Daunton M. The Cambridge Urban History of Britain, Volume 3: 1840-1950
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appalled at the prospect that the loss of their undertakings was to be treated
simply as a book-keeping entry within the public sector accounts and hence they
would receive as compensation simply the amount of their net outstanding
debt.
76
(vi)
How and why was the erosion of local interests linked to the later nationalisa-
tion of gas, electricity and transport in the s? The starting point in unrav-
elling this story is the interwar period and the motley collection of undertakings
recorded in Table .. What to do, for example, with all those small undertak-
ings at the end of the national electricity grid network? The McGowan
Committee () identified economies which could be realised in marketing
and finance from grouping into larger units and from the standardisation of volt-
ages.
77
In so far as the economies of scale were at a regional (or sub-national)
level the question was how regional business organisations would emerge. The
Committee proposed that they should be developed from existing undertakings
but recognised that legislation and compulsory powers would be necessary.
Precisely how this would work out was not clear. Herbert Morrison had seen
the solution in regional boards publicly owned on CEB lines. This got support
from some civil servants, from the Conservative Minister of Fuel in and by
Liberal Gwillam Lloyd George as Minister in . Many professionals saw it as
inescapable. Even E. H. E. Woodward, general engineer and manager of the
North Eastern Electricity Supply Company who wanted larger business units,
saw ownership as irrelevant and advocated public boards.
78
In the event the leg-
islation of created twelve such regional distribution boards for England and
Wales and two for south Scotland to set alongside the North of Scotland Hydro-
Electric Board which had been established in .
A similar issue arose in the case of gas with the simplification that before the
advent of natural gas in the s there were no major economies of scale in
production or distribution. But there were unexploited economies of scale per-
ceived in marketing and finance. A respected view was the Heyworth Report of
which stressed the need for the development of gas appliances, marketing
gas in rural areas, developing new uses of gas and expanding research, all of
which it saw as requiring regional units of business organisation.
79
The peak
number of undertakings had been for the statutory companies in and
for the municipal enterprises in . But on the eve of nationalisation these
numbers were only per cent lower, as may be seen in Table .. Moreover,
Robert Millward
76
Ibid., pp. –.
77
McGowan Report, Report of the Committee on Electricity Distribution, Ministry of Transport ().
78
Hannah, Electricity before Nationalisation, ch. .
79
Heyworth Report, Report of the Committee of Inquiry into the Gas Industry , Cmd ().
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the distribution of undertakings was, like electricity, highly skewed. As the
Heyworth Committee pointed out there were only sixty-five undertakings in
producing more than million therms per annum but they accounted for
per cent of total sales; even some of the large private companies were holding
companies which the Committee felt had made only modest improvements in
efficiency because they always needed the consent of the subsidiaries. As for the
local authority sector, the municipal boundaries were not always optimal for pro-
duction and distribution, even in the absence of major economies in these func-
tions, and joint boards had not proved successful. The Heyworth Committee
makes an interesting contrast ten years on from the McGowan Committee
rejecting the latter’s idea of grouping round existing undertakings. Heyworth
went unambiguously for regional public boards and this was taken up in the
act which established twelve Area Boards producing and selling gas and report-
ing separately to parliament.
Thus in both electricity and gas the ‘public board’ element arose in part from
the problems associated with a ‘natural’ or ‘voluntary’ emergence of larger units
of business organisation. The nationalisation programme grafted on to this set of
boards, certain institutions, objectives and obligations which cannot be ration-
alised simply by the pressure to exploit economies of scale.
80
To this matter we
shall turn shortly. In the meantime it should be noticed that the complex mixture
of private and public interests which constituted, in gas and electricity, obstacles
to the formation of bigger units, was repeated in an even stronger form in water
supply. In there were local authority undertakings, some statutory
companies and , non-statutory companies though the local authorities
accounted for per cent of the industry’s net output. Apart from the sheer
number of undertakings and the entrenched position of local authorities there
were other interested parties. After the First World War the Ministry of Health
was given the responsibility for the planning and conservation of water resources.
Other Ministries had an interest including the Board of Trade whose Water
Power Resources Committee suggested in that the wider development of
water power schemes was held back by the multiplicity of interests involved.
81
Both Ministries advocated a central water authority. But Catchment Boards and
Fishery Boards were also able to make their presence felt through the Ministry
of Agriculture and Fisheries. The Federation of British Industries had its own
Riparian Owners’ Committee which was active on the question of the release
of ‘compensation water’ from reservoirs. As John Sheail has shown, the requisite
planning of water use and resource development therefore faced considerable
The political economy of urban utilities
80
M. Chick, ‘Competition, competitiveness and nationalisation’, in G. Jones and M. W. Kirby, ed.,
Competitiveness and the State: Government and Industry in Twentieth Century Britain (Manchester,
).
