Britain, along with the dominions and the rest of the Empire, declared war on Nazi Germany in 1939, after the German invasion of Poland. After a quiet period of “phoney war”, the French and British armies collapsed under German onslaught in spring 1940. The British with the thinnest of margins rescued its main army from Dunkirk (as well as many French soldiers), leaving all their equipment and war supplies behind. Winston Churchill came to power, promising to fight the Germans to the very end. The Germans threatened an invasion—which the Royal Navy was prepared to repel. First the Germans tried to achieve air supremacy but were defeated by the Royal Air Force in the Battle of Britain in late summer 1940. Japan declared war in December 1941, and quickly seized Hong Kong, Malaya, Singapore, and Burma, and threatened Australia and India. Britain formed an alliance with the Soviet Union (starting in 1941) and very close ties to the United States (starting in 1940). The war was very expensive. It was paid for by high taxes, by selling off assets, and by accepting large amounts of Lend Lease from the U.S. and Canada. The US gave $40 billion in munitions; Canada also gave aid. (The American and Canadian aid did not have to be repaid, but there were also American loans that were repaid.)
Welfare conditions, especially regarding food, improved during the war as the government imposed rationing and subsidized food prices. Conditions for housing worsened of course with the bombing, and clothing was in short supply.
A common theme called for an expansion of the welfare state as a reward to the people for their wartime sacrifices. The goal was operational in a famous report by William Beveridge. It recommended that the various income maintenance services that a grown-up piecemeal since 1911 be systematized and made universal. Unemployment benefits and sickness benefits were to be universal. There would be new benefits for maternity. The old-age pension system would be revised and expanded, and require that a person retired. A full-scale National Health Service would provide free medical care for everyone. All the major parties endorsed the principles and they were largely put into effect when peace returned.
The end of the war saw a landslide victory for Clement Attlee and the Labour Party. They were elected on a manifesto of greater social justice with left wing policies such as the creation of a National Health Service, an expansion of the provision of council housing and nationalisation of the major industries. Britain faced severe financial crises, and responded by reducing her international responsibilities and by sharing the hardships of an “age of austerity.” Large loans from the United States and Marshall Plan grants helped rebuild and modernize its infrastructure and business practices. Rationing and conscription dragged on into the post war years, and the country suffered one of the worst winters on record. Nevertheless, morale was boosted by events such as the marriage of Princess Elizabeth in 1947 and the Festival of Britain.
Labour Party experts went into the files to find the detailed plans for nationalisation that had been developed. To their surprise, there were no plans. The leaders realized they had to act fast to keep up the momentum of the 1945 electoral landslide. They started with the Bank of England, civil aviation, coal, and cables and wireless. Then came railways, canals, road haulage and trucking, electricity, and gas. Finally came iron and steel, which was a special case because it was a manufacturing industry. Altogether, about one fifth of the economy had been nationalised. Labour dropped its plans to nationalise farmlands. The procedure used was developed by Herbert Morrison, who as Lord President chaired the Committee on the Socialization of Industries. He followed the model that was already in place of setting up public corporations such as the BBC in broadcasting (1927). As the owners of corporate stock were given government bonds, and the government took full ownership of each affected company, consolidating it into a national monopoly. The management remained the same, only now they became civil servants working for the government. For the Labour Party leadership, nationalisation was a method to consolidate economic planning in their own hands. It was not designed to modernise old industries, make them efficient, or transform their organisational structure. There was no money for modernisation, although the Marshall Plan, operated separately by American planners, did force many British businesses to adopt modern managerial techniques. Old line socialists were disappointed, as the nationalised industries seemed identical to the old private corporations, and national planning was made virtually impossible by the government’s financial constraints. Socialism was in place, but it did not seem to make a major difference. Rank-and-file workers had long been motivated to support Labour by tales of the mistreatment of workers by foremen and the management. The foremen and the managers were the same men as before with much the same power over the workplace. There was no worker control of industry. The unions resisted government efforts to set wages. By the time of the general elections in 1950 and 1951, Labour seldom boasted about nationalisation of industry. Instead it was the Conservatives who decried the inefficiency and mismanagement, and promised to reverse the takeover of steel and trucking.
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