Callaghan 1976-79 Flashcards
IMF loan
Labour government had to borrow $3.9 billion from the International Monetary Fund (IMF), with the intention of maintaining the value of sterling. IMF negotiators insisted on deep cuts in public expenditure, greatly affecting economic and social policy
What is devolution?
Transfer of powers to a lower level of government
How many seats had Labour lost in by-elections?
4 seats= ruling by MINORITY
Lib Lab pact 1977
- Liberals would vote in favour of Labour if Labour party agreed to push Liberal policies.
- Labour agreed to a referendum on the devolution of Scotland/Wales.
- Both referendums were voted against.
Fell apart in 1978.
Who opposed devolution?
Majority of Conservative MPs and many within the Labour Party
What were passed in 1978?
Devolution Acts for Scotland and Wales which opened the way for referendums
Scottish and Welsh referendums
A clause of the referendums: 40% of entire electorate had to approve of devolution in order to pass it
Results:
- Scottish - 51.6%= YES but only 32% of electorate
- Welsh - 20.3%= YES but only 12% of electorate
Callaghan political divisions
- Government faced issues internally and within British politics.
- Labour Party became increasingly split, larger issues emerged concerning Britain’s entrance into the EEC.
- Many members of parliament saw Britain’s entrance to EEC as betrayal of democracy, as Heath’s government entered Britain into the EEC without a referendum vote.
- In 1975, Wilson held a referendum about EEC membership but many argued it was to provide an illusion of democracy.
- The ‘stay’ campaign had a larger budget and threatened that leaving would damage Britain.
- There were debates about loss of British sovereignty/democracy through union with Europe
Trade unions
- Cuts to public expenditure as a result of the IMF loan.
- They made several Trade Unions abandon their loyalties to the Labour party.
- Wilson’s “social contract’ with trade unions had fallen through.
- After this, there was barely a month in which there wasn’t a strike.
- The government saw more moderate unions begin to become increasingly militant.
Education
- Callaghan attempted to reform education, and proposed a series of questions to do this during the Great Debate in 1976.
- However, the government soon had to focus again on the economy so the proposed Education Bill was not passed
Inflation
- Inflation reached around 15% during Callaghan’s time in office.
- This was influenced by the 1973 oil crisis and the continuous wage increases.
- Mounting economic issues threatened bankruptcy.
- So, to stop the economy from declining further, the Chancellor of the Exchequer tried to reduce government spending.
- In the 1976 budget, Healey also imposed large tax increases and tried to impose a 3% limit on wage increases
Winter of discontent
Period of unrest, centered around strikes against wage restrictions, accompanied by storms that occurred during 1978-1979 in the UK
What Callaghan faced
~ Serious party divisions.
~ A narrow House of Commons majority.
~ Trade union unrest.
~ The Winter of Discontent.
~ The fallout of the 1975 referendum.
~ Economic instability.
Callaghan leaving power
- The IMF loan, Labour party disunity, economic crisis, and the Winter of Discontent led to the end of the Labour party’s control of government.
- In 1979, Callaghan called a general election, but it was too late and Labour had lost a lot of support.
- As a result, Margaret Thatcher secured a Conservative majority and became the next Prime Minister.
What happened to unemployment?
High=1.6 million but had started to fall
