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Ministerial Control of the British Nationalized Industries

Published online by Cambridge University Press:  07 November 2014

Frank Milligan
Frank Milligan*
Affiliation:
London, England
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Extract

In Britain the public corporation has for some time been almost universally regarded as the appropriate form of organization for publicly-owned commercial undertakings, but the only common article of faith underlying this agreement is the negative proposition that such undertakings cannot be run efficiently by organizations on the lines of government departments, staffed by civil servants. Beyond that there is nothing approaching unanimity, either between or within the political parties. And now that the nationalization programme of the Labour party is substantially completed (and, with the important exceptions of road transport and steel, substantially accepted by the Opposition) attention centres increasingly on those questions which remain in dispute.

Foremost among these is the question of public control: how much control? and by whom? The scheme adopted by the Labour Government rests on two premises: first, that by eliminating the motive of maximizing profits, nationalization eliminates much of the need for external controls, since the industries may now be expected to devote themselves wholeheartedly to public service; and, second, that the equity interest which passes from the shareholders to the general public can only be exercised by a minister of the Crown, answerable for his actions to the public's representatives in Parliament. Thus, while the various nationalized industries differ from each other in a number of respects, all may be classified together under the general description: “public corporations, strong minister type.”

Type
Research Article
Information
Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 17 , Issue 2 , May 1951 , pp. 164 - 183
Copyright
Copyright © Canadian Political Science Association 1951

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References

1 The single exception to this policy is the rate-fixing power of the Transport Tribunal.

2 Bank of England Act, 1946, 9 & 10 Geo. VI, c. 27; Coal Industry Nationalisation Act, 1946, 9 & 10 Geo. VI, c. 59; Civil Aviation Act, 1946, 9 & 10 Geo. VI, c. 70; Transport Act, 1947, 10 & 11 Geo. VI, c. 49; Electricity Act, 1947, 10 & 11 Geo. VI, c. 54; Gas Act, 1948, 11 & 12 Geo. VI, c. 67; Iron and Steel Act, 1949, 12 & 13 Geo. VI, c. 72; Air Corporations Act, 1949, 12, 13 & 14 Geo. VI, c. 72, See also Chester, D. N., The Nationalised Industries: A Statutory Analysis (rev. ed., London, 1951).Google Scholar

3 The wording is that of the Coal Act; corresponding provisions in the other acts are substantially the same.

4 See Morrison, Herbert, Socialisation and Transport (London, 1933)Google Scholar, chap. x.

5 Ibid., 161.

6 The B.O.A.C., of course, differed greatly from the L.P.T.B. in its financial dependence upon the Government and the vital interest of the Government in its policies.

7 Official Report, Standing Committee “C,” Dec. 7, 1948, col. 38 et seq.

8 House of Commons Debates, vol. 461, Written Answers, col. 4, 02 7, 1949.Google Scholar

9 Coal Industry Nationalisation (National Coal Board) Begulations 1946, Statutory Rules and Orders, 1946, no. 1094; Electricity (Central Authority and Area Boards) Regulations 1947, Statutory Rules and Orders, 1947, no. 1750; Gas (Area Boards and Gas Council) Regulations 1948, Statutory Instruments, 1948, no. 2233.

10 There can be little doubt that Mr. Strachey, as Minister of Food, was seriously at fault in forcing the resignation of one director of the Overseas Food Corporation and dismissing another who refused to resign. The evidence that these two were solely or especially responsible for the serious flaws in the O.F.C.'s operations was, to say the least, unconvincing. Dismissal is a legitimate weapon in the proper circumstances, but to use it as Strachey did may well injure the prestige of the public boards.

11 Management Efficiency in Nationalized Undertakings (London: British Institute of Management, 1950), 5, n. 1.Google Scholar

12 For details of the early corporations consult Robson, W. A., ed., Public Enterprise (London, 1937)Google Scholar, or Gordon, Lincoln, The Public Corporation in Great Britain (New York, 1938).Google Scholar

13 P. 171.

14 In the case of transport and gas this power is limited to reserve funds only.

15 Official Report, Standing Committee “B,” May 28, 1946, col. 570.

16 Commons Debates, vol. 418, cols. 721-2, 01 29, 1946.Google Scholar

17 See especially: in second reading debate on the Bank of England Bill, SirAnderson, John, Commons Debates, vol. 415, cols. 58–9Google Scholar; in the second reading debate on the Civil Aviation Bill, ibid., vol. 422, Mr. Lennox-Boyd at col. 621 and Col. J. R. H. Hutchison at col. 687; and in the second reading on the Transport Bill, Sir David Maxwell Fyfe, ibid., vol. 431, cols. 1644-5. The issue was fought out at some length in the Standing Committee on the Transport Act, Official Report, Standing Committee “B,” Feb. 25, 1947, cols. 1495-1528.

