A Better Britain: POD 1944
- Thread starter Chris Nation
- Start date
1.) From what I've seen, implementation of the Beveridge Report in full was the major factor motivating support for Labour. I no longer have access to any of my books on the matter, as they'll like be in storage for the rest of my days, but there is quite a bit in David Kynaston's 'Austerity Britain' and Peter Hennessey's 'Never Again', to begin with. Furthermore, the phrase 'the NHS as it came to be' is wide open for interpretation, ranging from the actual coalface implementation in the late 1940s, which is the only extent I'm dealing with, or its bloated state in the 1960s and beyond.
2.) I made three points:
A.) Britain had not been blown up repeatedly.
B.) Damage to both industry and housing, whilst significant, was not comparable to the devastation of the Continent and Japan
C.) Housing was not a huge expenditure as a portion of the budget or of GDP
Which of those do you disagree with entirely?
At no point did I contend that there wasn't a housing problem prewar (indeed, it wasn't mentioned at all) or during the war. It simply wasn't an existential one nor one that required Brobdingnagian levels of expenditure. This was part of a reply to the contention that the NHS could not be afforded as "country had just been blown up repeatedly".
Neither Housing nor Health were among the largest budget lines of expenditure.
There certainly wasn't an existential choice between the two.
3.) I have no issues with your first two sentences. Britain after WW2 was facing a range of problems:
- A lack of hard currency
- The immediate impact of the cut off of Lend Lease in 1945
- A lack of exports to make hard currency and an accompanying loss of markets
- A very bad winter in 46/47 that lead to a cascade of disasters
- Very large deficit in the initial years
- Huge foreign debt, both inside and outside the sterling zone
- An Anglo-American Loan that included terms of convertability, laying the grounds for a future fiscal rush to the exits
- The destruction of many competitiors obscuring the underlying issues of British industry: lack of productivity, old facilities and methods, too many competing firms and marques for too small a market, issues with infrastructure, a lack of capital for modernisation, socio-cultural issues besetting management and labour unions and half a hundred more.
- Getting the most Marshall Plan aid and then having very little to show for it
The economic foundations of 1945-1950 were not a function of the election of Labour in 1945. They flowed on from the Second World War and the massive changes during said conflict, which particularly had a deleterious impact on 1945-1947, the nadir years.
The economic foundations of 1945-1950 were not a function of the 1940-1945 Coalition either. There was little that could be done during an existential and bloody war in terms of structural economic reform, infrastructure and real industrial development as more was thrown into the war effort than any other major state; on that last point, I can recommend "The Economics of World War II: Six Great Powers in International Comparison", edited by Mark Harrison.
The latest point in time that can really affect 1945-1950 in any meaningful way is 1936-1939, or the mini-boom that was cut short by rearmament, crisis and war. If we really want to change how Britain rolls out of the Second World War on macro terms, we need to head back to the late 1920s.
Different decisions made in 1945-1950 will be felt fully from the late 1950s onwards. However, for them to be truly meaningful changes rather than simply micro-alterations, or the ability to take a different road rather than simply wiggling the wheel whilst stuck on a one-way street, they need to be earlier and they need to go to the base of what really ailed the British economy. Spending 200 million pounds differently isn't going to change things.
4.) I made two points:
Firstly, that the cost was not a huge fraction of the national budget.
Secondly, based on this, it was affordable even in 1946 and 1947.
On the first point, the evidence previously presented on the budgets can be followed up using online sources and books. Simply asserting that it was "considerable" doesn't make it so.
Total expenditure between 1945 and 1950 was £1418.2 million at an average of £236.37 million. However, there was a rise towards the final two years of 1949 and 1950. Surely this suggest a budget already bloating and twisting beyond control?
No.
A look at the percentages of GDP gives us a better picture:
1945: 1.5%
1946: 1.6% (+ 0.1%)
1947: 2.1% (+ 0.5%)
1948: 2.2% (+ 0.1%)
1949: 2.4% (+ 0.2%)
1950: 2.7% (+ 0.3%)
None of those rises were not affordable. None of them were a huge fraction of central government spending.
The costs were not high.
They were especially not high during the negotiations for the Anglo-American Loan of 1945/46.
Ah, but let's have a look at those fractions of the budget you mention there:
1945: 2.02%
1946: 2.39%
1947: 4.11%
1948: 5.46%
1949: 6.46%
1950: 7.39%
Surely this represents the veritable growing monstrosity of bloating expenditure!
Not really.
Healthcare immediately before the war was 1.8% of GDP in 1938 and 1939 and 1.7% from 1934-1937. This was double the 1929 figure of 0.9%. If not for the Second World War, gradual increases would suggest hitting a level of 2.5% by 1949/50. That wouldn't be a big fraction of the national budget.
Before we get to this next point, let us establish a few things. Firstly, spending as a total portion of GDP and secondly, Defence spending as a total of GDP
Total Spending
1945: 71.9%
1946: 66.2%
1947: 50.1%
1948: 40.5%
1949: 37.1%
1950: 37.0%
(FWIW, 1939 was 29.8%, 1934-1938 floats around 29%, 1933 is 32.6%, 1932 33.8%, 1931 32.8% and 1930 30%)
Defence
1945: 53.1%
1946: 45.6%
1947: 16.6%
1948: 7.9%
1949: 6.6%
1950: 6.2%
The big expenditure areas of 1945-1950 was Defence, with spending on an unprecedented peacetime level; Debt Interest, which reflected the enormous cost of the recent war; Food and Supply, which went to feeding the populace under rationing (and feeding them fairly well); and Education, which had been rising for some time and was a priority that crossed ideological boundaries.
The last kicker is this: economic growth.
