Essay : Tony Benn and British Leyland
Ian Nicholls examines the time when Tony Benn’s political career intersected with that of British Leyland.
Benn was well-intentioned for his plans for the Government-controlled carmaker, but events conspired against him. Here’s how and why.
The death of Tony Benn only a year after the demise of his political opponent Margaret Thatcher marked the end of an era. Between them, these two diametrically opposed political titans fought for the ideological soul of Britain for nearly a decade. The consequences of that ideological battle still resonate today.
Unlike Margaret Thatcher, Tony Benn was never a party leader. Like the Iron Lady, Tony Benn was a controversial figure in the country as a whole, but he was also controversial in his own beloved Labour Party. Many members blamed him for contributing to the party’s long period in opposition from 1979.
This essay focuses on Tony Benn’s involvement with British Leyland. It is actually the story of two Benns. One is Anthony Wedgewood Benn (above), Postmaster General and then Minister of Technology in Harold Wilson’s 1964-70 Labour Government. This man was the moderate, pragmatic minister who oversaw the outlawing of pirate radio and pushed ahead with the supersonic Anglo-French Concorde, although records now reveal he and the Government saw it as an expensive white elephant and tried to cancel it.
The other character in this story is Tony Benn (below), the post-1970 champion of the hard left, the darling of the Labour Party conference, who saw the Trade Unions as the representatives of the working class and essential partners in government. This character, seen by the right wing press as the most dangerous man in Britain, oversaw the Government rescue of British Leyland in December 1974.
1964 – the Technology Ministry years
We shall start our story in October 1964 when the Labour Party under Harold Wilson returned to power after ’13 years of Tory misrule’ as it was dubbed at the time. The new Government discovered to its horror that Britain was virtually bankrupt after 13 years of one party rule, a situation bizarrely similar to 2010! Harold Wilson and his colleagues had to adopt a pragmatic approach to government, and indeed the cabinet was an anti-Tory rainbow coalition of individuals from all walks of life.
The electorate deemed their prudent approach to the economy sufficient to re-elect the Labour Party with a 96 seat majority in March 1966. This was an era when politicians talked about modernising Britain, sweeping out the old and bringing in the new. The Beeching Report was a symbol of all this and, although it was produced under the auspices of the previous Conservative administration, the new Government embraced its cost cutting benefits as Britons aspired towards car ownership. Victoriana was out as concrete tower blocks sprung up everywhere.
The schism between the Labour left, which advocated full-blown socialism, and the right which preferred a form of social democracy was exposed by the six-week National Seamen’s Strike that began in May 1966. The Government was criticised by its own MPs for not supporting the strikers, while in contrast the Prime Minister Harold Wilson blamed communist conspirators. The political importance of the strike was enormous: the disruption of trade had an adverse effect on the United Kingdom’s precarious balance of payments, provoked a run on the pound and threatened to undermine the Government’s attempts to keep wage increases below 3.5 per cent.
A consequence of all this was that, in July 1966, the Government introduced some squeeze and freeze measures. This started off the chain of events detailed in this site’s British Motor Holdings story that led to the formation of British Leyland.
A Labour Government will… set up a Ministry of Technology to guide and stimulate a major national effort to bring advanced technology and new processes into industry.”
– 1964 Labour Party manifesto
That same month Harold Wilson appointed Anthony Wedgewood Benn as the Minister of Technology. The Ministry of Technology was established by the incoming Government of Harold Wilson in October 1964 as part of Wilson’s ambition to modernise the state for what he perceived to be the needs of the 1960s. The pledge was included in the Labour Party’s 1964 General Election manifesto: ‘A Labour Government will .. [set] up a Ministry of Technology to guide and stimulate a major national effort to bring advanced technology and new processes into industry.’
It was in this capacity that Anthony Wedgewood Benn first became involved in the merger between Sir Donald Stokes’ Leyland Motor Corporation and Sir George Harriman’s BMH.
Bringing Leyland and BMC together
In the summer of 1967, Wedgewood-Benn suggested that the two firms co-operated in joint export operations designed to increase their competitiveness in world markets. This was following a request by the Industrial Reorganisation Committee (IRC) to both Leyland and BMC to supply them with detailed information about their operations. The IRC was a Government body established in 1966 to encourage mergers and reorganisation to create more efficient British industrial base. It was the IRC that first suggested serious merger moves to create a giant British-owned motor manufacturer.
On 28 July, that Sir Donald Stokes met the Minister of Technology, Anthony Wedgewood Benn, to find out the attitude of the Labour Government and the Monopolies Commission to a proposed BMH-Leyland merger. Wedgewood Benn then got the Prime Minister involved.
