John Barnes, Historian

Noting, when he finished the book in 1969, that "some of the most characteristic issues of the last decade first emerged into prominence" in the two year period when Selwyn Lloyd was at the Exchequer (June1960- July 1962), he adds "many of the supposedly distinctive economic policies of the Labour Government during its first three years of office had already emerged, at least in embryonic form, under Mr Selwyn Lloyd" (Pp.xv-xvi). More conscious of dissensus in the 1950s than most, Jefferys agrees. Although sharply critical of Macmillan's conduct of the modernisation strategy (arguably too much so) and his failure to match it with any attempt at institutional reform (NB the 1962 reforms of the Treasury and the adoption of the Plowden report on public expenditure), he recognises nevertheless the shift in emphasis from the "laissez-faire collectivism" of the early 1950s to a "more active corporatism in industrial policy", a shift which became more pronounced after 1960.

Perhaps the most substantial account of what was toward is offered in the second volume of Middlemas's Power, Competition and the State. He sees the early 1960s as the beginning of the second high peak of British corporatism (the first was the wartime structure).

On this view the 1944 settlement had been the first stage in a developing discourse about how Britain was best governed. Although written in very general terms, it enable the Government to seek coherence in the pursuit of agreed social and economic goals on the basis of a negotiated relationship with other key actors, particularly the financial, industrial and labour institutions, and to limit wasteful competition. However, the 1950s were, in his view, characterised by a growing defensiveness, a lack of trust and a growing preoccupation with the balance of power. The postwar settlement remained important both as a concept and a historic experience, but far from reshaping over time the outlook and ethos of those taking part in such discussion, the machinery itself was emasculated until only the civil servants were left in the position of sole trustees of the legacy of 1944. As Middlemas is forced to concede there had never really been any agreement on the rules of the game or on specific incentives to bind the actors into it. The 1956 White paper, The Economic Implications of Full Employment, which Middlemas interprets as an attempt to reassert the principles of the postwar settlement, relied very heavily on suasion when it implied that full employment must depend on wage restraint and industrial modernisation, but suasion proved of little use to cope with a situation in which the problems of how to restore competitiveness, increase productivity, and speed up both innovation and investment loomed increasingly large. No one was as yet prepared to denounce a weak corporatism that had certainly given full rein to pluralistic stagnation and perhaps induced it (Beer). Instead there was a climate of blame shifting in which attention was focused mainly on the indiscipline of the shopfloor and the deficiencies of Government economic management.

Middlemas sees the Government's actions in 1961 in terms of a relaunch of the postwar settlement, building on relationships that already existed, even if much eroded. He suggests that those taking part, while ready to concede the necessity of some ground, were ready also to reserve to themselves a much greater right to assert their own self interest than had been true of 1944, and he argues that their failure to bring matters to a satisfactory outcome in the course of the next few years opened the way to challenges from both Left and Right. While there may have been individual actors, particularly in the civil service, who thought in these terms, it is far from clear that any of the leading politicians were looking back to 1944. The same also seems to be true of other key figures. Rather than looking back to the war years, they were looking across the Channel at the buoyant fortunes of their principal European rivals. In fact it is possible to suggest that the dissensus of the 1940s and 1950s gave place to consensus in the 1960s as politicians came to accept that Britain was falling behind her European competitors and that those involved in NEDC were as much concerned with achieving the right degree of technocracy as they were with the need to adopt a more European style of policy-making in order to achieve similar degree of economic success.

That is certainly Trevor Smith's view. In The Politics of the Corporate Economy he looks to identify a number of factors which led to an apparent metamorphosis in the nation's mood. Some seem harder to justify than others. Thus it may be true that the upwardly socially mobile beneficiaries of the 1944 Education Act had "a built-in vested interest in novelty" and there are certainly insights (as well as quiet amusement) to be obtained from Chris Booker's study of the collective fantasy on which the British people subsequently embarked (The Neophiliacs) but it is not easy to pin down conclusive evidence for the generalisation. More productive is the sense that the young were becoming impatient with the old in the parties and in the City and were looking for new ways to do things. That there was a distinct shift in mood is clear and it has been traced to three factors in particular: -

(a)   a growing awareness of Britain's changed stature in international affairs and a sense that europeanism might refurbish a national sense of destiny;

(b)   a growing consciousness also that Britain's economic record left a good deal to be desired when compared with those in the obviously successful EEC; and

(c)    what amounted almost to a hangover from the national enthusiasm for Macmillan's hedonistic message in the 1959 election.

More than one observer sensed that the nation was less than at ease with itself over the blatant materialism of the Conservative appeal and wanted to find a new sense of purpose. (Cf. Kilmuir's memoirs). To some extent the American economist Galbraith caught that mood when he contrasted private affluence with public squalor, although it should be added that in the early 1960s, the Conservative Government set in train a sharp rise in public expenditure.

It is easier to explain the Government's change of course than it is to explain its choice of model. The first explanation, which clearly has some mileage in it, is that the longevity of the Conservative Government in office was beginning to tell on its political fortunes.

The second is that in the perennial battle with the Opposition to shape the public perception of the course of events, Wilson managed to make the charge of "Stop-Go" economics stick, hence the need for the Conservative Government to find an answer.

The third would suggest that what was taking place was a paradigmatic shift in the way the average Briton looked at the world. Conscious that Britain's role as a great power was played out and seeing her step-by-step relinquish her Empire, electors became conscious also that Britain's relative prosperity masked a relative decline in her fortunes for which they blamed the Government rather than attribute this to factors outwith the Government's control. The Opposition after all was telling them that they could do better and Macmillan was more than half inclined to believe it.

