National Industrial Organisation
The biggest change of industrial policy with the advent of a post-war Labour government was the shifting of the boundary between public and private economic activities. Millward and Singleton (1995: 309) explain how ‘By the end of the 1940s .. . one half of annual capital expenditure in the UK was undertaken in the public sector of which some 40 per cent was accounted for by the nationalised industries.’ However, while some industries saw significant government intervention and areas of nationalisation, especially in what were seen as vital areas of the economy and where industries were related to export targets, in the remaining industries ‘the Labour government [had] only a poorly articulated philosophy of how to cope with what remained in the private sector’ (Millward and Singleton, 1995: 313).
The post-war reconstruction effort reflected the principles of cooperation that had been negotiated during the war. This was part of a process that started at the end of WWI where the government was looking to work with the emerging peak organisations to establish ‘a national consultation and negotiating machinery for sector wages and working conditions’ (Bennett, 2011: 39). Reconstruction would be planned, tripartism (state-industry-labour) would be retained and the institutions involved would have a greater part to play in the extended state, recognising a
Regional Enterprise Policy 65 need to balance self-interest. In terms of government-industry relations, by late 1943, ‘industry’ (broadly grouped within representative bodies) had provided a relatively unified sense of how these relations could work in the post-war UK. Industry was willing to join a tripartite institutional arrangement that would provide assistance to the state, but which would also permit industry access to government and influence on policy. Mid-dlemas (1986: 64) encapsulates the core of this deal:
So long as government gave industry for the first time a substantive generic priority it would in return listen to what Ministers wanted; so long as it had a voice in the determination of that interest, at least as powerful as those of unions or the City of London, it would conform to the eventual national interest.
This had wider implications in terms of how problems such as unemployment in the depressed areas would now be addressed. For example, there was a shift of responsibility from the Ministry of Labour to the Board of Trade, whose remit involved the regulation of private industry. That is, the problem was addressed through a new focus on industrial coordination rather than the movement of labour. Scott (1997: 367) lists the criteria used by the Board of Trade when allocating government owned factories to the Development Areas in 1949, with an emphasis on employment rather than, for example, supporting small firms or business growth:
- 1. Employment
- 2. Availability of raw materials
- 3. Availability of essential machinery
- 4. Technical aspects re suitability of factory, etc.
- 5. Adaptations required
- 6. Foreign currency commitments
- 7. Status of applicant
- 8. Financial standing of applicant
A danger of this approach was that firms setting up additional capacity in the Development Areas were likely not to invest in this location (in contrast, the Board of Trade let firms set up R&D and more innovative functions in London) and, if the organisation was to experience difficulties, it was in these peripheral activities where layoffs were most likely to occur. Hague and Dunning (1954-1955: 211-213, cited in Scott, 1997: 372) explain:
The suspicion arises that a number of branches were being exploited by their main factories, used to cope with demands beyond the capacity of the central factory and made to cut their output if any cutting had to be done.
A lot of this activity was therefore focused on large firms and industrylevel negotiation that mostly excluded small businesses and enterprise policymaking. However, small businesses’ access to finance did persist as an aspect of this regional policy activity.
