Reconstructing Britain, then and now
A new history of Clement Attlee’s legendary 1945 administration holds lessons for a Labour party preparing to govern in tough times
For the left the prospect of an incoming Labour government comes with a sense of foreboding as well as anticipation. Britain is a conservative country not given to returning left wing parties with large majorities. When it does, expectations are high, and often disappointed.
Labour sees its task as one of reconstruction, the repair of a nation torn by long turbulent years of un-conservative Conservative rule. Public services have been damaged by austerity, inequalities are widening, living standards are flatlining, housing is scarce, infrastructure is crumbling. Political debate is polarised, riven by culture wars.
The new government wants to do much, but will have to defy the conditions it will inherit. A stagnant economy will impose severe fiscal constraints: taxes are already at a 70-year high, debt is close to 100% of national income and the cost of servicing it is soaring. Tory intentions to cut taxes in the run-up to the election imply further cuts to public services if accepted. The tough fiscal rules Labour has set itself means new revenue will have to be generated by growth and productivity rather than borrowing. Current labour patterns are dependent on high levels of immigration that will be hard for a party with liberal inclinations to address. These and other domestic challenges will have to be met against the darkening backcloth of international conflict and climate change. And an overwhelmingly Remain party will have to find a way of embracing Britain’s fixed status outside the EU.
The shadow of 1945
Hopes for incoming Labour governments are forever framed in terms of the achievements of the hallowed 1945–51 administration that laid the foundations for the post-war social democratic settlement, no matter how distant that world might be from ours. Clement Attlee’s government faced challenges peculiar to its time, including the onset of the Cold War, the rebuilding of Europe, the relinquishment of Empire, the re-deployment and re-housing of hundreds of thousands of troops, and an exchequer exhausted by the war effort.
This time, however, there are certain parallels that resonate. Starmer’s Labour will take office in an age of fiscal constraint, austerity, labour shortages, a critical lack of social housing, international unrest, and dissatisfaction with the performance of privately run utitlies. Attlee’s administration faced the formidable challenge of postwar reconstruction. But in at least one fundamental respect Labour’s challenge today is tougher: that of offering hope to a jaded electorate cynical about the possibilities of politics. The 1945 government was at least able to appeal to the spirit of collective resolve and readiness for sacrifice fostered by the war effort.
Age of Hope: Labour, 1945, and the Birth of Modern Britain by historian Richard Toye offers a timely blow-by-blow account of the Attlee administration that casts light on the lessons it might hold for Keir Starmer’s Labour, highlighting the blend of pragmatism, idealism and administrative competence that secured its reputation, without overlooking its flaws.
The administration’s capacity to adapt to rapidly changing circumstances was exemplified by its response to the unremitting economic and foreign policy challenges that might have overthrown it.
‘A new socialist economic order’
Though indelibly associated with the creation of the welfare state the government’s priority on taking office was assertion of public control over the direction of the economy. Haunted by memories of how adherence to liberal economic orthodoxies had obliged the 1924 and 1929 Ramsay MacDonald administrations to impose austerity, the incoming government had resolved that economic growth and full employment would only be possible if basic industries and public services were owned and administered by the state. Social security could only be guaranteed through the shared prosperity generated by and channeled through a socialist economic order. In the words of Labour’s manifesto Let Us Face the Future: ‘They say, full employment. Yes! If we can get it without an interfering too much with private industry. We say, full employment in any case, and if we need to keep a firm public and an industry in order to get jobs for all, very well.’
Labour’s confidence in the possibilities of state planning now seems very much of its time, Attlee going so far as to proclaim that ‘in matters of economic planning we agree with Soviet Russia’. But the effectiveness, however blunt, of the centrally directed war economy seemed to offer proof of concept. And the new government’s position was more nuanced than a simple desire to override the market with central planning: Labour questioned the very existence of an uninhibited ‘free market’, pointing to a pre-war private sector choked with monopolies, cartels, anti-subsidies, and protective duties. As Toye puts it: ‘The question in socialist eyes was not one of nationalisation versus laissez-faire but rather the substitution of public control for wasteful capitalist exploitation — and the elimination, not of competition, but of its unhealthy varieties.’
But although the insight was illuminating, the strategy to address it was ill-defined. Let Us Face the Future pledged broad and deep nationalisation, starting with the Bank of England, fuel, power and the utilities. The proposed ‘arms-length’ model of nationalisation, however, according to which corporations would be run by boards guided by commercial principles, did not seem to give the government sufficient leverage to integrate the new public enterprises into a coherent economic plan. And there was resistance from the unions, anxious to defend traditions of free collective-bargaining and choice of employment from state interference.