81
J. A. Hassan, ‘The water industry, –: a failure of public policy?’, in R. Millward and J.
Singleton, eds., The Political Economy of Nationalisation in Britain – (Cambridge, ).
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obstacles.
82
In the Committee on Scottish Health Services recorded hun-
dreds of separate undertakings working independently to serve their own areas.
In England and Wales a White Paper was drafted to confer on the Minister of
Health the role of a central coordinating authority empowered to regulate the
acquisition of water rights, create joint boards and revise the areas of supply and
distribution. The White Paper never materialised in the s though a Central
Advisory Water Committee was established in .
83
Thus the broad stance of governments in the interwar years was to achieve
reorganisation through voluntary amalgamation. This was largely unsuccessful so
that by the s investigative bodies like the Heyworth Committee were openly
espousing public ownership. It is important to note that support for public
boards did not just come from the Labour party. In the depressed economic con-
ditions of the interwar period the Conservative party could not reject public
ownership out of hand especially given their role in the creation of bodies like
the Central Electricity Board and the London Passenger Transport Board. The
‘étatist’ wing of the party was barely distinguishable on many issues from the
Morrisonian wing of the Labour party and in Harold Macmillan described
Labour’s programme for the nationalisation of the Bank of England, coal
mining, power, land and transport as mild compared with his own plan.
84
The
Conservatives’ Industrial Charter of opposed nationalisation and direct
planning in principle but fudged privatisation outside one or two small sectors
in road and air transport, claiming that privatising the large public corporations
would be too disruptive. Moreover, a large body of professional opinion, includ-
ing the investigative bodies mentioned already, were by the late s and s
canvassing a more interventionist government stance in industrial matters.
Indeed, industrial policy involving mere arms-length regulation had been dis-
credited by the s. The coal owners’ image had been dented as early as the
s.
85
During the Second World War their ‘solution’ for the industry was a
Central Board comprising representatives of the management and owners but
no miners or customers and yet supposedly acting as trustees for the industry in
dealings with parliament.
86
Similar ‘corporatist’ solutions forwarded by the Joint
Committee of Electricity Supply Associations and, for airlines, by the various
shipping and railway undertakings with shares in airline companies were not well
received.
87
Robert Millward
82
J. Sheail, ‘Planning, water supplies and ministerial power in inter-war Britain’, Public
Administration, (), –.
83
Hassan, ‘Water industry’.
84
See ch. of Millward and Singleton, eds., Political Economy of Nationalisation.
85
B. Supple, ‘‘‘No bloody revolutions but for obstinate reactions’’?: British coal owners in their
context –’, in D. Coleman and P. Mathias, eds., Enterprise and History: Essays in Honour
of Charles Wilson (Cambridge, ).
86
M. W. Kirby, The British Coal Mining Industry – (London, ), p. .
87
Hannah, Electricity before Nationalisation, p. ; see also p. of P. Lyth, ‘A multiplicity of instru-
ments: the decision to create a separate British European airline and its effects on airline pro-
ductivity’, Journal of Transport History, (), –.
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For the Labour government of –, taking the infrastructure into public
ownership had two clear merits. It provided the opportunity for exploiting the
scale economies which many observers claimed existed: in the distribution net-
works and in the marketing and finance of electricity and gas; in the generation
of electricity supply, high tension transmission already being in public owner-
ship; in the merger of local water undertakings, drainage authorities and sewage
works into integrated river basin systems; in railway scale economies not yet real-
ised by the four companies. Secondly, it offered the prospect of eliminating the
excess profits which were available for the private undertakings with de facto
monopolies ‘in the field’ or which would have been available if private firms had
been amalgamated into new large business units. Of course, public ownership
was not theoretically needed to achieve this since there was always the option of
arms-length regulation. It was the perceived failure of interwar regulation in air-
lines, gas and water supply, retail electricity supply and railways which enhanced
the case for an alternative form of industrial intervention. The litany of failed
regulation is to be found in the stream of government inquiries: the
Boscawen Report on transport, the McGowan Report on electricity, the
s reports of the Joint Committee on Water Resources and Supplies, the
Cadman Report on civil aviation, the Reid Report on coal and the
Heyworth Report on gas.
88
This is then sufficient to explain the emergence in
the s of the publicly owned Area Gas and Electricity Boards, the Railway
Executive, British Overseas Airways Corporation, British European Airways
Corporation and the concentration of generation and transmission in the new
British Electricity Authority.
