriate forms of organisation for the new giant enterprises that he was so instrumental in bringing into existence. He recognised that harmonious human relations were not enough, arguing that 'while good will between both sides of industry was extremel y important, there was a danger that it might be over stressed to the detriment of efficient management and increased productivity'; and, on another occasion, that 'Education and indoctrination will not be good enough, nor committees; radical changes in organisation, methods of work, and management methods may sometimes be necessary'.41 What is surely striking about Morrison's position is the extent to which the model from the private sector for managing large-scale organisations was treated as unproblematic. No one seems to have asked whether publicly owned industries should be run like General Motors or ICI or what this implied about the purposes of nationalisation. Morrison himself does not appear to have felt called upon to defend the parallel. The decentralisation issue seems to have emerged as the main The management question 1947-51 123 'managerial' problem that was specifically related to nationalisation in this period. 42 In part this occurred because of its compatibility with the stress on human relations. Austen Albu, for example, argued that there was now a 'universal understanding of the difficulty of maintaining initiative, responsibility, communication of ideas and morale in large-scale undertakings of every kind'. This, in turn, meant that there was a need for greater decentralisation in the nationalised industries, a conclusion which, as for Morrison, pointed to ICI as the best example of decentralised management under a centralised Board.43 This menu of management possibilities for the nationalised industries was obviously rather limited. In practice the management systems which emerged in those industries tended to reflect arguments about collective bargaining and capital finance as much as any notion of internal organisational efficiency. However, there was some tendency to greater decentralisation with successive nationalisations, from the highly centralised Coal Board to the regional organisation of gas. But overall it is obvious that, apart from the platitudes on human relations and a rather one-dimensional notion of centralisation, Labour never really got to intellectual grips with management in the public sector during this period. On the other hand, the parallels drawn with the private secto r were linked to emerging trends in Labour's thinking about company organisation and management, a topic which will be considered in the final section of this chapter. Turning to the question of the unions and management, it is clear from Chapter 5, that the TUC and most union leaderships strongly supported the Government's productivity drive. This support raised the issue o f what attitude was to be taken to management. Here, two rather different emphases co-existed. On the one hand, there was the persistent union claim for a greater share in management, meaning greater consultation from the shopfloor to the national level rather than any idea of joint management or radical forms of industrial democracy. On the other hand, there was the tendency to regard management as a technical practice, as an expert function on a par with other professional competencies. In this context management was something to be learned and thu s something that, if mastered, might strengthen the unions' claim to a greater say in the running of industry. The latter position served to give an ideologically congenial gloss to the campaign by the TUC in particular to encourage union members to learn management techniques. Both of these arguments were apparent, for example, in the report of the TUC to the special conference of union executives in September 124 Industrial efficiency and state intervention 1948. Th e aim here was to encourage unions to do more to take advantage of existing management training facilities. Whilst the immediate context was that of raising productivity, education in management technique, it was argued, also arose 'for the unions as a question of long term policy, mainly from the standpoint of the workers' claim to fuller participation i n the control of industry'.44 The TUC's support for training in these latter terms was further emphasised in the document Trade Unions and Management, produced after the 1949 Congress. Much of this was taken up with descriptions of the kinds of techniques that unions should be interested in learning. These were seen as encompassing job evaluation, time and motion study, and work measurement. But the underlying message emphasised the longer term objective. Jack Tanner of the Amalgamated Engineering Union, for example, argued that there 'must be a development in the attitude of trade unionists to industrial management'. Management 'should b e no longer regarded as a "mystery" and it was essential that . . . unions should learn its techniques and the elements of production engineering'. This kind of lesson was very much supported by E.P. Harries, in charge of the TUC's Production Department. He saw a major part of the task of that department