Labour’s history of nationalisation gives us hope for the future

I have always found the industrial nationalisations undertaken by the Clement Attlee's Labour government inspiring. It was an ambitious task to bring so much of the economy into public ownership. Few subsequent governments have had grand ambitions. The Blair government’s reforms pale in comparison.

In the 1940s Labour realised a long term socialist ambition to run industries democratically and for the benefit of all, not just a few rich owners. The nationalisations following World War 2 were widely supported. The government took control of the mines, railways, electricity, gas, iron and steel, the Bank of England, inland waterways, road haulage and Cable & Wireless Ltd.

These nationalisations were popular as they tackled big economic problems. The mining industry had been in financial trouble since the First World War and many small mines were closing, leading to unemployment. There was also a lot of concern about safety and the dire working conditions in many mines.

The railways were also in a bad state after the war. There had been heavy bombing of track and stations, and there was a shortage of locomotives. Both the railways and the mines had been successfully run by the government during the war, so it made sense that they should be nationalised.

Massive ambition

Over 800 coal mines were taken into public ownership under the National Coal Board (NCB). Conditions in the mines run by the NCB were more humane than they had been before nationalisation. The newly-nationalised British Rail also invested in new rolling stock to replace what had been destroyed in the war.

The nationalised industries were given money by the government for investment and modernisation. There was an expansion of civil aviation and of cable and wireless communications. This greater investment in energy, transport and communication was good for all businesses, not just the state-owned ones, and it contributed to postwar economic growth.

The nationalised industries could exploit economies of scale as they were much larger than the small firms they had replaced. British Rail could produce a locomotive or lay track much more efficiently than the smaller private rail companies as the steel was brought in bulk from another nationalised supplier that didn’t need to satisfy the demands of shareholders.

The main advantage of nationalisation was that the government could coordinate industries and plan across the entire economy. The vast apparatus of the state, which had so effectively prospected the war, could now be turned to creating jobs and wealth for all.

This was an impressive accomplishment. Never before had any government brought so much into public ownership. Mines, railways and other large industries were being run in the interests of ordinary people and not for the wealthy few. Decisions that affect the entire economy could be debated in the public sphere, not in shadowy boardrooms.

Selling the family silver

Of course it didn’t last. The Thatcher government privatised many of these state-owned industries in the 1980s. At the time it was described (by former Tory Prime Minister Harold Macmillan no less) as “selling off the family silver”. The comparison is apt as the revenue for the government can only be made once and then the gains of nationalisation were lost.

The Thatcher government did this because of its ideological commitment to free markets. At the core of all this was the greed of neoliberals, an economic belief that opening up markets for private companies is automatically best for everyone. Ultimately this has lead to the wealth created by these industries being captured by a few rich owners.

Today, the coal mines are almost all gone. The cost of privatised utilities are going up and up. A 2017 study by the University of Greenwich estimated that consumers in England were paying £2.3bn more year a year on their water bills than if the company was nationalised. £18.1bn was paid out in dividends, but little infrastructure investment was undertaken.

Private island

For anyone looking to learn more about this topic, James Meek’s book Private Island catalogues the errors and waste of privatisation. He traces the disastrous privatisations of the railways, the postal service and the utilities, showing that privatisation failed to achieve the increased innovation and economic dynamism that was promised.

There is some hope in the form of the current Labour opposition. Both Jeremy Corbyn and John McDonnell are in favour of nationalisation, and McDonnell has said that a Labour government would renationalise the railways, water companies, energy firms and the Royal Mail. The private rail franchises would not be renewed and the lines would be brought back into public ownership one by one as the franchises come up for renewal.

This gives me hope that the great accomplishments of the Attlee government aren’t lost forever. There is a future for nationalisation and the idea that it is better if industries are run openly, democratically and with the proceeds of their activity shared amongst us all.

British Rail image created by Steve Jones and used under creative commons.