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CHAPTER 11

‘You’ve never had it so good’: Conservatives

1951–64

Wealth and welfare are partners. They both rose under Attlee’s socialism, Macmillan’s opportunity society and Butskell’s consensus.

A. H. Halsey, ‘A Sociologist’s View of Thatcherism’ in Skidelsky, ed., Thatcherism, p. 186

The memory of massive unemployment began to haunt me then and for many years to come.

Harold Macmillan, recalling Stockton in the 1920s, quoted in Horne, p. 71

Let’s be frank about it, most of our people have never had it so good.

Macmillan at party rally in Bedford, 1957

FROM 1948 TO 1973 Britain enjoyed a sustained period of economic growth, averaging around 2.8 per cent a year. With growth the welfare state expanded, and at times expanded rapidly. More could be afforded, more could be and was done.

There were of course economic ups and downs, some much sharper than others. The two and a half decades saw the arrival of ‘stop-go’ – or perhaps more accurately ‘go-stop’, in which economic stimulus led to overheating in the form of inflation or big balance of payments deficits, to be followed by contraction and then expansion again. But it was not until the early 1970s that the bedrock of the welfare state, full employment, first cracked. Even then the fissure was relatively small: in 1971–2, when for the first time unemployment averaged more than 3 per cent over the year, it did so by only the finest of margins. Such figures were to be low by the standards of the 1980s and 1990s, but what now seem minor shifts in the jobless total stimulated intense controversy; and there was continuing concern at levels of structural unemployment in some parts of Britain that were often double the national average.

None the less, after the initial, painful hiccup over rearmament during the Korean War, the late fifties and early sixties became dubbed the age of affluence. In the mid-1950s, Conservative economic policy was dubbed by the Economist ‘Butskellism’,¹ combining the names of the present and previous Chancellors, Butler and Gaitskell. Neither liked the label. Butler was to cavil in his autobiography that ‘both of us spoke the language of Keynesianism. But we spoke it with different accents and with a differing emphasis.’² After 1955 the cross-party conflict over the handling of the economy sharpened noticeably. None the less, the phrase did capture what in retrospect looks like a broad economic consensus.

This did not mean that there was a consensus on spending on the welfare state. Housing was put top of the Conservatives’ list of priorities and everything else – hospitals, health centres, schools, books – languished for some years a long way behind, a fact made much of by Labour. But there was still perpetual alarm within the government at the apparently inexorable growth in social spending. Repeated attempts at retrenchment in health, social security and education were made by successive Chancellors and the Treasury, but these met with only the most limited of success and were to culminate with the resignation of Peter Thorneycroft as Chancellor of the Exchequer in January 1958. A proto-monetarist faced with inflation and a sterling crisis, Thorneycroft had proposed curbing the money supply and freezing public spending through a package of measures with options including ending the family allowance for the second child, reducing the NHS ophthalmic service, increasing the NHS element in the national insurance contribution, introducing a ‘boarding fee’ or hotel charge in hospitals, and raising the price of school milk. After three Cabinet meetings Macmillan summed up strongly against him, arguing that the family allowance proposal was ‘contrary to the traditions of the Conservative Party’ and that the other measures would create disaffection and fresh wage claims. Only the increase in NHS contributions was allowed through. When Thorneycroft resigned, taking his junior ministers Enoch Powell and Nigel Birch with him, Macmillan, soon to be ironically characterised by the left-wing cartoonist Vicky as ‘Supermac’, insouciantly dismissed the loss of his Treasury team as ‘a little local difficulty’. Social priorities, which included the impact on employment and the housing programme, and the fear of higher wage demands, had taken priority over the fear of inflation. This was, in a small way, a turning point for the welfare state. As Kenneth Morgan has put it: ‘The battle fought out over ROBOT in 1952 was again won by the consensus, one-nation party, with the significant difference that Butler was now chief among the doves.’³

The economy continued to expand and Macmillan’s retort to a heckler in Bedford, in fact delivered at one of the rockier moments for the economy, came to dominate the 1959 general election; helped along by the first recognisably ‘give-away’ pre-election Budget, it turned into the slogan ‘You’ve never had it so good’.

That Budget was to lead to another dose of ‘stop’ and a mild recession in 1962. But it remains true that over the whole of the Conservatives’ tenure up to 1964 there were unmistakable indicators of growing personal wealth and comfort. Production of television sets exceeded a million a year in 1953. The number of cars on the roads rose from 2.5 million in 1951 to more than 6 million by 1964. The proportion of households owning a refrigerator rose from 5 to 37 per cent, those owning washing machines from 11 to 52 per cent. As the 1950s moved into the 1960s the baby-boom generation of the war produced a new word, ‘teenagers’, bringing skiffle and Teddy Boys in Edwardian drapes. Max Bygraves charted the changing times with ‘Fings ain’t what they used to be’ (‘They’ve changed our local palais into a bowling alley’ and ‘… Paris is where we spend our outings’). Coffee bars and rock and roll gave way to the twist and Dansette record players which played LPs made of plastic rather than black acetates which smashed when dropped. As the Macmillan era closed four lads in Liverpool were sending small but heaving audiences mad in a place called the Cavern.

