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New industry and strategy

New industries

The government was probably more effective in promoting consolidation and rationalisation in newer industries. The supply of electricity was key to the modernisation of British economy between the wars. In the mid-1920s, The Weir Committee considered electricity supply and distribution, its report resulted in the 1926 Electricity (Supply) Act, which provided for the establishment of the Central Electricity Board (CEB). The generation of electricity was largely in the hands of municipalities, which assisted the process of consolidation. The CEB was responsible for the successful construction of a national grid and negotiating supply contracts.

The British Broadcasting Corporation (BBC) was a successful, non-profit, state-sponsored monopoly, set up by an act in 1922. The Corporation was a great success, with nine million radio licenses issued per annum by 1926. Other public or semi-public corporations set up by the government during this period included the London Passenger Transport Board in 1933 and, in civil aviation, the British Overseas Airways Corporation (BOAC) in 1939. The establishment of BOAC had strategic importance for military aviation and the Royal Air Force.

Strategic industry and tariff protection

The First World War threw the strategic importance of certain industries into sharp relief. After the war, the government moved to protect key strategic industries against foreign competitors by means of the 1921 Safeguarding of Industries Act. This shielded certain industries of military importance, such as fine chemicals and optical glass and instruments, with a 33.3 per cent import duty. In 1926, this was extended to other products if they undercut British products because of currency depreciation.

After the onset of the Great Depression, the use of import tariffs provided a more general means of protecting British industry in an increasingly protectionist world. Industry supported tariffs as a means of protection from manufacturers in countries that operated tariff systems. The Custom Duties Act of 1932 marked a decisive break with British free trade policies by imposing a ten per cent import duty on manufacturers and established the Import Duties Advisory Committee (IDAC) to consider adjustments to the tariff. On the recommendation of IDAC, the tariff was soon raised to 20 per cent, and more on certain goods, such as chemicals.