January 2018 marks fifty years since the formation of British Leyland Motor Corporation, a company (latterly a publicly owned one) synonymous with failed industrial policy. Whilst the disastrous history of what had been hoped would be Britain’s ‘national champion’ is hard to dispute, the question remains: did politics kill British Leyland?
The decision to form BL in the first place via the government’s Industrial Reorganisation Committee was an inherently political one. Harold Wilson’s Labour government was deeply interventionist by today’s standards. It all fitted in with the Wilson administration’s ‘white heat of technology’ rhetoric: Britain’s car industry would be a dynamic part of high-tech, forward-looking nation of the future. In the deal brokered by politicians, Britain’s two biggest motor manufacturers, BMC (who made Austin and Morris cars) and Leyland (Triumph and Rover cars, plus trucks and buses) would merge to create the fifth-largest vehicle maker in the world.
The Industrial Reorganisation Committee was a tool of a government that believed intervention in the economy was not only necessary, but desirable. This is the first way in which government policy has been accused of killing BL – by enforcing an unworkable merger. The desire to form such a huge company was not an ideological socialist one; the aim was not to take the car industry into public ownership. The theory was that if the two manufacturers joined forces, they could benefit from economies of scale, on costs like research and development, and sharing components. In doing so, they’d be more focussed on fighting foreign competition, rather than each other, and assisting Britain’s balance of payments.
None of this was an inherently bad idea. The decades since 1968 have seen a consolidation of the car industry globally. BL was the right size, had some strong products, and should have been well positioned to benefit from combining the abilities and capacity of both companies – this is, after all, what VW has done in recent decades to great success. In retrospect, it is easy to say the merger shouldn’t have happened, that Leyland (the structurally stronger of the two) would have been better off alone. It was equally reasonable to assume that the newly merged company would get its act together.
The merger was far from a myopic, ideologically-driven scheme, ploughed ahead with by a bluntly technocratic government, as it is sometimes portrayed. It was a pragmatic plan, and it was met with huge optimism at the time. Yet, by the end of the ‘70s, BL was in a state of near-constant crisis and had ceased to be a serious global player.
Even so, one political failure did massively affect the fortunes of Britain’s car industry - France’s veto on Britain’s EEC membership application in 1963. This mattered because steep import duties were charged on cars from outside the Community, whilst a free market existed within it. Fiat, VW, Renault and the rest benefited from this, whilst Britain – the only significant Western European car manufacturing nation outside of the EEC – lost out.
It would have been the optimal time to join, too. At the time, BMC made a range of cars that appealed to European drivers – especially the Mini, and its larger brother, the 1100 series. Both were smart, well-designed cars, and already big sellers in the UK. They were sold at a significant premium over comparable European cars within the Community.
BMC, instead, concentrated their export efforts on the old Commonwealth countries, but cars designed for Britain’s well-maintained roads were never going to be ideal for South Africa or Australia, and it was these markets that the emerging Japanese car industry first conclusively conquered a few years later. All this meant BMC was in a weak position by the time of the ’68 merger.
Of course, Britain did eventually join the EEC in 1973. BL strongly supported the campaign. But by then – perhaps due to lack of understanding of the European market – it wasn’t in as strong a position to compete. Yes, the Mini’s sales increased – but what was really needed was a mid-size model that would be as strong a contender on the continent as BMC’s 1100 could have been in the ‘60s. But instead, they produced this.
The Austin Allegro was not the car Europe wanted. It was hardly even the car that Britain wanted. It never met the sales precedent set by the model it replaced, the 1100. There’s so much to say about what was wrong with the Allegro. It was not the VW Golf, a car launched the following year, and exactly the car Europe wanted.
The Allegro is symptomatic of how capable BL was of sabotaging itself, regardless of the political context. All that capacity for market research, development and innovation somehow resulted in a car slower, heavier, uglier and with much less export appeal than the 10 year old design it replaced.
What about the other kind of politics – the kind that no conversation about BL is complete without? Industrial relations at the company were increasingly terrible as the ‘70s wore on. BL was hardly unique; the root cause being, to a great extent, that wages were not keeping up with inflation by the late ‘70s.
To me, that makes the grievances of those striking in the run up to the ‘Winter of Discontent’ far more sympathetic, despite the Thatcherite narrative through which the period is often recounted. Greater prominence has always been given to the – admittedly damaging – strikes over getting an extra five minutes on tea breaks and the like. Besides, even accepting the destructive behaviour of some shop stewards, poor industrial relations ought to be seen as a symptom of a structurally unsound company rather than the cause.
BL became a political football in 1975, when its precipitous decline reached the point where the government had to save it through nationalisation. The formation of BL in 1968 had been part of a political strategy, its nationalisation was reactive. Letting BL go to the wall, as some members of the Thatcher administration would later argue should happen, would have meant mass unemployment in the Midlands.
From then on, politics did kill BL, essentially. The Wilson, Callaghan and – interestingly – Thatcher administrations gave it sufficient bailouts to keep it going, but never enough to undo the strategic mistakes of 1968 – 1975. Thatcher’s solution was to break it up and sell it off in the late 1980s. That was, undisputedly, an ideological decision. The slimmed down group was beginning to turn itself around by then – and one of its privatised successors, the Rover Group, went on to have an (admittedly temporary) renaissance in the ‘90s, making re-badged Honda models. Dismantling BL was not the only option. In France, Renault went through a period of state ownership and emerged intact into the private sector.
Today’s economic and political climate has changed vastly since 1968. No longer is Britain a primarily industrial country, a land of trade union policy and Industrial Reorganisation Committees. No-one seriously suggests the kind of intervention that led to the creation of BL nowadays. However, the car industry is as hot a political potato as ever.
Car makers are footloose transnational corporations; the Japanese owned car factories in the UK are here because of Britain’s openness to trade, especially within the EU. What’s the government’s strategy for keeping them here after Brexit? Meanwhile, intervention is once again being seriously discussed to cajole the industry. Only when legislation began to be implemented by national and local governments to restrict fossil-fuel powered cars did the manufactures start to take electric vehicle development seriously. Last year’s VW emissions-test scandal suggests that, without insufficient oversight, corporations often don’t act in society’s best interests. The cars, and the people making them have changed, but political intervention in the car industry is here to stay.