Europe was an issue which divided Labour. Although Wilson was ambivalent (not strongly committed either way) some in Labour were proEurope – notably Jenkins and George Brown. Others especially on the left-wing were very anti-Europe, notably Babara Castle and Michael Foot. This caused tensions in the party when Wilson applied to join the EEC. The 1967 Second Rejection of Britain’s EEC Application following Charles De Gaulle’s Veto.

The promise of the White Heat of technology had failed to resolve Britain’s long-term economic problems like inflation, balance of payment deficits, low productivity and slow economic growth had failed to materialise. It was possible for the Conservatives to criticise Labour’s economic record. The DEA and National Plan had not secured the anticipated growth. Wilson’s public claims that he would not devalue the currency caused him considerable embarrassment in 1967 when he was forced to devalue. Although Jenkins application of deflationary methods actually resulted in an improved economic situation with a balance of payments surplus, inflation was still 12% between 1969 – 1970.

When Edward Heath became prime minister, he has a clear and detailed programme of policies for the modernisation of Britain. Since 1965, he had already been leader of the Conservative Party for five years while it was in opposition to Wilson’s government. This was longer than any leader since the war apart from Winston Churchill. He was the first Conservative Party leader to have been educated at state schools. He therefore came from a different social background of the traditional Grouse-Moor Tory leader with old Etonian establishment links. He was often perceived as being rather stiff and prickly in dealing with people. In contrast to Wilson, he was not seen as devious or interested in plots and intrigues. Yet, he lacked Wilson’s natural charisma and warmth in dealing with people. Many people regarded Heath as too honest for his own good and not skillful enough in pleasing political allies. Heath was good at political policies, but not at politics.

T3 Political Flashcards by Alannah .

Ted Heath and Conservative strengths

Ted Heath was notably different to the traditional Conservative leader.
He was grammar school educated and was the first leader of the Party to be democratically elected.
Heath was not part of ‘The Establishment’ and appeared as a new face for the Tories.
By the time of his election success in 1970, Heath had already been leader of the opposition for five years – the longest period of any Conservative leader since WW2 apart from Churchill.
Heath seemed well prepared for government, having spent much time preparing detailed policies, especially on industrial relations and economic modernisation.
He also knew all about the EEC having been a chief negotiator under Macmillan between 1961 1963.
By the time of the 1970 General Election the Wilson ‘magic’ had worn off with his indecisive leadership in government.
The Conservative government record of 1951 – 1964 was generally positive.
Despite the confidence of winning the general election, Labour had a fragile position and the Conservatives were consistently ahead in the opinion polls (although Heath’s personal ratings were still not impressive).
But Enoch Powell’s ‘Rivers of Blood’ speech gained him widespread public support and sympathy and arguably contributed to Conservative electoral success in 1970.

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The ‘Selsdon Park Conference’ & ‘The Selsdon Man’

Heath’s new approach to the economy, breaking away from the post-war consensus, was agreed at a Conservative Party meeting held at Selsdon Park.
It referred to a new type of Conservatism, sometimes called the ‘New Right’ that Heath advocated in the run-up to the 1970 General Election.
At a Conservative Party strategy conference held at Seldsdon Park in January 1970, the Conservatives had agreed to promote a largely laissez-faire or hands-off approach to the economy and to encourage people to use their new freedom to promote their own interests.
In particular Heath’s government wanted to cut public subsidies [financial grants] to Britain’s underperforming ‘Lame-Duck’ industries.
The change of approach away from the post-war consensus, was intended to be a liberating form of politics, but the Labour Party was quick to brand it a return to pre-consensus Conservative right-wing reactionary politics.
Harold Wilson coined the term ‘Selsdon Man’. The ‘Selsdon Man’ was an insulting term devised by Harold Wilson, for the 1970 General Election, of an imaginary selfish Conservative Party voter who rejected the post-war consensus.
Harold Wilson memorably declared a month later: ‘Selsdon Man is designing a system of society for the ruthless and the punishing, the uncaring. His message to the rest of us is: you’re out on your own.’

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1970 Conservative Manifesto

Tax Reform.
Better Law & Order.
Reform to Trade Unions.
Immigration Controls.
Cut to Public Spending.
End to public subsidy to ‘Lame Duck’ industries.

