Mention British Leyland to anybody today and you will probably be told that it was a badly managed company that made terrible cars and its workforce were always on strike. Today, BL might seem like an embarrassing footnote in British history, best consigned to the past where it belongs, but I would argue that the whole drawn-out saga had a profound effect on Britain, its politics and its people and it still resonated as recently as 2019.
When the company was formed in 1968, Sir Donald Stokes and his new Finance Director, John Barber, began recruiting many cost control experts from Ford and General Motors with the specific intention of reducing the manufacturing costs of all the company’s vehicles. This was at a time when Britain’s attempt to join the Common Market had been blocked twice by France, and any dreams of selling substantial amounts of vehicles to mainland Europe had been dashed.
The problem with all this was that, while some cost-cutting was desirable, it went too far. From the Morris Marina of 1971, all British Leyland cars with the exception of Jaguar, were subject to brutal cost control in design and manufacture. That these cars should prove to be less than robust was no surprise, just as the Japanese were beginning to attack the British market. British Leyland took the patronage of their existing customers for granted, and cheapened the engineering integrity of its resulting products, making no real attempt to take on the threat from the East. Because many of the Cost Controllers were recruited from Ford of Britain, which was seen as a success story, no one questioned this strategy, and Lord Stokes in interviews repeatedly deflected criticism onto the now defunct British Motor Corporation.
A battle of ideologies
Whereas BMC had boosted sales through the adoption of front-wheel drive, British Leyland made no attempt to make genuine improvements on what had come before. This was embodied by the Austin Allegro, which was compromised by the need to cut costs and share components. The notion that it would meet serious competition from the continent was obviously not considered by the Product Planners, who probably looked on the Halewood-built Ford Escort as its main opposition.
The principal cause of British Leyland’s recourse to the Government in December 1974 was the ruinous Three-Day Week of earlier in the year, which had drained the company of its financial reserves. But the company had been on the slide before the events of early 1974. The failure of the Allegro had cost it around 5.5% of the UK market, as well as the development costs, the Mini was on the slide because British Leyland deemed it a loss maker and not worth replacing, and Rover-Triumph were losing sales to the Ford Granada.
To make matters worse, Britain had joined the Common Market in January 1973 and the UK car market was up for grabs. No longer would it be neatly divided between BLMC, Ford, Vauxhall and Rootes-Chrysler. Moreover, in truth, apart from the more specialist brands, Britain had nothing the Europeans wanted. In short, British Leyland was already heading for the rocks, alienating its customers with its new generation of cost-designed-out cars, something that would achieve its nadir with the Rover SD1 of 1976, and we haven’t even touched the issue of industrial relations.
Going cap in hand to the Government
When British Leyland went to the Government, Lord Stokes and John Barber successfully continued to propagate the view that the crash was down to the ineptitude of BMC, the Energy Crisis of October 1973 and the Three-Day Week, that was their undoing. They maintained that the company’s problems were merely financial – but it was, of course, much more complex than that.
It was in December 1974 that the Trade and Industry Minister Tony Benn entered the picture and to him British Leyland was more than just an ailing company in need of a cash injection. In his previous incarnation as Anthony Wedgewood-Benn, the moderate Minister of Technology in Harold Wilson’s previous Labour Government, he had been one of British Leyland’s godfathers. By 1974, the man many believe was the greatest Prime Minister Britain never had, had moved to the left and rebranded himself as Tony Benn.
Benn played a part in drafting Labour’s February 1974 election manifesto which stated: ‘The British people, both as workers and consumers, must have more control over the powerful private forces that at present dominate our economic life. 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… 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.’
Sorting the profitable from the lame ducks
Benn added: ‘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 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.’
In the case of British Leyland, the key phrase was, ‘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.’
Moving to the left rapidly
All this was at a time when many observers thought that Britain was heading in a socialist direction. The Heath Government had tried to bring in legislation to control the power of the trades unions and had been brought to book by the labour movement in the February 1974 General Election. People power seemed to have triumphed over the forces of capitalism, and Tony Benn was seen by many in the labour movement as the new messiah.
Tony Benn was a man obsessed by the Labour landslide victory of 1945 to the end of his days. He would tell anyone who cared to hear it that Clement Atlee was Britain’s greatest ever Prime Minister, and that what Britain really needed was radical socialist policies again. He was oblivious to the fact that the world had moved on since 1945 and that many of his views now alienated voters, particularly the middle classes.
