Problems of Nationalized Industry

William Robson, William A. Robson

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000527988
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

First Published in 1952, Problems of Nationalized Industry presents the first serious discussion on the issues related to nationalization of industries in Britain during the first half of the twentieth century. Part I includes fourteen essays on the general framework of public corporations; methods of assessing compensation; the organization of nationalized industries; labour and staff problems; joint consultation between management and workers; finance and price policy; scientific research and development; and a comparison between nationalization in England and France. Part II consists of a substantial body of general conclusions which are related to the earlier chapters. This book is a must read for scholars and researchers of British politics, labour politics, labour economics and political science.

PART ONE

DOI: 10.4324/9781003254553-1

CHAPTER I THE PUBLIC CORPORATION IN BRITAIN

By WILLIAM A. ROBSON

DOI: 10.4324/9781003254553-2

Genesis of the Public Corporation

BRITAIN is at the present time engaged in an experiment on the outcome of which will depend the success or failure of her great effort at economic reform and social and physical reconstruction. That experiment is the nationalization of various major industries and the social services. The institution by which the policy of nationalization is in most cases being carried out is the public corporation.

The public corporation is not an entirely new institution. There have long existed numerous organs exercising official or governmental functions, yet possessing varying degrees of independence from the executive and distinguishable from the great departments of state under the direct control of ministers of the Crown. There are bodies such as the Public Trustee,¹ the Charity Commission,² and Trinity House.³ There are organs performing technical and specialist functions such as the Tithe Redemption Commission,⁴ the Air Registration Board,⁵ and Medical Research Council.⁶ There are bodies concerned with cultural activities such as the Arts Council,¹ the British Council,² the great national museums and scientific collections, and the Public Record Office.³ There are bodies which are ancillary to and almost integrated in the great departments of state such as the Prison Commissioners,⁴ the Board of Control,⁵ the Commissioners for Crown Lands,⁶ and the State Management Districts for Liquor Control in Carlisle.⁷ An essential feature of all these bodies is that they were created in order to undertake tasks of a specialized nature free from the direct executive control of Ministers, although often subject to their influence or decisions on matters of policy. These organs are, however, quite different from the new public corporations concerned with the operation of great socialized industries or services. The underlying reason for the creation of the modern type of public corporation is the need for a high degree of freedom, boldness and enterprise in the management of undertakings of an industrial or commercial character and the desire to escape from the caution and circumspection which is considered typical of government departments.⁸

¹ Public Trustee Act, 1906.

² Charitable Trusts Act, 1853.

³ "The master, wardens, and assistants of the guild, fraternity, or brotherhood of the most glorious and undivided Trinity and of St. Clement in the parish of Deptford Stroud, in the County of Kent" (Merchant Shipping Act, 1894, s. 742). By the Merchant Shipping Act, 1854, s. 389, the superintendence and management of all lighthouses and beacons in England and the adjacent seas were vested in the Trinity House, subject to the existing jurisdiction of local lighthouse authorities.

⁴ Tithe Act, 1836.

⁵ Constituted under the Air Navigation Act, 1936, s. 2, and incorporated on February 28th, 1937, under the Companies Act, 1929. The Air Registration Board is composed of representatives of the aircraft industry. It performs functions relating to the airworthiness of aircraft delegated to it by the Secretary of State for Air and the Minister of Civil Aviation. It receives financial grants from the government.

⁶ Originally established under the National Health Insurance Act, but incorporated by Royal Charter in 1928. See National Health Service Act, 1946, s. 16.

¹ Established by Royal Charter, August 9th, 1946.

² Constituted by Royal Charter in 1940.

³ Public Record Office Act, 1838, s. 8. The Public Record Office is under the supervision of the Master of the Rolls.

⁴ Prisons Act, 1877, s. 6.

⁸ Mental Deficiency Act, 1913, s. 22, and Mental Treatment Act, 1930, s. 11.

⁶ Crown Lands Act, 1927, s. z.

⁷ Licensing Act, 1921, s. 16.

