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  1. The Weekend Essay
13 April 2024

Harold Wilson’s lessons for Labour

Keir Starmer would do well to study Wilson’s programme for national renewal.

By David Edgerton

How does Labour’s political culture help the party judge what its governments have done in the past? It does think with history, but a weird one. Clement Attlee is known for patriotism and the NHS; Harold Wilson for the Open University and social liberalisation measures; New Labour for Bank of England independence and the minimum wage, and changing the social composition of its members and supporters. Based on this history, Labour did surprisingly little to transform the country. The significant change came after 1979. As Keir Starmer put it in 2023, “Margaret Thatcher sought to drag Britain out of its stupor by setting loose our natural entrepreneurialism.” Attlee and Blair had places in his account, but not Wilson.

Nor does Harold Wilson occupy much of a place in the Labour pantheon. He is famous for the phrase the “white heat of the technological revolution”, which he did not actually say word for word, and for a misunderstood speech he gave in 1963, which did not include it. In received accounts he is always dealing with crises and is the butt of criticism from the revisionist right as well as the left. He is known as a devious political operator, at best a unifier. To general astonishment last it was revealed that he only found personal happiness in his last two years in office, the consequence of a love affair with his deputy press secretary, Janet Hewlett-Davies. As for his achievements, he is damned with faint praise.  

This is surprising. He won four general elections (if we cheat a bit), more than Attlee (two) and Blair (three). He was prime minister for eight years, more than Attlee (six), but less than Blair (ten). Like Attlee between 1950 and 1951, and unlike Blair, he raised Labour’s share of the vote in office, twice, and on average to higher levels than Blair. He was easily the most accomplished debater and speaker of any Labour prime minister (and indeed leader). Having acquired a theoretical critique of British capitalism – and an idea of how to change it – he was also the most intellectually interesting of all Labour leaders.

Writing in 1964, Perry Anderson wrote of “Wilsonism” that, “Perhaps for the first time in its history, the Labour Party now possesses a coherent analysis of British society today, a long-term assessment of its future, and an aggressive political strategy based on both. The contrast with Gaitskellism is arresting.”

Wilson, Anderson went on, “shows a relatively acute structural perception of British society. He is convinced that the present crisis of the governing class allows the Labour Party to split the Conservative bloc, detaching from it specific, crucial groups in the population. First and foremost among these is the ‘technical intelligentsia’: scientists, technicians, engineers, architects, managers, and professional workers, employed in both private and public corporations. Far from long-term occupational changes undermining Labour’s strength by making ‘less workers’, Wilson is confident that they can increase it by creating ‘more producers’. Thus his immediate target of winning the technical intelligentsia away from the Conservative bloc by playing on its antagonism to a demoralised aristocracy, is married to a long-term aim of including this pivotal, expanding sector of the population within the Labour alliance.

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“Untouched by anti-communist phobias, benefiting by the debacle of the Conservative economy, Wilson makes few concessions to consumer ideology. Instead, he continually attacks social imbalance in Britain, the real impoverishment of collective needs and the artificial inflation of private ones, and appeals to his audience as producers to change this, in the name of ‘a new Britain’. Finally, he offers an altogether new rationale for the degree of social intervention which this implies: instead of a calm, continuous future of ascending material well-being and contentment, he insists on the explosive technological and social upheavals of automation ahead.”

Anderson was right to underscore Wilson’s hostility to consumerism, to a straightforward embourgeoisement thesis, and his deep commitment to productivism.

He went on: “For the first time in its history, the Labour Party is now lead by a man who by any standards is a consummately adroit and aggressive politician. The long reign of mediocrity is over. MacDonald, Henderson, Attlee, Gaitskell – whether honourable or contemptible, the leaders of the Labour Party have always had in common political timidity, tactical incapacity and miserable intellectual vacuity… Now, suddenly this is over. The Labour Party has at last, after 50 years of failing, produced a dynamic and capable leader.”

Others on the left were less enamoured of Wilson, but that he should receive such an endorsement from Anderson is notable.

Wilson’s political and economic thinking certainly owed a good deal to Fabianism’s emphasis on experts and on reason as opposed to emotion; on the need for bureaucracy, organisation and planning, and a hostility to consumerism and to quick market fixes.

But declinism was central to Wilson’s arguments. That is surely why Anderson found them so interesting.

Wilson was nationalistic and committed to the poor commonwealth. A child of the industrial technical middle class, an economist by training, and someone who had worked in business in the 1950s, what also distinguished Wilson was his knowledge of, and desire to control, private industry.

The essence of Wilson’s approach was that government must influence not merely industry, but particular private non-nationalised firms. It had to have a direct link to firms, and in 1950, as president of the Board of Trade, he proposed to have government appointees to boards of large companies.

Wilson’s central concern was that the most important firms should work in line with the national interest. Private business was there in trust to the nation. If it failed it should be nationalised, as inefficient arms firms were during the Second World War.

Wilson was committed to production, exports and investment. The nation had to invest to produce, and produce to export, and to invest “in underdeveloped areas abroad, particularly within the Commonwealth”. Financial planning was not enough. “There must be a sufficiently purposive direction of the economy,” he wrote in 1957, “to ensure the main requirements of the nation are met – particularly exports and capital investment”.