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Wilson & Europe

Europe was an issue which divided Labour.
Although Wilson was ambivalent (not strongly committed either way) some in Labour were proEurope – notably Jenkins and George Brown.
Others especially on the left-wing were very anti-Europe, notably Babara Castle and Michael Foot. This caused tensions in the party when Wilson applied to join the EEC.
The 1967 Second Rejection of Britain’s EEC Application following Charles De Gaulle’s Veto.

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Wilson & the Trade Unions

Wilson had difficulty controlling the trade unions.
Frank Cousins resigned following Wilson’s introduction of the 1966 Prices and Incomes Policy.
There were the 1966-1967 ‘wildcat’ strikes especially by the Seamen and Dockers Union in response the 1966 Princes and Incomes Policy.
Wilson appeared to be unable to bring the Trade Unions into line following the failure of the ‘In Place of Strife’ white paper in 1969.
The decision by the government to back down was humiliating.

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Wilson & Immigration Policy

There was a crisis following the sudden influx of Kenyan Asians in 1968.
This prompted the Labour government to tighten restrictions on entry via the Commonwealth Immigration Act of 1968.
This was followed up by a more positive Race Relations Act in 1968 which extended the 1965 Act by banning discrimination in housing and employment and gave the Race Relations board additional power.
The Conservative Minister Enoch Powell’s so called ‘Rivers of Blood’ speech warning of bloodshed due to mass immigration led to him getting sacked by Heath.

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Economic Policy

The promise of the White Heat of technology had failed to resolve Britain’s long-term economic problems like inflation, balance of payment deficits, low productivity and slow economic growth had failed to materialise.
It was possible for the Conservatives to criticise Labour’s economic record.
The DEA and National Plan had not secured the anticipated growth.
Wilson’s public claims that he would not devalue the currency caused him considerable embarrassment in 1967 when he was forced to devalue.
Although Jenkins application of deflationary methods actually resulted in an improved economic situation with a balance of payments surplus, inflation was still 12% between 1969 – 1970.

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Edward Heath’s Leadership (1970 - 1974)

Edward Heath felt that his election victory of 1970 would enable him to run a strong government, committed to modernising Britain.
Heath was pro-European and despite wanting economic reforms was the last of the One Nation Conservatives who largely still accepted the post-war consensus.
He achieved success in his efforts to secure British membership of the EEC in 1973, something that had thwarted his predecessors.
He was, it should be remembered, Macmillan’s choice as the UK’s chief negotiator during Britain’s first attempt to join the EEC back in 1963.
At the same time his career ended in failure with a massive political and economic crisis from 1973 culminating in his electoral defeat in 1974 and the loss of the Conservative Party leadership to Thatcher in 1975.

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Heath as Leader

When Edward Heath became prime minister, he has a clear and detailed programme of policies for the modernisation of Britain.
Since 1965, he had already been leader of the Conservative Party for five years while it was in opposition to Wilson’s government.
This was longer than any leader since the war apart from Winston Churchill.
He was the first Conservative Party leader to have been educated at state schools.
He therefore came from a different social background of the traditional Grouse-Moor Tory leader with old Etonian establishment links.
He was often perceived as being rather stiff and prickly in dealing with people.
In contrast to Wilson, he was not seen as devious or interested in plots and intrigues.
Yet, he lacked Wilson’s natural charisma and warmth in dealing with people.
Many people regarded Heath as too honest for his own good and not skillful enough in pleasing political allies. Heath was good at political policies, but not at politics.

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Heath’s Government Priorities

Heath seemed well prepared for government.
He had spent his time in opposition developing detailed policies, especially on industrial relations and economic modernisation.
He also knew the issues surrounding EEC entry inside out, having been the chief negotiator in 1961 to 1963.

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Heath’s Conservative Critics

However, after the economic and industrial problems of the period 1970 to 1974 and the election defeats of 1974, several backbench Conservative MPs were determined to force a leadership contest.
Margaret Thatcher would emerge as Heath’s main and key challenger.
Thatcher’s policies, later called Thatcherism, were very much to the right of Heath and Macmillan.
She rejected outright the Post-War Consensus.
She had become sympathetic to the neo-liberal policies of monetarism and free market supplyside economics [privatisation and deregulation] advocated by the Chicago School of Economists.
These New Right economic ideas, that rejected the principles of One Nation Conservatism, where being advocated by key backbench Tory MPs like Enoch Powell and Keith Joseph.

