The Labour Party assert that what makes them different from the Tories is their belief in government-directed planning for all aspects of production — which industries shall be encouraged to expand and which to contract and how much all of them shall produce. The aim of such planning is to secure maximum total production; wages as high as possible and. of course, "full employment". On the other hand, the Tories would leave it all to market forces with the managers of industries making their own decisions about how to react to market changes in demand. For the Tories, government intervention would be restricted to promoting competition, as the way to reduce costs and prices and enable British industry to be competitive in world markets.
The Labour Party's ideas were embodied in The National Plan, a volume of nearly 500 pages, adopted as official policy by the Wilson Labour government in 1965. The ineffectiveness of Tory policy has been shown by, for example, the increase from 1⅓ million when they entered office in 1979 to 3½ million seven years later. One of the factors in the increase in unemployment has been the long-term decline of British manufacturing industry. Some of present unemployment is due to world recession, the rest is due to the shrinkage of manufacture. In 1900 British exports of manufactured goods represented 33 per cent of the world total of such exports. In 1965 it was down to 14 per cent and is now about seven per cent. On balance Britain is now an importer of manufactures. It was noted in the 1965 National Plan that the British share which was a quarter of the world total in 1950. had declined by 1962 to less than one sixth. The extent of the decline can be seen in a comparison between Britain. Germany and France. In 1951 British total production was equal to that of Germany and France combined. In 1985 German production was three times what it was in Britain and French production nearly double that in Britain.
The problem had been considered in 1931 by the MacMillan Committee on Finance and Industry. The committee accepted that the decline had taken place but took comfort in the fact that British exports of manufactures were still the largest of any country in the world and that British wage levels were the highest in the world except the USA. British wage levels are now the lowest in Europe except for Italy and are far below those in the USA. Japan and many other countries. The MacMillan Committee also pointed out that. "The USA is unable to compete with us in world markets in our principal staple exports such as coal or textiles and many iron and steel products".
There are now many countries which can undersell British products in all these fields. Textile exports have been drastically reduced, coal can now be imported at prices below those of British coal and the exports of British coal, once enormous, have reduced almost to vanishing point. The MacMillan Committee were complacent about the future. They took the view that "the shortcomings in this country in technical efficiency" were exaggerated, though they also recognised that the high level of unemployment in Britain (1,290,000 in 1928, compared with 432,000 in 1913) had already come into existence before the depression which began in 1929. In the depression itself it rose to 23 per cent. not far short of double what it is in 1986.
The Labour Party's justification for the 1965 plan was that 13 years of Tory rule had made the problems of British industry much worse. A Labour Party pamphlet summarising the plan had this:
In 1964 the crisis was reached: the Balance of Payments deficit was about £756 million — the largest in Britain's peace-time history. Years of stagnation had taken their toll. Once more an emergency squeeze was needed; but this could not be the final remedy. This time we could not be content with the old "stop-go" cycle. A new plan of action was needed(Target 1970)
The plan was drawn up after consultation with the trade unions, employers' organisations and big employers, who were asked what expansion of production was possible in the five years to 1970. The plan itself settled on a 25 per cent increase in total output, with a 20 per cent increase in wages. It planned to avoid inflation: prices were to remain stable. It included particular forecasts such as raising the annual rate of housebuilding to 500,000 a year. A remarkable feature of the plan was its assumption that unemployment was not a problem but that there was an absolute shortage of workers. The plan foresaw that 800,000 additional workers would be needed by 1970, 400,000 of which would come from the increase of population. The remaining deficiency of 400,000 workers would have to be met, as much as possible, by increasing the output of the workforce.
The plan accepted that there would be some industries in which more workers would find jobs and others in which the number of jobs would fall. They were right about an increase in the number of jobs in the Health Service, education and insurance, banking and finance but they got it badly wrong about manufacturing industries. Halting the decline of manufacture was one of their main concerns and they planned an increase in the number of jobs by 292,000. Instead the number of jobs in manufacture fell by 260,000. The plan had no effect at all in increasing total production but some boards of directors of companies, including some in the manufacturing industries, were encouraged by it to step up their output. What happened in manufacture was that profits, which had been steadily failing since 1951, fell further during the five years of the plan.
The method of preparing the plan had been to ask companies to forecast what types and designs of products they would be turning out in five years' time and in what quantities. Some companies regarded the whole thing as being unrealistic to the point of farce. What types and what quantities will be produced in five years' time depends on what demand there will be in the market, something no company can possibly know in the inherently unstable world of capitalism. How many of the many tens of thousands of companies which have gone bankrupt in the depression since 1979 could see it five years in advance?
The plan accepted that some industries were in decline and would need fewer workers. Among the industries in which jobs would decline were agriculture, coal mining and transport, the planned number of redundancies being 142,000, 179,000 and 99,000 respectively. Based on their assumption that there was an overall shortage of workers, the plan described redundancies as "releasing” workers for employment elsewhere. No doubt many of the redundant workers did find other jobs for a time at least. To ease the transfer, the Labour government passed the 1965 Redundancy Payments Act. Of particular interest is the coal industry One of the factors expected to reduce the number of coal miners' jobs was the expansion of nuclear power. Dungeness "B" nuclear plant was expected to "produce base load electricity more cheaply than a contemporary coal fired station. The number of coal miners who lost their jobs under the Labour government was 199,000, twenty thousand more than the government had planned. They lost their jobs because the pits in which they worked were running at a loss.
Here is the statement about loss making , pits made in the National Plan.
The aim of the industry will be to eliminate inefficient capacity, rather than to under-utilise efficient capacity, in order to keep costs down as far as possible and to match the falling level of demand. Pits where proceeds of sales fall short of mere running expenditure are being closed down as quickly as possible, unless there is a prospect of their moving out of this category, e.g. after a reconstruction is complete. These measures should lead to a compact and competitive industry still supplying more than half the nation's energy and offering attractive jobs.
It will be observed that this is almost identical with Ian MacGregor's pit closing formula for getting rid of 40,000 miners which led to the year long strike in 1985.
There was no strike against pit closures in 1965. Indeed the minister in charge of the plan, the late George Brown, when introducing it at the Labour Party Conference received a standing ovation. Evidently the Labour Party and trade union delegates, and the workers they represented, all shared the illusion of their leaders, that "full employment" was a reality and that they would never have to fear the dole queue.
Edgar Hardcastle