It appears that in the ensuing six months after British Leyland went to the government for money, Tony Benn took it upon himself to act unilaterally, believing he had the mandate of the British people who had voted for a radical socialist manifesto. While Sir Don Ryder compiled his report into British Leyland, Tony Benn was in regular contact with the Combined British Leyland Shops Stewards’ Committee. This body, formed in 1968, was originally led by Longbridge Convenor Dick Etheridge, who was succeeded in 1975 by Derek Robinson.
This committee had, since its formation, obstructed all attempts to rationalise British Leyland’s sprawling network of plants, saddling the company with the excess cost of perhaps 30,000 too many workers on its payroll. Any notion of British Leyland operating one model plants as many rival firms did, went out of the window thanks to the need to pacify the Shop Stewards’ Committee. While the lack of rationalisation may have concerned the Ministry of Technology in 1969 under Anthony Wedgewood Benn, by 1975, all talk of redundancies at British Leyland were off the agenda at the Department of Industry under Tony Benn.
Jeremy Corbyn: influenced by Tony Benn
Far from being neutral, Tony Benn was actively engaged in plans to enable some sort of workers control of British Leyland with various union officials, one of whom was a certain Jeremy Corbyn. He wrote in 2014: ‘I worked at the Engineering Union in the early 1970s and Tony came to our offices to seek support for his industrial strategy because he felt he was being obstructed by the dead hand of officialdom in Whitehall. He encouraged us to produce a blueprint for workers’ control of British Leyland.’
Jeremy Corbyn was one of many who came under the spell of Tony Benn and his enticing world view. Others on the left claimed at the time that with British Leyland now owned by the state, the strikes restricting production would peter out, that the workforce would knuckle down now that they were no longer working for the forces of private capital. In April 1975, Tony Benn personally addressed a meeting of the Combined British Leyland Shops Stewards Committee. It is quite clear from hindsight that Benn was telling the Shop Stewards that the Government was on their side, and the Ryder Report duly delivered an over optimistic assessment of British Leyland’s prospects.
The Shop Stewards wanted Lord Stokes and John Barber removed and the Government duly obliged, to be replaced by second string executives. When the Ryder Report was discussed at Cabinet level, Tony Benn claimed that British Leyland would act as an import stopper, which was way off the mark. It is indeed possible that Prime Minister Harold Wilson got wind of what Tony Benn had been up to and felt he had exceeded his remit. The premier counted Lord Stokes as a personal friend. Whatever, in a June 1975 Cabinet reshuffle, Tony Benn swapped places with Energy Minister Eric Varley, who was a genuine trade unionist from a mining background. Harold Wilson was in the process of watering down his party’s radical socialist manifesto, something that would rebound on his successor in 1979.
British Leyland: plans were in motion
Eric Varley found that, thanks to his predecessor, in the case of British Leyland, the die was cast. In the next two and a half years the workforce behaved like it was a part of the public sector and not competitors in a fiercely fought international market. The belief among the Shop Stewards that the money would always be forthcoming to meet their wage demands was widespread, that there was a bottomless pit of cash, that the British Government could not afford British Leyland to go under. The belief that the workforce would not strike now that the company was owned by the state was woefully misplaced.
When Trades Union officials met with Eric Varley to discuss greater employee involvement, they were politely rebuffed. They were gradually finding out that, while Tony Benn might have been their friend, his replacement was decidedly more neutral. To make matters worse, the models sanctioned in the Stokes/Barber era continued to come on stream, with degraded engineering and quality taken out on cost grounds. The 18-22 Series/Princess (ADO71) bombed while the Rover SD1 was launched with much fanfare and little quality.
By the end of 1977, when Michael Edwardes took over the helm, the damage had been done. In the space of a decade Britain’s reputation as a leader in automotive technology had been destroyed, while imported cars flooded into Britain and exports dried up. A decade earlier Ford of Britain had been hailed as an industrial success story, but by the end of the decade it was importing cars from other European plants to feed UK demand, and the same applied to General Motors. By 1979 British Leyland’s market share had dipped below 20% as recession hit.
Such was the accelerated pace of foreign car imports since Britain had joined the Common Market that in 1979 it was calculated that imported cars would have the entire UK market by 1987.