What, then, were Wilson’s objections to Conservative policy? The Tories placed too much emphasis on monetary measures. With a few exceptions, the “fiscal weapon”, as he called it, had “not been used in a discriminatory manner”. But the view of the Labour opposition was “that they might be used to discriminate between ‘essential and less essential forms of investment’”. He noted that in 1955-56 “oil distributing companies were able to build vast numbers of quite inessential garages and petrol stations along the highroads of Britain to cash in on the profits of the boom in private motoring”. The Labour test, he claimed, was not whether investment was public or private but, “How essential is it?” Under Labour the ultimate investment decisions would be taken by “state servants under the direction of Ministers” not “bank managers”. 

The “white heat” speech on 1 October 1963 is remembered for being the first, perhaps, the only major British political speech about science and technology, and for inaugurating what is seen as a serious but failed attempt to put science and technology at the centre of national policy. But Wilson’s remarks that day have been misunderstood.

The speech was not just about science and technology. It was a powerful declinist speech. The problem of the British economy, Wilson argued, was the old elite, finance, the gentlemen who acted as if the world owed the UK a living (as it once had to British rentiers, whose overseas income paid for a big chunk of British imports). Wilson called for something new, more national, more scientific. The speed also evoked Wilson’s powerful criticisms of elite delusions in defence. It is little remembered that Wilson (and the 1964 Labour manifesto) argued that the new Polaris nuclear weapon system would be neither British, nor interdependent, nor a deterrent. Nor do people remember his opposition to selling frigates to Franco, or arms to South Africa.  

To the extent the white heat speech was about science and technology, it was not about prioritising them within the British state, but rather about fundamentally redirecting the state’s wasteful innovation away from military research and development and other prestige projects.

But the usual story of Wilson’s government goes like this: Labour started with grand plans to transform the state but things went wrong as the result of economic problems and an obstinate failure to devalue the pound. This story has an element of truth, but it misses a lot.

Wilson did not want to devalue because he thought it would decrease the pressure for much-needed structural change. Such change would come through the implementation of special policies for certain industries such as computers, as well as increased investment allowances, increased regional investment, and the creation of national industrial champions.

Such initiatives did not end in 1966 but became more radical. As the Labour manifesto of 1966 put it: “During the next five years we intend to carry through a massive programme for modernising and strengthening British industry.” The Industrial Reorganisation Corporation was established in 1966 to create more efficient and competitive businesses – it gave us General Electric Company, and British Leyland and ICL (Fujitsu). It was run by Frank Kearton, a senior industrialist with an Oxford chemistry degree. The shipbuilding industry was merged into a small number of firms such as Upper Clyde Shipbuilders and Scott Lithgow on the Clyde, and Swan Hunter on the Tyne. This was a much more radical government-led reorganisation of private industry than there had ever been. It was discriminatory.

But perhaps more important was the development of the Ministry of Technology into the most comprehensive industry in British history. In 1964 Mintech was novel, but by 1970 it was significant. In 1967 it took over the Ministry of Aviation, great procurers for the military in aviation and electronics, and the sponsoring department for civil aerospace. Wilson knew this was where expertise in industrial intervention lay, and where the technological strengths of the state were. To this he added the Ministry of Power, and some elements of the Board of Trade (shipbuilding, engineering, textile and chemicals, and weights and measures), and the residue of the Department of Economic Affairs, not least the Industrial Reorganisation Corporation. Nothing like Mintech ever existed or would exist again. It would have had more attention if it was called what it was – a Ministry of Production. It was at the core of Britain’s developmental state.

The key to this expansion was Wilson’s understanding that the defence supply departments always had enormous power and influence over industry. And central to Wilson’s vision was the extension of the discriminatory practices of the supply ministries to the civil sector.

The Ministry of Technology realised that British industry was not doing too little R&D, as so many had claimed. They learnt that national R&D did not lead to national growth, and that there were important deficiencies in management and investment which were more significant for growth. This informed the central point of Wilson’s white heat speech – that money should not be spent on prestige projects, but should go to bread and butter efforts more likely to succeed. In 1964 and 1969, Labour came close to cancelling Concorde. It cancelled many other projects. It started few large ones – no big aircraft projects were started under Labour or ever again. One that got away was the hugely expensive and very secret Chevaline project to build a re-entry vehicle carrying nuclear weapons, which was to be fired into space by Polaris missiles.

As Tony Benn, the minister of technology between 1966 and 1970 put it, there “is a movement away from the limited approach to growth implicit in the support of research and development to a more direct recognition that production technology – production itself and marketing – are at least as essential to the achievement of industrial strength. Formidable as our national research capability is – and it is formidable indeed – our commercial performance has not in the past been commensurate with the amount of money we spend as a nation on research and development.”

