3:10 Labour governments of Wilson and Callaghan - Content Flashcards
What position did Wilson find himself in when he found himself prime minister once again in February 1974?
He was in a much less promising position than he had been in 1964
How was the economic situation when the Labour government came into power in February 1974?
In a terrible situation: inflation was at 15% and the balance of payments deficit was £3 billion
What was the result of the February 1974 election?
Inconclusive result
By October 1974, Wilson thought it was safe to…
call another election to secure a majority
What was the result of the October 1974 election?
Wilson (Labour) wins, but only by a majority of 3
Since Wilson is governing with a very small majority, he must…
be careful not to make members of his party disagree with him - maintain party unity
What particular promise regarding the economy had Wilson made in his 1974 manifesto?
That he would increase public spending
What economic problems does Wilson inherit in 1974?
> Inflation at 15%
Balance of payments deficit of £3 billion
What other problems does Wilson have to deal with when he comes into power?
> Problems with industrial relations
Complicated situation in Northern Ireland
Difficult Labour party divisions
Since they were a minority government, the Labour government needed….
support from the other political parties in order to pass legislation through Parliament
As opposed to his first time as prime minister, Wilson was now…
older and less energetic
Why might people have not voted Conservative in the October 1974 election?
People still associated Heath and the Conservative Party with the 3-day week and terrible industrial relations
What is the first economic reform Wilson makes when he comes into power?
> He moves money around
He increases taxes to bring in more revenue. This allows the government to increase public spending and for deflation to decrease, but it means the people have less money.
Who are those on the Left of Wilson’s Labour government? (Bennites)
> Tony Benn
Michael Foot
Jim Callaghan
Who are those on the Right of Wilson’s Labour government? (Social Democrats)
> Barbara Castle
Roy Jenkins
Owens
Williams
Where is Wilson on the political spectrum of Labour?
He is in the centre - he aims to maintain unity between those on the Left and the Right
When did Wilson negotiate the Social Contract with the Trade Unions Congress (TUC)?
1973 (while Wilson was in opposition)
What did the Social Contract entail?
> Voluntary wage restraint by the unions
Wilson’s government would repeal Wilson’s Industrial Relations Act and pay board
The government would provide food subsidies and a freeze on rent increases
Allowed employees to treat individual groups separately in wage negotiations
Wildcat strikes are allowed, but union leaders cannot call official strikes
Why was the Social Contract going to be unsustainable?
The economy with inevitably change: when inflation is higher, the trade unions will ask for higher wages to keep up with inflation
While the Social Contract was a bad option for the Labour government…
they didn’t have any better options
Why did Wilson act quickly on industrial relations as soon as he came into power?
He wanted to demonstrate that the Labour party was better equipped than the Conservatives to work with the trade unions
The Social Contract sent a clear message to the trade unions that…
the Labour government was not looking for any confrontations
Wilson quickly reached an agreement with…
the National Union of Miners (NUM)
This allowed him to…
put an end to the state of emergency and the three-day week
Wilson put Benn and Foot, two left-wingers, in charge of…
the departments of Industry and of Employment
Who was Wilson’s chancellor?
Denis Healey
When did Healey issue his two budgets and what did these aim to do?
Budgets in March and July 1974 - these aimed to deal with the economic crisis while maintaining good relations with the unions
What was the inflation rate in 1975?
25%
Why did Wilson see a surge in inflation in 1975?
He had imposed a rush of large wage increases for trade union members that he deemed necessary to get out of the industrial crisis that had brought down Heath
Wilson needed to reduce spending and stop inflation, but…
he had made promises in his 1974 manifesto to increase public spending
In January 1975, Healey made a speech in…
Leeds, where he gave a stern warning of wage inflation - it caused unemployment and also that it was vital to control public spending
What did Healey’s April 1975 budget entail?
This budget imposed steep rises in taxation and public spending was cut
When was the National Enterprise Board (NEB) formed and what was its purpose?