The imports are coming
It was also in 1979 that the Labour Government, now led by James Callaghan, fell after the ‘Winter of Discontent’, to be replaced by that of Conservative leader Margaret Thatcher, who was no fan of British Leyland. At that autumn’s conference the Labour Party descended into open civil war, with Tony Benn and his supporters claiming that the leadership had reneged on its radical 1974 election manifesto promises. The widespread nationalisations had not occurred, nor had ‘socialisation’ of existing state-owned operations, a euphemism for trade union representation in management.
To many, Tony Benn’s removal from the Department of Industry in June 1975 had resulted in unfinished business, and British Leyland was to have been the model for a socialist industrial strategy. Instead, the bold socialist experiment had been abruptly terminated with the arrival of Eric Varley, who had no interest in micro-managing British Leyland, and eventually oversaw the replacement of its part-time and second division management with the more capable Michael Edwardes.
By the time Tony Benn and his supporters were at loggerheads with his party’s leadership, the gloves were off at British Leyland as Sir Michael Edwardes and his hardline management began to tackle the Combined British Leyland Shop Stewards’ Committee and its decade long intransigence over rationalisation and working practices. Over the next two years Sir Michael Edwardes dismantled any notion that British Leyland was a partnership between management and workers, much to the alarm of left wingers, who were screaming for his resignation by 1981, one of them being Tony Benn, who had authorised the appointment of Edwardes to the National Enterprise Board back in 1975.
Such was the dire state of BL in early in 1980 that its UK market share was at one stage as low as 13%.
The all-too-brief recovery
The Austin Metro offered a brief glimmer of hope, but the bruising 1980 and 1981 pay disputes demonstrated that the British Leyland Shop Stewards had plenty of fight still left in them.
As a new car, after a house, is the most expensive item one is likely to buy, the quality and reliability of said item matters, and the events at British Leyland destroyed worldwide confidence in British manufactured goods and this was exposed in the recession of the early 1980s. How culpable one thinks the Thatcher Government of the time was, is a matter of partisan opinion, but one major factor was the sheer lack of consumer confidence in British manufactured goods, and that can be laid at the door of British Leyland. The Thatcher Government could in theory have saved a lot of Britain’s industrial base by propping it up with taxpayers’ money. But the British Leyland debacle was a stark warning to those who toyed with such ideas.
The Maestro and Montego further reinforced the belief that British Leyland was a dead duck, propagating the policy of designing cars to cost to take on Ford, instead of designing a quality product to take on the likes of Volkswagen and Peugeot. Back in 1945, the Labour Party manifesto had stated that unemployment was caused by under consumption. The situation in Britain in the mid-1980s made a mockery of this statement. Britain was enjoying record car sales, but had a shocking unemployment total of over three million.
The 1980s: a decade of aspiration
In other words, there was plenty of money floating around, but too few people wanted to spend it on UK manufactured goods. This I believe was the result of the failed attempt to revive British Leyland. The Maestro and Montego were more than just two botched cars that failed to take off commercially. They represented state investment in industry, a national project in industrial renewal, that Britain could compete on a world stage. Their failure therefore represented national industrial defeat and seemed to confirm that Britain was no good at manufacturing, even when a lack of finance was not an issue. If the Maestro and Montego was the best the one time workshop of the world could do, then the future was bleak, very bleak.
In Thatcher’s Britain this was ammunition for those who believed that the service industry was the way forward, that investing in manufacturing was akin to flushing money down a toilet. And, while it was fashionable to berate the Government for Britain’s shrinking industrial base, the factories continued to close and the imports flooded in, as the consumers spoke with their wallets.
Whole areas of Britain became an industrial waste land as long established industries shut down, their former employees and families entering an environment of benefit dependency for decades. This caused stark social divisions that perhaps will never be healed. Politicians as always exploited this division for their own ends, ignoring the fact that the populace they appealed to were part of the problem for not buying British manufactured goods in the first place.
The Japanese take the strain
As industrial exports dwindled and imports thrived, Britain could not earn the money to pay for its way in the world, becoming dependent on foreign investors setting up satellite operations in Britain, which were vulnerable to future economic troughs.
The 1983 General Election was a landslide victory for Margaret Thatcher’s Conservative Party. Although much derided, the Labour Party’s manifesto was a rehash of the successful 1974 offering. The difference was that the party’s leadership now had the will to carry it through. However, the intervening nine years had seen the British Leyland debacle occur and the public appetite for massive public intervention had waned considerably. It was also a year of record car sales in Britain, but only 1,044,597 were manufactured in the UK, an indication of both the affluence of society and its willingness to tolerate mass unemployment within its midst.