It was only from the middle 1950s onward that it become apparent that although the economy was expanding and Britain was becoming more affluent, its industries were making do with obsolete equipment while the rest of Europe re-equipped. Europe’s prosperity was increasing at roughly twice the rate of Britain’s as the post-war version of relative decline set in. Each period of ‘stop’ and ‘go’ affected the welfare state. Equally, some of the welfare state policies were affecting the economy. Chief of these was housing. And it was housing which first and most clearly showed the party divide over the boundaries of the public and private sectors in welfare.

Housing

The Ministry of Housing was like cricket, you could see the runs, the houses were being built.

Harold Macmillan, quoted in Hennessy, Whitehall, p. 438

This is my moment and I intend to ram it home.

Ben Parkin, speaking in the Commons at the height of the Rachman scandal, Hansard, 22 July 1963, col 1119

A drama of optimism turning into arrogance and ending in disaster … if lifts and security [had] worked, the story would be very different.

Patrick Nuttgens on high-rise housing, The Home Front, 1989, p. 95

Politically, we had to remember that raising the rents of nearly two-thirds of the total houses, affecting anything between 16 and 20 million people, was not exactly an easy operation.

Harold Macmillan, Tides of Fortune, p. 444

Labour’s departure in 1951 saw the end of a six-year period (twelve, if the war is taken into account) when the building of new homes had come close to being a state service. Three-quarters of all new building had been council houses, publicly financed through central government grant and rates; and all of it had been state controlled: private houses, and even repairs above the most minor, had required licences. Bevan had, however, turned down the idea of nationalising housing, and first he and then Dalton had gradually eased restrictions on private house building, allowed councils to lend for house purchase, and introduced improvement grants for private housing. But when Macmillan, the new housing minister, started to shift more sharply the boundaries between public and private provision the issue acquired a new ideological and political edge.

When Bevan departed, housing had been split from its fifty-year association with health. Macmillan, in evidence of intent over the 300,000 houses target set by the Tory party conference, promptly renamed Dalton’s Ministry of Local Government and Planning the Ministry of Housing and Local Government and set out to make his and the Tories’ reputation as guardians of the welfare state.⁴ He had not wanted the job, telling Churchill: ‘I know nothing whatever about the housing problem.’ To that the Prime Minister replied with considerable foresight: ‘It is a gamble – [it will] make or mar your political career.’⁵ For the next three years, with Churchill’s backing, Macmillan put housing at the head of the welfare state queue, beating other areas for resources and launching in earnest the numbers game that was to dominate housing policy for much of the next twenty years.

With the showmanship that was increasingly to mark him out, within three months of taking office Macmillan announced ‘The Great Housing Crusade’.⁶ He needed a crusade to protect him from the Treasury. For the first year of Conservative rule was a period of economic crisis, as officials warned the new Chancellor, Butler, that the blood was ‘draining from the system’ and that Britain was once again staring ruin in the face.⁷ The pledge to build 300,000 houses became Macmillan’s ‘sheet-anchor’ allowing him to ride out the economic gale⁸ and resist cuts through a mixture of elegant bullying, the odd hint at resignation and a reorganisation of his department on wartime-like lines of control. The net result, he noted, was ‘more than my fair share’⁹ of resources.

To reorganise a department ‘concerned with guidance, advice, supervision, sometimes even warning and reproof, but never with positive action’,¹⁰ Macmillan brought in as Director-General Sir Percy Mills, an industrialist who had been controller of machine tools during the war. The appointment caused no little friction in Whitehall, not least with Beveridge’s old adversary Sir Thomas Sheepshanks who was now Macmillan’s permanent secretary.¹¹ Macmillan once brutally dismissed him as ‘useless’.¹² The resentment of Mills was one of the early signs that a civil service leavened and enlightened during the war with outside expertise now once again regarded itself as the sole guardian of policy development and administration.

Almost everything except labour still remained in short supply – bricks, steel, timber, cement; Macmillan at one point complained that surely the last of these could be produced more quickly when all it amounted to was ‘Thames mud and chalk’.¹³ To hit 300,000 a year, Macmillan cut further the minimum size for council housing which Dalton had already eroded, encouraged the building of smaller two-bedroom houses by councils, and relaxed and then removed licences for private house building. His aim, he declared, was ‘to set the builders free’. He also allowed the first post-war council house sales, the aim being to cut Treasury subsidies for rents and to generate more capital.¹⁴ Some 3000 were sold by the 1955 election.¹⁵ Macmillan thus initiated a policy which in a different form would eventually become Mrs Thatcher’s icon. As he told the Commons in December 1951, in what was to become a recurring Conservative theme: ‘We wish to see the widest distribution of property. We think that, of all forms of property suitable for such distribution, house property is one of the best.’¹⁶

But as Macmillan himself made clear, crucial to the numbers game was the cut in the size of council houses. The smaller ones were now popularised as ‘The People’s House’ and promoted to the public on the grounds that while they might be smaller, their rent was lower. There were repeated exhortations to reduce the number of bricks and other materials used. ‘Unless we get the economies, we shan’t get the houses,’ he declared. Timber and steel shortages also saw the introduction of much more reinforced concrete and of steel-reinforced lintels, a permanent change in housing construction.¹⁷

‘The fierce and almost frantic pursuit of the housing target filled my mind,’ Macmillan remembered. The monthly figures provided ‘a scorecard on which the eyes of all the critics, friendly and hostile’ were riveted. Bets were laid between political colleagues on whether completion figures would be attained.¹⁸ It was not quite a case of ‘never mind the quality feel the width’; but it was heading that way as quality and quantity came into conflict. Macmillan’s resolution of the problem differed from Bevan’s, and problems for the future were created.

