The Third Labour Government 1945-1951

The size of the Labour majority in the 1945 election (146 seats) gave it a mandate for the first time to carry out its election manifesto 'Let Us Face the Future'. Six of the 20 members of Attlee's cabinet were union sponsored.

The Labour government inherited the severe economic problems of the pre-war period with the added burden of the economic destabilisation of war. British exports in 1945 stood at a third of their already low 1939 level. A flurry of legislation covered three main areas - nationalisation and economic planning, social welfare and trade union law.

Nationalisation and Planning

Labour's programme of nationalisation was extensive and bold. The coal, gas and electricity industries were taken into state control in 1947. When the National Coal Board was established in 1947, two trade union leaders were appointed to the Board - Walter Citrine of the TUC and Ebby Edwards of the National Union of Mineworkers. The transport infrastructure - railways, most wharves and docks, London's buses and tubes, and later road haulage, were nationalised. The major, but ailing iron and steel industry was nationalised in 1950 as was the Bank of England in 1946. Several smaller industries and services like cables and telecommunications and parts of the hotel and catering trade were also in state hands by 1951. By then roughly 20% of the national economy was controlled by the state employing a workforce of over two million people. However, only decaying and unprofitable sectors were taken into state control in order, as Herbert Morrison put it, to 'make possible the organisation of a more efficient industry' in the interests of the nation as a whole. This and the fact that astronomical sums in compensation payments were given to the former owners (many of whom became leading figures on the Boards of Directors of their respective public corporation), helps explain why there was so little opposition to nationalisation (except in the case of iron and steel).

Many of the mechanisms of state planning and control had already been set up during the war. The object was to promote a healthy economy by increasing Britain's gross domestic production and export potential. The means, via four civil service committees (manpower, materials, balance of payments and capital investment) fell far short of the aim, given the irreconcilable clash of interests between the profit motive of private capital and that of the common good. The clamour for de-control of the economy became the rallying cry of private industry, backed by the Tory Party and the Tory press. Labour's economic plan, such as it was, was in tatters. The return to economic orthodoxy was also motivated by the government's reliance on US aid in the form of the Marshall plan. The price for such aid was clearly stated by the Americans - Britain had to cut back on spending on welfare and had to de-control the economy in order to make the entire European market more favourable for American exports.

The Welfare State

From the 1930's onwards, Labour was the only party which made the extension of social benefits for all from 'the cradle to the grave' a top campaigning priority. Its achievement in government gave concrete expression to this in 1946 via the National Insurance Act, which provided for sickness and unemployment benefit for all who had paid the required national insurance contributions. The National Insurance (Industrial Injuries) Act, which insured all workers against workplace accidents - a measure for which the TUC had fought long and hard, and the National Health Service Act. The aim of the NHS was 'to promote the establishment ... of a comprehensive health service designed to secure improvement in the physical and mental health of the people' and weathering the storm of protest from the doctors' organisation, the British Medical Association, ensured that it would be free at the point of need. Labour resolutely opposed a means test because it took the view that the welfare state would be a non-starter unless its benefits were genuinely open to all. This principle of universality remained the cornerstone of Labour and the TUC's social policy for the next five decades.

1947: The Turning Point

1947 saw a very harsh winter, a fuel shortage and a financial crisis - the gravest since 1931. Labour embarked upon a series of 'austerity' measures which effectively transformed it from a party of reforming zeal into one of retrenchment and economic orthodoxy. An attempt was made to reduce the balance of payments deficit by cutting down on imports. This affected imported foodstuffs especially and meant a cut in the already meagre rationing still extant from the war. The 'black' market provided extra rations for those who could afford it. Domestic spending on social services was cut drastically and in 1948 the government introduced a wage freeze. The TUC assented to the wage freeze, but in so doing recognised that there would be strong opposition to this from the left- in particular from the Communist Party which had grown rapidly in membership and influence during the war.

1950-1

Labour's manifesto for the 1950 General Election, 'Let us Win Through Together', displayed the caution already evident in its post 1947 policies. Despite the extraordinarily high turn out (which at 84% remains a record), Labour's overall majority dwindled to five; although its share of the popular vote remained high at 46%. Hence it was just a matter of time before a fresh election was held to give Labour a more workable majority. But by 1951 when a new election was held, the tide had turned. Labour actually won more votes than the Tories but the result of boundary changes gave the latter an undeserved slim majority and secured their position as the party of government for the next thirteen years.

The Labour Government and the Trade Unions

The 1927 Trades Disputes and Trade Unions Act was repealed in 1946. The Labour Party's trade union membership rose dramatically since the 1946 Act restored 'contracting in' for purposes of payment of the political levy.

In general, the TUC was motivated by a commitment to maintaining Labour in power, and its uncritical attitude was bolstered by the continuance of the anti-communism that the trade union leaders had already displayed before the war and now found little difficulty in sharing with the government. The rank-and-file opposition to the government's austerity programme after 1947, identified as the work of communist militants, was interpreted as an attack not only on the government, but on the trade union leaders who tamely supported it. The TUC published two pamphlets, 'Defend Democracy' and 'The Tactics of Disruption'; Communists were labelled as 'abject and slavish agents of forces working incessantly to intensify social misery' and calls were made to ban them from holding office in trade unions and trades councils. Several trades councils were de-registered for failing to toe this line, nine communist full-time officials were sacked from the Transport and General Workers Union (TGWU) and Bert Papworth, the busworkers' leader, also lost his seat on the TUC General Council. There was a succession of strikes in various industries and Seven London dockers were prosecuted under Order 1305 in 1951. This and the invocation of the Emergency Powers Act marked the unprecedented use in peace time of the legal and repressive apparatus of the state.

Professor Mary Davis, Centre for Trade Union Studies, London Metropolitan University