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Inside the Department of Economic Affairs: Samuel Brittan, the Diary of an “Irregular” (1964-66) - review

Vernon Bogdanor reviews Samuel Brittan's diaries.

Inside the Department of Economic Affairs: Samuel Brittan, the Diary of an “Irregular” (1964-66)
Edited by Roger Middleton
Oxford University Press, £50

Sam Brittan is a national treasure. Since 1966, he has produced a regular commentary, both magisterial and iconoclastic, for the Financial Times, but before that, from 1964 to 1966, he was an “irregular”, a temporary civil servant in the Department of Economic Affairs (DEA).

Fortunately for those interested in the formation of economic policy, he breached civil service rules by keeping a diary. There was, admittedly, a respectable precedent, because Sir Alec Cairncross, chief economic adviser from 1961- 64 and head of the government economic service from 1964-69, had also kept a diary, which has already been published. But Brittan is far less restrained than Cairncross. His diary is a treasure trove for the historian. Most administrative history is pretty dreary stuff – the story of how paper travels from one desk to another. Brittan tells us what it was really like. He joined the Treasury after Labour’s election victory of 1964, which ended 13 years in opposition: 13 wasted years, as Labour was wont to put it. The years of stagnation were to be replaced by purposive planning – indeed, by a National Plan, designed to raise the rate of economic growth. “Let’s go with Labour” had been the election slogan.

But how was the dynamic new Britain to be created? The prime need was to launch an in - stitutional counter to the Treasury, the DEA, whose remit was expansion rather than counting candle ends. The DEA had been prefigured in Aneurin Bevan’s resignation speech of 1951, when he called for economic planning to be taken away from the Treasury and handed to a new ministry of production, a view shared by Harold Wilson, who had resigned with Bevan.

The trouble was that economists did not have the faintest idea of how to achieve a higher rate of economic growth. The politicians seem to have hoped that, if only the government proclaimed its intentions loudly enough and often enough, industry would respond. The Conservatives had proposed a growth rate of 4 per cent, something that had not been achieved since mid-Victorian times. Yet Labour had ridiculed this as too timid. In the first few days of the new government, the ruling triumvirate – Wilson, Callaghan, the new chancellor, and George Brown, secretary of state at the DEA – decided not to devalue the pound; and, to discredit the Conservatives, they emphasised the large balance- of-payments deficit that Labour had inherited – which, as later statistics show, was grossly exaggerated. All this was self-defeating.

Brittan waxes eloquent about how devaluation had become the great unmentionable. In its place was an emphasis on “planning”. Yet, as the banker David Walker has argued, “by giving primacy to the maintenance of a singular external value of the pound, domestic production became a dependent variable”. The same mistake is now being made on a continental scale by the parties of the European centre right, led by Angela Merkel. In consequence, retrenchment was needed to satisfy the financial community, culminating in the deflationary measures of July 1966, six months after Brittan left the civil service. The National Plan was, in the words of the economist Roger Opie, “conceived October 1964, born September 1965, died (possibly murdered) July 1966”.

The government was in any case far too riven from the start by interdepartmental jealousies and rivalries, some of them of an unbelievable triviality, to do much planning. “Met Chancellor in street,” runs the entry for 13 April 1965. “Setting up committee on international liquidity. Don’t tell George!’’ Matters were not helped by Brown, who was too often “tired and emotional”. “If George Brown misses any more meetings through ‘morning sickness’,” Wilson quipped, “we will be wondering whether he is going to give birth to a ‘little Neddy’ ” – little Neddies being committees of businessmen, trade unionists and officials, intended to plan individual industries.

The diary exposes the realities behind the rhetoric of planning. “Gloomy toilet with no soap or towel,” reads the first entry. “I donated a piece of soap to the toilet, which afterwards vanished – there were no telephone directories.” A department that could not plan soap, towels or telephone directories was hardly likely to be able to restructure the British economy. But in any case the policies necessary – better technical education, more competition, more flexibility in labour markets – would hardly yield results within the term of a single government. It is hardly surprising that the failure of “planning” led Brittan to the economic liberalism with which he has become so closely identified.

The diary has been expertly edited by Roger Middleton, who contributes a most valuable introduction that provides the background to the making of economic policy. The history of the British civil service has been written by Peter Hennessy in Whitehall (1989). Brittan’s diary, the reflections of an economic commentator of rare intelligence, gives the flavour without which the history is incomplete. But the price is outrageous.

Vernon Bogdanor is research professor in history at King’s College, London. Inside the Department of Economic Affairs: Samuel Brittan, the Diary of an “Irregular” (1964-66) is published by Oxford University Press, £50

This article first appeared in the 20 August 2012 issue of the New Statesman, Back To Reality