as educating 'all sectors of the T.U. movement in the problem of management', adding that this was a crucially necessary development at workshop as well as headquarters levels.45 In some ways such an attitude towards management is unsurprising, given th e general union commitment to production and productivity, though it is in marked contrast to the attitude typically taken prior to the war. But what is perhaps more interesting is the precise way in which this new attitude to management was advocated. Trade Unions and Management produced two reasons why the unions should change their approach. One emphasised individual advancement: there was a common assumption at this time that in the long run, at least in the nationalised industries, the normal route to an administrative job would be by training competent trade unionists in management. The other was that such knowledge would allow unions to 'react knowledgeably to simpler proposals'.46 This reactive posture, which characterised most of the TUC's pronouncements on management, needs to be compared with what may be called a 'radical productionism', where learning about management was seen as allowing unions 'to participate directly in achieving productive efficiency'. This contrast should not be overdrawn. There were undoubtedl y shades of opinion on the issue of the degree to which The management question 1947-51 125 training trade unionists in management involved the idea that existing managers were inefficient. But some trade unionists did certainly take a highly critica l line, even though they were in a minority against the TUC view, whic h was that such a challenge to the legitimacy of management could cut across the industrial co-operation and consensus that it wished to establish.47 The position on this of one union, the Association of Supervisory Staff and Engineering Technicians (ASSET), is of especial interest. ASSET'S rol e was central partly because, at least on occasions, it opted to take a 'radical productionist' line. But, in addition, ASSET was the union for (junior) managers and supervisors, and so was integral to the attempt to forge a new link between labour and management. Moreover, Labour's two key ideologues on management, Austen Albu and Ian Mikardo, were prominent ASSET members. 'Radical productionism' did not become a consistent ASSET position, but it was powerfully expressed on occasions and this was especially so during the economic crises of 1947 and 1949. In the latter case, for example, an editorial in the union's journal argued that: 'Inside ASSET we have many, many managers who are fighting bitterly to establish industrial democracy; are waging a ceaseless war against directors' policy that creates inefficiency and discontent.' The union also provided Mikardo (the union's parliamentary spokesman) with a platform to expound similar views.48 Mikardo was partly successful in getting this kind of radical view of management int o the economic policies of the Left in the Labour Party. Both of the best known manifestos of the Labour Left in this period, Keep Left and Keeping Left, essentially accepted the kind of case that ASSET was promoting. The first of these, for example, attacked the BIM a s too conservative in its approach to management reform: 'Its constitution and powers are circumscribed in order not to offend the existing institutions and the existing firms of consultants - a major example of that tenderness to vested interests to which we have already referred.' Keeping Left linked its proposal for the extension of economic planning in the name of greater efficiency to the argument that this action by the Government 'would entitle it to ask the unions to institute a mass scheme of education in management for their officers, shop stewards and other representatives, and would thus canalise the energies of the unions into a new progressive full employment function'.49 Mikardo was therefore something of a link over 'radical productionism' between ASSET and the Left of the Labour Party. This position, whilst noted, is not sufficiently emphasised in most treatments 126 Industrial efficiency and state intervention of the Labour Left. In fact, one of the striking features of the period is the exten t to which the Left in this area mirrored the priorities of the Labour leadership. The Left, too, put increased output and higher productivity at the centre of its agenda - it just advocated more radical means than the leadership to achieve these ends. This sharply divided the Parliamentary Left from the Communists, who after 1947 rejected their earlier 'radical productionism' in favour of a posture stressing the defence of working-class standards against 'heightened exploitation'.50 Nevertheless, the appeal of this 'radical productionist' position should not be exaggerated. ASSET itself was an ambiguous body. Whilst there seems to have been little active resistance to Mikardo's role as spokesman for the union, its own 'managerialism' was more complex than a simple endorsement of standard contemporary Left positions. The idea of a training in management as preparation for advancement up the industrial career hierarchy was clearly popular in ASSET, and