The Tory landslide enabled to the Government to tackle head on the powers of the Trades Unions. Whether it was a good or bad thing to do is open to debate, but this was another consequence of the Labour movement’s failure to provide a convincing and electable alternative to that of Margaret Thatcher. Again I attribute this to the British Leyland morass.
Trying to revitalise BL
1986 saw the arrival of Graham Day at British Leyland, which he soon re-branded as Rover, but even he must have known that the glory days of the BMC Mini and ADO16 series would never come back. The collaboration with Honda was a way of keeping the re-branded Rover Group on life support, with the 1989 second generation Rover 200 becoming a best seller. The vital difference was that the R8 was a much better car than its predecessors, but its improved quality may have been down to the fact that it retailed at a higher price and had more room to use higher quality components. For a brief period the BL/Rover sales decline was arrested. But how much of this all to brief resurgence was down to the Honda connection?
Jaguar Cars, hailed as an industrial success story in early 1980s Britain, had been privatised in 1984. In the autumn of 1986 it announced its new XJ40 saloon to much publicity. However, the new XJ40 was woefully underdeveloped by a small Design Team, despite its extensive testing, with new owners finding its complex electrical systems in conflict with each other, leading to dashboard warning lights flickering into life as soon as they drove off the dealers forecourt. Sadly, the original XJ40 has become another symbol of British industrial ineptitude, with many owners beginning to embrace the possibility of buying something made in Germany instead. In 1989, Ford took over Jaguar and began to rectify many of the problems, but the damage to the Jaguar brand was enormous.
Meanwhile, the Thatcher Government had given up on trying to persuade Ford and General Motors to return production that had shifted elsewhere in Europe after 1973, and focussed on persuading Japanese manufacturers to manufacture in Britain as a gateway to European markets. Honda, Nissan and Toyota all set up manufacturing plants in Britain and, by 1994, UK car production had improved to 1,466,823, the best year since 1974. That same year BMW took over the Rover Group.
And along came BMW
BMW had gambled their future on selling quality cars at a price that reflected their true cost of manufacture. This compared with British Leyland, which had joined Ford in the race to the bottom of the price listings. The Rover SD1 should have conquered Europe. But because it was badly built to a price, it tarnished forever the Rover brand in export markets. By 1994, the UK market was sucking in large numbers of BMW saloons, and those of the other prestige German manufacturers, reflecting how even the reputation of the premium UK car brands was on the wane.
BMW’s acquisition of Rover drove Honda to the exit door, resulting in Rover having to enlarge its K-Series engine range to replace Honda units. But the enlarged K-Series engine and its resulting head gasket failure (HGF) issues simply brought back bad memories of terrible BL quality. Talk of K-Series head gasket failure became common in the motor trade and gradually reached the mainstream media. The whole HGF saga was again to the benefit of Rover’s rivals, and again demonstrated that buying British was a risky business.
For Rover Cars, BMW’s investment resulted in the new MINI and the Rover 75. We now know the new MINI was a success, but how much of this was down to the decision not to use the problematic K-Series engine? The saga of the Rover 75 demonstrated what happens when a company launches a product, no matter how good, onto a market that has no real interest in it and no need for it. BMW’s capital investment required annual sales beyond that ever attained by a Rover-badged executive car before. The problem with the 75 was that it had the K-Series engine, which everybody knew was prone to HGF, it was not built in Germany and the Rover marque had a poor reputation in export markets thanks to the SD1 debacle.
Its failure was not something anyone wanted to contemplate, yet in hindsight, although it was the time of Tony Blair’s ‘Cool Britannia’, patriotism did not extend to purchasing something made in deepest Oxfordshire. The climate that German made was best meant that the 75 was doomed to fail, tragic though that was. As we all know, BMW offloaded Rover to the Phoenix Four and Land Rover to Ford. MG Rover finally ceased trading in 2005. That summer I visited the Birmingham Mini show and stopped off at Q Gate at the now silent Longbridge plant. I was disgusted by the number of German cars I saw in Birmingham, indicating how little support the British motor industry was receiving from its local community.
The Noughties also saw the end of car making at Vauxhall, Luton, Ford at Dagenham and Peugeot at Ryton. All these closures had been on the cards since Britain had joined the Common Market in 1973. The smaller British operations had become mere satellites of the larger pan-European multi-nationals, and it was already evident that, while the British public wanted the employment these factories brought, they were not particularly bothered about where their shiny new car was made.
