I agree that the realization of what the H-bomb could do and the resulting introspection did more or less do away with concepts of the UK maintaining a large industry for the next big drawn-out war.
However that concept was still an underlying policy in the preceding immediate post-war period that helped frame decisions like 4 bombers built for the v-bomber requirements.
And variations on this theme survived much longer - as late as 1956 as per Minister of Supply’s Reginald Maulding’s 5 year plan for the UK aircraft industry the emphasis was on preserving and protecting the status quo rather than efficiency or consolidations/ mergers.
That and the fact that the UK aviation industry consolidated quite quickly after 1957, and somewhat ironically around what became the TSR2 project, does somewhat qualify the contention above that the UK Government/State couldn’t have done a lot more earlier to better shape the UK aviation industry for the future even if it had wished to.
As in other topic discussions I’d highly recommend reading Chris Gibson’s and Tony Butler’s books on this period for some information on this topic.
I also recommend Dan Sharp RAF Secret Jets of Cold War Britain as I am almost quoting him above.
I wrote a Masters thesis on the rationalisation of the aircraft industry, so its something that I have looked into in some depth.
There was an early realisation of the need to rationalise from 1950 but attempts were thwarted by the Korean rearmament programme which reversed these trends. The MoS was grappling with having too many design teams as early as 1948 but the post-war scarcity of materials and resources had a bigger impact in production and design at that time, it was still 'make do and mend' at that stage. It was Macmillan who really went for the trimming, which was by then badly needed and probably should have begun around 1954-55. Indeed the MoS highlighted the need to restructure the industry in February 1954 with a memorandum by Under-Secretary Denis Havilland, but the Cabinet failed to act.
One problem was sub-contracting, which was making efficient large scale production difficult to achieve, for example even aircraft like the Boulton Paul Balliol were planned to produced on two production lines (this this case BP and Blackburn). In many cases these decisions were later reversed. Partly this was forced by a lack of productive capacity at the aircraft companies.
In an attempt to improve production facilities the state spent £106M between 1950 and 1954, by the end of the 1950s some companies had nearly half or more of their available capital from state sources. Oddly the government never considered safeguarding its economic stake until the 1965 Plowden Report which advocated a state shareholding.
Selective tendering was attempted a few times before the mid-1950s. General MoS policy was to reduce number of aircraft companies which relied on MoS contracts to those that had the resources and experience to design modern fighters and bombers and to avoid the dispersion of scarce personnel resources. But the aircraft companies, had the right to see any specification with a security grade of Restricted or lower and could submit a tender even if they were not on the MoS's approved Trade’s List. In addition the MoS feared a political backlash from local MPs in the Commons complaining about selective tendering. So this policy never really worked out. Some attempts were made to tender only on a private venture basis in a few cases but companies were reluctant to do this.
The political willpower was only found during the Macmillan reforms, the infamous meeting at Shell Mex House for the GOR.339 briefing must have come as a big shock to the industry. But then it did come after the Sandys Axe which had clearly shown the industry which way the wind was blowing.
But lets not forget the industry saw the need too, Stanley Hooker, Goerge Dowty, George Edwards and Reginald Verdon-Smith all favoured a rationalised industry before the government acted. Smaller firms like Miles, General Aircraft, Cierva and Supermarine had all been hoovered up and merged, Hawker Siddeley was beginning to finally resemble a unified group.
GOR.339 was a success at merger. But at the same time the government had tried to merge the rest of the industry around the Bristol 200 airliner but BEA told the government where to go they went with the Trident instead, the government powerless to even force BEA as a state-owned company to buy what it told it to buy (the legal loophole was as long as they could self-finance an order they could effectively buy what they wanted). Earlier in 1958 de Havilland had wanted to build a consortium with Fairey, Hunting and Bristol around the BEA requirement, the impetus came from de Havilland because they had the resources to do it.
But as ever caveats, the government wanted exports to keep money flowing into the economy and the industry. Frequently it backed whatever looked to be the winner on the export market, despite often having no clue about the world market. There can be few times in British history when airline export deals were discussed at cabinet level so frequently as during the 1950s. The Transport Aircraft Requirements Committee (TARC) was formed in the early 1950s to represent the ministries, research establishments and the airlines to review civilian aircraft development and make recommendations for future research. But it TARC lacked an executive function, was ignored by the airlines overlooked its work and because the MoA saw TARC as a potential rival, no greater powers were ever given despite repeated criticisms from the Select Committee on Estimates on this point.
