Strikes and Money: Jack Is All Right…
Conservatives of the fifties have had a particularly bad press for their willingness to stick with the Attlee consensus, allowing the country’s underlying economic weakness to worsen. There is much in this. Churchill had fought the 1951 election promising to defend the new Welfare State and was inclined to speak wistfully of the case for coalition government in peace as in war, a theme first heard in 1945. He felt warmly towards the small Liberal Party and had half promised to help them by introducing some kind of proportional voting, though this was quickly scuppered by the Conservative hierarchy. He railed against class war and deliberately appointed the moderate, appeasing lawyer Walter Monckton to deal with trade union and labour matters. Yet there was one moment when Britain might have experienced a Thatcher-sized jolt, a British revolution thirty years early. It came on Churchill’s watch in 1952 when his young Chancellor, Rab Butler, proposed cutting the pound free from the system of fixed exchange rates agreed after the war at Bretton Woods. The scheme was called ROBOT. In detail it was fiendishly complicated, because of Britain’s network of obligations to so many other countries using sterling as their reserve. In essence, though, it was very simple. The pound would float partly free, or rather fall dramatically against the dollar, thus giving Britain’s struggling exporters a huge one-off boost. The government would be unable to fund its old obligations, the huge overseas defence establishment, and much of the new Welfare State. Grand housebuilding projects would be put on hold and unemployment would initially rise. But on the other hand, the bleeding of reserves and the periodic balance-of-payments crises would be a thing of the past. Britain would get the chance of a fresh start, not unlike post-war West Germany. Imports would be cut, exports would rise, sterling’s freedom in the world would be re-established and the alternative future of a genteel, endless decline might be averted. It was nothing less than a free-market national coup which would, among other things, infuriate the Americans. The historian Peter Hennessy has compared it to the desperation of the Suez war: ‘ROBOT was the desperate and risky response of frazzled yet clever men who had run out of both caution and alternative ideas.’
ROBOT, which was never revealed at the time, caused a rare row over matters of high principle inside the government and was eventually scuppered by the Foreign Secretary, Anthony Eden, and by Churchill’s own growing unease about its domestic implications. It was the kind of scheme which might have been pushed through by a determined, vigorous Prime Minister armed with a mandate for change but was too much for an old man elected on a blandly consensual ticket. And it was the only example of such radical thinking for years to come, at least at this level of government. For the most part, this was a government which ran on domestic autopilot. Above all, in the eyes of later critics, it failed to take on rising trade union power. The unions had swollen in numbers to record levels of membership. Their leaders tended to be working-class men who had left school in their teens to cut coal, drive lorries or load ships before becoming full-time organizers. In the fifties, they still had personal memories of the General Strike of 1926. Bitterness about the Depression had been partly assuaged after Labour repealed anti-union legislation, giving them powerful immunities in the case of strike action.
These national leaders, men such as Arthur Deakin, Sam Watson and Bill Carron, tended to be patriotic and socially conservative, ready to back the Bomb and Nato, and aligned against the left in Labour Party confrontations. They were well able to do deals with middle-of-the-road Tory ministers. More were Catholics than were Communists. But their greatest card was the economy. Very high rates of employment, high demand from customers starved of goods, and relatively high corporate profits meant that there was an insatiable demand for skilled labour. It was easy for firms to pass on higher costs caused by generous wage settlements. And in terms of days lost to strikes, Britain’s record was not bad in the fifties, better than many economies which were growing faster. Butler at the Treasury confessed that he had no wages policy, only ‘Walter’s friendship with trade union leaders’ and when Monckton and Churchill did a deal to stop a bus-drivers’ Christmas strike because it was too ‘disturbing’, the Prime Minister phoned Butler late at night to tell him the good news. On what terms had he settled, the Chancellor nervously asked. Churchill replied, ‘Theirs, old cock! We did not like to keep you up.’
