James Callaghan's Premiership (1976-1979)

Question 1

The IMF Loan 1976

Answer 1

• CoE, Denis Healey began negotiating for a £3 billion loan from the IMF
• Required Britain to make major cuts in public spending
• This outrage left-wing Labour and the trade unions
• This helped to stabilise the financial situation but increased unemployment
• 1978: Unemployment reached 1.6 million

Question 2

The Lib-Lab Pact 1977

Answer 2

• Slight majority of 3 seats for Labour
• Tight margin made the government heavily dependent on the Liberal MPs
• Eventually formalised the Lib-Lab Pact to strengthen Callaghan’s position

Question 3

North Sea Oil 1978

Answer 3

• Economic situation got better as North Sea Oil came on stream
• Inflation fell but at the cost of increased unemployment

Question 4

Devolution Referendums 1979

Answer 4

• Liberals demanded for a devolution referendum for Scotland and Wales as part of the Lib-Lab Pact
• At least 40% of the electorate had to vote yes for devolution for it to become law
• Both countries were nowhere near the 40% minimum of all those eligible to vote

Question 5

The Winter of Discontent 1978-1979

Answer 5

• ‘British Disease’: phrase coined by foreign journalists, refers to bad employer-worker relations and constant industrial stoppages
• December 1977: trade unions became more demanding and aggressive, gov announced maximum of 5% ceiling on wage rises
• Public sector workers began to make demands
• Public sector workers felt the most victimised from cuts on public spending
• 22/01/1978: Around 1.5 million workers were on strike
• Selective strikes organised to gain media attention
• School meal service disrupted, mounds of rubbish were left on the streets uncollected, grave diggers left dead bodies unburied
• Callaghan simply denied there was a national crisis when asked by reporters
• ‘The Sun’ newspaper misreported his responses as ‘Crisis? What Crisis?’, used by Conservatives 1979 election attack ad