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The Rise of Margaret Thatcher

Thatcher served as Education Secretary during Heath’s government of 1970 to 1974.
The British press dubbed the future Prime Minister “Thatcher, Thatcher, milk snatcher” for sponsoring legislation to eliminate the free milk program for students over the age of seven.
Many people who supported Thatcher did so because was nobody else.
Enoch Powell had left the Conservative Party in favour of the Ulster Unionist Party (UUP) and Keith Joseph had made a controversial speech in which he raised concerns about certain sections of society having children.
Another factor was Heath’s inability to win over doubters within his own party. He was not very good at schmoozing the Conservative backbenchers.
Thatcher did not yet have widespread support for her specific policies.
But she exploited the feeling that things were going badly wrong both within the Conservative Party and within the country under Heath’s leadership.

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The 1975 Conservative Leadership Election

Thatcher defeated Heath in the Conservative leadership election in 1975 and following this, Heath’s reputation took a battering from the supporters of Thatcherism who repudiated much of his legacy.
Thatcher would later famously mock Heath’s ‘U-Turn’ in his economic polices during a 1980 Conservative Party conference speech where she would famously say: To those waiting with bated breath for that favourite media catchphrase, the ‘U-turn’, I have only one thing to say: ‘You turn if you want to. The lady’s not for turning!’
Heath remained a member of parliament and would watch Thatcherism at its height critically from the backbenches. This is what became known as Heath’s ‘long sulk’.
Heath never liked or forgave Thatcher for seizing the leadership of the Conservative Party or for her abandoning of One-Nation Conservatism and shifting the Conservative Party towards the new consensus brought about by Thatcherism.

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February 1974 Election

Following the Three-Day-Week, Heath tried to bolster his government by calling a general election for 28th February 1974, using the election slogan “Who governs Britain?”.
The result of the election was inconclusive with no party gaining an overall majority in the House of Commons.
Although Heath’s incumbent Conservative government won the highest percentages of votes, they lost in terms of seats due to the nature of the first-past-the-post system.
This resulted in a hung parliament, the first since 1929.
Both Labour and Conservatives lost a considerable share of the popular vote, largely to the Liberal Party under Jeremy Thorpe’s leadership, which polled two-and-a-half times its last share of the vote.
The Liberals gained over 6,000,000 votes, but only fourteen Liberal MPs were elected.
Heath did not resign immediately as Prime Minister. Instead, he began negotiations with Jeremy Thorpe, leader of the Liberal Party in the hope of forming a coalition government.
Thorpe, who was never enthusiastic about supporting the Conservatives, demanded major electoral reforms in exchange for agreeing to a coalition government.
Unwilling to accept such terms, Heath resigned on 4 March 1974 and Harold Wilson now returned for a second time as Prime Minister.

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Wilson’s Minority Government

Heath was now replaced by Wilson’s minority government, eventually confirmed, though with a tiny majority, in a second election in October 1974.
Wilson’s second Labour government was a minority government that was unable to form a majority coalition with another party.
Wilson, therefore called another early election in early September, which was held in October 1974.

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October 1974 Election

The October 1974 General Election was the second general election held that year.
The election resulted in the Labour Party led by Harold Wilson winning the narrowest majority recorded, 3 seats.
This enabled the remainder of the Labour Government (1974 1979) to take place, which saw a gradual loss of its majority.
This was the last general election victory for the Labour Party until 1997 each of the next four consecutive general elections produced a Conservative parliamentary majority between 1979 till 1997.

Wilson’s Second Labour Government (1974 - 1976)

The narrowness of Labour’s overall majority in the Commons.
The grim effects of the rapid inflation that followed the 1973 OPEC Energy Crisis.
The struggle with the trade unions.

Wilson’s Problems (1974 - 1976)

When the Labour government came back into power in March 1974, Harold Wilson found himself in a much less promising position than he had been in 1964.
The economic situation was awful: inflation was at 15% and the balance of payments deficit was £3 Billion.
The trade unions would need to be delt with; the Northern Ireland situation was fragile.
The Labour Party was less united than ever and Wilson himself was much older and less energetic.
In addition, as a minority government Labour had to depend on support from other parties to get legislation passed in Parliament.

