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During the Second World War, the iron and steel industry was again taken under government control by the Ministry of Supply which, in association with the Ministry of Aircraft Production, allocated steel production. Importantly for the industry, the war brought increasing demand which utilised the capacity improvements of the late 1930s. However, it also brought many problems; labour supply, raw material supply and above all political changes (such as the Labour Party, with its continued commitment to some form of nationalisation, taking seats within the coalition government). The successful government management of the industry during the war demonstrated that nationalisation could be positive for the industry, the workforce and the owners.
The election of a Labour government in 1945 brought with it the promise of nationalisation of the steel industry (as it had for coal and the railways), however, it took many years for the plans to be finalised and was discussed many times in Cabinet. Finally, in November 1949, at the very time that the Labour government was losing political support in the country, the Act to nationalise the iron and steel industry was passed by Parliament.
The Conservatives appointment to office in 1951 meant denationalisation of the iron and steel industry. The short period of public ownership in 1950 had not been sufficient to stop the break up of the nationalised organisation back into private firms. At the same time, however, the rearmament programme caused by the Korean War rapidly increased demand for steel and shortages.
The re-nationalisation of the steel industry by Harold Wilson's Labour government in 1967 did not involve the entire industry but just 14 of the largest firms. Importantly, there was cross-party consensus on nationalisation and, by 1971, it was established that the Conservatives would not de-nationalise the industry. Despite the high hopes of the early years of the British Steel Cooperation, foreign competition remained strong and market conditions hard, making it difficult for Britain to compete in an international market.
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