1945: - 4.6%
1946: - 4.53%
1947: - 1.52%
1948: + 3.06%
1949: + 3.59%
1950: - 0.61%
The large seeming increases in Health in 1948 and 1949 as a percentage of the National Budget came from the combination of increased economic growth, cuts in defence spending and redirection of government expenditure, primarily the first two factors.
Another way of looking at it is the following piecharts:
https://www.ukpublicspending.co.uk/year_spending_1946UKbt_17bc1n#ukgs302 Defence is 69%, Interest is 9% and Health is 2%
https://www.ukpublicspending.co.uk/year_spending_1947UKbt_17bc1n#ukgs302 Defence is 33%, Interest is 12% and Health is 4%
https://www.ukpublicspending.co.uk/piechart_1948_UK_total Defence is 19% of spending, Interest is 14% and Health is 5%
https://www.ukpublicspending.co.uk/year_spending_1949UKbt_17bc1n#ukgs302 Defence is 18%, Interest is 13% and Health is 6%
https://www.ukpublicspending.co.uk/year_spending_1950UKbt_17bc1n#ukgs302 Defence is 17%, Interest is 13% and Health is 7%
Those don't look like bloated or very high costs. Education, Welfare and Pensions all grew in 1945-50 and exceeded Health.
In conclusion, the extra spending keeping the Budget up at that 37-40% of GDP didn't come from the 0.3% increase that Health comprised, but quite a from all the other spending + the extremely large Defence budget for peacetime + the interest bill.
The UK didn't just have to fix housing, which I'll admit isn't that expensive, if it wanted to stay as anything other than America's lapdog. The lack of money led to a collapase in many industries in which Britain had a lead (Aeronautics for example) - the Marshall money could've modernised factories, infastructure been used to rationalise/merge companies.
That's just one example - there are many things it could've been spent on instead of coal subsidies, and other things.
That's just one example - there are many things it could've been spent on instead of coal subsidies, and other things.
Yes, this is true. However, as with any other major policy proposal, the specifics of what the Beveridge Report is was not actually particularly well-understood by a large slice of the British public in 1945. It would rather be akin to doing a poll in 1966 America over the "Great Society". Obviously a great many people are going to be in favor of this, without knowing exactly what the Model Cities Program entails. This is borne out by polling data from the time, which I have submitted previously.
I suppose I disagree with the implication that because London hadn't been entirely flattened and because Manchester didn't look like Hamburg that housing is not an extremely pressing issue that British people cared deeply about in 1945, and one that, if handled differently, would have produced radically different outcomes. There was a housing crisis during the war, and there was a pretty severe housing crisis following the war, and one that Labour, despite considerable expenditure (you'll have to forgive the phrase), did not alleviate to the public's satisfaction. You're looking at this from a utilitarian perspective on housing. You could say that there wasn't as great a need for housing as could be found in Germany and Japan, but there was even less need for housing in the United States, or in Canada, or in Australia. But they all experienced massive housing booms postwar, and reaped the dividends from that for decades. There is a very long way to go to get to a property-owning democracy from a starting point in 1945. A phrase coined in the late 40s. By Anthony Eden.
I disagree with this as well. British manufacturing and exports did recover. Quite quickly. The total volume of manufactured goods doubled in the year between Q3 1945 and Q3 1946. By Q4 1946, manufacturing exceeded 1938 levels, substantially.
Yes, which is why it's important to not go around spending money on nationalization, nor, at this stage, on health.
I have addressed this. I think it's an ambitious development in my timeline, but not altogether unreasonable. It was remarked at the time that the loan was unpopular with American conservatives precisely because they didn't trust the new Labour government. I think having Churchill in office significantly assuages these concerns, and leads to a stronger argument that lending Britain money on generous terms is in American strategic interests in having a strong and staunchly anti-communist ally in Western Europe. I think this does wonders for British industry in the short term, because it allows the government to use monetary policy to protect British manufacturing from so much competition. What are you thoughts there?
This goes back a bit to what I said earlier. This is not a question of spending an extra £200m. This is a massive housing program. For comparison, US home ownership in 1940 was around 43.6%, higher, but not too dissimilar from the British homeownership rate in 1938 of 32%. By 1950, just five years after the end of WWII the American home ownership rate increased to 55%. That is a monumental increase in a very short period of time, following policies broadly similar to what are being proposed here for the UK. This is a transformation of the British economy and British society, as 5,000,000 British veterans are going to jump the queue straight into the British middle class. Additionally, this is going to free up older housing stock for purchase by the urban and rural poor, as the beneficiaries of these policies are going to prefer new homes to purchasing a fixer in Tottenham. This is going to clear the slums through a level of sheer profit motive that would have been unimaginable coming out of Whitehall. This is not a socialist shifting of resources from one minor concern to another minor concern. This does come with several challenges that I am trying to work out, and perhaps you might have thoughts on them.
1) Timber is in short supply in the UK in general. This is one factor that led the Labour government to consistently fail to meet their relatively modest targets for home building. It's possible to just not care about the inflationary impacts of allowing the market to fulfil this need, but on a macro level we do run into the problem of Britain's current account - unless a large percentage of the dollars gained from the Anglo American loan (unrealistic, as most of it is going to be needed on defense) and the Marshall Plan go into procuring building supplies.
- Perhaps here Newfoundland can be of use.
2) In the above scenario, how does this impact the cost of housing, which, as it's being delivered through the market via home loans which are only controlled for cost via a government guarantee limiting interest expense to the homebuyer?
3) Does Britain still possess the level of loanable money to actually make these loans? I think the answer is yes, as long as it's not all done in one go.
However, I do think that there are also massive sociocultural benefits to this policy as well. These people are going to feel much more economically secure - this leads to a greater baby boom, which will further fuel increases in GDP.