Why fight the unions? It was a horribly difficult task, anyway. In a statist economy, ministers were abnormally close to the power of the public sector unions. By later standards, an astonishing number of industrial workers were employed by the State – some 1.7 million people in transport, the mines and the power industry alone. Again and again, from the railways to the power stations, from bus workers to coalminers, to engineering, Monckton and his successors bought them off. Ministers knew perfectly well what they were doing. In his diary for June 1955, for instance, Macmillan, when Chancellor, reflected on the settlement of a railway strike which had done ‘much harm’ to the economy. He comforted himself with the thought that the men got little more than they could have had earlier which ‘may have a deflationary effect and do something to stop the see-saw of wages and prices which has begun to show itself in the last year or two’. By 1958, as Prime Minister, he steeled himself to hold out against just the kind of transport strike that Churchill would have settled with a phone call. Yet Macmillan too never quite took it seriously and anyway by then the unions were changing in ways that made it harder to cope with them, not easier.
Built up over decades by amalgamations and local deals, they were sprawling baggy monsters which bore little relation to organization by plant or industry. A single factory might have a maze of competing and mutually suspicious unions operating inside it. This led to the growth in power of the shop stewards, often younger and more militant people who had filled the power gap during the war years when their elders were away. They could get deals for the people around them which were better than national agreements. By the mid-fifties there were scores of thousands of them. It was ruefully noted that Britain now had more shop stewards than soldiers. Wildcat strikes were more common than full-scale national disputes and they caused more disruption and uncertainty. Meanwhile as the old guard died off more left-wing leaders were quietly moving up the union hierarchy. A good example was Frank Cousins, a former miner and truck-driver from Nottinghamshire who was running the road hauliers in Churchill’s day and who became leader of the Transport & General Workers’ Union in the year of Suez when more than half a million T&G men voted for him. He was Macmillan’s antagonist in 1958 and became a major headache for successive Conservative governments, leading strikes in the car industry, among busmen and elsewhere before being brought into the 1964 Labour cabinet by Harold Wilson. For a time he was the most famous, or infamous of the Brothers; but there were plenty of Cousins.
If strikes were one small cloud on the edge of the sunny skies of the Tory years, inflation was another. It was always there in the fifties, getting worse as the decade continued, but not yet quite a crisis, although with so many older people living off annuities and savings, it began eating into the lives of many middle-class families. The problem was simple to describe, hard to sort, particularly after the rejection of radical measures such as ROBOT. The country was exporting all it could but its appetite for manufactured imports was insatiable. Britain no longer had enough overseas investments and was not earning enough through producing well-made, competitively priced goods, in order to earn the living its people now thought they deserved. In other times the gap had been easily closed by ‘invisibles’ – earnings from banking, insurance and shipping, where Britain remained a world leader. It might have done so in the fifties and sixties too, except that Britain was spending such an historically vast amount of money on defence in peacetime, and spending that money abroad. In effect, the weaker British economy was subsidizing the fast-growing West German one because of the huge expenditure on the British Army of the Rhine.
The entirely predictable result of the balance of payments gap was that the pound was under constant pressure. There were periodic devaluations which damaged the reputation of the politicians in charge at the time – though the 1949 Labour devaluation is widely credited with kick-starting the Tory good times which followed. Trying to maintain British power through the sterling area (not just most of the Old Commonwealth, except Canada, but other countries including most of Scandinavia and traditional trading partners such as Portugal) meant that defending the value of the pound was an issue inflamed by pride and political sensitivity. In the Tory years it was another problem postponed. Defend the pound and Britain’s global self-image or let it fall and help Britain’s exporters? ‘Stop-go’ saw sudden tightenings of fiscal policy, then a stab on the accelerator, as government tried to break into a new era of growth, before slamming on the brakes to deal with the resulting surge in inflation. Until the post-war Bretton Woods system broke down in 1971 there would be regular arguments about devaluation. For politicians at the time, it was like trying to solve a puzzle with one too many parts.