In the event, the administration’s nebulous visions of a socialist planned economy, like those of its predecessors, were blown away by immediate and unrelenting economic pressures. During its first months in office the Truman Presidency ended Lend-Lease, the programme through which the US had channelled materials, food and commodities to its wartime allies. A ‘financial Dunkirk’, to use Keynes’s vivid image, was averted by the granting of fresh assistance, but at a stern price. The new loan, repayable in 50 instalments from 1951, would necessitate continued austerity, and its insistence on the free convertibility of dollars and Sterling created the conditions for the currency crisis that threatened Attlee’s leadership in 1947, as Britain’s limited dollar reserves began to run dry. Though alleviated by the new line of credit secured by the Marshall Plan the unrelenting demands of convertibility culminated in the forced devaluation of the pound two years later.
US assistance also required acceptance of the terms of the Bretton Woods agreement that established a new liberal economic order. But although regarded by the party’s left as a capitulation that ended hopes for an alternative socialist framework, Toye points out it is far from clear it was regarded as such by the government itself, many of whose senior ministers believed the International Trade Organisation and other Bretton Woods institutions complemented ambitions to assert greater control over the domestic economy, establishing a framework guarding against the splintering of the global economy into a confusion of rival trading factions, as had happened during the pre-war years.
Though pressing ahead with incremental nationalisation, Attlee’s Chancellors declined to build an an economic architecture capable of steering the economy, prioritising the evolution of the Keynesian fiscal instruments and price control mechanisms that were to be used by successive post-war governments to foster and smooth economic growth. Toye suggests that although the ‘shift towards Keynesianism and quite modest configuration of controls could be seen as a retreat from full blown socialism’ in reality ‘these were pragmatic adjustments that allowed Labour to pursue its goals in non-doctrinaire fashion’. The voyage may have been turbulent, but when Labour left office living standards were rising, full employment had been achieved, the Treasury’s dollar reserves were being replenished, and exports were booming.
Idealism and pragmatism
The administration’s international record told a similar story of adaption under duress. The manifesto’s internationalist rhetoric about dismantling the Empire was always likely to be unfulfilled given the government’s reluctance to negotiate away the imperial preference system that secured trading advantages and vital revenues for Labour’s domestic ambitions. The administration did oversee Indian independence and the referral of the Israel question to the UN, but in both cases its decisions were driven by events rather than managed. Though, as Toye puts it, ‘formally committed to battling racial prejudice and imperialism, it failed, by some distance, to transcend the supremacist assumptions and structures of the time’.
But there were significant international achievements. Toye paints a favourable portrait of Foreign Secretary Ernest Bevin, who ‘combined the canniness of the union negotiator with more than a dash of socialist idealism’. Habitually cast as a Cold War warrior, Bevin’s realism was motivated by optimism that other nations would reciprocate the concessions Britain was prepared to grant. The Foreign Office navigated the perilous balance of power between the US and the USSR, Attlee commending the willingness of the virulently anti-communist Bevin’s to ‘[stand] up to the Americans’. Labour helped lay the groundwork for the post-war international order by playing leading roles in the founding of NATO and the reconstruction of Europe, supporting the development of new legal and economic systems and resettling millions of refugees. And it negotiated the delicate task of balancing the deployment of labour and resources between the immediate needs of the domestic economy and the maintenance of war readiness.
The foundations of social democracy
The surprising implication of Toye’s account of the economic and international maelstrom through which the government passed is that the establishment of the welfare state, now regarded as its landmark achievement, was accomplished relatively easily. The administration succeeded in implementing the key elements of the Beveridge Report during its first two or three years, extending social security through the National Insurance Act, rolling out secondary school coverage through implementation of the 1944 Education Act, dedicating sufficient resources to hit ambitious targets for house building, and, of course, founding the NHS. The government built more than 200,000 high quality homes a year, inspiring the succeeding Conservative government to go even better and build 300,000, albeit at the price of smaller house sizes and lower quality fittings. The NHS, which exceeded the party’s relatively modest manifesto commitment in scope, was secured through Aneurin Bevan’s capacity to strike a compelling deal with a medical profession that had been reluctant to give up private practice.