During the weekend of 13-15 October 1967 the Prime Minister Harold Wilson along with his Technology Minister Wedgewood Benn convened a meeting at Chequers between Sir George Harriman and Sir Donald Stokes. The Prime Minister suggested that a merger between British Motor Holdings and the Leyland Motor Corporation would be in the national interest. Sir George Harriman of BMH later said: ‘When the Prime Minister asks it’s not a good thing to say no. After Chequers I did feel an extra compulsion to go ahead.’
British Leyland Motor Corporation is formed
After this, the IRC, under its Chairman, Sir Frank Kearton, acted as mediator between the two parties and the merger was announced on 17 January 1968. Wedgewood-Benn was credited by the press as one of the instigators of the merger, which nearly fell through, before coming into being in May 1968 as the British Leyland Motor Corporation.
It would be grossly unfair to use the subsequent failure of British Leyland as a stick to beat Anthony Wedgewood Benn/Tony Benn and accuse both he and Harold Wilson of committing a monumental political and industrial blunder. They, like the media, the city, the analysts and the financial institutions, were all taken in by the Donald Stokes/Leyland public relations machine masterminded by Keith Hopkins.
However, as the British Motor Holdings story relates, both Jim Slater and John Barber told the Leyland board that serious rationalisation would be required of the merged company to make it viable. After the merger, Stokes baulked at the chance, citing union opposition. Leyland had played hardball during the merger negotiations, but once they had established their dominance over the BMH men in the merged corporation, their ruthless managerial approach evaporated into thin air.
1970 – and Labour is ousted by the Tories
In June 1970 the Labour Party was unexpectedly defeated in the General Election by the Conservatives led by Edward Heath, forcing Anthony Wedgewood Benn onto the opposition benches. While his party comrades tended to move to the right as they grew older, Wedgewood Benn moved to the left. He later wrote of ‘the power of industrialists and bankers to get their way by use of the crudest form of economic pressure, even blackmail, against a Labour Government.’
In October 1973 he announced that he wished to be known as Mr Tony Benn rather than as Anthony Wedgwood Benn.
It was against a background of worsening industrial relations in Britain that Tony Benn’s most influential period began. He became convinced that, as in 1945, the secret to electoral success lay in creating a socialist programme involving large scale nationalisation plus a degree of workers involvement in the running of their firms, or industrial democracy. Benn saw the Trade Unions as an intrinsic part of this programme. He also managed to persuade a great many Labour Party members of the wisdom of this course. Although Harold Wilson remained leader, Tony Benn was now winning the hearts and minds of many rank and file members.
1974 – the Ministry of Trade and Industry years
The opportunity to carry out Tony Benn’s programme came in February 1974 when Edward Heath called a snap General Election over who ruled Britain, the Government or the Trade Unions. This was amidst the three-day week as the Conservatives fought their second battle with the National Union of Mineworkers in less than two years.
The three-day week forced British Leyland to operate at only 60 per cent of capacity, which was uneconomic, draining it of all the funds it had built up during the recent ‘Barber Boom’ car sales bonanza.
Tony Benn co-wrote the Labour Party manifesto which stated: ‘Repeal the Industrial Relations Act as a matter of extreme urgency and then bring in an Employment Protection Act and an Industrial Democracy Act, as agreed in our discussions with the TUC, to increase the control of industry by the people. However, more will be needed if we are to create a new spirit in industry. The British people, both as workers and consumers, must have more control over the powerful private forces that at present dominate our economic life.
‘To this end we shall sustain and expand industrial development and exports and bring about the re-equipment necessary for this purpose through the powers we shall take in a new Industry Act and through the Planning Agreement system which will allow Government to plan with industry more effectively. Wherever we give direct aid to a company out of public funds we shall in return reserve the right to take a share of the ownership of the company.
‘In addition to our plans set out for taking into common ownership land required for development, we shall substantially extend Public Enterprise by taking mineral rights. We shall also take shipbuilding, ship repairing and marine engineering, ports, the manufacture of airframes and aero-engines into public ownership and control. But we shall not confine the extension of the public sector to the loss-making and subsidised industries.
‘We shall also take over profitable sections or individual firms in those industries where a public holding is essential to enable the Government to control prices, stimulate investment, encourage exports, create employment, protect workers and consumers from the activities of irresponsible multi-national companies, and to plan the national economy in the national interest.