⁸ The Post Office has been criticized by all political parties as an example of how the constitution of an ordinary government department is ill-designed to secure business efficiency in the services which it administers. Criticism culminated in a Memorial signed by some 320 M.Ps. and addressed to the Prime Minister in December, 1931. See the Report of the Bridgeman Committee on the Post Office, Cmd. 4149/1932.

The growth of the public corporation has been very rapid. The Port of London Authority, set up in 1908,⁹ was virtually the only example prior to the war of 1914-18. The Haldane Committee on the Machinery of Government, in its famous report published in 1918, regarded the public corporation with disfavour, as not securing the safeguards which ministerial responsibility to Parliament alone provides.¹⁰ This part of the report had no influence on the subsequent course of events. The following year saw the establishment of the Electricity Commission¹ and the Forestry Commission.² In 1926 the British Broadcasting Corporation and the Central Electricity Board were established.³ In 1928 the Racecourse Betting Control Board was set up to instal, own and operate the totalisator.⁴ In 1933 the London Passenger Transport Board,⁵ and in 1939 the British Overseas Airways Corporation⁶ were created. These bodies represent the earlier phase of the movement. The second phase began with the return to power in 1945 of a Labour Government pledged to large measures of nationalization. These measures involved the establishment of many different kinds of organization. They all, however, belong to the species of public corporation. All political parties now accept the public corporation as being the appropriate instrument for operating nationally-owned undertakings requiring management of a commercial or industrial character.

⁹ Port of London Act, 1908, s. 1. See "The Port of London Authority," by Lincoln Gordon in Public Enterprise, edited by W. A. Robson.

¹⁰ Cmd. 9230/1918.

¹ Electricity (Supply) Act, 1919, s. 1. See "The Central Electricity Board and Other Electricity Authorities" by Graeme Haldane in Public Enterprise, edited by W. A. Robson.

² Forestry Act, 1919, s. 1.

³ The B.B.C. is incorporated by royal charter; the Central Electricity Board was constituted under the Electricity (Supply) Act, 1926, s. 1.

⁴ Racecourse Betting Act, 1928, s. 2.

⁵ London Passenger Transport Act, 1933, s. 1.

⁶ British Overseas Airways Act, 1939, s. 1.

Nationalization Legislation, 1945-50

The Bank of England Act, 1946, brought the capital stock of the Bank of England into public ownership, and the Bank under public control.⁷ The Coal Industry Nationalization Act of the same year brought about the public ownership and operation of the coal-mining industry and certain allied activities. For this purpose the Act established the National Coal Board, charged with the duties of working and getting the coal in Great Britain, securing the efficient development of the coal-mining industry, and making supplies of coal available in the manner seeming to the Board best suited to the public interest.

⁷ Cf. the Cable and Wireless Act, 1946, which brought the share capital of Cable and Wireless, Ltd., into public ownership, but left control of cables and wireless in the hands of the old operating companies.

The Civil Aviation Act, 1946, established three airways corporations (in place of B.O.A.C. as a single unit) with exclusive rights to operate regular services within the United Kingdom or on international routes. By means of amalgamation the number of airways corporations has now been reduced to two.¹ The legislation also enabled the Minister of Civil Aviation to own and operate civil airfields, and his department will manage all the airfields in Britain required for regular air services.

¹ By the Airways Corporations Act, 1949, and the Air Corporation Act, 1949, B.S.A.A.C. is merged with B.O.A.C., so that there are now only two corporations, B.O.A.C. and B.E.A.C. See, also, Civil Aviation Act, 1949.

The Transport Act, 1947, nationalized forthwith the railways, canals and inland waterways, and also the chain of hotels and restaurants owned by the railways. In addition the entire London passenger transport system, which had been placed under public ownership and operation by the London Passenger Transport Act, 1933, was transferred to the Transport Commission. In regard to road transport services a duty was imposed on the Commission to acquire undertakings engaged (in 1946) to a predominant extent in ordinary long-distance carriage of goods² for hire or reward. This formula covers the road haulage industry other than that part of it which is engaged in purely local transport. Certain specialized types of vehicles were, however, excluded, such as tank vehicles engaged in the carriage of liquids, those used for furniture removals, the carriage of meat, livestock, felled timber, etc. Moreover, vehicles used by manufacturers, traders or other business concerns for the conveyance of goods in the conduct of their business were not nationalized, although when the Bill was originally presented they were included.