A key measure was the Industrial Expansion Act of 1968. As Benn introduced it, “The object of industrial policy, as we see it, is to pick winners and not to run an indiscriminatory ‘meals-on-wheels’ service for British firms whether they are efficient or inefficient.” The “government will not be limited in their capacity to stimulate industrial growth simply by the accident of history which has confined them to certain sectors and certain roles within each sector”. The act gave the minister huge discretionary powers of intervention and finance. A Tory called it “the groundnuts repetition scheme”.

If there were many narrow discriminations, there were also broader ones like the Selective Employment Tax to promote manufacturing at the expense of services. There were general measures such as the Redundancy Payments Act to promote structural change, the impact of which was significant in the 1960s, as employment fell in mining, railways and textiles. Government was changed too, with many of the recommendations of the 1968 Fulton report, a notably technocrat analysis of the civil service, implemented along the same lines as the Ministry of Technology.

The significance of nationalism to the Wilson doctrine was exemplified by the building of new aluminium smelters under the Industrial Expansion Act. Two were powered by new nuclear stations, the third by a coal-powered station, in Wales, Scotland and the north-east. Labour increased import controls in 1964, and sought to increase domestic food production. 

The enthusiasm for the commonwealth was found in many places and was associated with anti-consumerism. Wilson used to make disparaging anti-consumerist references to selling washing machines in Düsseldorf but celebrated making steam ploughs for the poor of Commonwealth (an idea discussed in the white heat speech). 

But things change, and there was a decisive shift to Europe, since it was recognised that the UK economy needed better access to European markets, and that British defence efforts should be concentrated in Europe. The UK asked again for accession to the European Economic Community in 1967. Owing to the extraordinary levels of defence expenditure, many wasteful procurement programmes were cut (including a plan to build new aircraft carriers); plans were made to withdraw from east of Suez and focus on defending Britain’s immediate neighbours. Labour changed things, and adjusted policy to reflect the UK’s real place in the world.

For both Attlee and Wilson, production trumped welfare. The approach was not tax and spend, but transformation. From the 1950s, Labour began rejecting the basis of the Beveridgean programme that it had expanded in the 1940s, and which dated back to the 1920s as the central organising principle of the welfare state. Its basis was the flat-rate contribution, a poll tax, and a flat-rate benefit, irrespective of need. The Beveridge system was based on a regressive tax, an automatic mechanism to keep contributions and benefits low (to subsistence or below level, and that only with a full record). But it was so inadequate that it could not work without an (expanding) national assistance scheme of means-tested benefits.  

Labour under Wilson rejected this austerity welfare state. It wanted to create the New Welfare State. The story is complex, but the essentials were straightforward. The idea was to replace the fixed rate/fixed contribution system with one in which National Insurance payments increased with income and benefits. Thus pensions would be at the level of half of an individual’s income (the traditional norm for occupational pensions, including public sector ones) rather than a fixed rate at a small percentage of average wages.

After 1964 Labour made pensions much more generous, and in 1967 introduced earnings-related unemployment and sickness benefit. But the big measure, the National Superannuation and Social Insurance Bill of 1970, which promised a graduated contribution, and graduated pension, fell. This presaged changes in the 1970s. From 1975-76, the National Insurance contribution ceased to be flat rate and became a percentage of income. A new State Earning Related Pension was enacted by Labour in 1975.

The changes in the pattern of state expenditure were important. By 1970, it was higher on social services, education, health, and lower on defence. The country went back to the 1930s ratio of military to welfare spending, and moved away from the bloated defence expenditures characteristic of the post-1945 warfare state, which reached well over 10 per cent of GDP.

These industrial and welfare measures are significant because, while they represented breaks with the past (not least with the policies of the 1945-51 Labour governments), they were also reversed. Margaret Thatcher liberalised the economy and was profoundly hostile to any sort of industrial policy, which she eviscerated. She ceased to believe that manufacturing was more important than anything else, and rejected the view that the balance of trade was a measure of national strength. All the ideological underpinning of economic nationalism was junked.

Thatcher also reversed many key changes in the welfare system. Earnings-related unemployment benefit, and the earnings-related pension were ended. Subsistence benefits were again the order of the day and means testing extended. Although National Insurance remained graduated, it remained regressive, and was hiked. The idea of a poll tax reappeared, in the notorious Community Charge, which replaced the tax rates, which were the only significant wealth tax. Thatcher represented the revenge of the 1950s on the 1960s and 1970s.

Wilson was the great hope of British social democracy, and his failure was its failure. He had a project, and one which involved a rare understanding of the nature of the British state and power in Britain. Wilson did much to change the Attlee legacy, not least to address its deficiencies in both industrial policy and in welfare. But his key initiatives did not survive. Yet it was under Wilson that Labour last wished to undertake a programme of national renewal while in office.

EP Thompson said of Wilson, in a crushing review of his memoirs, that he “never uses one cliché when two or three will suffice… What is more alarming is the growing conviction that the author apprehends the universe as cliché”. While a reasonable judgement of the book, this is not quite right about Wilson the thinker and transformer. The problem is, we have come to think of him in clichés.

This article is based on a lecture given on 27 January 2024 at the “How Labour Governs” conference organised by the Labour History Research Unit at Anglia Ruskin University.

[See also: The 2010s: a decade of revolutionaries without a revolution]

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