Set up in 1974 under Tony Benn - to administer the government’s share holdings in private companies as well as giving financial aid.
Its overall aim was to increase investment.
However, by 1975, the NEB proved to be…
not as effective as hoped
The government’s decision to…
nationalise the failing car manufacturer British Leyland caused renewed controversy about the role of government in rescuing ‘lame-duck’ industries
It was becoming apparent that the Social Contract was not limiting wage demands, so by 1975…
a more formal pay restraint was introduced
The shifts in economic policy…
intensified party divisions
Which Labour members did not want to put so much pressure on the unions, and believed in more State intervention in industry?
The Left wingers Benn and Foot
When did Wilson resign as Labour leader?
March 1976
What was Callaghan’s political stance and character?
> He was a committed trade unionist
An ‘old-fashioned Eurosceptic’ - anti-Europe
Perceived as an authoritative, old-style politician
A pragmatist - guided more by practical considerations than by ideals
On the Left of Labour (Bennite)
What experience did Callaghan have?
Lots of experience - he had been Chancellor, Foreign Secretary and Home Secretary. Now that he was Prime Minister, he had held all four of the Great Offices of State.
Overall, he is more experienced than any other Labour cabinet member.
Callaghan was also the ideal leader to…
maintain party unity - as PM, Callaghan would move himself to the centre of Labour, showing his pragmatism
What was the situation Callaghan inherited from Wilson when he became Prime Minister in 1976?
Very difficult
> Inherited an economic nightmare of ‘raging inflation’
> The poor balance of payments was putting pressure on sterling
> The government was running out of currency reserves
> The Labour government still had a very small majority
On the day that Callaghan came into power, how many seats did Labour have?
317 seats
How many seats did the Conservatives and other opposition parties have?
318
When did Callaghan give his ‘Cosy World’ speech to the Labour Party conference?
September 1976
In this speech, he warned the party that….
> the ‘cosy world’ in which the government could ensure full employment was gone
Britain was trying too hard to be a world power by spending too much - Britain should instead look for a comfortable secondary role
“Britain is acting above her means”
In this speech, Callaghan also argued that…
in order to avoid ‘the twin evils’ of unemployment and inflation, productivity needed to improve. Callaghan claimed that both the Labour and Conservative governments of the last 20 years had failed to solve this problem.
How was the Cosy World speech received by the British public?
It was not well-received, since it was so honest
The speech also helped to prepare the Labour Party for the fact that…
the government was planning to apply for an emergency loan from the IMF. The government was anxious that there would be a run on the pound.
When did the chancellor Denis Healey receive a loan of £3 billion from the IMF?
December 1976
In return for the loan, Callaghan’s government had to…
make big spending cuts
While the economy seemed to be improving as Callaghan managed the IMF crisis well…
the loan reinforced the idea that Britain was in economic decline. The Conservatives denounced this as a national humiliation.
Why did the IMF crisis harm Labour party unity?
> The Left of Labour saw it as a betrayal, caving in to international financiers
There was a growth of leftist militancy in some trade unions and local councils
What evidence is there that the economy saw substantial improvements in the later years of Callaghan’s premiership?
> North sea oil came on stream - 9 oilfields in production by 1978
> Inflation fell to 10%
> Unemployment was at 1.6 million - although this was still high, the number had started to fall
> The number of days lost to industrial disputes had fallen to a 10-year low
How was Labour’s strength in the House of Commons by 1977?
Very weak - their majority had disappeared
One solution of this issue would be for Labour to form a coalition with another party, but…
Callaghan was unable to do this, since it would sacrifice Labour party unity. The Left of Labour/Bennites did not want a coalition with the Liberal Party.
Instead, how did Callaghan strengthen his government?