this obviously tended to produce a rather different perspective on the legitimacy of existing industrial organisation. But more important was the way in which ASSET could also be drawn into the dominant consensual approach to industrial issues. The issue of the journal ASSET for July 1947 carried a front page message from Herbert Morrison. He wrote: I wish ASSET luck in its work and hope that by spreading and extending its membership this vast miscellaneous body of the middle class, which is composed of the technical, supervisory and the managerial classes, will become ever more competent to make an increasing contribution to the economic and social well-being of the community. Underlying this mellifluous message lay a rather different kind of managerialism than that espoused by Mikardo. The point of organising managers into a union was not to spearhead the exposure of existing inefficiencies, but to draw managers into the great arch of co-operative endeavour across classes in the cause of higher productivity.51 Morrison's outlook echoed that of Austen Albu in 1942. The latter had suggested then how Labour needed to approach management: If the Trade Union movement were to make a constructive approach to them, proposing collaboration for positive social purposes, many of them could be persuaded that the real interests, both of themselves and of the nation, lie in an association with the political and industrial organisations of the Labour movement. The management question 1947-51 127 And this in turn was reminiscent of ideas put forward very clearly in Sidney Webb' s undeservedly neglected work of 1917.52 Such a view of management was embedded in a much broader view of changes in British society . The possibility of a Labour alliance with management was commonly seen not as an act of political will, but as resting on a fundamental change in the function of management in the modern corporation. In short, it depended upon the idea of a managerial revolution. As has been already noted, the book titled The Managerial Revolution, written by James Burnham, had appeared in Britain in 1942. Burnham had argued that the world was already a long way down a path which would lead to managers becoming everywhere the ruling class (in a context of state-owned property). His analysis was couched in Marxist terms, and he saw this new ruling class as co-existing with different political arrangements, totalitarian initially, possibly democratic later, but always maintaining effective power.53 This work was a frequent reference point for the Left in the later 1940s. Broadly speaking, Labour writers, especially but not exclusively those on the Right of the party, tended increasingly to accept the central thesis about the shifting locus of power in society, a process which may perhaps be seen as culminating in the New Fabian Essays of 1952 and Crosland's Future of Socialism of 1956.54 The idea of a shift in the locus of power rested in turn on the idea of the separation of ownership and control in the modern corporation. This alleged separation became a commonplace in much Labour discussion of the late 1940s and early 1950s. It implied both that the 'old' idea linking political centrality to the ownership of the means of production was outdated, and also, perhaps more important in the current context, that managers were no longer 'agents of capital'. Rather, they were (actual or potential) experts in administration and human relations, a 'third estate' in the realm, with no inherent reason for being anti-Labour.55 Such propositions were hardly new in the 1940s, but they were becoming muc h more important as Labour, from its position as the party of government, had to grapple both intellectually and politically with management. Faced with issues about running newly nationalised industries, Labour was forced to take a view on how far this process of management would differ from that in the private sector. As suggested above, discussions on managing the nationalised industries implicitly suggested the difference was small. This was made explicit by Albu, once more, who argued that the real division in relation to producer units 134 Industrial efficiency and state intervention methods suc h as the Taft-Hartley anti-T.U. bill, the use of tear gas against strikers, lynching and the Ku Klux Klan, will not increase productivity.'11 The AACP proposal in fact touched a raw nerve of anti-American sentiment, evident across the political spectrum.12 In announcing the idea Cripps went out of his way to stress the agreement given by the FBI and th e TUC, and emphasised that the AACP was proposed 'not on the basis of our industries being inferior to those of other countries', but because 'an exchange of experience and knowledge of production would be of great benefit to this country'.13 Given this endorsement, if not enthusiasm, the AACP was established in 1948 as a bipartite body, with representatives from the BEC as well as the FBI, the TUC and employer and union representatives from the USA, but no government members. It was intended that the organisation's life would be coterminous with Marshall Aid, that is, ending in June 1952. In the early stages the