Wilson’s Industrial Relations (1974 - 1976)

When Labour came into government, Wilson acted quickly.
He wanted to demonstrate that the Labour Party was better equipped than the Conservatives to work with the trade unions.
In 1973, while in opposition, Wilson had negotiated the ‘Social Contract’ with the trade unions.
The ‘Social Contract’ would involve voluntary pay-demands restraint by the trade unions and in return the government would repeal [abolish] Heath’s 1971 Industrial Act and pay board.
The trade unions were sent a clear message that Wilson’s government was not looking for any confrontations.
Agreement was quickly reached with the National Union of Miners [NUM] allowing Wilson to end the state of emergency and the Three-Day-Week.
Two Labour left-wingers, Tony Benn and Michael Foot, were put in charge of the Department of Industry and the Department of Employment respectively.
Wilson’s new Chancellor, Denis Healey, issued two budgets, first in March and then in July 1974, both aiming to deal with the economic crisis without upsetting the trade unions.

Wilson’s Economic Reforms (1974 - 1976)

The first problem was the surge I inflation due to the rush of large wage increases that were deemed necessary to get out of the industrial crisis that had brought down Heath’s Conservative government.
In January 1975, Chancellor Denis Healey made a speech in Leeds, giving a stern warning of the dangers: that wage-inflation caused unemployment and that it was vital to control public spending.
In April 1975, Healey’s budget imposed steep rises in taxation, and public spending was cut.

The National Enterprise Board [NEB]

The National Enterprise Board [NEB] was also set up in 1974 under Tony Benn to administer the government’s shareholdings in private companies.
It could give financial aid. While the NEB’s aim was to increase investment, by 1975 its effectiveness was being questioned.
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.

Breakdown of the ‘Social Contract’

It was also becoming apparent that the ‘Social Contract’, between the Labour government and the trade unions was not limiting further wage demands by the trade unions.
By 1975 a more formal pay restraint policy was introduced. These shifts in policy intensified Labour Party internal divisions.
Left-wingers like Tony Benn and Michael Foot did not want to put more pressure on the trade unions and they believed in more, not less, state intervention in industry was necessary.

Wilson’s surprise resignation (March 1976)

Despite his achievement in leading his party to victory in the two elections of 1974, Harold Wilson was in office for only two years.
In March 1976, Harold Wilson, suddenly resigned as prime minister and leader of the Labour Party. He was to be succeeded by James Callaghan as Labour prime minister.
From time to time there have been suggestions that Wilson’s surprising decision to step down so early was because he wanted to leave office before the economic situation got worse.
He allowed conspiracy theories to spread that he was made to resign by MI5, the British domestic spy agency.
Alternatively, he allowed the conspiracy theory to spread that he was threatened with blackmail by the Soviet secret service over an affair he was supposedly having with Marcia Williams, his personal secretary, who ran his ‘kitchen cabinet’.
The less dramatic, but more likely explanation, is that the strain of office and leadership led him to keep to an earlier resolution that he had made to retire at the age of 60 from politics.

Callaghan’s Labour Government (1976 - 1979)

Despite his achievements in leading his party to victory in the two elections of 1974, Harold Wilson was in office for only two years.
He resigned in March 1976 to be succeeded by James [Jim] Callaghan as Labour Prime Minister.

three crippling restrictions

* The narrowness of Labour’s overall majority in the House of Commons * The grim effects of the rapid inflation that followed the 1973 OPEC Energy Crisis Oil price rises. * The struggle with the trade unions.

The End of the Post-War Consensus (Stagflation)

* Although the oil crisis began during Heath’s time in office, it was to be the Labour Government of 1974 – 1979 that suffered the full force of these developments. * Unemployment rapidly grew combined with high inflation, peaking at 25% in 1975, led to industrial strikes and the wage-price spiral. * Callaghan’s response in a 1976 key speech was, ‘We used to think you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending .... That option no longer exists.’

Inflation

* The second problem was that the Labour governments of 1974 – 1979 held office at a time when Britain began to suffer the worst effects of the rapid inflation that followed the price rises of 1973 OPEC Energy Crisis. * The decline in the value of money and the growing deficit in its trade balance threatened to make Britain bankrupt. * In March 1976, for the first time in its history, the pound dropped below $2 in exchange value against the pound.