I'm sorry - I simply do not accept the underlying basis of your argument. Per British Post-War Economic Policy by W.F. Crick:
"Government expenditure on social services made up 42 percent of the total budget outlays in 1949-10 as against 18 percent in 1938-9, while the total cost of the social services, including such items as employers' contributions under the National Insurance scheme, added up to nearly one-quarter of the estimated national income, as against less than one-eighth just before the war. Clearly, such a growth of proportions constitutes an important redistribution of the national income."
I will agree with you that a much larger proportion of this massive increase went on food and supply, as one would expect when the government begins to take over the provision of food in a country (in a way, not to put too fine a point on it, that would be wholly intolerable to any of us reading this, no matter how Socialist we might think of ourselves. Certainly the Britons at the time found this to be the most intolerable of the postwar restrictions on personal freedom and choice). However, in my view, it is ridiculous to claim that because the economy was growing that also means that by definition the proportion of the national income spent on health must also rise.
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On the very big picture:
I think that you're going to have to do more than simply assert handwavium through the agency of an unknown (Powell) to get a Conservative victory in 1945, even taking into account the issue of housing or your other proposed policies. It might behove you to read through some of the numerous previous attempts on this particular forum of the website, being a very new poster of a few days on your first timeline, as some of the issues proposed have come up before; this is not meant as patrionising, but simply that there are a good 14-15 years worth of resources lying in the backpages of Post 1900 and many of the most salient voices are no longer around.
You are not the first chap to approach this particular idea, but in order to affect real change, I'd strongly advise pushing the point of departure back further than in the midst of the war; utilise another method than "a single young and relatively unknown character comes along with all the right ideas" and take the opportunity to tweak a few more events around the edges. From a 1945 standing start, there isn't too much that can be changed significantly for 10-15 years and those 10-15 years are ones of incredible global change and significant advance. It does seem as if you have a particular endgame or socio-economic and political situation you are working towards that has already been predetermined; this may not be the case, but is how it comes across. I would suggest that this is rather more the characteristic of a story rather than a hard timeline.
For this response, you'll have to forgive me that I don't have my books to make reference to, but the ones I'd recommend would be
Democratic Socialism and Economic Policy: The Attlee Years, 1945-1951 (Cambridge Studies in Modern Economic History) by Jim Tomlinson
The Secret State: Whitehall and the Cold War by Peter Hennessy
Family Britain, 1951-1957 (Tales of a New Jerusalem) by David Kynaston
The British Economy Since 1945: Economic Policy and Performance 1945-1995 (Making Contemporary Britain) by Alec Cairncross
Science, Technology and the British Industrial 'Decline', 1870-1970 (New Studies in Economic and Social History) by David Edgerton
Warfare State: Britain, 1920-1970 by David Edgerton
Britain and the Economic Problem of the Cold War: The Political Economy and the Economic Impact of the British Defence Effort, 1945-1955 by Till Geiger
The Lost Victory: British Dreams, British Realities, 1945-50 by Correlli Barnett
Arms, Economics and British Strategy: From Dreadnoughts to Hydrogen Bombs by G.C. Peden
1.) Apart from Beveridge, there was the general memory of the negative aspects of the 1930s that, fairly or not, were lumped on the Conservatives; we can also take into account the Labour ministers of the wartime Coalition Government running large swathes of the home front. Overall, a fairly profound sea change is needed to make up the difference between the Labour landslide of 1945 in @ and a Conservative majority victory. To make for an effective and realistic timeline, you'll need to implement this.
2.) You seem to be dancing around the issue here. Housing is a large and emotive issue and played a role in the Conservative successes of 1950 and 1951; MacMillan accrued significant political capital from being the bloke in charge of the ministry when it could deliver on the oft promised increase. Labour promised 300,000 a year and managed 1.5 million by '51, which wasn't enough to keep up with expectations.
I will note that my first two points came out of a reply I had to another chap, not yourself. They don't go to the heart of any of the points you made or any of the issues with your timeline.
3.) For this part, I hope you'll forgive me if I deal with each point in order, as there is a lot here.
a.) I definitely agree that British manufacturing increased, but that doesn't disprove that Britain had lost markets (in North and South America to the USA under Lend Lease and associated agreements and in Europe to the devastation of war) and that it didn't quite have enough of the hard currency earners to get US dollars in the necessary amounts to pay for other commitments. The two aren't mutually exclusive and the increase in exports wasn't necessarily to the places where they would have been of the most value.
b.) Foreign debt was always going to grow so long as borrowing was required. Debt within the Sterling zone didn't really matter, but outside (which essentially means the USA and Canada), it is something to be minimised. However, the bulk of the deficit was mostly dealt with in 1945/46 and then structurally addressed from that point. As I've said before, bugger all was spent on Health and Nationalisation. Getting rid of the deficit was by and large a function of cutting Defence spending back from over half of GDP.
Simply repeating something isn't an argument. The actual evidence from budgetary spending does not suggest inordinate focus on Health and Nationalisation. Housing, Education, Welfare and Pensions all rose to 520.1%, 189%, 237% and 935% compared to 250% for Health. I think nationalisation costs are in the Fuel/Energy budget for coal, but the other industries aren't immediately apparent - if you can find them, that would be a good bonus to collective knowledge.
c.) I think that Churchill might be able to get a loan on better terms, but getting less money is a net negative. Avoiding convertability is something that can be done in this TL, but the aim should be to get more than $3.75 billion. On another point, your Churchill dialogue is way, way off the way that he talked in terms of profanity, familiarity and general style.