The priorities of the Labour government were of course determined by the
severity of the problems they faced and the ease with which they could be
resolved. This is particularly germane to understanding inaction in the whole
field of water resource development which remained very much a local affair
and in urban areas therefore the municipal borough still dominated matters.
Arguments for nationalisation had been advanced since the turn of the century.
A plan for nationalisation was adopted in by the Cabinet’s Industries for
Nationalisation Sub-Committee but was buried under other events. There were
three underlying elements in this outcome. First was the absence of any chronic
supply crisis: demand was growing at . per cent per annum –, much
less than subsequently and less, so far as we can gather, than in the nineteenth
century.
89
Although the physical infrastructure of land drainage and sewage
works was neglected there was nothing like the collapse of underground net-
works which occurred later. At the same time the range of interested parties in
the industry and the range of interested government departments were much
The political economy of urban utilities
88
Boscawen Report, Royal Commission on Transport, Final Report, with Additional Recommendations,
Cmd (); Cadman Report, Report of the Committee of Inquiry into Civil Aviation, Cmd
(); Reid Report, Report of the Technical Advisory Committee on Coal Mining, Cmd ();
McGowan, Report; Heyworth, Report.
89
Hassan, ‘Water industry’.
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larger than in gas and electricity. The suppliers of services included private water
companies, local authority water supply undertakings, drainage authorities, local
authority sewage authorities and river conservancy bodies. Property rights in
land and water were held by all the above institutions together with riparian
interests, landowners and industrialists. Within Whitehall they had a fertile field
for lobbying amongst the various government departments involved: Ministry
of Health, Board of Trade, Ministry of Agriculture and Fisheries, Department
of Scientific and Industrial Research. The hurdles to be surmounted in any reor-
ganisation of the industry were formidable. As Table . shows, there were still
separate local authority undertakings in and the development of river
basin management and national coordination had to await an act of .
For the sectors which were, in the s, transferred out of private and
municipal ownership, there remains to explain the institutional arrangements
which emerged. In particular why was urban government replaced not only, and
sometimes not at all, by regional bodies but by national boards? The answer lies
in the form of economic planning adopted by the Labour government. Planning
embraced relationships between industries and this explains why, from , it
was ‘transport’ rather than ‘railways’ which appeared in the list of industries to
be nationalised and why, in , the railways were but one of five Executives
under the control of the British Transport Commission. This umbrella organ-
isation, as well as the British Electricity Authority, the British Gas Council and
the National Coal Board were also vehicles for the reconstruction of the
economy. Each had to draw up programmes for investment in physical capital
and training for staff and workers and was answerable to the Minister of the spon-
soring government departments. This was certainly consistent with earlier
Labour party ideas on public boards being subject to the control of a National
Investment Board though the effectiveness of this linkage has been disputed.
90
Thirdly, though perhaps most elusive of all, was the idea that nationalised indus-
tries would provide common services, that is rail services, gas and electricity
supply throughout the country at uniform charges. Fraser and Martin Chick
have argued that this originated in municipal provision of the ‘necessities’ of
life.
91
By the interwar period gas, electricity and water were established items of
consumer budgets and probably with low price elasticities of demand. Chick has
identified a growing conviction in some quarters that electricity was not a luxury
for higher income groups. The musings of the War Cabinet Sub-Committee on
the future of electricity supply included the argument that ‘the Public have
increasingly come to regard electricity as a necessity and not a mere luxury and
Robert Millward
90
See p. of G. N. Ostergaard, ‘Labour and the development of the public corporation’,
Manchester School, (), –; A. Cairncross, Years of Recovery: British Economic Policy
– (London, ), p. .
91
Fraser, ‘Municipal socialism’; M. Chick, ‘The political economy of nationalisation: electricity
supply’, in Millward and Singleton, eds., Political Economy of Nationalisation, pp. –.
Cambridge Histories Online © Cambridge University Press, 2008
it should be regarded from the same point of view as sewerage or water’, a posi-
tion perfectly in line with Morrison’s ideas about uniform prices for electricity.
92
Providing services in this way clearly meant ignoring the costs of supply to
different parts of the country and accorded with a one-nation approach to eco-
nomic issues.
Hence the Nationalisation Acts of – had two central features. First was
that the new corporations were to serve the public interest and so a public
purpose was written into the acts and embraced the provision of common ser-
vices and the development of investment programmes. Thus the British
Electricity Authority was required ‘to develop and maintain an efficient, coor-
dinated and economical system of electricity supply . . ., the Electricity Boards
[to] secure . . . the development, extension to rural areas and cheapening of sup-
plies of electricity’.