² "Ordinary long-distance carriage" is defined by the Act as the carriage of goods for a distance of 40 miles or upwards by the person who carries on the undertaking, in such circumstances that the vehicle or vehicles are at some time during the carriage more than 25 miles from the operating centre as measured along the route. Transport Act, 1947, s. 39 (2).

It was left to the commission to acquire those road haulage concerns which fall into the category mentioned above, and a commercial operator can require the commission to acquire his business if he falls into that category. He can also appeal to an arbitration tribunal if he contends that the commission has no right to acquire his undertaking.

In regard to passenger road services, the Transport Commission is authorized to prepare and submit at any time to the Minister of Transport schemes for passenger road transport services covering specified areas. A scheme is to promote or facilitate the co-ordination of the passenger transport services provided in the area, whether by road or by rail. It must also secure the provision of adequate, suitable and efficient passenger road services to meet the needs of the area. The Transport Commission is required to review the existing road passenger services in Great Britain as soon as possible in order to decide which areas shall have schemes. A scheme may provide for constituting or specifying the body or bodies which are to provide services within the area, and it can designate the body or bodies which are to administer the undertaking and to which it is to be transferred. The Transport Commission may name itself as the body to operate the passenger road transport services, either alone or in conjunction with other organs.

Coast-wise shipping was not nationalized and the merchant marine is left untouched except for cross-Channel services to France and Ireland which formed part of the railway undertakings. Trade harbours, on the other hand, come within the ambit of the statute and are accorded somewhat similar treatment to that provided for motor bus and motor coach services. Thus, schemes of management and development of trade harbours may be prepared by the Commission and submitted to the Minister of Transport.

The Electricity Act, 1947, completes the movement toward the nationalization of electricity supply which was begun in 1926 when the Central Electricity Board was set up to construct and operate a nation-wide system of interconnected generating stations known as the grid. The earlier legislation introduced a large measure of public ownership and control over the generation and distribution in bulk of electricity, but left the detailed distribution to consumers in the hands of "authorized undertakers". Approximately two-thirds of electricity distribution was owned and operated by local authorities and one third by public utility companies. Now the whole mass of these undertakings has passed into national ownership and an integrated system of public management. The British Electricity Authority is the body responsible for generation of electricity and a general control of policy, while 14 public corporations known as Area Electricity Boards are responsible for distribution.

The Gas Act, 1948, transfers the entire gas industry to public ownership. Hitherto about a third of the industry was owned by town councils and two-thirds by public utility companies. In future it will be operated by a series of 12 area gas boards covering large regions with a National Gas Council in charge of a few central functions.

The Town and Country Planning Act, 1947, entirely transforms the legal and administrative framework of town and country planning. The central and local planning authorities are given complete control over the development of land for any purpose whatever. A Central Land Board has been set up to distribute compensation to landowners for the loss of their development rights and, on the other hand, to levy development charges on any person who is granted permission to develop land. The New Towns Act, 1946, authorizes the Minister of Housing and Local Government to create new towns either on virgin land or on the sites of existing small towns or villages; and he can establish development corporations for this purpose. About 14 development corporations have so far been created for this purpose.

The Overseas Resources Development Act, 1948, created the Colonial Development Corporation, which is authorized to spend £150 millions on major works of capital development in the Colonial Empire; and the Overseas Food Corporation, which was formed to undertake large fo...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Original Title Page
• Original Copyright Page
• PREFACE Page
• Contents Page
• PART ONE
• PART TWO
• SELECT BIBLIOGRAPHY
• INDEX OF NAMES
• INDEX OF SUBJECTS