18 Official Report, Standing Committee “B,” May 28, 1946, col. 505.

19 “Ministerial Control and Parliamentary Responsibility of Nationalised Industries,” Political Quarterly, XXI, 1950, 152–3.Google Scholar

20 See especially statements by Mr. Dalton (re Bank of England) in Commons Debates, vol. 413, col. 498, 08 21, 1945 Google Scholar; by Mr. Shinwell (re electricity) in Official Report, Standing Committee “E,” March 13, 1947, col. 635; and by Mr.Strauss, (re steel) in Commons Debates, vol. 464, col. 1604, 05 9, 1949.Google Scholar See also Morrison, Herbert, “Public Control of the Socialised Industries,” Public Administration, XXVIII, 1950, 3–4.CrossRefGoogle Scholar

21 Commons Debates, vol. 422, col. 605, 05 6, 1946: Mr.Morrison, .Google Scholar

22 Official Report, Standing Committee “D,” March 23, 1948, col. 343.

23 See Commons Debates, vol. 418, col. 808, 01 29, 1946 (coal)Google Scholar; ibid., vol. 431, col. 1891, Dec. 18, 1946 (transport); Official Report, Standing Committee “E,” March 13, 1947, cols. 635-6 (electricity); Official Report, Standing Committee “D,” March 23, 1948, col. 336 et seq. (gas); Commons Debates, vol. 464, col. 1604, 05 9, 1949 (steel).Google Scholar

24 Official Report, Standing Committee “B,” Feb. 25, 1947, cols. 1507-8.

25 Commons Debates, vol. 440, col. 1249, 07 23, 1947.Google Scholar

26 “Public Control of the Socialised Industries,” 4-5. For the same reason Mr. Morrison opposes the granting of subsidies where directions may injure the nationalized industries financially. Why should they be compensated for doing the sort of thing that private industries do without compensation?

27 On the other hand, in future there can be no repetition of the situation which was reliably reported to have arisen between Mr. Churchill, as Chancellor of the Exchequer, and Mr. Norman, as Governor of the Bank: “The right hon. Member for Woodford said he was not to increase the bank rate. Mr. Montague Norman increased it the next day, and blow the City, and blow the commercial institutions, and let the whole thing go bang.” Mr. Churchill was powerless—it is slight consolation to the public that thereafter he always referred to Montague Norman as “Mr. Skinner.” See Commons Debates, vol. 457, col. 732, 11 2, 1948.Google Scholar

28 Details are given in Longhurst, John, Nationalisation in Practice (London, 1950), 104–5.Google Scholar See also Commons Debates, vol. 447, col. 2176, 02 26, 1948.Google Scholar

29 Nationalisation in Practice, 176.

30 House of Lords Debates, vol. 159, col. 214, 11 3, 1948.Google Scholar

31 Longhurst, , Nationalisation in Practice, 112–13.Google Scholar

32 House of Commons Papers, 1950-1, no. 141, British European Airways, Report and Accounts for 1949-50, 22.

33 Lords Debates, vol. 168, cols. 121-2, 07 5, 1950.Google Scholar

34 Davies, , “Ministerial Control and Parliamentary Responsibility,” 153.Google Scholar

35 Commons Debates, vol. 470, col. 1434, 12 1, 1949: Mr.Thorneycroft, Peter.Google Scholar

36 Ibid., vol. 472, col. 1166, March 15, 1950.

37 Ibid., vol. 470, col. 1391 et seq., Dec. 1, 1949.

38 Address on “Incentives to Efficiency in the Nationalised Industries,” delivered to the Institute of Public Administration, Jan. 25, 1950. See also his “Ministerial Control and Parliamentary Responsibility,” 153.