‘We shall therefore include in this operation, sections of pharmaceuticals, road haulage, construction, machine tools, in addition to our proposals for North Sea and Celtic Sea oil and gas. Our decision in the field of banking, insurance and building societies is still under consideration. We shall return to public ownership assets and licences hived-off by the present Government, and we shall create a powerful National Enterprise Board with the structure and functions set out in Labour’s Programme 1973.
‘We intend to socialise existing nationalised industries. In consultation with the unions, we shall take steps to make the management of existing nationalised industries more responsible to the workers in the industry and more responsive to their consumers’ needs.’
This was strong stuff indeed. Was British Leyland included in the companies that were to taken over by the state? For years many of the unions involved in the motor industry had been passing resolutions at their conferences calling for the nationalisation of the industry.
From hung parliament to overall majority
The General Election resulted in a hung parliament and, after some bartering, the Labour Party once again took over the Government. Tony Benn was appointed as the Trade and Industry Minister. The Prime Minister, Harold Wilson, now had a new protégé, Eric Varley, a National Union of Mineworkers backed MP. Varley was appointed as the new Energy Minister, and it was he who bought off the NUM and settled the miners dispute. Bizarrely the careers of Benn and Varley would intertwine over the next decade.
In October 1974 the Labour Party managed to increase it majority in another General Election as British Leyland’s finances faltered. On 6 December 1974, Tony Benn announced to Parliament that, ‘Discussions have been taking place with the company regarding both its short-term requirements for working capital and its long-term investment programme.
‘Because of the company’s position in the economy as a leading exporter and of its importance to employment both directly and through the many firms that are dependent on it, the Government are informing the company’s bankers that the approval of Parliament will be sought for a guarantee of the working capital required over and above existing facilities. I am satisfied that this will enable the company’s requirements to continue to be met without interruption.
‘In response to the company’s request for support for its investment programme, the Government also intend to introduce longer-term arrangements, including a measure of public ownership. In order to help the Government in framing a scheme for this purpose, they propose to appoint a high-level team, led by Sir Don Ryder, including members drawn from the Industrial Development Advisory Board, to advise on the company’s situation and prospects, and the team will consult the company and the trade unions in the course of its work.
‘If the Government are required to put substantial sums of money into British Leyland in view of its importance to our national economy, it is quite right that the taxpayer in making that contribution should get with it an appropriate measure of public control and accountability.’
This announcement brought forth cheers from Labour backbenchers, who saw it as part of the Government’s programme for extending public ownership.
British Leyland is bailed-out
Lord Stokes later commented: ‘We ran out of money. We were building a new factory for Rover, which was over £100 million and we had a cash flow crisis. All our overseas markets suddenly dried up. But I think the Government, and Benn in particular, was determined to get British Leyland nationalised. The only way they would give us any extra facilities was by taking the company over. All we wanted – though we probably would have needed more than that – was £200 million. If they had left it to private enterprise, desperation would have driven us into effective economies. But they just poured money in.’
I think the Government, and Benn in particular, was determined to get British Leyland nationalised. If they had left it to private enterprise, desperation would have driven us into effective economies. But they just poured money in.”
– Lord Stokes
The financial collapse of BLMC must have been like manna from heaven to Tony Benn, a golden opportunity to enact his theories. And so began Tony Benn’s great socialist experiment. He and his followers believed that ownership by the state would motivate workers into pulling together to turn British Leyland round.
In a speech around this time, Benn made it quite clear where he thought the blame lay for the financial collapse of BLMC: ‘Attempts to blame workers for the state of the company are superficial, offensive and do not merit serious consideration. The real fault is a chronic lack of investment over many years. The Ryder Report has identified this lack in the manufacturing industry as having brought one of Britain’s greatest firms almost to its knees. The choice now is to pull out of the British motor industry involving directly 160,000 jobs and affecting nearly a million jobs altogether — or to undertake a major re-equipment programme involving public ownership and a major advance in industrial democracy.’
The Ryder Report was unveiled in April 1975 and delivered what its sponsor wanted. Later the All-Party Commons Trade and Industry Sub-Committee would suggest that the decision to pump millions into British Leyland had been taken by the Government before Lord Ryder’s team had started work. Their report stated: ‘It must have been clear to them that their recommendations would not have been implemented if they had not matched the known views of the Government.’
The Chairman, Patrick Duffy, a Labour MP, told a press conference: ‘We were struck by evidence from the Department of Industry which suggested they were not unprepared for the Ryder Report and its recommendations.’
