1990s >> 1991 >> no-1047-november-1991

When Labour Ruled (1)

On 3 September, the Rt Hon Baroness Castle of Blackburn appeared on the Channel Four “Opinions” programme to urge us not to let that marvellous achievement, The Welfare State, be taken away from us. She reminisced for half-an-hour upon the setting up of the National Health Service and how the post-war Labour governments engaged experts to explain to them what poverty was, so that they could devise schemes like Family Allowances in an attempt to combat it.

While fondly remembering her own part as plain Barbara Castle in all the this, she seemed to forget her part in Labour’s other record on poverty: its consistent and often vicious efforts to hold down wages—at the same time as inflating the currency to make them worth less.

The Welfare State was only ever a collection of schemes for regulating poverty. Full-scale war had brought out clearly again, as in 1914, what a sorry state the British working class was in. Armed forces medical staff found that a large proportion of the conscripts were undernourished and unhealthy—not the stuff of which efficient, ruthless fighting machines are made. The Liberal, Sir William (later Lord) Beveridge was commissioned by the wartime coalition government to produce a report suggesting practical means by which British capitalism could ensure that it had a healthy and efficient workforce for the economic war that would follow the bombing war.

The war was a crisis for British capitalism. No-one knew how it would end. Like the economist Keynes, some years before, many of the British capitalist class feared that a social system which could produce a slump like that of the 1930s and then a war like that of the 1940s might well be overthrown, particularly as Russia (which they thought of as socialist) was one of the main allies against Germany, Italy and Japan. Many politicians, particularly Labour and Liberal, felt that the state must intervene to ameliorate the worst effects of unemployment, dire poverty and the poor health that resulted from them. Keynes had assured them that it was possible for governments to prevent slumps and unemployment through applying appropriate fiscal controls.

Discussion about post-war society and what it should be like began quite early on in the war. Propaganda films and radio broadcasts for civilians as well as the armed forces placed considerable emphasis upon “what we were fighting for” as well as what the war was supposed to be against.

The wartime conditions in which this discussion took place was those of extensive state control. Political parties had been largely submerged in the coalition government and almost every aspect of civilian life was controlled, as it was for soldiers, sailors and airmen. By the time the war ended, state control of the economy and of a great part of people’s lives had come to seem normal and inevitable to the British working class.

Labour takes charge

The Second World War gave the Labour Party its greatest opportunity. But it also exposed its fundamental impotence as a party to represent the British working class. The editorial in the March 1943 Socialist Standard put it like this:

    “The latest tragi-comedy is the complete outmanoeuvring of the Labour Party on the Beveridge Report. They have demanded for years (as a stepping stone to something or other) a much improved system of unemployment and sickness benefits and old-age pensions. One familiar demand put forward at Labour Party (e.g., in 1923) was that unemployment pay should be at trade union rates. Along comes the capitalist politician Beveridge with a much less favourable scheme, and the Labour Party, fearful lest this second-best scheme should be endangered, gives it their qualified approval. Now the Government announces that it too approves of the scheme, but with modifications and postponements. The Labour Party, now fearful of “diehard” opposition, finds itself hesitant about endangering the modified scheme, which is, in itself, two steps backward from its own. But how can it deny its own doctrine that “anything is better than nothing”?”

The Family Allowances  Act, as a first stage in a comprehensive social security scheme, was introduced by the coalition government in 1945. The Labour government, elected with an overwhelming majority in July of that year, seized upon the whole Beveridge scheme as its own and introduced the National Insurance Act in 1946. 


A great deal of rationing and many wartime controls were continued under the post-war Labour government. Like a good, capitalist government, they were concerned in case workers should force up wages under conditions of expanding production and full employment, so reducing profits, and they imposed a wage freeze.

The level of optimism in the country was high and the Labour Party was able to plead for tolerance from the workers towards the austerity regime the government was maintaining, on the grounds that it would only be a temporary state of affairs until expanding industrial output brought full prosperity. The absolutely vital thing, they insisted, was for workers to work harder and produce more for export. However, in spite of assurances by the Deputy Prime Minister, Herbert Morrison, to a meeting of cotton workers in Manchester in April 1948, the British textile industry was already meeting intense competition and protectionism from the USA and Japan. The confident assurances of full employment  upon which the whole plan rested were already beginning to look unrealistic in the competitive post-war world.

In 1949, the Labour government suffered its first financial crisis and the pound fell sharply in value. The government devalued it by 30 percent, after denying that it would do so. In October, the government passed the National Health Service (Amendment) Act, taking the power to impose a charge on prescriptions, although they did not impose one. In 1951, a further Act did impose charges for false teeth and glasses. After two elections in that year a sufficient number of the British working class voted Conservative to throw Labour out.

It was not simply the long succession of increases in health charges that followed which eroded British workers’ faith in the Welfare State: the state itself had repeatedly even under Labour revealed its true colours as the agent of the employing class. It used laws and the courts to hold down wages, and it used troops to break strikes. Above all, however, the lie that governments could control the economy was exposed so often that hardly anyone could go on believing it.

For socialists, the trouble has been that this hotch-potch of poor relief and incomes control, together with the nationalisation of major industries, was called “socialism” by the Labour Party themselves as well by other politicians such as Margaret Thatcher. The result has been that, as well as becoming rightly sceptical about politicians’ promises, many of our fellow workers gave become completely cynical about all political action. We have a lot of work to do.

Ron Cook


Next month we look at the anti-working-class record of the Wilson government which managed the affairs of British capitalism between 1964 and 1970.

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