Quantity, however, was needed. By 1952, early returns from the first population census in twenty years indicated one million more households than dwellings, and more than two million dwellings which were shared by two or more families.¹⁹ This grim picture, despite a million houses having been built since 1945, was the result of demographic change. Since 1931, the population of England and Wales had risen by only 10 per cent, but the number of households had increased by 28 per cent, or nearly three times as fast: the result of more single elderly, survivors of the First World War, and the growing popularity of both marriage and smaller families. Thus over twenty years, the number of one and two person households had risen from 29 to 39 per cent of the total, while the number of big households (six members or more) had halved from 16 to 8 per cent.²⁰ Macmillan achieved his numbers, helped in part by the ‘valuable inheritance’ of the New Towns, a development he regarded as showing ‘real imagination’ on Labour’s part.²¹ He was aided by Sir Percy Mills and the regional housing boards they set up, the drive of Dame Evelyn Sharp, an under-secretary who was shortly to become one of Whitehall’s few female Permanent Secretaries, and the ministerial expertise of the self-made engineer Ernest Marples, who shocked colleagues when he arrived in Parliament in 1945 sporting orange-brown shoes beneath his blue suits.²² Macmillan once acknowledged simply: ‘Marples made me PM: I was never heard of before housing.’²³

The target was reached in 1953 when 318,000 houses were built and was comfortably exceeded in 1954 when another 357,000 were added. Moreover, more than a quarter of these new homes, against 15 per cent in 1952, were in the private sector.²⁴ What had been a trickle of private homes was becoming a stream ‘to augment or even to some extent replace the rising river of subsidised housing,’ Macmillan noted.²⁵ New housing, however, was only part of the problem. With the numbers rolling in, he turned his attention to the slums and the linked problem of rent which he described as ‘the most intricate and politically dangerous’ of the housing issues.²⁶

In July 1952 a report from the Sanitary Inspectors’ Association had pointed out that houses were falling out of use as fast as they were being built, or faster.²⁷ A key reason was rent levels. In 1951 in England, 53 per cent of houses remained privately rented and less than 30 per cent were owner-occupied.²⁸ Many rents, however, had been controlled since 1939, some of them at levels set in the 1920s. The mesh of controls meant that rents could vary two-and-a-half-fold for identical houses in the same street with the same amenities.²⁹ Frequently rent income was too small for landlords to finance repairs. Homes that had once been good were becoming slums, and slum clearance, the Luftwaffe’s contribution aside, had been halted by the war. Anything between 280,000 and 500,000 homes were calculated to need clearance, against the 140,000 slum dwellings whose demolition had been halted in 1939.

Macmillan therefore prepared to switch the programme’s emphasis to include repair, conversion and slum clearance. In 1953 he proposed that councils would be able to take over slums for their site value only, turning local authorities into slum landlords but ones charged with clearing them and able to set realistic rent levels for the replacement housing. Aside from the New Towns, which were taking overspill from the cities, councils were given bigger subsidies for slum clearance than for other forms of new building. And as part of this ‘Operation Rescue’ a limited rent increase, a ‘repairs increase’, was allowed in the private sector where landlords could demonstrate by certification that they had put homes into good repair in the past three years – this last to protect tenants who in despair had undertaken repairs themselves. In addition, all new private houses and flats would be free of rent control. ‘The opposition to this [the easing of rent restrictions] was considerable,’ Macmillan recorded. ‘But I felt it was another move to freedom.’³⁰

Macmillan faced Bevan at his stormiest. Labour was into the leftward shift that, from the end of the war at least up to 1983, it took each time it went into opposition – at least in terms of its policy as passed by annual conferences. The Tories equally were to move right when not in power, whatever finally happened when they returned to government. Bevan argued that all rent-controlled private property should be taken over by the councils, municipalising, though not nationalising, some five to six million homes. Landlords could not be trusted to spend rent increases on repairs, he argued. Only local authorities could find the cash and therefore they should take over the homes.

Morrison, among others, wanted nothing to do with that, but in 1956 the Labour Party conference endorsed the policy. Arthur Greenwood, in recommending this ‘full-blooded Socialism’ to the conference, commented accurately that it was ‘probably the biggest socialization project that has yet been attempted in the democratic world’.³¹ Its object was to ‘take the profit out of private landlordism’ and ‘make housing a social service’. Had such a policy ever been implemented, housing would indeed have become just that, with well over 60 per cent of homes council controlled. This policy of mass municipalisation was balanced by the promise of more generous local authority mortgages for home owners. But even Greenwood could see that ‘entirely new problems’ would be created if the local authority was ‘virtually the only landlord in the area’.³² Needless to say this never happened, although the idea survived into the 1959 manifesto, hedged with let-out qualifications about timing. Nothing, however, could better illustrate the real differences that would remain over the public sector/private sector divide in the welfare state. Where Bevan was right, as Macmillan much later conceded, was that the ‘repairs increase’ he allowed in rent was too small to have much effect. (Bevan, having his cake and eating it, had dismissed the increase as ‘a mouldy turnip’.)