93
Consonant with these aims was the constitution of the Boards whose
members were to be as disinterested as the corporation’s objectives. Such had
been the philosophy behind the CEB. Similarly, the new corporations were not
to pursue profit. Finance was to come from fixed interest stock – either the
industry’s own or government bonds – and any surpluses actually earned were
required by the statutes to be devoted to the public purpose, that is reinvested in
the industry. The investment programmes were not simply a commercial matter
and had to be approved by the relevant Minister of the sponsoring department.
Moreover, the new undertakings were expected to be commercially orien-
tated, innovative and enterprising. Thus, like the CEB and the London
Passenger Transport Board, they were to have their own corporate legal status
free from Treasury supervision, able to appoint their own employees and to be
sued in the courts. The injunction to provide ‘cheap and efficiently supplied ser-
vices’ in the Electricity Act recurs in all the statutes and has to be seen in con-
junction with another injunction, variously worded, along the lines of ‘revenues
shall not be less than sufficient for meeting all outgoings properly chargeable, on
an average of good and bad years’. Vague though this wording might be for
accountants, it was roundly interpreted to have the straightforward interpreta-
tion of breaking even taking one year with another, and was much more easily
monitored than the even vaguer public purposes. Financial deficits were a con-
sequence and this distinguishing feature of the post-war nationalised sector con-
trasts strongly with the experiences of the local utilities with which we started
this story.
The political economy of urban utilities
92
Chick, ‘Political economy’, p. .
93
Section () and () of Electricity Act ( and , Geo. ), Public General Acts and the Church
Assembly Measures of :Vol. II (HMSO, ).
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·
·
The provision of social services
(i)
H
the provision of social services in Britain since the
mid-nineteenth century no longer focus their accounts around an irre-
versible linear view of the ‘rise of the welfare state’or the steady growth
of collective and, especially, central government provision for social welfare
which culminated in the legislation of the Labour government of the later
s.
1
Instead, they emphasise the importance of other agencies in addition to
the state in the provision of welfare. There has been a ‘mixed economy of
welfare’ in which a variety of suppliers, or alternative sources of assistance, may
be involved in the provision of individual welfare in addition to those designated
by statute. The state was only one element, and, for much of the nineteenth and
early twentieth centuries, arguably not the most important element. Especially
significant was voluntarism or voluntary activity arising from ‘individual choice
in individual, self-governing ways’, which recent analysts, following and mod-
ifying Richard Titmuss in his influential lecture on ‘The social division of
welfare’, subdivide into voluntary, commercial and informal ‘sectors’.
2
In
Victorian Britain the expenditure and personnel of voluntarism far exceeded
that of the central and local state, while that of the local state of poor law
1
P. Thane, ‘Historiography of the British welfare state’, Social History Society Newsletter, (),
–; A. Digby, British Welfare Policy (London, ); G. B. A. M. Finlayson, Citizen, State and
Social Welfare in Britain – (Oxford, ); M. J. Daunton, ‘Payment and participation:
welfare and state formation in Britain –’, P&P, (), –; M. J. Daunton,
‘Introduction’, in Charity, Self-Interest and Welfare in the English Past (London, ), pp. –; P.
Johnson, ‘Risk, redistribution and social welfare in Britain from the poor law to Beveridge’, in
Daunton, ed., Charity, Self-Interest and Welfare, pp. –.
2
Finlayson, Citizen, State and Social Welfare, pp. –; G. B. A. M. Finlayson, ‘A moving frontier: vol-
untarism and the state in British social welfare –’, Twentieth Century British History,
(), pp. –; Digby, British Welfare Policy,pp. –; R. M. Titmuss, ‘The social division of
welfare’, in R. M. Titmuss, Essays on ‘The Welfare State’ (London, ).
Cambridge Histories Online © Cambridge University Press, 2008
guardians and local authorities exceeded that of the central.
3
The history of the
provision of social welfare since the mid-nineteenth century is one, in part, of
the changes and continuities within the different sectors. It is also concerned
with the shifting boundaries or the ‘moving frontier’within this mixed economy
of welfare – sometimes, as in the case of voluntary hospitals, directly from vol-
untarist activity to statutory agencies, but most often a continuous if varied inter-
relationship between voluntarism and the state, which itself had constantly
shifting boundaries within the local state between the poor law and local author-
ities and, as John Davis shows in his chapter (see above, pp. ‒), between
local and central government.