Your next assertion in that chapter that this would allow British industry to "retain an extremely privileged position within the British Empire" ... it doesn't really follow. It was more of a combined lifebelt for the British economy and a means of maintaining British commitments on a global basis. British industry was well entrenched in some parts of the Empire, on its way out in others (large sectors of Australia, for example) and somewhere in between on others. A lack of convertibility and the subsequent economic crises that lead to devaluation of the pound are a positive, but not the ultimate panacea.
d.) You've got a lot going on in this point. One sentence leaps out at me, though:
"This is a transformation of the British economy and British society, as 5,000,000 British veterans are going to jump the queue straight into the British middle class."
That is darn ambitious and probably beyond the scope of what can be realistically achieved through one single measure at this point in time. Housing would be a big measure, no doubt, but not a panacea.
Newfoundland didn't have the timber surplus at the time. I remember seeing some references to timber in Kynaston or Hennessey, I believe, but there wasn't an easy solution.
I think it is worth asking the question in particular (British postwar housing options) of the whole subforum and do some further digging.
I would be very conservative in anticipating really radical conclusions from any particular policy. British GDP isn't going to increase majorly through increased births by anywhere near the level needed to get a discernable difference. However, changing the general housing policy situation in Britain will have a lot of good knock on effects.
5.) Your quote from Crick is something that I have no issue with and is broadly correct.
However, Health wasn't the problem. Education, Pensions and Welfare were the big increases.
Furthermore, it seems you aren't quite representing my argument correctly. This is it:
A.) Health, although it increased, was not a large fraction of GDP nor of government spending
B.) It wasn't the greatest drag on the economy
C.) The largest reasons for the British budget to remain above the previous peacetime average as a percentage of GDP were Defence and Debt Interest
I did not say that economic growth means that health spending must rise; rather, I explained why it did rise in this particular situation, extrapolated from the statistical evidence. I did this to support Points A and B above. The largest increase in Health spending in the late 1940s came in 1947, but that wasn't entirely due to NHS spending or implementation (for a few key reasons) but because of the extremely problematic weather conditions and economic issues of that year.
Tracing the lines of the Health budget without the intervention of the Second World War, I can see it hitting a similar point by 1950, but that isn't an absolute given, nor the real basis of what I'm saying.
The best way to decrease costs on an immediate basis is to increase GDP over time (reducing Debt Interest payments) and increase food production capacity in the 1920s and 1930s (so rationing can be ended earlier, reducing Food and Supply spending). The interwar period also has ample opportunities to rationalise coal and rail, increase energy production and half a hundred other things.
If I think back on Vanguard to Trident, I recall mention of an idealised defence budget of 1500 million pounds that couldn't be afforded. 1950 had a GDP of 12,926 million pounds and that isn't enough to afford the best of all worlds. Getting that even 15% higher would allow for many different things to be covered. This isn't going to be achieved realistically in 5 years of the postwar period, but is very easy if we go back further.
I think that you're going to have to do more than simply assert handwavium through the agency of an unknown (Powell) to get a Conservative victory in 1945, even taking into account the issue of housing or your other proposed policies. It might behove you to read through some of the numerous previous attempts on this particular forum of the website, being a very new poster of a few days on your first timeline, as some of the issues proposed have come up before; this is not meant as patrionising, but simply that there are a good 14-15 years worth of resources lying in the backpages of Post 1900 and many of the most salient voices are no longer around.
You are not the first chap to approach this particular idea, but in order to affect real change, I'd strongly advise pushing the point of departure back further than in the midst of the war; utilise another method than "a single young and relatively unknown character comes along with all the right ideas" and take the opportunity to tweak a few more events around the edges. From a 1945 standing start, there isn't too much that can be changed significantly for 10-15 years and those 10-15 years are ones of incredible global change and significant advance. It does seem as if you have a particular endgame or socio-economic and political situation you are working towards that has already been predetermined; this may not be the case, but is how it comes across. I would suggest that this is rather more the characteristic of a story rather than a hard timeline.
For this response, you'll have to forgive me that I don't have my books to make reference to, but the ones I'd recommend would be
Democratic Socialism and Economic Policy: The Attlee Years, 1945-1951 (Cambridge Studies in Modern Economic History) by Jim Tomlinson
The Secret State: Whitehall and the Cold War by Peter Hennessy
Family Britain, 1951-1957 (Tales of a New Jerusalem) by David Kynaston
The British Economy Since 1945: Economic Policy and Performance 1945-1995 (Making Contemporary Britain) by Alec Cairncross
Science, Technology and the British Industrial 'Decline', 1870-1970 (New Studies in Economic and Social History) by David Edgerton
Warfare State: Britain, 1920-1970 by David Edgerton
Britain and the Economic Problem of the Cold War: The Political Economy and the Economic Impact of the British Defence Effort, 1945-1955 by Till Geiger
The Lost Victory: British Dreams, British Realities, 1945-50 by Correlli Barnett
Arms, Economics and British Strategy: From Dreadnoughts to Hydrogen Bombs by G.C. Peden
1.) Apart from Beveridge, there was the general memory of the negative aspects of the 1930s that, fairly or not, were lumped on the Conservatives; we can also take into account the Labour ministers of the wartime Coalition Government running large swathes of the home front. Overall, a fairly profound sea change is needed to make up the difference between the Labour landslide of 1945 in @ and a Conservative majority victory. To make for an effective and realistic timeline, you'll need to implement this.
2.) You seem to be dancing around the issue here. Housing is a large and emotive issue and played a role in the Conservative successes of 1950 and 1951; MacMillan accrued significant political capital from being the bloke in charge of the ministry when it could deliver on the oft promised increase. Labour promised 300,000 a year and managed 1.5 million by '51, which wasn't enough to keep up with expectations.
I will note that my first two points came out of a reply I had to another chap, not yourself. They don't go to the heart of any of the points you made or any of the issues with your timeline.