39 H. of C. Papers, 1949-50, no. 235, 9.

40 Official Report, Standing Committee “E,” March 11, 1947, col. 619.

41 Commons Debates, vol. 443, col. 76, 10 21, 1947.Google Scholar

42 Ibid., vol. 451, cols. 356-7, May 27, 1948.

43 Statutory Rules and Orders, 1946, no. 1094.

44 H. of C. Papers, 1949-50, no. 219, Industrial Coal Consumers' Council, Annual Report for the Year Ended 30 June, 1949, 9.

45 Ibid., no. 336, 68-70. Later, the B.E.A. was able to convince the Minister that the scheme was not producing the effects he expected, and it was abandoned.

The Evening Standard published a report (unconfirmed officially) of a later disagreement, in this case about the time that display lighting should be permitted. “BEA wanted the lights to go up at 6 p.m. They needed the revenue. But Gaitskell overruled the men who make the power. His reason was a fear of load-shedding, which Lord Citrine [Chairman of B.E.A.] describes as ‘Over-emphasized.’ ” “The Londoner's Diary,” Jan. 19, 1950.

46 Commons Debates, vol. 457, col. 889, 11 3, 1948.Google Scholar

47 It has been stated that the Authority complied with the Minister's request only after he had made it clear that he would, if necessary, give formal directions. The Powers of the Minister (London, 1951), 8 Google Scholar; this is no. 2 of a series, Nationalised Industry, published by the Acton Society Trust.

48 H. of C. Papers, 1950-51, no. 141, 22.

49 “Ministerial Control and Parliamentary Responsibility,” 151.

50 “Public Control of the Socialised Industries,” 5.

51 Commons Debates, vol. 422, col. 605, 05 6, 1946.Google Scholar Similar views have been expressed by Pakenham, Lord, Lords Debates, vol. 168, col. 122, 07 5, 1950.Google Scholar Cf. Mr. Morrison's account of his own relations, as Minister of Transport, with the Chairman of the Central Electricity Board, SirDuncan, Andrew, Commons Debates, vol. 418, col. 970, 01 30, 1946.Google Scholar

52 “The Public Corporation: II. Powers of Ministers and Parliament,” The Times, 01 21, 1947.Google Scholar

53 See, for example, Mr. Harold Macmillan during the second reading of the Bill, Coal, Commons Debates, vol. 418, col. 957, 01 30, 1946.Google Scholar

54 See, for example, Hutchison, J. R. H., The Great Betrayal (London: Conservative Political Centre), 1950.Google Scholar

55 For an examination of the controversy over parliamentary control, see Accountability to Parliament (London, 1950)Google Scholar, no. 1 in the series, Nationalised Industry.

66 The writer has examined the role of these councils in greater detail in an essay to be incorporated in a forthcoming study of Nationalized Industry (Robson, W. A., ed.) to be published by Allen & Unwin.Google Scholar

57 Commons Debates, vol. 478, col. 2880, 10 25, 1950.Google Scholar

58 See his statements in Hansard: vol. 418, cols. 966-7, Jan. 30, 1946 (Coal Bill); vol. 422, cols. 600-2, May 6, 1946 (civil aviation); vol. 447, cols. 474-5, Feb. 11, 1948 (Gas Bill). Earlier expressions of the same view may be found in Socialisation and Transport, 79, 98-9.

59 Official Report, Standing Committee “D,” March 11, 1948, cols. 205, 208.

60 Commons Debates, vol. 447, Written Answers, col. 163, Feb. 11, 1948; and vol. 450, Written Answers, cols. 140 and 163, May 5 and 7, 1948. The most striking change was in relation to the coal industry, where the staff of the Ministry of Fuel and Power was reduced by 850 in the first two years as a result of nationalization.

61 Reports of the Permanent Members of the Transport Tribunal Sitting as a Consultative Committee under Section 82 of the Transport Act, 1947, (6th and 16th February 1950) (London, 1950).Google Scholar After the charges schemes have been brought into force, transport charges will cease to be a matter for decision by the minister, although he will still be empowered, under section 50 of the Transport Act, to require the Tribunal to review the operation of any charges scheme.

62 Lords Debates, vol. 151, cols. 1276-8, 08 12, 1947.Google Scholar

63 Nationalisation in Practice, 118. See also p. 187 where he suggests “… the advisability of supplementing the Minister by the appointment of some more permanent policy-making body.”

64 War Memoirs, III, 1172 Google Scholar, quoted by Jennings, W. I. in Cabinet Government (Cambridge, 1946), 96.Google Scholar

65 Parliamentary Government in England (London, 1938), 280–308.Google Scholar