Academic Historian Pauline Gregg on the Nationalization of the Electricity and Gas Industries

With the energy crisis threatening even greater numbers of working people with grinding poverty, while the bosses of these industries record obscene profits and pocket millions in bonuses, I looked up the nationalisation of the electricity and gas industries in Pauline Gregg’s The Welfare State (London: George G. Harrap, 1967). She writes of their nationalisation

‘The Electricity Bill came up for its second reading on February 3, 1947. The history of electricity supply was another example of haphazard growth and piecemeal legislation. At one time there had been no less than 635 Electricity Undertakings over the country; in London there were still 75 in 1947. The industry was governed by 243 Provisional and Special Orders and Acts of Parliament; tariffs and voltages differed from area to area, and often in adjoining districts; municipal ande company undertakings had never come to terms. Whichever Government had been returned in 1945 would have had to impose some degree of order and rationalization upon the industry. Scotland alone showed some ordered development. In 1941 Thomas Johnstone, the devoted Secretary of State for Scotland in the Coalition Government, had appointed a committee to consider the practicability of developing the water-power resources of Scotland for the generation of electricity. It was a scheme which would make work for areas which were losing their population besides bringing the great boon of electricity to small townships and scattered homesteads. It was a great tribute to a country at war that in February 1943 it had passed the Hydro-electric Development (Scotland) Act which established a Hydro-electric Board for the North of Scotland.

The Bill before the House in 1947 proposed to establish a British Electricity Authority with full responsibility for generating electricity and selling it in bulk. Local distribution would be in the hands of fourteen area boards, Scotland would still be served by the Scottish Hydro-electric Board, who jurisdiction was extended to include some 22,000 square miles north and west of a line from the Firth of Tay to the Firth of Clyde-about three-quarters of the total area of Scotland. Again the measure raised only a token opposition and took 165 Conservatives into the lobby against it on February 4, 1947, rather as a gesture against the Labour Government than from real opposition to the Bill.

A similar pattern was proposed for the reorganisation of the Gas Industry. On January 21, 1948, the Bill “to provide for the establishment of Area Gas Boards and a Gas Council” was presented by Hugh Gaitskell, who had succeeded Shinwell as Minister of Fuel and Power. It was given its second reading on February 11 by 354 votes to 179. Gas supply, like Electricity was complicated, disintegrated, inefficient and controlled by a legislative framework that was a major obstacle to improvement. All Reports agreed on the desirability for larger areas of administration and for great integration, and Gaitskell claimed that the most suitable structure for the industry would be found under public ownership.’ (pp. 73-4).

And on pages 76-77 Gregg explains why these measures were needed and that they didn’t constitute a political and economic revolution.

‘Nationalization, it has been said, was a political and economic revolution, forced through after a generation of waiting. There had been a generation-and more-of waiting, but both the election results of 1945 and the debates in the House of Commons overrode any suggestion that they were ‘forced through’. The myth that they involved “a political and economic revolution” is disposed of on several grounds: the industries concerned (with the exception of iron and steel) were either semi-derelict or in urgent need of such reorganisation as could come only from a central authority with large resources to back it; they were all natural monopolies amenable to the advantages of large-scale operation; they were either public services or approximating to such; their public control was in step with a world-wide movement and one which, in Britain itself, was already well established. Banking and insurance all over the world, big power projects like the Tennessee Valley Authority in the U.S.A., the Volta River scheme in Ghana, the Panama Canal Company, the Aswan Dam on the Nile, the Kariba Dam on the Zambezi, afforestation schemes, flood-control, navigation improvement, agricultural development, railways in Europe, America, Canada, Australia-schemes which started before or after and continued at the same time as the British nationalization undertakings – put Britain in the main flood of development, not in any revolutionary situation. For the Labour Party and for their opponents this was paradox that changed the political scene. Who had stolen whose thunder was difficult to determine, but, with the exception of iron and steel, it was unlikely that much party political capital could ever again be made out of the issue of nationalization’.

This last sentence was disproved when Thatcher and the Tories went on their rampage of privatisation in the 1980s and ’90s. But even then, support for privatisation never went above 50 per cent. The nationalisation of the utilities was common sense and the majority of the Tory party at the time understood this. Privatisation was supposed to open up further sources of investment, and competition would lower prices.

This has not happened.

Energy prices are going up, while bosses are pocketing massive pay rises. Thatcherism, as I have said in a few previous posts, has failed.