The recent studies of social welfare provision emphasise the changing balance
within the mixed economy of welfare at the national level and are based on a
wide range of heterogeneous examples. Were there urban aspects to the provi-
sion of social welfare? If we accept Philip Abrams’ critique of urban history and
his suggestion that historians who want to study welfare provision should do just
that and not confuse the issue by the ‘re-ification of the city’,
4
then there is no
reason to go further. Yet, without treating the city as if it were an actor or search-
ing for ‘the urban variable’ as part of an explanation, it is useful to examine the
provision of social welfare in towns and cities for a number of reasons.
First, in the nineteenth century especially, ‘new forms of charity have gener-
ally been forged in urban settings’.
5
As R. J. Morris argues, size, density and
complexity are the defining characteristics of towns and cities, and they inten-
sify ‘externalities’ for which the power structures of urban places devise
responses. Externalities arise when effects on production and welfare are outside
the market and go wholly or partially unpriced, bringing a need for non-market
interventions, including the provision of social welfare, which became more
pressing as towns grew in size. While there is an emphasis in the historical liter-
ature on the low demand for fixed capital in British industry, this approach misses
the high demand for capital in the urban infrastructure. This high demand was
not only for drains and water, as Robert Millward describes in his chapter (see
above, pp. ‒), but also for social welfare in forms such as hospitals, work-
houses and schools, which would have benefited the poor and given a reason-
able return but which was not met because of free rider problems and difficulties
of urban finance, particularly a narrow local tax base.
6
Yet, the cities saw a wide
Marguerite Dupree
3
Daunton, ‘Payment and participation’, .
4
R. J. Morris, ‘Externalities, the market, power structure and the urban agenda’, UHY, (),
; P. Abrams, ‘Towns and economic growth: some theories and problems’, in P. Abrams and
E. A. Wrigley, eds., Towns and Societies (London, ).
5
Jonathan Barry and Colin Jones, ‘Introduction’, in Jonathan Barry and Colin Jones, eds., Medicine
and Charity before the Welfare State (London, ), p. .
6
J. G. Williamson, Coping with City Growth during the British Industrial Revolution (Cambridge, ),
pp. –; N. F. R. Crafts, ‘Some dimensions of the “quality of life” during the British Industrial
Revolution’, Ec.HR, nd series, (), –.
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variety of experiments, innovations and initiatives designed to control and
influence the incidence of externalities, some of which were through central or
local government agencies, such as the poor law, others by voluntary societies,
such as hospitals and children’s homes, and others by informal social structures,
such as family and kin, neighbourhoods or ethnic groups. ‘The nineteenth-
century city became a vast laboratory which tested the effectiveness of market
mechanisms to the limit and then tested the operation of other ways of produc-
ing and delivering goods and services.’
7
A second reason to examine the provision of social welfare in towns and cities
is the different circumstances of urban and rural workers. Rural workers, for
example, received payments in kind to an extent that disappeared for urban
workers; the nature of rural credit differed in important respects from that which
was available to town dwellers; and there were marked differences between rural
and urban labour markets.
8
Third, even though the proportion of the population of Britain living in
towns and cities increased during the first half of the period of this chapter,
reaching nearly per cent by , urban history even in the second half of the
period is not the history of the nation writ large. Philip Waller pointed out the
paradox that as the proportion of the population living in towns and cities rose,
the value of the diminishing rural portion of the population was enhanced, and
‘the nation’s governing voice was not a city echo’. While ‘the completeness of
the urbanisation of society [meant that] almost everything that went on in towns
affected society at large, . . . towns were subject to limitation and direction by
national authorities’ in which rural aristocratic elements and other interests were
disproportionately paramount.
9
Fourth, and finally, at the same time that it is important to recognise similar
characteristics among urban areas and identify distinct phases in urban history, it
is important to recognise variations between types of towns and cities within
different periods and between England and Wales on the one hand and Scotland
on the other. ‘It is an essential part of the urban historian’s task to demonstrate
that urban functions and dysfunctions, the urban experience and the urban
influence, were very variable.’
10
Victorian towns, in particular, enjoyed much
discretion by deciding whether to adopt ‘permissive’ national statutes. The result
was considerable variation in policy.
11
Voluntarism and local government were
still important in the provision of social welfare in the interwar years. The
Victorian practice of allowing local authorities to decide whether or not to take
up government subsidies persisted; local authorities kept their responsibility for
many services, took care of all not covered by national insurance and were
The provision of social services
17
Morris, ‘Externalities’, –.
18
J. Treble, Urban Poverty in Britain – (London, ), p. .
19
P. J. Waller, Town, City and Nation (Oxford, ), p. .
10
Waller, Town, p. viii.
11
R. H. Trainor, Black Country Elites (Oxford, ), p. .
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