Tony Benn moves to the Energy Ministry
However, on 10 June 1975, attitude to the shift to the left in his Labour Party that had occurred since 1970. The Trade and Industry Minister Tony Benn switched places with Energy Minister Eric Varley. This was effectively a demotion for Tony Benn, who had helped to formulate the party’s industrial policy.
As a frontline minister, Benn’s career had peaked, and it seemed to mark a watering down of the Labour Party’s 1974 socialist manifesto. Harold Wilson, along with advisors like Bernard Donoughue, were well aware that elections were won by attracting the middle class vote, and Tony Benn’s zeal for full blown socialism was seen in this respect as an electoral liability. While Tony Benn looked to 1945, Harold Wilson looked to 1966 for inspiration.
It is to Tony Benn’s credit that British Leyland was saved in 1975, although in reality the Government had little choice. However, as detailed in History: British Leyland, the grand illusion – Part Three, his master plan soon came unstuck. During 1975 British Leyland lost an estimated 12 per cent of its planned production due to industrial action. To put it charitably, Benn’s naïve belief that the Trade Unions could police their own backyard without resort to restrictive legislation, was unfounded.
A consequence of this chaos was that even the profitable parts of British Leyland began to lose money and the respite for some plants proved only temporary.
British Leyland begins to unravel
At the behest of the Trade Unions, the Labour Government had pursued a tax and spend policy. This crashed and burned in 1976 as the Chancellor of the Exchequer, Denis Healey, and new Prime Minister, James Callaghan, went cap in hand to the International Monetary Fund for a loan. The IMF demanded and got an assurance that the British Government would now practice a prudent fiscal policy in order to repay the loan. Public spending cuts soon followed as the Government began to put its house in order. Tony Benn railed against this, resenting the IMF dictating terms to a democratically-elected Government. He would later accuse his ministerial colleagues of introducing monetarism to the UK, much to their chagrin.
Over at British Leyland, the new economic realism resulted in the appointment of Michael Edwardes as Chairman in November 1977. Edwardes was no fan of worker participation schemes and over the next five years he would gradually dismantle Tony Benn’s socialist experiment. In 1978 he even told Benn’s replacement at the Department of Industry, Eric Varley, that the Government needed to outlaw unofficial strikes.
Michael Edwardes was a hard-headed businessman and, along with his chief lieutenant, Ray Horrocks, introduced a hard line industrial relations policy. Plants that wouldn’t play ball were starved of investment, which was redirected to more compliant factories, and ultimately closed. Edwardes and Horrocks rode roughshod over the shop stewards’ movement, which the left looked on as representatives of ordinary working people. They were after all elected by their work colleagues.
The schism between Tony Benn and his cabinet colleagues widened during the ‘winter of discontent’. The ‘winter of discontent’ of 1978/79 saw the clash between the Trade Unions and the Government over its 5 per cent pay restraint policy. Some of his colleagues wanted to call a state of emergency and bring in the army to run essential services, while Benn advocated capitulation to the strikers paralysing the country, a ‘no confrontation’ policy.
Tony Benn wrote in his diary: ‘15,000 troops would be deployed… The PM wants an emergency committee made up of (mostly right-wingers)… There will be an operations centre and something called the OSG – Organisational Sub-Group … We shall meet on a daily basis……We must not run this like a military operation against an enemy.’
1979 – Labour out, and Benn sidelined
With Labour’s predictable defeat in the May 1979 General Election by the Conservatives led by Margaret Thatcher, Tony Benn saw his chance to seize the policy initiative. At the 1979 Labour Party conference and succeeding conferences, Benn and his supporters argued that Labour had lost power because they had abandoned the socialist programme contained within the party’s February 1974 election manifesto. Quite how they squared this up with the election of the Conservatives is anyone’s guess.
However, even to someone who disagreed with virtually everything Tony Benn stood for, he did have a valid point. Tony Benn blamed the IMF for Labour’s 1979 defeat, citing the public spending cutbacks and pay restraint policy that resulted from it. Some historians have since claimed that the 1976 IMF loan was not necessary and that incorrect Treasury figures lay behind the Government’s request for a loan, but the wages free for all did result in spiralling inflation. Tony Benn remained fixated with the 1945 Labour landslide to the end of his days, unable to comprehend that the world had moved on since VE day.
The Labour Party conferences passed resolutions advocating the abolition of the House of Lords, withdrawal from the European Economic Community, unilateral nuclear disarmament and the repeal of the new Conservative laws that restricted Trade Union power. The irony of this was that it was the Callaghan Government that was destroyed by union power – it was like continuing to smoke after being diagnosed with lung cancer. Another irony was that it was Tony Benn’s beloved Atlee Government that had embarked on Britain’s nuclear weapons programme and the magnificent V-bombers that originally carried the resulting bombs.