There is obviously a measure of truth in all three explanations, not least the difficulty that any Government has in re-inventing itself in office. But it is important to note

(a)   that the Conservative Government came within an ace of winning the 1964 election; and

(b)   the record of subsequent governments in dealing with Britain's problems was not such as to allow us endorse without question the criticisms advanced by Jefferys among others on the basis of the contemporary critique [see Barnes in Hennessy & Seldon (eds): Ruling Performance].

Too much of the historiography is still shaped by the criticisms advanced by Michael Shanks and the authors of the Penguin Specials. It is not so much that the criticism was ill founded, but that the Macmillan Government had in any case begun to address it. Its successors were arguably not only less successful in doing so, but created in advance an illusion about their ability to tackle Britain's problems, which not only created wholly false expectations about what was possible but led to corresponding disillusion when reality broke in on fantasy.

The reformist literature can be divided into two: publications which were concerned primarily with advocating or improving national planning, virtually all of whom looked to the French model, and a more heterogeneous collection designed to secure the reform of particular institutions, procedures and policies, of which the most notable found a place in Penguin's What's Wrong series. Particularly influential was Michael Shanks's The Stagnant Society, whose main proposals were concerned with the reform of trade unionism, but which neatly caught the zeitgeist in its pages.

Comparisons with what was going on across the Channel figure in government publications like Economic Trends as early as 1956, and the LSE economist Peter Wilesbut they took on seem to have begun in 1958. Shonfield's critique of British Economic Policy Since the War appeared in 1958 and a revised edition in 1959. Wilson as shadow Chancellor had begun to develop his criticism of the Government's policies in Remedies for Inflation (November 1957), but the theme is muted in the 1959 manifesto. Growth finds a more definite exponent in Roy Jenkins: The Labour Case. In the spring of 1961 Wilson calls for a "Four Year Plan for Britain" (7 February) and elaborates it in the New Statesman 24 March 1961.

At the time and arguably more influential, both sides of industry had tired of "Stop-Go". What Brittan has characterised as the "Brighton Revolution" seems to have been behind the switch in the FBI line.

The Weeks dining club - Hugh Weeks chaired the FBI's economic policy committee - began meeting in 1960.

PEP publishes Growth in the British Economy

Amory's HP restrictions heavily counter-productive

November 1960 FBI Conference on 'The Next Five Years'

Group III looked at Economic Growth in Britain

Planning Board discusses "conditions favourable to growth" at four meetings in the early months of 1961

Wilson's Four Year Plan for Britain February/March 1961

Publication of The Stagnant Society leading to widespread press discussion

Joint PEP-NIESR Conference 1961

Hall's articles for the Economist 16 &23 September 1961

Lloyd established good relations with the TUC at his first meeting with them and after discussions with both the TUC and FBI in January 1961 could not see why he should not meet them jointly [Thorpe]. It has been suggested that he first mentioned the planning idea to Macmillan shortly after the FBI Conference and found it welcome. May looks more likely Cf. Macmillan to Lloyd 21 May 1961, cited in Green's Ideologies of Conservatism p.182.

In July 1961 the Chancellor circulated "Economic Growth and national Efficiency" in which the Treasury noted: "in the past year public interest in the rate of economic growth in this country has been intensified", argued that increasing demand in the short run "does not increase national efficiency" and suggested that the Government had a role to play in removing "obstacles to the effective operation of a market economy". The market was preferred to the Government for its ability in picking winners, but the Government clearly needed to be hands on and that was why Macmillan consciously reverted to the ideas set out before the war in The Middle Way.

They became the deus ex machina of the July measures alongside the pay pause, and it is clear what was intended from Lloyd's draft invitation to the two sides of industry in September to take part in "a more effective machinery for the co-ordination of plans and forecasts for the main sectors of our economy.... Study centrally the plans and prospects of our main industries.... Correlate them with each other and with the Government's plans for the public sector, and to see how in aggregate they contribute to, and fit in with, the prospects for the economy as a whole."

Macmillan's major contribution was a high grade planning staff with a considerable measure of independence and authority (NEDO).

However, despite Macmillan's backing (16 September 1961) the measure divided the Cabinet (Maudling ironically was the principal opponent) and was greeted sceptically by the TUC. The Employers were more positive. Only Macmillan's backing saw the idea through Tory opposition. The price of TUC support was a refusal to include discussion of wages in its remit.

The Government had lost ground in the continuing dialectic with the Labour party. The charges made by the Opposition that the economy was suffering from a continual process of "stop" and "go" had won widespread credence, not least from Macmillan. Hence his backing for the creation of the NEDC despite major doubts inside the Cabinet. Hence too the decision to make a radical attack on the weaknesses of the economy, productive and structural, the decision to be rid of RPM and restrictive practices and to seek an effective regional policy. Finally the decision to go for growth. Lloyd accepts the 4% target just before the "Night of the Long Knives".

By the early 1960s, it was accepted that if sustained growth was to be pursued, an incomes policy was necessary to underpin it. However, it was difficult to achieve, in part because a Conservative government was in power, in part because the unions were reluctant to compromise the process of free collective bargaining.

The Government itself had been slow to accept that such interference was necessary and when it did, it made matters no easier for itself by beginning with a public sector pay freeze in July 1961. But Macmillan hoped to win the TUC to planning by holding out higher growth as the route to high wages.

Guiding Light February 1962

National Incomes Commission July/November 1962.

Russell Jones documents the moves in an all too brief book, which can be usefully supplemented by looking at Dorfman and/or Panitch.