3.) For this part, I hope you'll forgive me if I deal with each point in order, as there is a lot here.
a.) I definitely agree that British manufacturing increased, but that doesn't disprove that Britain had lost markets (in North and South America to the USA under Lend Lease and associated agreements and in Europe to the devastation of war) and that it didn't quite have enough of the hard currency earners to get US dollars in the necessary amounts to pay for other commitments. The two aren't mutually exclusive and the increase in exports wasn't necessarily to the places where they would have been of the most value.
b.) Foreign debt was always going to grow so long as borrowing was required. Debt within the Sterling zone didn't really matter, but outside (which essentially means the USA and Canada), it is something to be minimised. However, the bulk of the deficit was mostly dealt with in 1945/46 and then structurally addressed from that point. As I've said before, bugger all was spent on Health and Nationalisation. Getting rid of the deficit was by and large a function of cutting Defence spending back from over half of GDP.
Simply repeating something isn't an argument. The actual evidence from budgetary spending does not suggest inordinate focus on Health and Nationalisation. Housing, Education, Welfare and Pensions all rose to 520.1%, 189%, 237% and 935% compared to 250% for Health. I think nationalisation costs are in the Fuel/Energy budget for coal, but the other industries aren't immediately apparent - if you can find them, that would be a good bonus to collective knowledge.
c.) I think that Churchill might be able to get a loan on better terms, but getting less money is a net negative. Avoiding convertability is something that can be done in this TL, but the aim should be to get more than $3.75 billion. On another point, your Churchill dialogue is way, way off the way that he talked in terms of profanity, familiarity and general style.
Your next assertion in that chapter that this would allow British industry to "retain an extremely privileged position within the British Empire" ... it doesn't really follow. It was more of a combined lifebelt for the British economy and a means of maintaining British commitments on a global basis. British industry was well entrenched in some parts of the Empire, on its way out in others (large sectors of Australia, for example) and somewhere in between on others. A lack of convertibility and the subsequent economic crises that lead to devaluation of the pound are a positive, but not the ultimate panacea.
d.) You've got a lot going on in this point. One sentence leaps out at me, though:
"This is a transformation of the British economy and British society, as 5,000,000 British veterans are going to jump the queue straight into the British middle class."
That is darn ambitious and probably beyond the scope of what can be realistically achieved through one single measure at this point in time. Housing would be a big measure, no doubt, but not a panacea.
Newfoundland didn't have the timber surplus at the time. I remember seeing some references to timber in Kynaston or Hennessey, I believe, but there wasn't an easy solution.
I think it is worth asking the question in particular (British postwar housing options) of the whole subforum and do some further digging.
I would be very conservative in anticipating really radical conclusions from any particular policy. British GDP isn't going to increase majorly through increased births by anywhere near the level needed to get a discernable difference. However, changing the general housing policy situation in Britain will have a lot of good knock on effects.
5.) Your quote from Crick is something that I have no issue with and is broadly correct.
However, Health wasn't the problem. Education, Pensions and Welfare were the big increases.
Furthermore, it seems you aren't quite representing my argument correctly. This is it:
A.) Health, although it increased, was not a large fraction of GDP nor of government spending
B.) It wasn't the greatest drag on the economy
C.) The largest reasons for the British budget to remain above the previous peacetime average as a percentage of GDP were Defence and Debt Interest
I did not say that economic growth means that health spending must rise; rather, I explained why it did rise in this particular situation, extrapolated from the statistical evidence. I did this to support Points A and B above. The largest increase in Health spending in the late 1940s came in 1947, but that wasn't entirely due to NHS spending or implementation (for a few key reasons) but because of the extremely problematic weather conditions and economic issues of that year.
Tracing the lines of the Health budget without the intervention of the Second World War, I can see it hitting a similar point by 1950, but that isn't an absolute given, nor the real basis of what I'm saying.
The best way to decrease costs on an immediate basis is to increase GDP over time (reducing Debt Interest payments) and increase food production capacity in the 1920s and 1930s (so rationing can be ended earlier, reducing Food and Supply spending). The interwar period also has ample opportunities to rationalise coal and rail, increase energy production and half a hundred other things.
If I think back on Vanguard to Trident, I recall mention of an idealised defence budget of 1500 million pounds that couldn't be afforded. 1950 had a GDP of 12,926 million pounds and that isn't enough to afford the best of all worlds. Getting that even 15% higher would allow for many different things to be covered. This isn't going to be achieved realistically in 5 years of the postwar period, but is very easy if we go back further.
I think it not entirely irrelevant to mention that I found this forum specifically because this particular postulated Tory victory in 1945 has always seemed such a crucial turning point for how a very different UK could have been birthed out of World War II, and read through some of the thoughts here. I don't believe that my particular strategy has ever been mentioned on this forum, although I have seen several iterations which do correctly infer that a Churchill ministry would have made housing the crucial project of the postwar period. However, they tend to fall into the path of thinking this would come in the form of council housing, which I think is not only much less economically beneficial to Britain in the medium and longer term, but I also actually think is historically unrealistic in 1945. There had been a major housing boom in the 1930s in Britain, using a not-too-dissimilar approach to what I am using here. The boom in the 1930s was fueled largely by building societies, harnessing the power of the pre-1960s exceptionally high (near German) savings rate, as well as local housing authorities taking on the role of important secondary lenders. This strategy produced pretty spectacular results in real life Britain, which was cut short due to the Second World War, and then put on hold as the Labour government in 1945 sought to use the State to accomplish this task. The Tories partially reversed course in 1951 and home lending increased again, reaching pre-war levels in the mid-1950s, but from 1945-1980 the State was by far the biggest player in the British housing market. The other problem is that the threads on this subject tend, in my observation, to fizzle out pretty quickly. Indeed, this is the only thread on the subject that I have seen where actual fiscal and economic data, which, as you can tell, is something that interests me greatly, is discussed in any real depth.
