Clement Attlee - one of Britain's biggest mistakes

This is not because Blair is particularly marvellous - except in his superb leadership over Iraq - so much as that Clement Attlee was, notwithstanding his mythical status on the Left, a truly disastrous premier: he was the man who lost the peace.

The first duties of a British prime minister are correctly to identify the greatest dangers to his country and then strive to guard against them. Attlee signally failed in this. When he became prime minister in July 1945, between V-E Day and V-J Day, the greatest long-term threat to his country was that she would squander the opportunities she had won and thereby hamstring future generations of Britons.

More than a quarter of her national wealth had been lost in the previous six years of war, so the vast sums of Marshall Aid that were being directed from America desperately needed to be spent rebuilding her industrial and transport infrastructure and making her economy competitive again. Instead of doing that, Attlee effectively wasted it on trying to build the utopian society that socialists in those days called the "New Jerusalem".

A chairman of a near-bankrupt company who paid out huge dividends before the profits underpinning them had been earned would soon face arrest; Clement Attlee instead has been deified by the Labour Party. Instead of spending the US’s Marshall Aid on the crucial tasks of rebuilding infrastructure and modernising industry - and Britain was the largest beneficiary of Marshall Aid in Europe, getting one-third more than Germany - Attlee spent it on creating the Welfare State, including that utterly bottomless pit of demand known as the National Health Service.

By 1951, the British taxpayer was already spending on the NHS more than three times the amount that its founder Aneurin Bevan had originally budgeted for, and it has consistently been wildly over budget ever since. Whereas in Germany material comforts took second place to national regeneration, and like the French, Japanese and Italians their priority was to reform their industries to make them competitive in world markets, here in Britain the Attlee government concentrated upon spending wealth before it had actually been created. There was 130m more spent on new housing than in all industrial construction in 1947-49. Even more disastrously, there was not a single mile of new motorway built in Britain between 1945 and 1950.

Attlee’s policies abroad were just as bad. As Jack Straw recently pointed out, if you are looking for the most intractable problems in the modern world - be it in Gaza or Kashmir or Burma - you find them in places once ruled over by the British Empire. What our New Labour foreign secretary failed to point out was that in every one of those cases it was the Attlee government’s over-hasty scuttle from our imperial responsibilities that led to the problems. Once you add to that the almost one million people killed in the Punjab and North-West Frontier provinces during the transfer of power in India in 1947, you have a crushing indictment of Attlee’s record.

Yet despite that imperial scuttle, Britain was still spending ludicrously large amounts on defence, as much as 8% of GNP by 1950. In order to try to maintain the illusion of Britain still being a great power on the scale of the other victors, Russia and America, Attlee invested vast amounts in the then unnecessary status symbols of a domestic civil aviation industry and an independent nuclear deterrent. He even went to war over Korea, which proved ruinously expensive and took far longer than expected, for no conceivable British national interest.

Fourteen days after the Germans surrendered in May 1945 they astonishingly enough had the Berlin bus system up and running again; that same day the London buses were on strike. The pusillanimity shown by the Attlee government towards the unions during his six years ensured that grossly restrictive industrial practices were preserved throughout the Forties and into the Fifties, all to promote a myth of industrial consensus.

Attlee constantly looked back to the problems of the Thirties, such as unemployment, rather than forward to those of the Fifties and Sixties, such as falling productivity and competitiveness relative to our economic rivals. Because ‘full employment’ had been such a shibboleth for William Beveridge and other New Jerusalemers, especially Attlee, it was pursued as a goal regardless of the distortions it wreaked on the economy. Rigidity in the labour market, wage-induced inflation and tardiness in technological adaptation were the predictable results.

To add to the terrible problems that were loaded on to what the historian Correlli Barnett describes as "a war-impoverished, obsolescent and second-rate industrial economy", Attlee introduced sweeping measures of nationalisation. Coal mines, railways, gas, electricity, civil aviation, road haulage, steel, cable and radio services, and the Bank of England were taken into public ownership, ensuring that the management of these vital industries became almost completely inured to the danger that they might lose their jobs through inefficiency or incompetence.

An inability to discern new markets was the first noticeable effect of nationalisation, but plenty of even worse ones followed. When nationalised industries turned into lame ducks, as almost all of them did over the following decades, they were subsidised by the taxpayer, often through the sale of long-term bonds. The last of these Attlee bonds was finally paid off by Gordon Brown in June 2002, so we the 21st-century British taxpayers have been shouldering half a century later the debts blithely taken on by Attlee and the New Jerusalemers. Of course, as soon as the European economies could afford to, they too instituted comprehensive national health schemes, which have turned out to be in almost every case far superior to our NHS. By that time, they had established clear economic superiority.

In 1950 under Attlee, Britain was investing only 9% of her GNP in industry and infrastructure, against Germany’s 19%. Small wonder that once Germany had surged ahead it was then able to create a health system it could afford. By contrast Attlee, in Correlli Barnett’s phrase, had built "a lavish and expensive Welfare State in the aftermath of a ruinous war, on foreign tick, while paying huge defence costs on the back of an un-modernised industrial system".

Tony Blair cannot make any of these points in his own defence, of course, since his party still idolises Clement Attlee despite all the facts. But when the Left starts using Attlee’s memory as a stick with which to beat the present Prime Minister, one ought to recall the truth of Winston Churchill’s remark, that Attlee was "a modest man, with a lot to be modest about".

Andrew Roberts’ Hitler and Churchill: Secrets of Leadership is published by Weidenfeld & Nicholson