Harold Wilson's Second Premiership

Question 1

Wilson’s Social Contract

Answer 1

• An agreement between Wilson and trade unions to stop NUM strikes and end the 3-Day Week
• Involved voluntary pay restraints by the trade unions in exchange for the removal of Heath’s 1971 Industrial Act and the Pay Board
• Wilson gave key cabinet positions to left-wing MPs to reassure trade unions
• Made Tony Benn Secretary of Industry and Michael Foot, Secretary of Employment

Question 2

Wilson’s Problems

Answer 2

• Inflation was at 15%
• Balance of payments deficit was at £3 billion
• Trade unions needed to be handled
• Situation in Northern Ireland was fragile
• Labour Party was heavily split yet again
• Labour was a minority government, needed support from other parties to get legislation passed

Question 3

Denis Healey’s 1975 Budget

Answer 3

• January 1975: Chancellor of Exchequer, Denis Healey made a speech
• Gave a stern warning of the dangers that wage-inflation caused unemployment
• Claimed that it was vital to control public spending
• April 1975: Healey’s budget imposed steep rises in taxation, public spending was cut

Question 4

Wilson’s Labour Party Divisions

Answer 4

• Left-wing complained that the gov was following policies which were indistinguishable from Conservatives
• Right-wing claimed that the gov appeared weak in the face of trade union extremists, in danger of losing its power to govern independently

Question 5

Breakdown of the Social Contract

Answer 5

• Left-wingers like Michael Foot and Tony Benn did not want to put so much pressure on trade unions
• Trade unions started to ignore the Social Contract restricting their wage demands
• Repeat of the problems which plagued Heath

Question 6

Wilson’s Resignation

Answer 6

• 1976: Wilson suddenly resigned as PM and leader of Labour
• Led many to make up conspiracies as to why he resigned
• Some said MI5 forced him to resign
• Others said that the Soviets were threatening him with blackmail to resign due to his supposed affair with Marcia Williams, a key member of Wilson’s kitchen cabinet
• True reason was because he was suffering from Alzheimer’s
• Also promised his wife to resign after 2 years of being in office