I take on board the point. It sounds like you're aware of some particularly useful threads. If you are aware of some where the topics discussed here are discussed in greater detail, please point me to them.
As for using Powell, I take on board this criticism, which has been leveled upthread on many occasions, and which I have previously acknowledged. However, I'm comfortable with the unlikelihood of this, precisely because I'm comfortable using Powell as a stand in. I chose Powell because he was obviously a key player in the real-life Tory Party of the 1950s, and because Powell voted Labour in 1945. This gives him the perspective needed to, if given the means to do so, challenge Tory orthodoxy while remaining broadly consistent with his real-life economic views. It's fun, and I like it. And I have, as you can probably ascertain, plans for him later down the road. I also don't think it's quite as out of order as you might think. Gaitskell entered Parliament in 1945. He was leading the Labour Party ten years later. Powell in real life entered Parliament in 1950. He was a junior Housing Minister by 1955 and had a great interest in housing in the UK. Which is obviously relevant.
I understand your point and to some extent agree. However, let me put this back to you: if we were living in this counterfactual world, the idea of a Labour landslide in 1945 bringing in a radical transformation of the British economy forever and ever amen would seem equally strange. The Labour government brought in sweeping changes in 1945 that were felt immediately. The postwar policies in the United States, West Germany, France, and Japan had consequences that were felt immediately. Bringing it back into a British context, the effects of Margaret Thatcher's policies (especially, incidentally, increasing home ownership rates in Britain) were felt almost immediately. I don't buy your argument that a different approach in 1945 is going to produce only a mildly different outcome for the foreseeable future.
I don't particularly, other than I would like to improve the postwar British economic performance, which the extent to the possibility of that is where we differ, and to the extent that has positive butterflies for the British place in the postwar international order, I would like to explore those as well.
Thank you for those recommendations. I will look for them on JStor.
Yes, this is the traditional hagiography for the Labour landslide in 1945 and the ascension of the one-term Labour government. However, I think I have explained why I think a radical policy shakeup in the pivotal of early 1945 would make a difference. It is not going to produce a Tory landslide. There have been several compelling countering points to this litigated in this thread, including those that you've raised, but none that I personally feel are fatal to the thesis.
The United States did not invade North and South America and force them to purchase American products. To the extent that those markets have been lost, it is a function of war. The failure to regain a large market share following the end of the Second World War has less to do with predatory American trade practices, as you seem to be alluding to, than with the inability of the British economy to successfully complete the transition from a war footing to a peace footing. The roots of a different outcome were actually sown - despite a punitive tax system and very poor climate for business, suggesting that British industry did retain some competitive advantage over American manufacturing, at least initially.
I'm grouping these points together, because they're related.
The idea that it wasn't a significant expense to buy out large swathes of the economy, which seems to be your argument, is prima facie, ridiculous, I'm sorry to say.
The cost of nationalization between 1945-1950 was equivalent to 25% of GDP. (http://researchbriefings.files.parliament.uk/documents/CBP-8325/CBP-8325.pdf)
Fully 2.3 million people were transferred onto the public payroll.
It was considerable expenditure, and, clearly, was not a particularly good investment. The entire history of Britain in the latter part of the 20th century is my submission of evidence for this claim.
I don't think it's necessary to get an additional £750m, if you're not nationalising everything. Even if you were, I think the Labour government would have made that same trade off to preserve exchange controls in the sterling area. The economic benefit of being able to protect British industry is worth, far and away, more than £750m to the Treasury, let alone to the economy as a whole.
With respect, I think this signals a lack of understanding of why the attempt to introduce the convertibility of sterling was so damaging to the British economy in 1947. If I am in London, and I want to purchase something from the United States, either I need to pay in dollars or the manufacturer must accept sterling in payment. If my assets are in the form of sterling, this, for the American manufacturer to accept sterling, they must agree that sterling is worth the dollar amount that they will get to exchange them into dollars. This is questionable in the 1940s. Otherwise I need to be able to pay in dollars. So I take my sterling to an Exchange Board in London, and they refuse to exchange my sterling for dollars. "Ah, but India uses sterling as well." So I go to India and approach the Exchange Board in Calcutta. They issue the same denial (which is where we get the phrase - Sterling area). I'm stuck either losing money on the trade by increasing the amount of sterling I have to offer to import the product, or I could use a British product.
Hence - protection of British industry.
Why? We have contemporary examples of it doing precisely that. To pretend that home ownership is not going to have the same affect in Britain simply because it is Britain strikes me as odd. There is a reason the most common complaint of the young in Britain is that they will never get on the property ladder. Come to think of it, there is also a reason why we have a phrase called "property ladder". If there is countervailing evidence, I genuinely would love to see it.
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Great list of references, most of which I have read, with interest. I particularly like Barnett's whole "Pride and Fall" series. Of course, Barnett is savaged by Edgerton in a review (sorry, can't remember which publication). Another criticism of Barnett is that he really wants the British people to be like the German people; we aren't. The British have an entirely different "mindset", epitomised, I think, by the phrase that Britain acquired an empire "in a fit of absent-mindedness". Obviously that basically applies to India, the Second British Empire, the First British Empire, America having been lost in 1776.
Chris,
I'll answer the points on nationalisation and convertability now, as I'm pressed for time.
A.) The financial data is very interesting. On its face, it looks large, but it uses the GDP value from the years they were transferred and the process was spread out over a number of years
1946: Bank of England (58 million), Coal (392 million) or 450 million out of 9756 million GDP (4.61%)
1947: Cable and Wireless (32 million), CEGB (542 million) or 574 million out of 10,544 million GDP (5.44%)
1948: Rail and Transport (1150 million) out of 11581 million GDP (9.93%)
1949: Gas (220), Iron and Steel (245) or 465 out of 12,348 million (3.77%)
The big cost that leaps out is Rail and Transport, but that may be a bit deceptive. Of the Big Four, three were pushing bankrupt before the war and got a decent deal out of the exchange for bonds. There doesn't seem to have been much of huge amount of controversy about rail nationalisation, but road haulage was contested, as was Iron and Steel.
