Since 1945, economic policy has passed through three distinct phases. The period began with the election of a government committed to planning a ‘socialist commonwealth’ but which gradually allowed its more radical ambitions to lapse and become transformed into the ‘postwar consensus’. This persisted until the 1970s and its essential elements were the welfare state, full employment, a more equal society, trade union consultation, the mixed economy and the Anglo-American alliance. This policy-making regime came under increasing pressure for its failure to reverse the processes of relative decline and eventually collapsed when the long postwar boom petered out amid the national and international turbulence of the 1970s. New approaches to the role of the state had begun to develop in the 1960s but it was unclear until the Thatcher government came to power in 1979 whether the postwar consensus would be toppled from the left or right. The 1979 result brought to office a government with radical new ideas in industrial, labour, monetary and welfare policies. The Conservative experiment has undoubtedly contained pragmatic and fortuitous elements, but its core has remained strong into the 1990s despite the departure from office of its leading propagandist and architect, Margaret Thatcher.
As noted in Chapter 8, wartime reconstruction planning began in 1943 and was determined to avoid the mistakes of the headlong decontrol after 1918. The scale of likely postwar shortages was frightening. A world food shortage was certain. British industry, having suffered extensive wartime disinvestment would be desperately short of all forms of capital equipment. Consumers needed to restock and the housing shortage would be horrifying. Foreign currency would be extremely scarce, severely limiting import capacity. In this context, there was broad agreement that controls would have to continue until shortages abated but there were wider strategic issues which were too politically contentious