If Macmillan hit his targets by relaxing controls on the private sector and by cutting standards in the face of overwhelming demand, his immediate successors Duncan Sandys, Henry Brooke, Charles Hill, Sir Keith Joseph and then Labour’s Dick Crossman all helped grow the bitter harvest that became the real disaster of post-war housing – system build, the high-rise towers and the great slab blocks of deck-access flats. It started almost by accident. Up to the mid-1950s traditional houses dominated. In 1953 just 23 per cent of public sector housing approvals were for flats, and only 3 per cent of those were for high-rise: blocks of six storeys and above. But from 1956, Sandys started paying higher subsidies for high-rise blocks. Up to then, he told the House of Commons, all flats had received the same subsidy.

Since construction, in practice, costs more as you go higher, the result has been that flats in low blocks have been more heavily subsidised in relation to costs than flats in high blocks. Apart from being inequitable, this has unintentionally influenced local authorities to concentrate on building blocks of three, four and five storeys, which, I believe, many honourable members will agree are most monotonous.³³

No one dissented. From then on, the taller the block the bigger the subsidy in order to eliminate the financial advantages of erecting low-rise buildings. On such wonderfully egalitarian and aesthetic grounds, the explosion in high-rise was, almost unintentionally, launched. Within four years, the proportion of high-rise had risen five-fold to 15 per cent of the construction programme, and by 1966 it accounted for 26 per cent of all homes started.³⁴

The guilty men – they were almost all men – were not just those in government. An unintended conspiracy of town planners, builders, engineers and architects, together with local councillors who believed they were doing their best but frequently failed to consult those they were rehousing, produced what became a costly and alienating fiasco. ‘Tower blocks were part of architectural and municipal prestige,’ the architectural historian Patrick Nuttgens has recorded, ‘– a desire to make a mark on the landscape, to display technical proficiency and to announce the arrival of a new age.’³⁵ In Birmingham, Harry Watton, the Labour leader known as ‘little Caesar’, was taken to see one of Bryant’s new system-build blocks at Kidderminster. Sheppard Fidler, the city architect recalled:

To get to the block we passed through a marquee which was rolling in whisky, brandy and so on, so by the time they got to the block they thought it was marvellous – they wanted to change over the whole [housing] programme [to these]. As we were leaving, Harry Watton suddenly said: ‘Right! We’ll take five blocks’ – just as if he was buying bags of sweets. ‘We’ll have five of them and stick them on X’ – some site he’d remembered we were just starting on.³⁶

Rod Hackney, an architecture student in Manchester in the early 1960s, has caught the flavour of the time as well as anyone in The Good, the Bad and the Ugly, his autobiographical account of the road to community architecture. The road ran from the 1930s and Walter Gropius, the founder of the Bauhaus, via the Modern movement to Le Corbusier’s ‘cities in the sky’. In 1946, Corbusier’s Towards a New Architecture was published in Britain with its ringing declaration that ‘we must create the mass-production spirit. The spirit of constructing mass-production houses. The spirit of living in mass-production houses. The spirit of conceiving mass-production houses.’ In well under a decade, the spirit had turned into a flood of buildings. ‘By the mid-fifties traditional building methods were considered slow, cumbersome and a hindrance,’ Hackney records. ‘The only way to build new homes on a massive scale was unrestrained use of the standardized mass-produced materials advocated by the Modernists. A vast proportion of these systems had to be imported from France, Denmark and – ironically – West Germany. Entire rooms were shipped over and were then slotted together like Lego on site.’ There was ‘blind faith in “hip” modern building materials – off-the-peg panels, concrete, glass, metal, plastics and aluminium … if one dared question the long-term performance of the new, the reply was swift: in the same way that technology had developed the materials, it would also develop solutions to problems as and when they were required.’³⁷

The modern movement and its sub-section the new Brutalism, which believed in the ‘honesty’ of bare concrete, seemed to meet the demands of cheapness, speed and what rapidly became the lack of space as the Town and Country Planning Act preserved green belt and put pressure on inner city land. The only answer seemed to be a version of the approach adopted by the first Tesco supermarkets: pile ’em high and sell ’em quick, or in this case build ’em quick, for in theory high rise gave savings on drains, roads, services and other infrastructure. This suggestion proved to be an illusion; high rise was eventually found to cost more than traditional ways of building. Politically, however, the numbers game was all there was. In later years, Keith Joseph’s hand would go over an anguished face and he would mutter ‘disaster, disaster’ when he contemplated what he had built when housing minister in the early 1960s. ‘I was genuinely convinced I had a new answer. It was prefabrication and, Heaven help me, high blocks … the best of intentions and the worst of results.’³⁸ He was to recall sadly: ‘I didn’t have a philosophy. I was just a “more” man. I used to go to bed at night counting the number of houses I’d destroyed and the number of planning approvals that had been given … Just more.’39 Almost no one asked the families from the massively expanding slum clearance programme what they thought of all this. Nicholas Taylor, an assistant editor at the Architectural Review, recalled the massive arrogance still present as late as 1967 when he proposed that some evidence should be sought on what people actually wanted, to go with an issue on ‘the best of current housing’. He was scornfully dismissed by the proprietor with the words: ‘But we KNOW what should be done!’⁴⁰