The only solution is to renationalise the utilities.

The 1959 Labour Pledge for Nationalisation and a Mixed Economy

I found this statement in Pauline Gregg’s 1967 book, The Welfare State (London: George G. Harrap & Co Ltd). It was formulated at the 1959 Labour conference as a response to a move by Hugh Gaitskell, then leader of the Labour party, to drop Clause IV, the commitment to common ownership, from the party’s constitution. The nationalisation had not proved popular, and the results were disappointing. It was felt that the party’s commitment to expanding nationalisation in its 1950 manifesto had contributed to its defeat, and the party had again lost the general election of October 1959. Gaitskell stated that nationalisation was not the be-all and end-all of socialism, but only a means to the ends of full employment, greater equality and high productivity. He also feared that the commitment to common ownership would lead to the party being continually misrepresented as wanting to nationalize everything.

However, Clause IV was not dropped and compromise formula agreed instead, pledging the party to a variety of forms of common ownership and to preserving private enterprise . It stated that the social and political aims of the party could

“be achieved only through an expansion of common ownership substantial enough to give the community power over the commanding heights of the economy. Common ownership takes varying forms, including state-owned industries and firms, producer and consumer cooperation, municipal ownership and public participation in private concerns. Recognising that both public and private enterprise have a place in the economy, it believes that the further extension of common ownership should be decided from time to time in the light of these objectives and according to circumstances, with due regard for the views of the workers and consumers concerned.’ (p.129).

Well, now is such a time. Rising fuel prices are pushing a greater number of hard-working Brits further into poverty, as well as damaging the entire economy. Gas, water and electricity would be cheaper if run as nationalised industries. Thatcherism has been an immense, colossal failure, as has its child in the Labour party, Blairism.

Now it’s time to go back to this formula for a mixed economy.

William Blackley’s 19th Century Plan for ‘National Insurance’

Looking through Pauline Gregg’s book, The Welfare State, I found this very interesting passage discussing William Blackley’s scheme in 1878 for setting up something very much like the National Insurance that forms part of the Social Security system set up as part of the welfare State. She writes

It [the 19th century movement for social reform] included the suggestions of a Church of England clergyman, the Reverend William Lewery Blackley, who, in the last quarter of the nineteenth century, advanced the notion of basing social security upon an insurance principle. His scheme was startlingly simple. There would be a compulsory levy on all wage- or income-earners from the age of about seventeen, the total amount payable by each person to be assessed according to his earnings by a National Friendly Society or Club. But though the total payment was fixed, the time taken to pay it was at the payer’s discretion, with an outside age limit of twenty-one, and there might be a reducation for rapid payment. It is remarkable how much of the scheme later adopted by the Government was anticipated by Blackley. Arguing that the instrument of the National Friendly Club would need to be present in every parish, he seized upon the Post Office as the executor of his plan. Going to the source of income, as the National Insurance Acts to, he put the onus on employers to deduct the instalments of the national tax from wages, and he made proof of payment depend upon stamps stuck upon a card. The amount paid was thus readily ascertainable, and when a card was fully stamped the holder was exempt from further payments. In return for the sum of £10, which Blackley tentatively suggested as an average amount of levy, claims of something like 8s. a week for sickness and 4s a week as pension over the age of seventy were proposed. Not only would his scheme take away the stigma of Poor Law relief from the old and the sick, but, since the rich would be paying higher contributions and would not claim benefits, funds would accumulate and the National Friendly Club remain permanently solvent. In anticipating the actual words ‘National Insurance’ in the title of one of his articles in the Nineteenth Century Review in 1878 Blackley was in some doubt. “I have long hesitated”, he wrote, “before fixing on such a title as I have chosen for the present writing, from a knowledge that its very sound may induce most readers to pass it over as a matter so extravagant, impracticable, and Utopian, as to be unworthy of serious consideration.”

(Pp. 8-9).

Unfortunately, few people did consider his scheme worth considering. It’s a pity, because if the plan had been put into action, much of the squalor and suffering of the Victorian age could have been alleviated, and the foundation of the welfare state put in place forty years early.

The Immense Popularity of the Beveridge Report, and its Reception by Labour and the Tories

A week or so ago I had a debate on here with a critic, who objected to my crediting Aneurin Bevan with the creation of the NHS. He asserted that the Beveridge Report, on which the NHS is based, was a policy of the wartime National Government, and also had Conservative support.