The 1976 IMF Loan

* In September 1976, the Chancellor of the Exchequer Denis Healey had to begin negotiating a loan of £3 Billion from the International Monetary Fund (IMF). * The terms of the loan required Britain to make major cuts in its public spending. * This outraged the Left-Wing of the Labour Party and the trade unions who threatened to make trouble. * In October 1976, Denis Healey had to delay a flight to Manila where the IMF negotiations were held, to rush to the Labour Party conference in an effort to preserve party unity. * He was only partially successful. A number of delegates jeered him when he appealed to them to show realism and accept that cuts in public expenditure were necessarily in the country’s interests. * This helped to stabilise the financial situation, but at the cost of increased unemployment which reached 1.6 million in 1978.

Labour’s Internal Divisions (1976)

* Dennis Healey’s rough reception showed that the long-running feud between the Left-Wing and Right-Wing of the Labour Party was as fierce as ever. * The Left-Wing complained that the government was following policies which were indistinguishable from those of the Conservatives; it was trying to fight Britain’s financial and economic ills by policies shaped round the demands of international financiers. * The Right-Wing counter-claimed that the government by appearing so weak in the face of threats from the trade union extremists was in danger of losing its power to govern independently and was detaching itself from the ordinary voters of Britain.

The Lib-Lab Pact (1977)

* Although the second of election in 1974 gave Labour a majority over the Conservatives, the overall majority throughout its five years in office was never more than three seats. * This tight margin made the government heavily dependent on the Liberal MPs, and influence, eventually formalised in the 1977 Lib-Lab Pact, that it had not enjoyed for half a century. * There was some justice in this, since, in the two elections in 1974, the Liberals had won nearly 20% of the popular vote. * Therefore, to strengthen his position Callaghan made Lib-Lab Pact (12 Liberal MPs voted for the government in return for referendums on devolution for Scotland and Wales).

The Scotland and Wales Devolution Referendums (1979)

* By 1977 Labour had lost their overall majority, and made a pact with the Liberals. * The government would push forward Scots/Welsh devolution legislation in return for the support of 12 Liberal MPs. * Many in the Conservative and Labour ranks disliked the idea of devolution, although after long debates devolution Acts were passed. * A clause was inserted into the legislation to make it unlikely for it to succeed – 40% of entire population had to approve of devolution for it to become law. * The Welsh referendum was a decisive win for ‘No’, and although 51.6% votes ‘Yes’ in Scotland as this did not represent 40% of the total Scottish population, devolution was also denied. * Angry Scottish nationalist MPs withdrew their support for the Labour Party as a result.

North Sea Oil (1978)

* The economic situation got better as North Sea Oil came on stream (1978 - 1979 oilfields in production). Inflation fell, but at cost of increased unemployment (1.6 million by 1978). * Some economic historians see this as a genuine improvement, others see it as a exception in Britain’s long-term economic decline. * The economic recovery, however, would be ignored by voters in the wake of the 1978-1979 ‘Winter of Discontent’.

Failure to call a 1978 General Election

* One example was his failure to call an election in the autumn of 1978, at a time when opinion polls showed the government was picking up support. * By waiting, he lost the room for maneuver, since there had to be an election no later than the autumn of 1979 when the five-year full parliamentary term ran out.

The Winter of Discontent (1978 - 1979)

* In the Autumn of 1978, the TUC rejected the government’s proposed 5% wage increase – leading to a wave of higher demands from industries. * Ford Lorry drivers won 15% increase after a 9-week strike, leading others like lorry drivers and train drivers to go out on strike. * Public sector workers unusually also joined in strikes, including hospital porters, clerical staff in local councils, and grave diggers and dustmen. * The strikes were not on the same disruptive scale as 1974, but still had a big psychological impact and affected the public mood.

Crisis? What Crisis?

* The economic problems Callaghan’s faced were beyond his powers and would have overwhelmed any government. * His relaxed style of leadership had its attractions, but it was not ideally suited to a desperate situation where a more dynamic approach seemed necessary. * When he was asked by reporters in January 1979 as to how he intended to deal with the chaos facing the country, Callaghan simply denied there was a national crisis. * This may have been a flippant response, but it was felt by many to capture his reluctance to engage fully with the issues confronting his government. * The Sun newspaper misreported his response as ‘Crisis? What Crisis?’ And these words became the focus of a Conservative 1979 general election attack ad.