Initially, many of these housing schemes attracted awards and international recognition. But, as Rod Hackney has put it, ‘Utopia showed early signs of cracking up.’⁴¹ Flat roofs that were fine in sunnier climes soon succumbed to British rain. Concrete became stained, crumbled, and spalled – partly the result of additives slung in to speed setting. Key joints leaked, sometimes because they had been packed with newspaper and concrete bags by builders on piece rates who were too impatient to wait for the right fittings. The result too often was ‘sodden walls and squelching floors’,⁴² and high fuel bills even when residents could control their own heating rather than having to rely on whole block systems which were often inefficient. Maintenance costs proved awesome. Lifts and rubbish chutes failed. As the physical environment deteriorated it was found that whole buildings and even estates could spiral down to decay and fear at alarming speed. By 1960, within two years of being built, the twin ten-storey blocks of Oak and Eldon Gardens in Birkenhead were subject to blackouts and flooding as the electrical and fire-fighting equipment was sabotaged and as children swung from balcony to balcony on the hose-reels. Two toddlers fell to their deaths and acts of arson led to repeated evacuations.⁴³ Even when vandalism did not reach that pitch, the long corridors and dark corners of deck access flats proved terrifying. Soon, Rod Hackney noted, ‘the only people giving awards and plaudits to architects were the muggers and burglars’.⁴⁴

This perception took time to grow, and for some tower blocks and the massive slab flats proved a success: single people, the childless and even better-off families can value them when they are built to a high standard and well maintained. The mighty towers of the Barbican development in the City of London remain popular. But for too many families the public developments proved a disaster. Mothers could not see children playing many floors below amid both poorly maintained concrete and a social mix that the very planning process had set askew. Long lost by the late 1950s and early 1960s was Bevan’s romantic vision of a socially mixed village. The slum terraces that were cleared often included privately rented, council and owner-occupied housing. However, once the intention to ‘improve’ an area by demolition and replacement was announced, blight descended, sales became impossible and prices slumped. For the council, this could conveniently cut the cost of compulsory purchase which might not be finally enacted for years. But as tower and slab blocks slowly gained their awesome reputation many of the most able fled the prospect of rehousing, leaving a mix of community that was far from balanced, and which was often rehoused with scant regard for placing people near neighbours and families. Housing ghettos in the sky began to be created.

Over time these conditions were to have a deeply corrosive effect on the public perception of council housing, both for those who lived in it and those who did not. At its peak, high-rise only accounted for well under 10 per cent of local authorities’ housing stock⁴⁵ – a figure which none the less meant homes for more than 1.5 million people.⁴⁶ But tower blocks, and the at times even more massive slab blocks, came to dominate city skylines. Jack Straw, Peter Shore’s political adviser at the Department of the Environment in the late 1970s and twice Labour’s housing spokesman, says that these developments ‘did for public sector housing. It was an alien form of housing which became intrusive to the rest of the population. Up to the mid-1950s council blocks in the main were four or five storeys, no different in style and scale from the private blocks in north Westminster, for example. Suddenly the skyline of every large town and city was disfigured by these “welfare blocks”. The middle classes didn’t mind paying for council housing. What they did mind was being literally overshadowed by welfare housing that was destroying their skylines.’⁴⁷

High-rise became an all-party disaster at both national and local level, but it was rent that was the chief source of party conflict over housing in the late 1950s and early 1960s. Compounding the problem of repairs was the fact that, while swathes of privately rented housing were appalling – well over a third of its households lacked hot water and one-fifth exclusive use of a lavatory⁴⁸ – people had got used to low rents. Real earnings had outstripped rent rises three-fold since 1938. By 1955 official figures suggested that on average less was being spent on rent than on either drink or tobacco.⁴⁹ Macmillan had lamented, ‘it is hard to get back the idea that the first thing on which the family income should be spent is living accommodation.’⁵⁰ A further complication was that council house rents, despite subsidies, were often more realistic than private ones. As a result, particularly in the more attractive housing, it was foremen and skilled workers who made up the largest section of council tenants, while the least well off often had to fall back on the worst of the private rented sector. In addition, amid full employment, the shrinking share of private renting was hampering labour mobility.

With well over a third of the houses and much more of the population renting privately, an instant free-for-all in rents was impossible when housing shortages still existed. The 1957 Rent Act, introduced by Powell and Sandys, carried through by Brooke and Reginald Bevins, produced staged decontrol. Rents at the top end of the market were deregulated over three years, affecting in the main, but not exclusively, the middle classes. Rents below that were raised, but remained controlled. As tenants moved out, however, rents could be re-set free of controls. With Labour’s official policy now municipalisation the parliamentary battle was furious, despite the Bill’s second reading in 1956 being overshadowed by the Suez crisis. Labour MPs denounced it as ‘vicious class legislation’ warning that tenants would be ‘thrown to the wolves’, left starving, or put on the streets by exploitative landlords who would do no repairs.⁵¹ Labour promised the Act’s repeal, the pledge becoming, in Keith Banting’s words, ‘a symbol of historic differences between the two parties’.⁵²

