The 1950s and the Conservatives
When the Conservatives returned to power following the 1951 election, they largely pursued an interventionist, Keynesian policy agenda. However, they did not continue to invest in any significant way in regionalpolicymaking. While the legislation remained essentially unchanged, initiatives were no longer supported, ‘with the partial exception of a few “blackspot” areas’ (Scott, 1997: 41). There was a belief that regional unemployment was no longer a problem due to international demand and the reinvigoration of the staple industries on which many regions of the UK continued to depend. There were now concerns that encouraging new industries into the Development Areas would damage these staple industries, which were seen as more central and of greater importance to the economy.
Scott (1996: 50-51) quotes a 1956 Treasury memorandum:
... in North Lanarkshire, there is an unemployment figure of 3.5 per cent, but apart from this the realities with which the [Distribution of Industry] Act was originally designed to deal have disappeared. Indeed, I suspect the fluctuations of employment in the newer industries are likely to be greater than in the old-established ones.
Of course, this reinforced a lack of diversification in these regions, leading them to continue to be vulnerable to changes in the staple industries. In this way, the Conservative government had managed to ‘achieve the worst of both worlds’ (Scott, 1996: 55). Central planning and coordination continued for the major industries, but longer-term investments in the potential growth industries were denied support.
The end of the decade, 1959-1961, saw a period of collapse following a 1959 boom with economic restrictions in spring 1960 and, the following year, another currency crisis. This highlighted the fragility of the UK’s recent prosperity and may have helped to encourage government, industry and trade unions to work together in the pursuit of economic growth through a sense of ‘shared responsibility for economic policy decisions’ (Blank, 1973: 221). This included negotiations around wage and price decisions as well as wider industrial planning.
Regional Policy but Little Room for Small Businesses?
In 1960, the Local Employment Act repealed and replaced the Distribution of Industry Acts. Regional development policy continued to target unemployment levels. In terms of enterprise policy, the ongoing focus on finance moved to the Board of Trade (although still with Treasury approval) and the DATAC was replaced with the Board of Trade Advisory Committee (BOTAC), but essentially with the same powers. However, the qualifying criteria were further restricted in an attempt to focus on those firms with a high chance of success rather than an inability to access finance elsewhere (Wren, 1996). The new ‘Development Districts’ were a lot smaller than previous focal points for regional policymaking, making the industrial estates approach less appropriate, although factory building and the provision of building grants continued.
The lack of focus on the concerns of small businesses may have contributed to Labour’s slim 1964 electoral victory. The election followed the decision of Conservative Prime Minister Douglas-Home to push through the Resale Prices Act, abolishing resale price maintenance that had been in place to protect small traders from undercutting by large shops and chains. This may have cost the Conservatives valuable votes from the small business community.
The installation of a new Labour government saw an increased focus on regional policy, for example through the Industrial Development Act (1966). However, the new focus on economic growth rather than directly seeking to address unemployment soon faltered when, within a year, rising unemployment caused a reworking of this emphasis. The investment grants were now available to all firms, including new and small businesses that were not making taxable profits. That is, the changes continued the move away from targeted support seeking to address the Macmillan gap.
The Urban Programme, begun in 1968, represented a broad collection of policies targeting urban areas of ‘special need,’ that is, of disadvantage and discrimination. In part, this urban focus was shaped by increasing tensions around immigration. Within the programme of initiatives, there was expansion of local authority financial assistance for small businesses that would continue to play a significant role in this aspect of enterprise policy delivery, totalling around £26m per year by the mid-1980s (Wren, 1996). Nonetheless, while there was an opportunity for radical new approaches at this juncture, much policymaking was stuck within an established set of ideas, a set of dominant policy narratives that persisted (Atkinson, 2000). In terms of the economy and industrial policy, the focus continued to be on centralised negotiation among government, industry and labour bodies that tended to represent the interest of large businesses.
This emphasis was explicit with the Labour government’s endeavours to support industrial development and economic growth through the Industrial Reorganisation Corporation, which focused on ensuring the ‘optimum’ size of firm. The IRC assisted the reorganisation and development of industries in terms of seeking to maximise efficiency and profitability, for example through the merger of GEC and Associated Electrical Industries. The guiding idea of this work was ‘that production units in the UK were too small to be competitive in world markets’ (Lonsdale, 1997: 46). In many ways, this was the very opposite of what we tend to consider forms of enterprise policy.