The very fact they were paid in bonds rather than cash does explain why it doesn't stick out in the budgets that I've spent the last 15 years squirreling away in; it also mentions that these were 3% jobs rather than the whole sum up front.
If we take the railways out of the equation, it doesn't amount to a huge amount of cash, either on a yearly basis or spread over 5-6 year.
B.) On convertibility, much of what needed to be purchased was not made or available in Britain (petrol for forces in the Middle East, gold payments to Persia, subsidies to the Greeks and Turks, funding for the Armies of Occupation in Germany, Austria, Trieste and Japan, machine tools, food from North America etc) and the 'invisible earnings' that had been so important pre-war were well down.
I'm going from memory for much of this; there is a decent amount that is relevant in Cairncross and Geiger's works, as I recall.
MickCz,
Barnett certainly had his particular axe to grind and interpreted a lot of material to suit his own weltanschauung; Edgerton's criticisms are valid, but he too comes from a specific point of view.
Overall, if given the choice, I'd go for more spread out and steadier change over the 1930s and wartime in combination with a 1945 major change. As it stands, even being able to have a defence budget of 1000 million in 1948, for example, would provide for ~20% of the corresponding US defence budget of $104 billion. That increase of 10% from the @ budget of 913 million quid doesn't really buy a lot. However, with a larger GDP of say, $400 billion 1990 USD as compared to ~330 billion, there is a little more wriggle room.
I'll answer the points on nationalisation and convertability now, as I'm pressed for time.
A.) The financial data is very interesting. On its face, it looks large, but it uses the GDP value from the years they were transferred and the process was spread out over a number of years
1946: Bank of England (58 million), Coal (392 million) or 450 million out of 9756 million GDP (4.61%)
1947: Cable and Wireless (32 million), CEGB (542 million) or 574 million out of 10,544 million GDP (5.44%)
1948: Rail and Transport (1150 million) out of 11581 million GDP (9.93%)
1949: Gas (220), Iron and Steel (245) or 465 out of 12,348 million (3.77%)
The big cost that leaps out is Rail and Transport, but that may be a bit deceptive. Of the Big Four, three were pushing bankrupt before the war and got a decent deal out of the exchange for bonds. There doesn't seem to have been much of huge amount of controversy about rail nationalisation, but road haulage was contested, as was Iron and Steel.
The very fact they were paid in bonds rather than cash does explain why it doesn't stick out in the budgets that I've spent the last 15 years squirreling away in; it also mentions that these were 3% jobs rather than the whole sum up front.
If we take the railways out of the equation, it doesn't amount to a huge amount of cash, either on a yearly basis or spread over 5-6 year.
B.) On convertibility, much of what needed to be purchased was not made or available in Britain (petrol for forces in the Middle East, gold payments to Persia, subsidies to the Greeks and Turks, funding for the Armies of Occupation in Germany, Austria, Trieste and Japan, machine tools, food from North America etc) and the 'invisible earnings' that had been so important pre-war were well down.
I'm going from memory for much of this; there is a decent amount that is relevant in Cairncross and Geiger's works, as I recall.
MickCz,
Barnett certainly had his particular axe to grind and interpreted a lot of material to suit his own weltanschauung; Edgerton's criticisms are valid, but he too comes from a specific point of view.
Overall, if given the choice, I'd go for more spread out and steadier change over the 1930s and wartime in combination with a 1945 major change. As it stands, even being able to have a defence budget of 1000 million in 1948, for example, would provide for ~20% of the corresponding US defence budget of $104 billion. That increase of 10% from the @ budget of 913 million quid doesn't really buy a lot. However, with a larger GDP of say, $400 billion 1990 USD as compared to ~330 billion, there is a little more wriggle room.
Yes, both Barnett and Edgerton have axes to grind, and both have good points to make. I particularly like Edgerton's Britain's War Machine which reminds us that Britain was not "alone", but was an Empire of consequence.
Also, I seem to recall reading (possibly Skidelsky...) that Britain did not have to accept the US loan that it did, and that a consortium of US banks was prepared to put a more advantageous loan together. Of course, Keynes was unwell, and was seeking to re-make the world economic system...a fruitless task, which was actually unsuccessful. The Bretton Woods "system" was never fully implemented, and effectively collapsed in 1971.
Well, it certainly had to take the loan if it wanted to implement the Labour manifesto in 1945. In fact, Keynes bluntly said as much to the government. I am interested in the bank loan. It seems...unorthodox to say the least, and I can't see Britain being able to borrow at 2% on private debt markets. If you find any more out, I'd love to hear it.
A real issue for Britain post-WW2 was that they hadn't lost the Imperial mindset when they were in no position in reality to support such a thing.
The Suez Crisis broke the Imperial mindset and to be honest that was a good thing because trying to live up to the mindset was costing alot which could've been spent better.
Not that Churchill getting reelected would help with that..
The Suez Crisis broke the Imperial mindset and to be honest that was a good thing because trying to live up to the mindset was costing alot which could've been spent better.
Not that Churchill getting reelected would help with that..
I was slightly wrong as to the alternative to the US loan. On page 289 of The Battle of Bretton Woods...Benn Steil...2013, he quotes Otto Clarke (later of Operation Robot fame)as saying Britain should have taken a series of smaller loans "from the Export-Import Bank, Canada and elsewhere". He effectively implies that Keynes was so intent on remaking the world financial order, and being an architect of it, that he would not accept anything else. As history shows, Keynes did his reputation no good, and the remade system was flawed.