In practice creeping decontrol took time to take effect. Initially evictions were few, rent increases limited. At the end of 1958, the Manchester Guardian judged the Act to be working: ‘The general expectation seems to be that the Act will, as promised, make rather more accommodation available.’⁵³ Particularly in London, however, the demographic pressures continued to mount. The service industries, growing rapidly in the age of affluence, were pulling low-paid workers into the capital, among them West Indian immigrants encouraged to Britain to boost the labour supply. At the same time, slum clearance ahead of rebuilding was diminishing the stock. Housing shortages were growing. By 1960 and 1961, rents were rocketing on renewal, homelessness was rising, bishops started to march, and the ministry found it had no decent figures on the private rented sector with which to fight back against the numbers that social scientists at the LSE headed by David Donnison were collecting. These showed that the private rented sector was still shrinking, while the rate of repair was not improving.⁵⁴

Slowly and increasingly explosively, housing became a media story. What made it detonate in 1963 was Perec Rachman. A Polish immigrant after the war, he had started in 1954 buying up the ends of leases in big multiply-occupied houses in Notting Hill and other parts of west London. His methods of shifting tenants out of unfurnished rooms so that he could re-let them, nominally furnished and at uncontrolled rents, were never too gentle. Faced with a house full of statutory tenants paying protected pre-war rents, Rachman would combine racial prejudice with business, according to the Sunday Times account which eventually revealed his methods. He would let one room to eight West Indians, ‘all accomplished musicians’, and tell them he liked parties. Within three months the ‘stats’ – statutory tenants – would have left, replaced by ranks of West Indian immigrants or poor whites, desperate for housing and paying uncontrolled furnished rents amid appalling overcrowding. Alternatively, the house would be sold vacant for five times the sum Rachman had paid for it.⁵⁵ If tenants refused to move, the heavies – ex-wrestlers and boxers – would be sent in. On one occasion, Rachman simply took the roof off a house when some tenants refused to leave. Others were intimidated, physically assaulted, had their furniture destroyed, or found that all-night ‘clubs’ had been established in their basements. In St Stephen’s Gardens, Paddington, residents and tenants famously fought back, once flooding one of the clubs to close it and on another occasion sawing up a staircase and electrifying it with metal fittings to prevent Rachman’s roadies evicting a couple.⁵⁶ Attempts by the police and local and public health authorities to deal with him were defeated by a web of holding companies so complex that it was never finally established how many properties he owned, although the minimum estimate at his peak in 1959 was 150 involving at least 1000 tenancies.⁵⁷

Rachman had been at work since the mid-1950s and indeed had died in 1962. The fuse that was to explode his name into a permanent place in the English language was the knowledge held by one of his firmest opponents, Ben Parkin, the Labour MP for Paddington, that Mandy Rice-Davies had been his mistress. When Rachman’s name came up in one of the court cases around the Profumo affair in 1963, Parkin pounced – injecting Rachman, housing and intimidation into the already fetid tale of Mandy Rice-Davies, Christine Keeler, and the Secretary of State for War who had shared his mistress with a Russian spy. With Rachman dead, the libel laws which had held back his full exposure no longer applied and the link to Profumo provided scintillating topicality and a fresh breath of life to a fading story. A month’s worth of media exposure resulted, running on into the summer ‘silly season’ when newspapers are short of news. Rachman, his methods, and the state of London housing were suddenly the issue.

Even The Times went graphic. It described:

A young girl, near to tears … [in] the pitifully small room in which she and her husband had to live. There was no water, except for a cold tap in the backyard down three flights of dark rickety stairs. The one lavatory for the 11 people in the building was too filthy to use. Cooking facilities had to be shared. The house was rat-infested and the walls so ridden with bugs and beetles that the girl was afraid to replace the ancient wall-paper which helped to some extent to keep them from crawling into the room.⁵⁸

Labour went to war. Harold Wilson, recently elected leader of the party, launched into the Tories over Rachman and the rent increases the Act had caused. The government’s response, that Rachman had been at work before the 1957 Rent Act and that housing shortages, not the Act, were the root cause, cut no ice. All ministers could promise was an inquiry, the Milner Holland report which did not emerge until 1965. ‘Rachmanism’ became such an integral part of the language that twenty-five years later, when Nigel Lawson announced that tax breaks in the Business Expansion Scheme could be used to provide new rented housing, Gordon Brown, Labour’s Treasury spokesman, felt only the need to label it ‘state-subsidised Rachmanism’ in order to condemn it.⁵⁹ It mattered not that Milner Holland finally estimated that only 1 per cent of London tenants were facing abuse and intimidation, or that its surveys showed that well over 80 per cent of tenants and in some cases more than 90 per cent were satisfied with their landlords. As Keith Banting put it, ‘the balance in the housing debate had shifted decisively’.⁶⁰ Landlords were bad, tenants were exploited. It was one of the messages which helped Labour to its 1964 election victory.