AACP established a five-part programme of work for itself: (i) plant visits and exchange of information on production techniques; (ii) an enquiry into maintenance of productive plant and power; (iii) productivity measurement; (iv) an examination o f specialisation in industrial production; and (v) the collection of economic information. The last four of these objectives spawned committees, all of which reported rather inconclusively in 1949. This reinforced the dominance of team visits to America as the AACP's main activity (in fact the only one for which it is usually remembered). By the end of its existence the Council had arranged 49 team visits in specific industries, and 17 on specialist subjects (for example, management education). Three visits of US teams to the UK were also organised.14 The role of the AACP in the productivity drive of the late 1940s must be partly seen in the context of the agenda set by its major participants, the peak associations. Certain areas, notably restrictive practices (by both firms and labour), were ruled out as specific objects of enquiry by the British participants, despite the Americans' view that these were likely to be important in explaining Anglo-American differences in productivity. Suc h questions were simultaneously said to be a 'purely British matter', to be fairly unimportant and, in any case, to be welcomed where they existed by both employers and unions in Britain because they encouraged 'stability through organisation'.15 Parallel to this kind of exclusion was a pact not to consider anything to do with labour relations: 'all agreed that there was to be no interference with the normal negotiating machinery and procedure of industry'.16 However, The 'Americanisation' of productivity 135 none of these issues could be effectively excluded from the team reports, a point considered later. More positively , both the employers and unions had various ideas as to what they thought the AACP should focus attention upon. The FBI, in setting out its 'fundamental considerations' in agreeing to the AACP, emphasised three points. It argued that: (a) lowest cost should be the criteria of efficiency rather than production per man hour; (b) greater efficiency was constantly barred by restrictions on capital developments; (c) the big problem in efficiency is bottlenecks in materials and supplies.17 The first point related to the FBI view that production per man hour comparisons with the USA were, despite their popularity, unfair and inappropriate becaus e they did not reflect the higher capital intensity of US production and thus distorted the overall efficiency differences. This was a highly important issue for the whole productivity drive and will be considered several times in the following pages. It clearly links to the second point, the belief of the FBI that, under Labour, investment had become th e 'residual legatee' of resources rather than the first call. The Government's view was that, contrary to this assertion, it was giving a high priority to investment, but that, especially because of the need to divert resources into exports, there was a limit to what might be achieved on this front, and in any event much more could and should be done to raise output with existing capital equipment. The last point was a staple complaint of the FBI in this period, linked to the belief that controls were excessive and should be removed more rapidly. Thus, from the FBI point of view, the AACP was largely a forum for pressing a pre-existing and well-known agenda of issues which it saw as crucial for productivity.18 However, there was also recognition that by involving unions the AACP could function to raise questions in a rather different way than the normal diet of FBI representations to the Government. An FBI draft report o n the AACP in 1950 argued that productivity was basically an issue of 'men and machines'. Given that machinery was largely outside the AACP remit, the focus should be on men. In this context it was argued that the Council could 'influence the psychological approach and affect the climate of opinion': Productivity consciousness is a long step towards the realisation of 136 Industrial efficiency and state intervention high productivity. It is in helping to promote this that the Council believe that its work has been and is of the greatest potential value.19 There i s a clear parallel between the FBI and TUC approaches to the AACP. On the one hand they both wanted to use it to press their own hobby-horses; for example, in the case of the TUC, the importance of Joint Production Committees. Equally, both were convinced that in the long run higher investment was the crucial element in raising productivity. But the TUC, like the FBI in its more reflective moods, accepted tha t in the short run the level of capital equipment had to be taken as given. What, therefore, was left? With restrictive practices and industrial relations ruled out, the TUC, like the FBI, tended to end up with a rather vacuous psychologism. Thus, Tanner from the AEU argued that: 'if we are going to get any immediate results it does mean improved and increased co-operation between management and work people'. Naesmith