Government Economic Controls in the British Building Industry, 1945-9

Abstract

Most discussions of the control of investment during the late 1930's and the Second World War had their origin, for obvious reasons, in the desire to regulate the aggregate level of economic activity. An unfortunate consequence of this preoccupation was that insufficient consideration was given to another problem of great importance: the determination of the uses to which investment resources are put.It was precisely this problem of the allocation of investment resources which became a matter of major concern to the Labour Government in Great Britain in the years after the Second World War. This paper will examine the manner in which the problem was handled with respect to investment in building, investment in plant and equipment will be ignored since no serious attempt was made to regulate it. The Government did not go much beyond entering into “gentlemen's agreements” with engineering firms respecting the percentage of their output which they planned to devote to export purposes-agreements of the sort which D. H. Robertson has delightfully described as “… the characteristic English processes of jollying along—of encouragements which are not quite promises, frowns which are not quite prohibitions, understandings which are not quite agreements.”The control of investment in building, by contrast, was a very ambitious venture. The Labour Government's experience in operating these controls is interesting for the light it sheds on problems of government planning for a major private industry. Moreover, this experience is particularly important since the industry concerned is one which is likely to play a crucial role in the programmes for development and welfare undertaken by many governments. The central focus of this paper, therefore, will be on the problems which arose in the attempt to control the pattern, as well as the volume, of activity in construction.