Richard Crossman promptly replaced the Conservative legislation with Labour’s own Rent Act. It restored security of tenure, created ‘fair rents’ with rent tribunals to hold the ring between landlords and tenants, and allowed three-yearly rent rises. After all the Sturm und Drang over the 1957 Act, it was to prove a remarkably bipartisan piece of legislation. Crossman, despite in the 1950s being seen as a firebrand of the left, had in 1960 himself been instrumental in quietly killing off Labour’s policy for the mass municipalisation of rented housing. His Rent Act in the end attempted to strike a real balance between landlord and tenant, rather than deliberately driving the private landlord out of business. As a result housing finally emerged in the mid-1960s as defiantly not a mass social service. Rather it was a firmly mixed economy, with Crossman’s measures including encouragement for home ownership as well as a renewed council housing drive. It remained, however, a mixed economy in which the returns from owning housing for rent remained too small to be attractive. The private rented sector continued remorselessly to shrink.

Meanwhile the Rent Act experience had caused the Ministry of Housing itself to lose faith in the private rented sector. Its civil servants were now headed by the formidable Dame Evelyn Sharp, described by Macmillan as ‘without exception the ablest woman I have ever known’⁶¹ and by Crossman as ‘like Beatrice Webb … in the sense of wanting improvement and social justice quite passionately and yet a tremendous patrician and utterly contemptuous and arrogant, regarding local authorities as children which she has to examine and rebuke for their failures.’⁶² She had wanted no more truck with Labour’s 1959 policy of municipalisation than Crossman. Equally, however, she believed it ‘very doubtful’ whether ‘the growing division of society into council tenants and owner-occupiers can be satisfactory’.⁶³ By the early 1960s her department’s officials were casting around for another private supplier of housing. Their answer after visits to Scandinavia was the non-profit-making housing association. Sir Keith Joseph, ever willing to experiment, invested £25 million in a pilot project in 1961 and in July 1963 a dozen two-bedroom flats in Birmingham became the first housing association homes to take in tenants.⁶⁴ Publicly funded, but independently provided, housing associations became the very first of a new type of body, neither traditionally state-owned nor strictly in the private sector, but used by the state as its agent: a very early version of a model that by the early 1990s and much adapted would include grant-maintained schools and NHS Trusts. In the dying weeks of the Conservative Government, Sir Keith, battered and bruised by Rachman, announced the first £100 million loan to the newly formed Housing Corporation to expand the idea.

Social Security

Already it is possible to see two nations in old age; greater inequalities in living standards after work than in work.

Richard Titmuss, on the impact of occupational pensions, 1955, in Essays on the Welfare State, p. 74

Too small and far too timid a step forward … a little mouse of a scheme.

Iain Macleod speaking on the new Tory pension scheme in the Commons, Hansard, 27 January 1959, col 1013

If housing generated the most controversy between 1951 and 1964, social security, other than pensions, probably provided the least. Particularly in the earlier years, there was a real sense that the problem of ‘want’ had been cracked. True, the failure to pitch insurance benefits high enough meant that many more people than anticipated ended up supplementing them with national assistance. From 842,000 clients in July 1948, the National Assistance Board found itself with a million on its books by 1949 and 1,800,000 by 1954, a figure which then fluctuated by 200,000 either way until the mid-1960s.⁶⁵

But many of the claimants were old: full employment saw to that. The stigma and pain of the loathed household means-test had gone. Home visits by local officers armed with discretion to pay extra for special needs formed the core of the service. There was an intellectual understanding by left-inclined social scientists and the more rigorous Tories such as Powell and Macleod that something had gone really rather wrong with Beveridge’s plan for an insurance-based scheme supported by only the smallest of means-tested safety nets; and there was one real attempt in 1955 by the long-forgotten Oliver Peake to float large numbers off the means-test by a 22 per cent rise in insurance benefits. But the Board by the mid-1950s had sunk into a ‘quiet obscurity’. It was believed by its supporters to be delivering a humane and effective service.⁶⁶

Benefits in those days of low though increasingly worrying inflation were not uprated annually. Between 1948 and 1964 the insurance benefits were raised six times, while the means-tested ones saw ten increases.⁶⁷ The two thus marched out of step. As a result confusion over objectives was revealed on both sides of the political fence, although a confusion which paradoxically illustrated the practical consensus over social security whatever the remaining differences in political philosophy. As Deacon and Bradshaw describe in their definitive record of the British means-test: ‘Sometimes insurance was increased by more than assistance – at which point the Government claimed that it was reducing the role of the means-test and the opposition complained that help was not going to those who needed it most. On other occasions, assistance was increased more and then exactly the same debate was held in reverse, with the Government extolling the virtues of selectivity and the opposition complaining about the means test.’⁶⁸

Where consistency was achieved in the mid-1950s was over the joint realisation that the chicken of paying pensions in full from 1948 was about to come home to roost. A large number of the growing army of pensioners who had made only ten years’ contributions were about to retire. The national insurance fund was heading for a horrible deficit. In addition, Richard Titmuss at the London School of Economics, along with others, was drawing attention to a growing gulf in old age between those with occupational pensions and those who had only Beveridge’s subsistence-level state pension which had increasingly to be topped up with national assistance to cover rent. ‘The outlines of a dangerous social schism are clear,’ Titmuss warned in 1955, ‘and they are enlarging.’⁶⁹ Labour, as part of its increasing attacks on the government over its failure to fund health and education at the levels needed to match demand, focused on pensions to argue that Conservative policies were failing to achieve sufficient redistribution towards the least well-off, among whom pensioners were the largest group.