This is true. However, the Beveridge Report was based on the work of Sidney and Beatrice Webb and the Socialist Medical Association, who had been demanding a free medical service for decades. Indeed, a free health service had been Labour party policy since the 1930s. And while the Tories in the Coalition government also supported Beveridge’s outline of the welfare state, it had particularly strong support in the Labour party.

Pauline Gregg in her book, The Welfare State, describes the massive popularity the Beveridge Report enjoyed with just about all parts of the British population on pages 19-20.

On November 20, 1942, only seventeen months after the appointment of the Committee, it was ready and signed. On December 2, it was made available to the public, and seen at once to go even beyond the expectations of The Times. Though called, simply, Social Insurance and Allied Services, it was an eloquent cry to end poverty, disease, and unemployment, and purported to supply the means of doing so. Its appeal was instantaneous. Queues besieged the Stationary Office in Kingsway. Not only the Press but BBC news bulletins summarized the Report. Brendan Bracken, the Minister of Information, needed only a few hours in which to perceive its enormous propaganda value, and soon it was being trumpeted across the world in many languages. At the cost of 2s, the then normal price of a government White Paper, it immediately became a best-seller at home and abroad, the subject of leading articles, letters to the Press, speeches and discussions at every level of society. Beveridge himself explained his Plan to millions on the radio and on the cinema screen, as well as addressing countless meetings. In twelve months 256,000 copies of the full Report were sold, 369,000 copies of an abridged edition, 40,000 copies of an American edition. Permission was given for translation into Spanish, Portuguese, and German. Translations were published in Argentina, Brazil, Portugal, Mexico, and Switzerland. Parts 1 and VI were translated into Czech, the abridgement into Italian and Chinese.

The Trades Union Congress and the Co-operative Party gave it their blessing. the National Council of Labour, representing all the bodies of organized Labour, called for the legislation necessary to implement the Report at an early date. The Liberal Party supported it, and through Geoffrey Mander welcomed the general principles of “that momentous report”. A group of young Tories tabled a motion in the House of Commons requiring the Government “to set up forthwith the proposed Ministry of Social Security for the purpose of giving effect to the principles of the Report”. “We believe”, said Quintin Hogg, who sponsored this motion, “the keynote of the restatement of political controversy after the war to be practical idealism.” The Beveridge scheme, said another Tory Member of Parliament, “touches the individual life of every man, woman and child in the country and reaches deep down into the homes of the people”. The Labour Party made the Report peculiarly its own. “It expresses”, said Sydney Silverman at its Conference in 1943, “the basic principle of this Party, the only thing which entitled us at the beginning and entitles us now to regard ourselves as fundamentally different from all other parties.” The Report, wrote The Times, had changed the phrase “freedom from want” from a vague though deeply felt aspiration into a plainly realizable project of national endeavour. “Sir William Beveridge and his colleagues have put the nation deeply in their debt, not mere for a confident assurance that the poor need not always be with us, but far a masterly exposition of the ways and means whereby the fact and the fear of involuntary poverty can be speedily abolished altogether.” The Report, it concluded, “is a momentous document which should and must exercise a profound and immediate influence on the direction of social changes in Britain.

Gregg notes on page 23 that in the House of Commons, when it came to a vote only a minority voted for the immediate implementation of the policy. In the end the Labour Party tabled an amendment calling for the early implementation of Beveridge’s plan as a test of Parliament’s sincerity. She also notes on page 25 that many Tory MPs voted against the motion as a reaction against the Plan’s support by Labour.

Meanwhile the Labour amendment was put to the House of Commons. “The Beveridge Plan”, said James Griffiths, moving it, “has become in the minds of the people and the nation both a symbol and a test. It has become, first of all symbol of the kind of Britain we are determined to build when the victory is won, a Britain in which the mass of the people shall ensured security from preventable want. Almost … every comment that has been made in the Press and on the platform since the Report was issued, the widespread interest taken in it and in its proposals, and the almost universal support given to it, are clear indications that the Report and the plan meet a deep-felt need in the minds and hearts of our people.”

But the effect of calling upon a Labour amendment was to unite the Tories against it, in spite of their own speeches, and Griffiths’ amendment was lost by 335 votes to 119, leaving the original non-committal motion to stand. It was a regrettable position. After the welcome and the publicity given to Beveridge’s proposals, and the high hopes raised, the Report was accepted by then sent to another Committee at Whitehall, who spent nearly two years considering it. Further consideration of details had, indeed, been assumed by its author. But the impression given was of shelving the Report, of wriggling out of the proposals. “This”, said Griffiths after the counting of the votes in the House of Commons,” makes the return of the Labour Party to power at the next election an absolute certainty.”