James Callaghan resigned as Labour Party leader in 1980 and was replaced by Michael Foot. In 1981, Tony Benn challenged Denis Healey for the deputy leadership of the Labour party. The campaign degenerated into a divisive struggle, unmatched for its bitterness. Healey and his backers were branded as ‘Tories’ by Benn’s vociferous and vocal supporters.
Denis Healey emerged victorious by the narrowest of margins after a bruising campaign. By now Tony Benn had distanced himself from any decisions he had made as a minister that embarrassed his left-wing credentials, claiming he was overruled by Harold Wilson and James Callaghan. This angered many of his former ministerial colleagues and, in part, explains why they fought tooth and nail to stop him. The 1981 Labour Party leadership contest was not Tony Benn’s finest hour.
Despite this divisive contest, in 1981 the Labour Party looked set to return to power as the Thatcher Government was deeply unpopular. A global recession, high interest rates, a tight fiscal squeeze and a general lack of confidence in British manufactured goods all contributed to rising UK unemployment. The nationalised industries were all shedding labour as they rationalised their operations.
The great retreat – BL contracts under Edwardes
Over at British Leyland, Michael Edwardes closed MG at Abingdon, Triumph at Canley, the Rover SD1 plant at Solihull and numerous other plants, all with the Government’s approval. This was not part of Tony Benn’s master plan for the British-owned motor industry. Britain’s cities burned as rioting occurred in the summer. Capitalism seemed to be failing and Tony Benn’s message struck a chord with many young political activists.
However, the Falklands war in 1982 changed everything, and the Thatcher Government emerged ahead in the opinion polls. As 1983 dawned the economy improved as well with record new car sales. The Government saw the time was right to call a General Election. The Labour Party’s 1983 election manifesto was largely a rehash of the 1974 document with added unilateral nuclear disarmament and was largely inspired by Tony Benn’s successful conference resolutions. Gerald Kaufman famously remarked that it was ‘the longest suicide note in history.’
I am not going to analyse why Labour flopped so badly in the polls in 1983, but I will take an alternative slant on events. In the 1983 General Election the Labour Party offered a dramatically different alternative to the Conservatives. That the electorate was given a genuine choice on the future direction of Britain is to the credit of Tony Benn, whether you agreed with his politics or not.
Margaret Thatcher emerged with a thumping 144 seat majority from the election, a convincing mandate on a par with the 1945 Labour landslide. This gave her the authority to begin dismantling the Britain created by the Atlee Government. Whatever one’s opinion of subsequent events, the electorate had been offered an alternative path to take, thanks to Tony Benn.
Tony Benn lost his Bristol seat in the 1983 General Election, but fate was about to come into play. In 1984, Benn’s nemesis Eric Varley decided to quit politics for a business career and resigned his Chesterfield seat. Tony Benn was duly elected the new member for Chesterfield and remained so until he retired from Parliament in 2001. By now Benn’s radical ideas were considered to be electoral poison as winning at all costs became paramount as party politics became hostage to pollsters, election strategists, unelected advisors and hired PR men. Tony Benn died in March 2014.
So what are we to make of Tony Benn?
His career from 1974 was inexplicably linked with Margaret Thatcher and Eric Varley. He could be accused of being a naïve fantasist who believed in the positive side of human nature. That thought process was tested to destruction by British Leyland – it was the acid test of Tony Benn’s vision for the future.
The belief that state ownership would unite workers in a common goal to create a viable, world-class, vehicle industry foundered amid double digit inflation that eroded wages, a desire for pay parity with other workers and a belief that nationalisation created a bottomless pit of finance to be mined for wage claims.
Perhaps the reason so many people found Tony Benn’s vision so entrancing was that we want to believe in people working together to create a better world…”
Tony Benn and his supporters seemed to think that ordinary workers were political animals just like they were, when their priorities were simply to survive in a dog-eat-dog world. At British Leyland there was no sense of community, of pulling together to create a brighter future. Events there exposed a culture of self-interest and damn the inconvenience to fellow workers laid off as a consequence of industrial action. State ownership was a legal technicality, it did not lead to better wages or working conditions.
Perhaps the reason so many people found Tony Benn’s vision so entrancing was that we want to believe in people working together to create a better world, when perhaps the reality is that we are all, to varying degrees, looking after number one, both professionally and personally, whether we like to admit it or not – a negative human trait that was later exploited by Margaret Thatcher…