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6 February 2019

How workers’ control of industry could transform the British economy

Faced with Nissan’s retreat and the decline of manufacturing, the left should take inspiration from the radical 1976 Lucas Plan. 

By Grace Blakeley

When Theresa May became Prime Minister in 2016, the phrase “industrial strategy” re-entered the political lexicon. According to May’s inaugural speech, greater state intervention was required to address the “burning injustices” of British society and to boost productivity, wages and skills. 

This was atypical language from a Conservative prime minister. The party had long viewed state planning as redolent of failed 1970s socialism. Margaret Thatcher was hailed for “modernising” the British economy by subordinating industrial production to financial and professional services.

Modernisation was, of course, a euphemism for deindustrialisation: a political project aimed at constructing a financialised economy in which workers would have little power. State-owned enterprises were privatised, financial markets were deregulated and the industrial policy pursued by the then powerful Department of Trade and Industry was supplanted by the Treasury’s “efficiency agenda”. Huge multinational corporations were encouraged to invest in Britain and take advantage of its newly “flexible” workforce, as well as generous tax breaks and regulatory incentives.

Nissan’s decision to build its first ever UK plant in Sunderland – announced in 1984 – appeared to vindicate this approach. The factory, which employs 7,000 people, is now one of the most productive car plants in Europe.

But while Nissan is a success story for British manufacturing, it is a notably rare one. Manufacturing now accounts for only 10 per cent of UK output, down from 27 per cent in 1970. Globalisation, creaking physical and social infrastructure and an overvalued currency driven by capital inflows into finance and real estate are all partly to blame. The uncertainty over Brexit and slower growth among the UK’s major trading partners has exacerbated these problems.

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It is in this context that Nissan has cancelled planned production of its new model X-Trail SUV in Sunderland. The government has announced that the company will be forced to reapply for the outstanding £58.4m of £61m of state aid promised after the Brexit vote in 2016. Yet as European demand for diesel cars contracts – both due to slower growth and the 2015 Volkswagen emissions scandal – any such support is unlikely to persuade the firm to reconsider. If May’s aim is to boost employment and wages, there are better ways to spend taxpayers’ money.

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A coherent and properly resourced industrial strategy would be a start. Alongside a dramatic increase in public spending on physical, social and knowledge infrastructure, the state could provide targeted support to corporations investing in researching, developing and manufacturing green technologies.

In isolation, however, such a plan would simply inflate profits for shareholders. A resilient, productive and sustainable economy requires combining a green industrial strategy with a plan to democratise corporate ownership and control.

Some of this could be achieved through nationalisation, some through mutualisation and some through reforming the asset management industry that controls most of our pensions and many of our firms. But were companies such as Nissan to declare their intention to leave Britain permanently, the government could pursue a far more radical solution.

In 1976, after manufacturer Lucas Aerospace announced plans to cut jobs across its 15 sites in the UK, the workers at the plant devised the Lucas Plan, an innovative proposal to reform the ownership and governance of the corporation. It proposed shifting production away from military equipment and towards “socially useful” goods and technologies. If Nissan left the UK, the state could support its workers in buying up the company’s fixed assets, starting a new, worker-controlled manufacturer, and developing a sustainable plan for the future of the factory. Instead of making retrograde diesel engines, the Sunderland plant could be adapted to produce electric vehicles – and perhaps even the physical infrastructure necessary to support them.

If emulated elsewhere, such a strategy would not simply represent a revival of British industry – but the emergence of a fundamentally new economic model. 

This article appears in the 06 Feb 2019 issue of the New Statesman, Broken Europe