(My emphasis).

The commenter also found my story, about how the pharmacist father of one of my mother’s friends declared he was going to vote Labour because so many people needed the NHS ‘absurd’. This was presumably because he couldn’t accept the idea of a true-blue Tory businessman ever voting Labour. But this paragraph shows this was pretty much what did happen, and the government knew it the moment the Tories voted against the Labour motion.

As for Sydney Silverman’s statement that support for the welfare state is what makes the Labour party fundamentally different from all other parties, it’s a pity that this wasn’t taken on board by Tony Blair and Gordon Brown when they decided to continue Thatcher’s programme of dismantling the welfare state and privatising the NHS. And it’s a pit that it isn’t recognised by Bliar’s successors – Liz Kendall and now Dan Jarvis.

Nye Bevan and Nostalgia for the Era Before the NHS: My Response to a Critic

Last week I received a comment from Billellson criticising me for stating that Aneurin Bevan was the architect of the NHS. He also stated that we did not have a private healthcare system before the NHS, and although some charges were made, they were in his words, not so much that people would lose their house.

Here’s what he wrote.

“Nye Bevan, the architect of the NHS, was also acutely aware of the way ordinary women suffered under the private health care system that put medicine out of the reach of the poor.”
Aneurin Bevan was not the architect of the National Health Service. The NHS was a wartime coalition policy, for the end of hostilities, agreed across parties. The concept was set out in the Beveridge Report published in December 1942, endorsed by Winston Churchill in a national broadcast in 1943 and practical proposals, including those the things the public value re the NHS today, set out in a white paper by Minister of Health Conservative Henry Willink in March 1944. It would have been established whoever was Minister of Health after the war / whichever party won the 1945 general election. The UK did not have a ‘private health care system’ before the NHS. Most hospitals in England and Wales were local government owned and run, the remainder voluntary (charitable). Those who could afford to pay for treatment were required to do so, or at least make a contribution, but nobody was expected to sell their house. The poor were treated in hospitals free of charge. c11 million workers were covered for GP consultations by the National Health Insurance Scheme which had been established in 1911. In many places, particularly mining areas, there were mutual aid societies that established health facilities including dispensaries. Scotland had a greater degree of state health provision and Northern Ireland had greater faith based provision before their NHSs were established, starting on the same day as Bevan’s English and Welsh service, but always separate established under separate legislation.

So I checked this with what Pauline Gregg says about the creation of the NHS in her The Welfare State: An Economic and Social History of Great Britain from 1945 to the Present Day (London: George G. Harrap & Co 1967).

She states

In 1942, during the War, the scope of health insurance had been considerably widened by the raising of the income limit for participation to £420 a year. But it still covered only about half the population and included neither specialist nor hospital service, neither dental, optical, nor hearing aid. Mental deficiency was isolated from other forms of illness. Medical practitioners were unevenly spread over the country – they had been before the War, but now their war-time service had too often disrupted their practices and left their surgeries to run down or suffer bomb damage.

Hospitals were at all stages of development. There were more than a thousand voluntary hospitals in England and Wales, varying from large general or specialist hospitals with first-class modern equipment and with medical schools attended by distinguished consultants, down to small local cottage hospitals. There were some 2000 more which had been founded by the local authorities or had developed from the sick ward of the old workhouse, ranging again through all types and degrees of excellence. Waiting-lists were long; most hospitals came out of the War under-equipped with staff and resources of all kinds; all needed painting, repairing, reorganising; some were cleaning up after bomb damage; most needed to reorient themselves before they turned from war casualties to peace-time commitments; all needed new equipment and new buildings. Other medical services were only too clearly the result of haphazard development. There were Medical Officers of Health employed by the local authorities, sanitary inspectors concerned with environmental health, medical inspectors of factories, nearly 2000 doctors on call to industry, as well as doctors privately appointed by firms to treat their staff. A school medical service provided for regular inspection of all children in public elementary and secondary schools; local authorities provided maternity and child care, health visiting, tuberculosis treatment, and other services for the poor, which varied widely from district to district. How many people there were of all ages and classes who were needing treatment but not getting it could only be guessed at.