By forming the ‘Lib-Lab pact’ in 1977
By forming the Lib-Lab pact, Callaghan was able to defeat…
a vote of no confidence tabled by the Conservative Party - a vote that the Labour government was no longer considered able to continue governing and so a general election must be called
What was the agreement of the Lib-Lab pact?
> 12 Liberal MPs agreed to vote with the Labour government in Parliament against a vote of no confidence
In return, the Labour government would accept a limited number of Liberal policy proposals. Callaghan would also promise to move ahead with devolution for Wales and Scotland.
The Lib-Lab Pact meant that Callaghan was now safe from…
votes of no confidence
Although nationalists in Scotland and Wales welcomed the opportunity for devolution (the transfer of power to a lower level)…
the majority of Conservative MPs and many Labour MPs were against any form of devolution.
After lengthy debates in Parliament…
in 1978, devolution Acts for Scotland and Wales were passed, opening the way for referendums
What were the ‘three pillars’ on which Callaghan relied on for support?
> The Social Contract
The Lib-Lab pact
Labour party unity
How did the Winter of Discontent begin?
Many trade unions were angry with Callaghan’s government as they thought their proposed wage increases were too low.
In autumn 1978, the TUC…
rejected the government’s proposed wage increase limit of 5%
What was the impact of the TUC’s rejection of this proposed wage increase?
It encouraged many other trade unions to also put in higher demands from the government, and they striked when they were not given these wage increases.
After a 9-week strike in late 1978, Ford lorry drivers achieved….
a 15% increase. This led to many unions following their example in the hope to achieve the same wage increases.
In 1974, Wilson also inherited…
the continuing Northern Irish Troubles
Although Heath had negotiated the Sunningdale Agreement with the UUP, the SDLP and the Alliance…
both loyalists and republicans were opposed and the UUP was now turning against it
The Ulster Workers’ Council was…
determined to bring down the Executive
So, the Ulster Workers’ Council…
announced a general strike to start on 15th May 1974
What happened only a few days later, on 17th May 1974?
Loyalist car bombs kill 26 in Dublin and 7 in Monaghan
What were the impacts of the Ulster Workers’ Council’s strike?
> The strike severely limited power and telecommunications
2 weeks of rioting and shortages
The British government declared a state of emergency
Within a fortnight of the strike commencing…
Faulkner resigned as the chief executive of the power-sharing executive
When did the Sunningdale Agreement collapse?
28th May 1974
As the Troubles continued, Wilson announced…
the establishment of a Northern Irish Constitution Convention, an elected body that would determine the future of government in Northern Ireland
What are the arguments that the British government was responsible for the collapse of the Sunningdale Agreement?
> They were far more concerned with the three-day week and industrial relations than the NI situation
They were reluctant to use force against the Ulster Workers’ Council’s strike at an early stage. Later, the use of force against the strike was vetoed by unionists in the executive.
They replaced Whitelaw with a much less experienced candidate
Wilson did not support the prospects of the SA, he didn’t believe Britain should own NI
They didn’t put down any resistance to the SA
What are the arguments that the unionists was responsible for the collapse of the Sunningdale Agreement?
> The Ulster Workers’ Council called a general strike which caused rioting and shortages
This strike caused Faulkner to resign as chief executive, which arguably led to the collapse of the SA
They didn’t want to make any compromises and so refused to accept the Sunningdale Agreement
They didn’t take up their seats in the assembly
What are the arguments that the IRA/republicans was responsible for the collapse of the Sunningdale Agreement?
> They did not want to compromise and accept the Sunningdale Agreement
Violence/killings
Content summary:
> Wilson’s situation in 1974
Wilson’s initial economic reforms
The Social Contract
Wilson’s agreement with the NUM
Healey’s budgets
The NEP
Labour party divisions under Wilson
Callaghan’s leadership style
The ‘Cosy World’ speech
Emergency loan from the IMF and its impacts
The Lib-Lab Pact
Devolution
Winter of Discontent
Failures of Sunningdale
Strike by Ulster Workers’ Council