Later that year, Gaitskell succeeded Attlee as Labour leader. ‘In his hatchet-burying mood,’ Douglas Jay, the economist and former President of the Board of Trade, who was then a senior Labour figure, recalled, ‘Gaitskell laboured very hard to get everyone, particularly Bevan, Wilson and Crossman, working harmoniously together. Rightly he saw that what Crossman needed was a real hard practical job to do which would divert him from playing politics. So Gaitskell asked him to head a formal and expert Labour party committee to re-think the whole pensions and national insurance system in the light of … ten years experience. I was to join the committee. We also had the exceedingly valuable help of Richard Titmuss, Brian Abel-Smith and Peter Townsend. This was the best job Crossman ever did.’ Jay went on:

The two central principles which in the course of the argument became increasingly clear to us, and in the end won unanimous agreement were these; first that since the ordinary man or woman would rather pay £1 a week as an insurance contribution than as income tax, and so feel that he or she had earned their own pension, the contributory principle was right [a married man with two young children in 1956 still had to earn 97 per cent of average manual earnings to pay any income tax]; and secondly since a single fixed contribution and pension for all must mean either too high a contribution for the lowest paid, or too low a pension for the well paid, it was inevitable that the contribution and pension must be earnings-related in the future if pensions were eventually to ensure a decent living standard in old age.⁷⁰

The chief snag, Jay records, was the rapid growth since 1948 of schemes run by employers – occupational pensions. In 1936 a mere 1.8 million people were members of such schemes. By 1956 that had risen to 8 million, around a third of the workforce, chiefly covering white collar staff including the civil service. The employers would resist higher contributions, arguing that they were already paying into their own schemes. A typically ‘English compromise’ was proposed: they would be able to contract out of higher contributions in return for the pensions they paid. Much of the credit for designing the scheme, which aimed eventually at half-pay on retirement against the fifth of average earnings that the existing pension provided, goes to Titmuss and his colleagues. The plan was published in May 1957, enthusiastically endorsed despite Crossman’s confession to his diary that its details remained ‘three-quarters baked’,⁷¹ and was thrown down as a challenge to the Tories. It was to take twenty years to come to fruition.

Crossman’s plan was remarkable for abandoning ‘fair shares for all’, the wartime slogan Labour had adopted as a sound socialist tenet. Earnings-related pensions would mean more for the better off – a stark departure from Beveridge’s subsistence principle and a move towards more continental ‘citizenship’ models of social security. But it won union support. A TGWU-backed Fabian pamphlet was already arguing that: ‘The only test by which a pension can be judged is by its relation to the wage packet earned at work. This is the way the boss looks at his pension and that is the way we should look at ours.’⁷² The unions also backed a state-run scheme as occupational pensions were commonly not transferable: workers saw them as a form of golden handcuffs, tying people to particular firms and even enforcing discipline within them. The more perceptive Conservative critics, while vigorously in favour of private provision, also saw that lack of transferability meant that existing occupational schemes reduced labour mobility, an issue that was finally to lead to sweeping changes in pension provision in the 1980s. There was therefore the beginning of a cross-party alliance available.

That was not evident in 1957–9. None the less John Boyd-Carpenter, the Minister for Pensions and National Insurance, was forced to respond in the face of these challenges and the escalating crisis over how to pay for pensions. Initially he dismissed Titmuss and his colleagues as ‘a skiffle-group of professors’ who had got their sums wrong.⁷³ When the sums broadly held up, he and others attacked the scheme as extravagant and inflationary, arguing that higher contributions by employers would mean higher prices – a point Beveridge drove home from his seat in the Lords as he spelt out his anathema to this departure from his principles.⁷⁴ Boyd-Carpenter’s final response was a vastly more limited scheme to introduce ‘graduated’ pensions. Above a low threshold, employees were to pay a percentage contribution on their earnings up to a £15 a week ceiling. This earned them ‘bricks’ of extra pension: 6d. (2.5P) a week for every £7.50 paid by a man and £9 by a woman. This was not strictly earnings-related, and no formal provision was made for up-rating the graduated pension alongside inflation. Younger workers were thus faced with the prospect that the ‘sixpenny bricks’ they had paid for early in life would be worth next to nothing when they retired. The scheme was presented firmly as an alternative for those who lacked occupational cover, and the benefits were deliberately limited to avoid competition with occupational schemes. For good measure employers were allowed to contract out on certain conditions. Finally, no secret was made of the fact that the higher contributions were intended at least as much to put the national insurance fund back into balance as they were to produce any sort of pensions revolution. The 1958 White Paper stated bluntly as its first objective: ‘to place the National Insurance scheme on a sound financial basis’.⁷⁵ The White Paper also formally abandoned Beveridge’s plan of relating contributions to the final cost of providing pensions. Instead, Boyd-Carpenter said, contributions would be set no higher than needed to balance income with expenditure as the scheme developed.

The limitations of Boyd-Carpenter’s scheme brought fierce cross-party argument at the 1959 election. Labour branded it ‘a swindle’ and the minister ‘a good bargain’. He in turn charged that Labour’s plan was ‘financially unsound’. The issues were far too complex, however, to make much impact on the electorate and in 1961 the minister’s 1959 legislation came into force.