Since it was clear that ad hoc improvement would no longer serve, a complete reshaping of the health and medical service marked the only line of advance. The general pattern it would take was indicated by Sir William Beveridge, who laid down his Report in 1942 the axiom that a health service must be universal, that the needs of the rich and poor are alike and should be met by the same means: ” restoration of a sick person to health is a duty of the state … prior to any other,” a “comprehensive national health service will ensure that for every citizen there is available whatever medical treatment he requires, in whatever form he requires it, domiciliary or institutional, general, specialist or consultant, and will ensure also the provision of dental, ophthalmic and surgical appliances, nursing and midwifery and rehabilitation after accidents.”

The Coalition Government accepted the Health Service Proposals of the Beveridge Report and prepared a White Paper, which it presented to Parliament in February 1944, saying the same thing as Beveridge in different words: “The government .. intend to establish a comprehensive health service for everybody in this country. They want to ensure that in future every man and woman and child can rely on getting all the advice and treatment and care which they may need in matters of personal health; that what they get shall be the best medical and other facilities available; that their getting these shall not depend on whether they can pay for them, or any other factor irrelevant to the real need – the real need being to bring the country’s full resources to bear upon reducing ill-health and promoting good health in all its citizens.” The Health Service, it said, should be a water, as the highways, available to all and all should pay through rates, taxes and social insurance.

Ernest Brown, a Liberal National, Minister of Health in the Coalition Government, was responsible for a first plan for a National Health Service which subordinated the general practitioner to the Medical Officer of Health and the local authorities, It was abandoned amid a professional storm. The scheme of Henry Willink, a later Minister of Health, was modelled on the White Paper, but was set aside with the defeat of Churchill’s Government in the 1945 Election. In the Labour Government the role of Minister of Health fell to Aneurin Bevan, who produced a scheme within a few months of Labour’s victory.

Pp. 39-51.

Churchill’s own attitude to the nascent NHS and the emergence of the later welfare state was ambivalent. In March 1943, for example, he gave a speech endorsing it. Gregg again says

He was “very much attracted to the idea” of a Four Year Plan of his own which included “national compulsory insurance for all classes for all purposes from the cradle to the grave”, a national health service, a policy for full employment in which private and public enterprise both had a part to play, the rebuilding of towns and a housing programme, and a new Education Act. He envisaged “five or six large measures of a practical character”, but did not specify them, … (p. 25).

However, two years later after the Beveridge Report had become the official policy of the Labour party, Churchill’s tone was markedly hostile.

Coming to the microphone on June 4, 1945, he said: “My friends, I must tell you that a Socialist policy is abhorrent to British ideas of freedom … Socialism is in its essence an attack not only upon British enterprise, but upon the right of an ordinary man or woman to breathe freely without having a harsh, clumsy, tyrannical hand clapped across their mouths and nostrils. A free Parliament – look at that – a free Parliament is odious to the Socialist doctrinaire.” The Daily Express followed the next day with banner headlines: “Gestapo in Britain if Socialists Win”. (pp. 32-3)

So Mr Ellson is partly right, but only partly. There was some state and municipal healthcare provision, but it was a patchy and did not cover about half the population. It was a Coalition policy, which was sort of endorse by Churchill. However, its wholehearted embrace and execution was by the Labour party under Aneurin Bevan.

And its immense benefit and desirability was recognised by many traditionally staunch Tories at the time. One of my mother’s friends was herself a pillar of the local Conservative party, and the daughter of a pharmacist. She told my mother that at the 1945 elections her father gather his family together and told them that he had always voted Tory, but this time he was going to vote Labour, because the country needed the NHS. He explained that he served too many people, giving them their drugs on credit, because they couldn’t pay, not to vote for Labour and the NHS.

Now I think the Tories would like to roll state healthcare provision back to that of the pre-NHS level, where there is some minimal state provision, but much is carried out by private industry. The Daily Heil a few years ago was moaning about how the friendly societies were excluded from a role in the NHS. Like them, I think Mr Ellson has far too rosy a view of the situation before the NHS. I’ve blogged on here already accounts from doctors of that period on how badly much of the population were served before the NHS, especially those without health insurance.

Britain needed the NHS, and the party that was most passionately in favour of it was Labour. That some Tories were in favour of it, including Churchill on occasions, is true. But there were others in the party that were very firmly against, and it was ultimately Rab Butler in the Tories who reconciled them to the NHS. But that reconciliation is breaking down, and they are determined to privatise it anyway they can.