from the cotton weavers saw this co-operation as being something to be spread from the peak associations to the shopfloor: 'The issue with us is how to get the people in the mills and factories and the workshops themselves lined up on the need for change and the way in which the changes should go.'20 The sectoral teams sent from Britain to the USA all consisted of representatives of both employers and employees, with the latter supposed to include supervisors, technicians and those from 'workshop level', including operatives and shop stewards. In practice, the composition of the teams was a persistent bone of contention. Early in 1949 Harries at the TUC wrote that the whole idea of team visits was 'going badly' because some trade associations were insisting on sending non-trade unionists.21 It was subsequently agreed that the procedure would be for the AACP to invite employers' associations to ask firms if they wished to nominate people for the teams; that they would be requested to do this in collaboration with trade unions; and that they would also be questioned as to whether the unions agreed to the nominations. This looks like, and seems to have functioned as, a rather uneasy compromise between the supposedly bipartisan character of the AACP and the fact that much of the non-dollar cost of the visits was borne by employers. The composition of the teams was also affected by the Americans screening-out communists on security grounds.22 Only one detailed account of a team visit seems to have survived. This is a case study relating to the making of the Cotton Spinning Report, by P.H. Cook of the Tavistock Institute. In this instance the The 'Americanisation' of productivity 137 worker members were nominated by the unions, and the eventual report was strongly endorsed by the employee side. Cook saw the team's efforts as making a 'serious and important contribution to its industry' and emphasised the importance of good communications within the team for its perceived success - a very Tavistock point of view.23 Like al l of the other teams, that on cotton spinning was sent around factories in Britain before it went to the USA. This 'briefing tour' involved visiting 17 companies over a fortnight, before a six-week tour of the USA which covered 35 plants. On the team's return, 29 meetings were held to publicise its report and findings, and the average attendance at these was said to be in excess of 100 people.24 This pattern was similar to that for most of the teams, though whether all were quite so easily co-operative is unclear. Cotton spinning was perhaps atypica l in the collaborative character of its industrial relations, though in most cases the 'screening' process seems to have ensured a minimum of discord amongst team members. Controversy arose most explicitly in cases where the unions felt that team membership had been 'fixed' by employers in order to secure a report favourable to themselves. For example, the Foundry Workers' Union protested ineffectively about the composition of the Steel Founding Team. When the team's report was published the union produced its own counter-report, which earned it a dressing-down from the General Council of the TUC on the grounds that '[the union] had obviously sought to influence shop stewards t o take an antagonistic view of the Report'.25 What message did the majority of team reports carry about the sources of Britain's low productivity compared with the USA? With 66 reports on diverse industries, and the politically charged nature of the issue, it is not perhaps surprising that different authors have drawn father different conclusions on this subject. For example, Broadberry and Crafts have tended to emphasise the overmanning and restrictive practices that were 'revealed' by the reports.26 Carew, by contrast, stressed the general social-psychological approach of the reports, with their belief that the particular character of American labour was vital. Coupled to this, for Carew, was an emphasis on the need for 'scientific management' as in the American model. In this account, therefore, the most important aspect of the AACP was its 'ideological challenge to basic labour movement values'.27 Though having very different views about the accuracy of the AACP diagnosis of Britain's productivity problems, both Broadberry and Crafts and Carew tend to focus attention on issues concerning labour. Is this a fair portrait of the reports? It must be conceded at once that the 138 Industrial efficiency and state intervention reports did contain a great deal of rhetoric about the alleged differences in labour attitudes and industrial relations between the USA and Britain. This derive d partly from the 'lowest common denominator' kind of approach of the FBI and TUC to the AACP, and was no doubt encouraged by the bipartisan nature of the teams. Much of this material was by its very nature ill-focused and lent itself to vacuous generalisation. As a contemporary critic noted: The teams, it seems, have found the real secret of high productivity; it lies not in machinery, not in factory layout - in short not primarily in technical improvements, but in the American Way of Life. If only the America n