ENGINEERS, MANAGERS AND POLITICIANS By the same author THE RISE OF THE CORPORATE ECONOMY MANAGEMENT STRATEGY AND BUSINESS DEVELOPMENT (editor) CONCENTRATION IN MODERN INDUSTRY (with 1. A. Kay) ELECTRICITY BEFORE NATIONALISATION ENGINEERS, MANAGERS AND POLITICIANS The First Fifteen Years of Nationalised Electricity Supply in Britain Leslie Hannah Research by Margaret Ackrill, Frances Bostock, Rachel Lawrence, Judy Slinn and Stephanie Zarach © The Electricity Council 1982 Softcover reprint of the hardcover 1st edition 1982 978-0-333-22087-0 All rights reserved. No part of this publication may be reproduced or transmitted, in any form or by any means, without permission First published 1982 by THE MACMILLAN PRESS LTD London and Basingstoke Companies and representatives throughout the world ISBN 978-1-349-03448-2 ISBN 978-1-349-03446-8 (eBook) DOl 10.1007/978-1-349-03446-8 CONTENTS List of Figures and Tables vii Preface ix Abbreviations and Glossary xii 1 Introduction: Electricity before Nationalisation 1 PART I NATIONALISA TION: THE PROBLEMS OF TRANSITION (1947-9) 2 Citrine's Way 7 3 Meeting the Capacity Crisis 23 4 Half-price Electricity? 29 PART II RECOVERY AND DEVELOPMENT (1948-57) 5 Ministers and Mandarins 41 6 System Expansion: the Area Boards 60 7 Commercial Development: Pricing for Growth 76 8 Generation: Centralisation and Conservatism (1948-53) 94 9 Generation: the Brown Revolution (1954-7) 111 10 Labour Management under Public Ownership 123 11 Retrospect: Citrine, Self and the Management of 139 Change 12 The North of Scotland Hydro-Electric Board (1943-60) 149 PART III THE CONSERVATIVE COUNTER- REVOLUTION (1954-7) 13 Devolving Power 161 14 Coal, Oil and Nuclear Escalation 168 15 The New Men 183 PART IV THE BOOM YEARS (1958-62) 16 The Electricity Council: Federalism and Finance 193 v vi Contents 17 Area Boards: Independence, Over-expansion and the New Rationality 208 18 Incomes and Productivity: Planning for Growth? 218 19 Hinton: the Nuclear Retreat 228 20 The CEGB in Practice 245 21 A Scottish Alternative? (1955-64) 266 Epilogue The Second Fifteen Years of Nationalisation (1963-79) 279 Statistical Appendix 289 Notes and References 297 Index 323 LIST OF FIGURES AND TABLES FIGURES 6.1 British Electricity Authority and the Area Boards 66 8.1 Schematic outline of the 275kV Supergrid, 1950 103 9.1 Major developments of British turbo-alternators, 1935-62 114 TABLES A.1 Generation statistics, 1938-80 291 A.2 Sales of electricity, 1938-80 292 A.3 Miscellaneous electricity statistics, 1938-80 294 A.4 Electricity prices in real terms, 1938-80 295 Vll PREFACE Many books have been written on the subject of Britain's public enterprises, and many of these have concerned the electricity supply industry, Britain's biggest capital spender in the 1950s and 1960s. The present work differs from them all in being based not only on published material but on free access to the surviving, but not publicly available documentary evidence in the industry and govern­ ment, and to the people involved in the decision-making. As far as I know, such an exercise in business history has not yet been attempted for other nationalised industrial enterprises, though there is no lack of prescriptive comment on these industries from economists, politi­ cal scientists, administrators and politicians. The temptation for the author explicitly to join in their debates on the objectives, control and performance of public enterprise was considerable. I have none the less felt it best rather to present a narrative account of the historical experience of the industry which at least approaches Ranke's simple definition of the historian's task as telling history as it really was. Of course, my own prejudices intrude in the selection of evidence and in the interpretation, but the reader will not find here a set of explicit policy prescriptions to lead him, according to his taste, to the salvation or damnation of the principle or practice of public enterprise. Even so, I would be disappointed to encounter a reader who was not led by the book to reflect critically on the models of economic behaviour, and of the policy process, which typically lie behind much of the discussion of the public sector currently produced by the academic and political debating machines. In particular, if politicians can read these pages without blushing at the sins commit­ ted by their kind (whether Conservative or Labour), one's faith in the possibility of constructive self-analysis would receive a large dent. The genesis of this book should be made clear. It is a sponsored history, commissioned by the Electricity Council on behalf of the Central Electricity Generating Board, the Area Boards in England and Wales and the two Scottish Electricity Boards. None the less, the views expressed are those of the author and not those of the Council or of the Boards. The author's independence was guaranteed by ix x Preface provisions for free access to documents in the