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Was British Leyland really an industrial policy disaster?

Kaveh Pourvand, 12 June 2013

‘Industrial policy’ is back in vogue. Organisations like the CBI, who only a few years ago would have dismissed it as anachronistic socialism, are now all in favour. However, the industrial policies of the 1970s, now remembered as abject failures, still cast a long shadow over current debate. One example above all crops up again and again: British Leyland. For example, CBI chief John Cridland espouses ‘twenty first century industrial strategy’ and not the ‘unsustainable’  old industrial strategy characterised by ‘compulsory planning extremism or with government “picking winners”, such as British Leyland’.

Austin_Metro_Auto_1983

Photo: The 1983 Austin Metro, A British Leyland model.

The nationalisation of Leyland is often held up as the textbook case of why industrial policy doesn’t work. It is one of the bad memories that still create doubt about the viability of industrial policy today. The truth is that the record of the 1970s is not as bad as now remembered. Rolls Royce could not have developed the RB211 engine that has driven its global success since privatisation without the shelter of public ownership. But it’s worth remembering that even in Leyland’s case, the supposedly emblematic case of industrial policy failure, things are more complicated.

It is certainly true that the original creation of the British Leyland Motoring Company (BLMC) in 1968 was disastrous. Encouraged by then Labour business minister Tony Benn, two of Britain’s car companies, British Motor Holdings and the Leyland Motor Corporation, merged to form a ‘national champion’. The rest is history. Calamitous history. BLMC was an unwieldy conglomerate encompassing not only car manufacture but also refrigerator, road surface and metal casting manufacturers in nearly 100 companies. It suffered from terrible labour relations, ineffectual management and its primary car division had a product range that was far too large and duplicative. It filed for bankruptcy in 1975.

It was nationalised by the Labour government. Subsequently, the shelter and subsidy provided to British Leyland (BL), particularly under Margaret Thatcher, laid the groundwork for the success of the British car industry today. Thatcher’s government reportedly provided the company with £2.9 billion of taxpayer money from 1979 to 1988. Although the company didn’t stay together after privatisation, these subsidies safeguarded many of BL’s most valuable subsidiaries, such as Mini, Jaguar and Land Rover that are today some of the most successful in the British car industry. Had they been allowed to go the wall, the industry would not be what it is today. In other words, even with the calamitous British Leyland, the record of old industrial policy is better than remembered. We should not let partial recollections of the past hold back industrial policy today.

For more of our work on the economy visit the Civitas website here. To see how the Conservatives need turn only to the Iron lady to learn how to successfully pursue state activism, see the Civitas report Time for Turning by David Merlin-Jones.

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