Way (the reports suggest) could be transferred to Britain, how hardworking, how comfortable everyone would be. This approach perhaps reached its nadir in the Grey-Iron Founding Report, which remarked upon the observed great energy of New Yorkers, and noted: 'Several members of the Team were infected by this energising atmosphere and enjoyed a greater capacity for activity and less need for sleep than was customary for them in Britain.'28 Rather little detail was given about industrial relations in the team reports. Whilst much is said about the technical aspects of production, the allegedly 'central' issue of workers' attitudes and behaviour is ill-supported by evidence. Oddly enough, the only report to have comparative figures on industrial relations showed more days lost by strikes in the USA than the UK.29 This may, of course, partly reflect the desire of the employers and TUC to keep restrictive practices and the specifics of industrial relations off the AACP agenda. A detailed contemporary study compared the assertions of the AACP reports with evidence from American industrial relations literature to see how far US practices were as presented in the team reports. The overall conclusion was that the American worker appeared much less different fro m the British worker than the AACP suggested: 'We can see, then, that the Productivity teams, excellent though they were on the technical aspect of production, gave a misleading picture of the American worker and his trade union.' The study went on to speculate how this misrepresentation might have arisen, given the union involvement in the teams. It noted the short time spent in the USA, the desire that some had to 'shake-up' British labour, the selective nature of the firm visits within the USA (with four out of five firms approached by the AACP withholding co-operation) and the psychology of intensive visits in a collaborative team framework.30 In part, therefore, the AACP can rightly be seen as just one more The 'Americanisation' of productivity 139 instalment in 'the Britis h Worker Question': the long-standing process of blaming labour for the ills of the British economy.31 Certainly the TUC wa s alive to the extent to which a certain kind of essentially anti-union propaganda could be read off from the team findings. It responded very critically to the 'Fleming-WaddeH' report, an internal AACP summary of the first fifteen team reports, which it saw as 'overweighting atmosphere and psychological factors' and playing down the machinery and investment aspects of higher US productivity. This indeed was a general problem for the TUC, as it tried to balance support for the AACP with criticism of those who used the reports only for propaganda.32 However, it is worth emphasising that the reports generally contained a good deal of substantive material which is not about workers and their attitudes. Carew, whose main interest is in labour relations, and who relies largely on TUC sources for his discussion of the AACP, rather glosses over this other material, simply saying that it focused on 'scientific management'. Broadberry and Crafts similarly mention the AACP critique of British management, but focus on the restrictionism of labour since this fits in more with their economists' assumption about the importanc e of competition in labour and capital markets.33 An analysis of 58 team reports prepared in 1952/3 shows that the main factors that they deemed responsible for the US lead in productivity were as follows. Heading the list were 'extensive use of mechanical aids' and 'appreciation by work people of need for higher productivity', followe d closely by three questions of 'managerial technique' - 'modern methods of costing', 'production planning and control' and 'work study'.34 Thus, alongside the almost mandatory reference to workers' attitudes, emphasis was placed on a range of factors which related either to low levels of investment in Britain (which, as we have seen, both the TUC and FBI accepted but regarded as unchangeable in the short run) or to managerial practices broadly defined. This was not, of course, the kind of finding which the FBI wanted from the AACP, though it had always been anxious that this might happen. As Middlemas remarks: 'In this sense, the FBI's fears were justified: the long-term thrust of the Marshall Aid experience highlighted management inadequacies, not those of the workforce.'35 The critique of management even comes across quite strongly in Hutton's We Too Can Prosper, despite the TUC's feeling that the author of this book had succumbed to the AACP disease of broad psychologistic generalisation without supporting evidence. Hutton's first 140 Industrial efficiency and state intervention substantive chapte r was called 'Better management, higher productivity' and cited as evidence of the superiority of American management the summary of 22 team reports in the appendix of the AACP's Education for Management?6 The AACP concern with management raises a much broader issue about th e forms of management that 'Americanisation' was held to entail in the late 1940s. This issue is considered later in the discussion of other components of government activity