A Home for Heroes
A Home for Heroes
The plan for the demobilisation of the British Armed Services had been carefully crafted in September 1944 by the then-Minister of Labour and National Service, Ernest Bevin. This initial plan had been created with the idea that the war in Asia would take significantly longer to resolve, even after hostilities in Europe had concluded. This was modified significantly following the surrender of Japan and revised yet again following the general election in June. Bevin’s 1944 plan had deviated significantly from the Conservatives’ initial proposal to favour married men, in a bid to release more manpower for British industry, rather than Bevin’s plan to favour married women and men over the age of 50, on grounds of compassion. In the end, the government revived the compromise proposition for a points-based system which would factor in age, length of service, and marital status. This would still have the effect of releasing younger, and married men, more quickly. By Christmas 1945, 2 million of the 5 million British servicemen had been demobilised and allowed to return home. By Easter 1946, demobilisation was largely complete, with 3.5 million British servicemen released from military service by that date.
Although these men were greatly needed back in the factories, demobilisation brought the first great test of the Tory government’s ability to deliver their promises to returning British servicemen. Each of these men were now entitled to a raft of new benefits, including, most pressingly, a benefit which would entitle them to a housing allowance for one year following the end of the war. This was to present a great opportunity to returning younger British servicemen, as they were not to be compelled to return to their family homes, but could instead take this opportunity to relocate themselves where jobs were in highest demand – and therefore where wages were highest. In particular, this would lead many of these servicemen to select new areas near the sites of massive building plans, which had already begun construction during the war, but suffered from chronic labour shortages.
Applications for accommodation help in London, Birmingham, Manchester, and Glasgow in particular far outpaced the expected numbers based on where servicemen had enlisted from. This had the effect of pushing up rents for new accommodations in these areas, which would be borne by the British Treasury. However, it was plain to see that these increasing prices would further kindle interest in these areas from property developers, seeking to both rebuild areas damaged by the war, and also to build new housing in these areas in the expectation that many of these demobilised servicemen would stay on permanently.
In addition to Easter 1946 being a watershed for the fact that a very large proportion of British servicemen had been demobilised by that date, it also marked another important milestone. On 23 April 1946, just two days after Easter, the very first home loan underwritten by the Servicemen’s Home Lending Authority was issued to a demobilised British Army sergeant and his wife and three children. The occasion was marked with a visit to the family at their new home in Slough, just west of London, by the Minister for Housing and Local Government, Enoch Powell. The visit to Slough seemed particularly propitious for the young Minister, for it lay just inside his envisioned “Commuter Belt” around London. Drawing on earlier plans by Sir Patrick Abercrombie, he was now envisioning a ring of suburban development around not only London, but also Birmingham, Manchester, and other major cities, which could be the sites of low-cost housing for returning British servicemen.
The plan for the demobilisation of the British Armed Services had been carefully crafted in September 1944 by the then-Minister of Labour and National Service, Ernest Bevin. This initial plan had been created with the idea that the war in Asia would take significantly longer to resolve, even after hostilities in Europe had concluded. This was modified significantly following the surrender of Japan and revised yet again following the general election in June. Bevin’s 1944 plan had deviated significantly from the Conservatives’ initial proposal to favour married men, in a bid to release more manpower for British industry, rather than Bevin’s plan to favour married women and men over the age of 50, on grounds of compassion. In the end, the government revived the compromise proposition for a points-based system which would factor in age, length of service, and marital status. This would still have the effect of releasing younger, and married men, more quickly. By Christmas 1945, 2 million of the 5 million British servicemen had been demobilised and allowed to return home. By Easter 1946, demobilisation was largely complete, with 3.5 million British servicemen released from military service by that date.
Although these men were greatly needed back in the factories, demobilisation brought the first great test of the Tory government’s ability to deliver their promises to returning British servicemen. Each of these men were now entitled to a raft of new benefits, including, most pressingly, a benefit which would entitle them to a housing allowance for one year following the end of the war. This was to present a great opportunity to returning younger British servicemen, as they were not to be compelled to return to their family homes, but could instead take this opportunity to relocate themselves where jobs were in highest demand – and therefore where wages were highest. In particular, this would lead many of these servicemen to select new areas near the sites of massive building plans, which had already begun construction during the war, but suffered from chronic labour shortages.
Applications for accommodation help in London, Birmingham, Manchester, and Glasgow in particular far outpaced the expected numbers based on where servicemen had enlisted from. This had the effect of pushing up rents for new accommodations in these areas, which would be borne by the British Treasury. However, it was plain to see that these increasing prices would further kindle interest in these areas from property developers, seeking to both rebuild areas damaged by the war, and also to build new housing in these areas in the expectation that many of these demobilised servicemen would stay on permanently.
In addition to Easter 1946 being a watershed for the fact that a very large proportion of British servicemen had been demobilised by that date, it also marked another important milestone. On 23 April 1946, just two days after Easter, the very first home loan underwritten by the Servicemen’s Home Lending Authority was issued to a demobilised British Army sergeant and his wife and three children. The occasion was marked with a visit to the family at their new home in Slough, just west of London, by the Minister for Housing and Local Government, Enoch Powell. The visit to Slough seemed particularly propitious for the young Minister, for it lay just inside his envisioned “Commuter Belt” around London. Drawing on earlier plans by Sir Patrick Abercrombie, he was now envisioning a ring of suburban development around not only London, but also Birmingham, Manchester, and other major cities, which could be the sites of low-cost housing for returning British servicemen.
Question for anyone following this thread: what do you think industrial relations look like in 1946-1947 Britain in this timeline? Particularly with the NUM, assuming Horner is still elected General Secretary with his 1946 Miners' Charter?