industry's possession dating from 1973 or earlier, and for arbitration in the event of any disagreement on the interpretation of the first fifteen years of nationalisation. (The Council reserved the right to review material from the period after 1963 covered in the brief Epilogue.) The Council have honoured that agreement. The only changes requested were minor modifications to several sentences for legal reasons and on agreed matters of fact, so that recourse to arbitration was not necessary. This is not to say that those who worked in the industry and have experienced the events described do not have strong views on the subject matter. I was' fortunate to be able to draw on the memories of more than a hundred of the staff of the industry as well as of the politicians and civil servants who agreed to be interviewed. I am also indebted to those who read the whole of the draft manuscript and commented on it: Lewis Allan, Robert Brown, Sir Stanley Brown, Philip Chantler, Lord Citrine, Philip Colinese, Fred Colmer, David Fenton, Richard Hancock, Lord Hinton, Duncan McGrouther, Cecil Melling, Ronald Richardson, Richard Savinson, Paul Schiller, Alan Wheatley and E. J. Wigmore. It was a particular sadness to me that Brian Murphy, one of the original movers of the project, did not live to read and comment on more than the early chapters. All of these commentators, while unstinting in their suggestions for additions or amendments, and sometimes spirited in their disagreement, were scrupulous in insisting that the final judgement should rest with me. Many other individuals within the industry have given assistance on specific points and I am grateful to them all. Mr Hancock and his staff in the Intelligence Section of the Electricity Council, in particular, have been an unfailing source of advice and enlightenment; and the secretarial, records and library staff in the Council and the Boards have responded to the myriad enquiries with unfailing courtesy and helpfulness. The staff of the British Library of Political and Economic Science, Churchill College Archives, the Institution of Electrical Engineers, the Public Record Office and the Scottish Record Office also gave invaluable assistance. This book is not part of the official Whitehall civil histories, but the Department of Energy and the Scottish Economic Planning Depart­ ment were kind enough to provide access to their official files, still closed under the thirty-year rule. Without this assistance, it would have been significantly harder to do justice to the complexities of the relations between the industry and government. This access was Preface xi subject to the Official Secrets Act, but no requests for alterations to the submitted manuscript were made by the Departments. I have also benefited from discussions on the nationalised indus­ tries in general (and the electricity industry in particular) from the advice of academic colleagues: notably Charles Baden-Fuller, Theo Barker, Michael Beesley, Duncan Burn, Ian Byatt, Sir Norman Chester, Donald Coleman, Tony Corley, Malcolm Falkus, James Foreman-Peck, Howard Gospel, Margaret Gowing, Thomas P. Hughes, Geoffrey Jones, John Kay, Sir Arthur Knight, Jonathan Liebenau, Peter Mathias, Richard Pryke, W. J. Reader, John Smith, Barry Supple, John Turner, Philip Williams, Sir Alan Wilson, and Graham Wilson. In the days before the word-processor, the skilful conversion of a difficult manuscript to a readable typescript by Marjorie Huntley and Lynda Prosser was particularly appreciated. My major debt, to the researchers, is recorded on the title-page. Without their assistance, it would have been impossible to penetrate even that small percentage of the total archival material available which we selected for research. Margaret Ackrill was primarily responsible for research on the Department of Energy and the Area Boards, Frances Bostock for commercial policy and the CEGB, Rachel Lawrence for generation and the Central Authority, Judy Slinn for industrial relations, and Stephanie Zarach for nuclear power and Scotland. Only the author should be held accountable for the judgements which appear in the book. London School of Economics LESLIE HANNAH December 1981 ABBREVIATIONS AND GLOSSARY AC alternating current. An electric current which alternately reverses its direction of flow. Now almost universal in Britain. Cf. DC. amp ampere. A measure of the quantity of electricity flowing in a circuit. The standard domestic ring-main circuit in Britain delivers up to 13 amps. AGR Advanced Gas-Cooled Reactor. The standard British design of reactor ordered from 1965 onwards; a develop­ ment of the earlier gas-cooled Magnox reactors. BEA British Electricity Authority. The national electricity authority for England, Wales and South Scotland between 1948 and 1955. The Authority was also sometimes refer­ red to as the 'Central Authority' to distinguish it from its Area Board associates. See also CEA. CEA Central Electricity Authority.