which also aimed at encouraging British industry to adopt (perceived) American methods. In many way s the questions raised there fell outside the institutional character of the AACP. However, that institutional character needs first to be considered in a little more detail. General questions about the impact of Labour's initiatives on productivity, together with an overall assessment of the AACP, are considered in Chapter 8. Here the focus is on the peculiarities of the AACP as an agency for raising productivity. As so often with the impact of an institution, there are great difficulties of interpretation, because no one criterion can be applied. Clearly different actors hoped for different things from the AACP. The Government hoped to appease American criticism of British economic policy and performance and so help to secure the continuation of Marshall Aid, while at the same time encouraging union and employer enthusiasm for the productivity effort. The USA had high hopes of the AACP and felt that these were being realised. Its participating representatives recognised that the AACP formed a 'temporary defensive alliance' between the FBI and TUC rather than an enthusiastic partnership. This stemmed from what was seen as the defensiveness of the British participants about the causes of Britain's lagging productivity - allegedly demonstrated by the refusal to confront restrictiv e practices, the 'over emphasis' on higher investment as the key to progress and the general refrain of 'British practice is suited to British conditions'.37 However, these drawbacks were never serious enough to threaten what was seen as the major gain, the acceptance of the need to raise British productivity by following the American example. Politically, the Government was committed to a 'hands-off approach to the AACP. The difficulty with this from the Government's point of view wa s how to respond if the Council was seen to be insufficiently active or doing inappropriate things. This issue came to the surface in the autumn of 1949 when the US Government put forward proposals aimed at increasing technical assistance to Britain. The issue for the Government was how far this was to be channelled via the AACP. The 'Americanisation' of productivity 141 Doubts on the desirability of using the Council were voiced by some senior civil servants, who noted that the AACP had not supplied government departments with its minutes, and indeed seemed to be working very hard to minimise any kind of liaison or contact. So the technical assistance proposal raised a dilemma: should the government reconcile itself to the various disadvantages of handing the whole thing over to the Council or should it think out some way of enabling the official machine to work openly with the Council and find a formula acceptable to industry to explain this state of affairs?38 In the event the Government channelled the increased assistance via the AACP, maintaining the earlier proposition that the Council was more likely to engage British producers, as well as to maintain America's support, if it were seen to be clearly working apart from Whitehall. For the FBI, to repeat, the AACP was a means of getting government 'off its back'. The FBI used the Council as a basis for resisting the taking of decisions on productivity elsewhere. For example, it remained aloof from the work of the Ministry of Supply's committee on standardisation by arguing that this work should be done by the AACP. Similarly it suggested that the vexed issue of data gathering for productivity measurement should come under the Council - though this did not lead to any greater co-operation by industry in producing reliable data.39 Overall, therefore, it would seem right to characterise the FBI's response to the AACP as minimalist and defensive. It welcomed the Council as a means of combating US misperceptions of Britain and keeping the Government at a greater distance, rather than as a significant initiative in the battle to raise productivity in British industry. Some of the same attitudes were shared by the TUC. But the productivity issue was more complex for the union side than for the employers. On the one hand, it was 'their' government which was setting so much store by raising productivity, and, as a central component of the Labour Movement, the unions could hardly ignore the political emphasis given to this objective. On the other hand, many union officials understood that Anglo-American comparisons were being used to attack trade unionism. The broad character of the TUC's response to this dilemma is clear. In public, it embraced the AACP with great enthusiasm. Yet, in private, it acted to try to restrain both the wilder rhetoric of the 'American Way of Life', with its usual anti-union implications, and the Left's criticism of some of the AACP material. Hence the TUC became politically committed to the idea of the AACP to a much greater extent than the employers. 