Paradoxically, the end of volume car production at Longbridge may have been the shot in the arm that British industry needed. With Longbridge gone there was no longer a symbol of poor British quality out there on life support to moan about. The emerging economies of China and India resulted in a demand for premium products from western manufacturers and one of those to benefit was Jaguar Land Rover now owned by Tata Motors of India. JLR along with many other UK manufacturers of premium goods that had survived the industrial armageddon that had engulfed Britain from the 1970s, now found their public image transformed. No longer were they manufacturers of badly designed, badly built tat that disintegrated upon purchase, but purveyors of quality goods. Even Britons, so addicted to imported goods, bought JLR products in large numbers. As a result business boomed, enabling the notion that Britain could survive outside of the confines of the European Union to gain traction. Britain is a great trading nation is the cry. That may well be the case now, but only a few short years ago Britain was an importers paradise.
And on to Brexit
Britain had joined the Common Market because its former empire markets were under assault by Japan and the USA and because it thought there were substitute markets to be gained in booming Europe. Instead, it endured de-industrialisation and mass unemployment as European imports flooded in. But by the second decade of the 21st century, the demand from China and India had convinced many that Britain could re-conquer markets lost four decades before and that Brexit was commercially viable. The success of JLR, a surviving part of British Leyland, is part of the Brexit equation. Unlike BMW and Rover, Tata’s investment has produced a dividend. But is this all down to timing? The fortunes of JLR do seem to be tied in to the respective strength of the Indian and Chinese economies and its finances are affected by any economic blips. And China and India are not the only markets outside the EU.
After the 2015 General Election, the opposition Labour Party surprised many by electing Jeremy Corbyn as its leader. A disciple of the late Tony Benn, as related earlier, he had been involved in drafting a blueprint for workers control of British Leyland in 1975. In the 2017 General Election he surprised many by boosting his party’s support, gaining 30 seats and eliminating the Commons majority of Conservative Prime Minister Theresa May. Real power seemed only an election away. Like his hero Tony Benn, Jeremy Corbyn believed that what Britain wanted was nationalisation and massive state intervention, that because the public had voted for it in 1945, they would do so again.
History (doesn’t) repeat itself
By the time of the 2018 Labour Party conference, some of the details had been fleshed out. The railways and energy utilities would be nationalised with worker and local government representation on the Boards to make them democratically accountable. The existing management would be fired and their positions replaced by lower paid executives. To this writer, this all seemed eerily familiar. Was this not a rehash of those 1975 blueprints for British Leyland? So on to 2019.
On 15 September Sir Michael Edwardes died, four decades after he had begun the process of rationalising British Leyland. Six weeks later new British Prime Minister Boris Johnson called a General Election for 12 December 2019. The Labour Party manifesto contained this: ‘We will put people and planet before profit by bringing our energy and water systems into democratic public ownership. In public hands, energy and water will be treated as rights rather than commodities, with any surplus reinvested or used to reduce bills. Communities themselves will decide, because utilities won’t be run from Whitehall but by service-users and workers.’
Again, is this the offspring of those discussions held back in 1975 for workers control of British Leyland? History records that the Labour Party’s left-wing agenda went down to a crushing defeat as another attempt to recreate the spirit of 1945 crashed and burned. Only time will tell whether a future electorate is again offered the same choice.
How BL changed Britain
The whole point of this long, rambling article is to demonstrate how the whole British Leyland saga changed Britain. Had the company succeeded, we might be living in a wealthier, more confident and less divided nation.
In a nutshell, the whole long-winded epic that was British Leyland demonstrated to many, not least at home, that Britain was no good at manufacturing, that quality was to be found in imported goods. To invest in British manufacturing was like stuffing good money down a lavatory u-bend. This mindset cost Britain great chunks of its industrial base along with thousands of well paid jobs, to be replaced by service industries offering lower paid employment. And this is epitomised by the Brexit debate. It is one thing to want your country back, but our roads are full of German cars. What part of being in the EU didn’t we like?
British Leyland was a failed industrial experiment that has scarred industrial policy in Britain ever since. It was a company owned by the people on behalf of the people, except the people didn’t want to buy its products. As a symbol of what Britain could do with the right investment, it was an industrial catastrophe resulting in economic collateral damage that affected millions of people.