By 1950 most of the acts that were to secure the government’s reputation were complete. And yet that year’s election reduced its majority of 145 to six. The received story is that by the second election the administration was drifting, a victim of its own success, searching for purpose after having driven through its 1945 programme. But Toye argues that its sense of mission was evolving as a new generation of ministers moved took senior positions, working out a redistributionist philosophy that was to become the blueprint for post-war social democracy. Though they adjusted the balance between market and state the Conservative administrations that followed were content to work within the social democratic framework Labour had established, which held until the neoliberal turn in the late 1970s.
The party would have held onto power had circumstances been only slightly different. Several of the government’s leading figures, already familiar to the public through their roles in the wartime government were fading, Bevin and Chancellor Stafford Cripps having to leave for reasons of health. Voters were weary of continued rationing and controls. Devaluation, though ultimately successful, looked like a response rather than anticipation of events. Above all, perhaps, the timing of the 1950 election was unfortunate. It was set in February, earlier than was necessary, because Cripps, did not want his budget, scheduled for the spring, to be construed as an election giveaway, an act of electoral self-sabotage inconceivable today. Had it taken place later in the year the government might have had more time to reap electoral rewards from rising living standards.
Attlee’s team held on for another 18 months, a brief second term riven by conflict over the cost of financing rearmament for the unexpected outbreak of war in Korea, most obviously manifested in the bitter dispute between Bevan and Hugh Gaitskell over the introduction of NHS prescription charges. Labour nonetheless ran the Conservatives close in the November 1951 election, losing by only 17 seats. But it was enough to allow the Tories, under a succession of moderate leaders, to capitalise on gradually rising living standards through the 1950s and lock Labour out of power until 1964.
The idea of 1945
Rival interpretations of the Attlee administration’s legacy continue to be used to define the party’s identity. Toye concludes with an illuminating history of the idea of 1945 in the Labour imagination.
Essays such as Ralph Miliband’s Parliamentary Socialism (1961), which argued that the government capitulated to a US-brokered economic and political order gained influence on the left through the late 1960s and 1970s amidst gathering disillusionment with Harold Wilson’s administrations. New Labour, in stark contrast, downplayed the government’s socialist aspect, emphasising its continuity with pre-war Liberal progressives such as Keynes and Beveridge, and argued that the realpolitik of the administration that founded NATO would have had no qualms in supporting military intervention in Kosovo and Afghanistan.
More recently Blue Labour figures such as Jon Cruddas and Maurice Glasman have highlighted the importance of patriotism, duty, loyalty, courage and other socially conservative virtues to wartime leaders such as Attlee, Bevin and Cripps, an interpretation underlined by John Bew’s 2016 biography Citizen Clem. Ed Miliband, close to both Cruddas and Glasman, attempted to channel the spirits of Attlee and Disraeli in the course of his shortlived attempt to appropriate the One Nation tradition from the Tories. Ken Loach’s 2013 documentary The Spirit of 45, a well produced if selective effort to emphasise the administration’s radicalism, was influential in turning the membership towards Jeremy Corbyn after Miliband’s defeat in 2015.
While occasionally name checking Attlee in his attempt to re-establish Labour’s patriotic credentials, Keir Starmer has so far made little reference to the government led by his illustrious predecessor. But Toye’s book suggests how it might serve as a useful model for a Starmer administration.
Though, as with any group of strong-willed individuals, the government bristled with internal tensions, it dispatched its business with brisk efficiency, its lasting reputation for administrative competence personified by the unassuming but reassuring figure of Attlee. Toye unearths a quote from the 1945 backbencher turned journalist Woodrow Wyatt: ‘If it had been accompanied by provocative language, by jeering at middle-class conventions, there could have been upheaval. But Attlee made it sound so respectable, if not dull, that he served his opponents, and even made his followers, frequently to their irritation, think nothing was happening.’ Parallels with Starmer’s understated persona have often been observed.
Though encumbered by fiscal constraint, Attlee and his ministers made effective use of regulation and fiscal and monetary levers to achieve their objectives, rewiring the economy by adjusting the balance between public and private, breaking monopolies, calibrating controls, and drawing on Keynes’s insights to design fiscal and monetary tools for smoothing economic cycles. Though cast in today’s political grammar, prospective Chancellor Rachel Reeves’s promise of thoroughgoing supply-side reform recalls the 1945 government’s concern to use the power of the state to rewire the market.
Above all, Attlee’s government was ready to adapt, to trim its sails to the prevailing political and economic winds in pursuit of its objectives. A Starmer administration will surely have to follow a similar course. The prospect of low key, pragmatic, administrative competence might seem unexciting. But not unwelcome, perhaps, after the storms through which recent governments have passed.
Age of Hope by Richard Toye is published by Bloomsbury.