142 Industrial efficiency and state intervention As indicated in earlier chapters, the TUC was willing to go to unprecedented length s in support of the productivity drive. Though not strictly part of the AACP, this support is well illustrated by the TUC's own 'Team Visit' to the USA in 1949. What was striking in the report which emerged from this initiative was the extent to which unions were encouraged to see productivity as their responsibility. As the document put it, the 'real problem confronting trade unions was to find ways and means of increasing productivity'. In pursuing this theme the role of American unions seems to have been substantially exaggerated, as when the report claimed that unions there made 'a major contribution to increasing the efficiency of less competent companies'.40 As Carew has persuasively argued, such conclusions were poorly supported by the evidence unearthed by the TUC. In fact, US pressure had produced a rather more 'up-beat' report which in effect recommended 'American' practices to the British even though these were rarely actually pursued by US unions. One result of the visit was the creation in early 1950 of the TUC's own Production Department, which focused attention on spreading the gospel of productivity amongst rank and file trade unionists, especially by providing training in management techniques for such people.41 In sum, union leaderships to a striking degree in this period saw their role as encouraging the productivity drive, though they often believed that this could be done more effectively by the unions themselves than by th e heavy hand of government. Nevertheless, this attitude did not lead to a significant radical 'productionism', involving a challenge to managerial prerogatives on the grounds of management inefficiency. As the Director-General of the FBI reported: I must say I have been much impressed by the recognition by the T.U. members of that Council that each side has its own distinct function, and I feel there is no danger there of collaboration leading to encroachments by the trade unions on to the field of management.42 The AACP was created for a political purpose as much as directly to raise productivity. Equally, the support of the peak associations for it was part of a political 'deal' between them and the Government. Its economic impact (considered in Chapter 8) must be seen in the light of this political situation. In particular, the FBI continued to be quite successful in using the Council to keep government out of certain areas related to productivity, whilst resisting any enlargement of the unions' role in this issue. In this sense the AACP may be seen as a case study of the problems that were encountered by the Attlee Government in its The 'Americanisation' of productivity 143 pursuit of policies via 'corporatist' structures of close co-operation and indeed significant dependence upon the peak associations.43 For many, the crucial issue in the attempts at 'Americanising' British industry in the immediate post-war period revolved around 'scientific management'.44 Carew's discussion of the AACP, for example, presents the key 'success' of that body in terms of the growing acceptance amongst British labour of scientific management, which it had previously resisted. Like many authors, Carew does not offer a definition of scientific management but tends to treat it as synonymous with Taylorism, in other words as concerned with the direct role of the worker in production, or what in recent years has often been called the 'labour process'.45 Whilst this equation of scientific management and Taylorism is appropriate for much of the early period of the scientific management movement before and after the First World War, it is very much less so in relation to the 1940s. Writers such as Urwick and Brech, for example, had incorporated much of the contemporary human relations approach into what they called scientific management.46 Similarly, a major managerial ideologue such as de Haan could remark of scientific management that: 'increasing output and raising efficiency are its technical and economic goals, while its social purpose consists of careful treatment of the human factor in industry and of the raising of the standard of living of the community'.47 Even where the definition of scientific management did not include the whole human relations package, it usually referred to a range of issues beyond the focus on labour. It might therefore embrace subjects such as production organisation, production control and managerial techniques which fell between 'the labour process' on one hand and human relations on the other. This background to the events of the 1940s is important because, in order t o understand the significance of the debate about scientific management and Americanisation in that period, it is necessary to define the meaning and connotations of these terms with some care. To that end this chapter will schematically divide the package that was being proposed into three: standardisation (or, with simplification and specialisation, what were often called 'the three Ss'); standard costing and budgeting, commonly seen as a crucial accompaniment to standardisation; and work study, including time and motion study. Together, these techniques would seem to define the main thrusts of the Americanisation of production in this period, along with the human relations perspective, which was dealt with in Chapter 5.