Rationalisation was a means to only trim the smaller companies off. When negotiations between de Havilland, Vickers and English Electric broke down in late 1959, Sandys had threatened Aubrey Burke there would be no help for an independent de Havilland. Lord Knollys later noted the comment was omitted from the minutes and when Burke left the room, Sandys admitted he would not let de Havilland die. It was a bluff, losing de Havilland was impossible given their export earning potential. Yet when Scottish Aviation was struggling, the government was torn over keeping the company going to keep jobs in Scotland and the lucrative RCAF overhaul contracts, or let English Electric buy the firm. The Cabinet was split, Aubrey Jones seeing no reason why English Electric should have take on that burden.
But what was the real outcome of the rationalisation policy? What was the real outcome?
It sucked up a lot of capital. BAC spent £1.3M in May 1960 buying up Hunting. Thankfully its plans for merging with Boulton Paul, Handley Page and Shorts never came off or millions more would have been spent. Hawker Siddeley spent £15M acquiring de Havilland in December 1959, Folland in May 1960 cost £814,000. Westland's purchase of Fairey included a £4M sweetner for the Rotodyne.
In 1960 Hawker Siddeley was doing well, its new group had a turnover of £324 million and a net profit of almost £21 million. BAC's pre-tax profit in 1961 was a more miserly £567,000.
But industry wide profits fell post rationalisation as funds were sucked into diversifying (Hawker Siddeley buying up electrical and diesel locomotive manufactuers and large investments in Canada including steel and coal interests) and buying up smaller companies. By 1964 Hawker Siddeley was in dire straits and being refused bank overdrafts.
Industry profits in 1957 had been £29.7M, they had declined to £18.9M by 1960, just £13.8M in 1961, breifly rising in 1963 to £23.3M, 1964 slumped back to £17.9M.
The original aim for the rationalised industry of bigger, stronger units was to self-finance civil programmes. This never happened, by 1960 the govenment was offering 50% launch aid for the VC-10 and VC-11, totalling £73M with as much as a cool £258M if the Super VC-10 and further VC-11 funding was thrown in.
Macmillan later directed Jones to spend funds to reduce unemployment in the aircraft industry due to the defence cutbacks and rationalisation before the October 1959 General Election, which resulted in the award of supersonic airliner feasibility study contracts. The origins of Concorde were as much a vote-winning sop than a technological way to leapfrog ahead.
But the government kept having to pump money into the industry. Treasury Issues for the industry had been £684M in 1956, £647M in 1959 but after the 1960 reorganisation they jumped to £711M in 1961, £751M in 1962 and £782M in 1962. Cutbacks in 1963 saw Issues fall to £707M.
But the performance of the industry declined further. In 1956 all British aircraft exports were worth £102.2M, this peaked in 1959 at £154.6M. After the big mergers of 1959-60 it fell to £140.3M, by 1962 was £114.3M and by 1964 only £107.3M. In 1963 no less than £20.8M of exports were actually second-hand airframes (Hunters etc.) and refurbished engines. Things only picked up from 1965 with £131M and not peaking until a record breaking year of £304.7M in 1969. Britain's share of the world market shrank from 32.9% in 1959 to just 14.2% in 1964. Dollar Area exports fell from £60.7M in 1961 to £20.6M in 1962.
In comparison home (civil and military) orders had been £290M in 1956, peaked at £305M in 1957 then maintained around £350M from 1961 to 1963. In 1964 home orders were worth £432M (only £79.4M being military), that's £300M more than its export value.
The final proof of the policy's failure came with the 1965 Plowden Report to re-examine the industry again. But if offered up the same solutions, more exports, further rationalisation into a state-shareholding company and throwing in international collaboration as a means to cut government funding.
) because what Sandys did is responsible for a lot of the tech in BSP never getting off the ground, whether as service types or one-offs. It's arguably why we HAVE the Secret Projects series in the first place.