Wilson and Callaghan: The Labour Government 1974-1979 Flashcards
Examine the key individuals of the Labour government 1974-79
- Harold Wilson’s second term as PM ended abruptly with his resignation in 1976. Mysterious at the time, his resignation was the result of being diagnosed with Alzheimers
- Jim Callaghan. As PM (1976-79) ‘Sunny Jim’ was neither charismatic nor innovative, but was solid, trustworthy and widely respected
- Roy Jenkins. Chancellor 1974-79. Was Defence Minister in the 60s Wilson government. First class intellect, highly cultivated, combative and had the popular touch. On the other hand, could be over-bearing, even bullying, and was a loner in Labour party politics.
- Michael Foot. Secretary for Employment 1974-76. Leader of the House of Commons 1976-79. Product of a West Country family with a distinguished record of public service and an old fashioned intellectual and veteran left winger, Foot was a former anti-appeaser, a 50s Bevan hero-worshipper and a founder of CND. A fine parliamentary orator he was less effective as a departmental minister.
- Tony Benn. Trade and Industry Secretary 1974-5, Energy Secretary 1975-79. In 1964-70 Wilson ‘scientific revolution’ enthusiast and Minster for Technology, Benn reinvented himself in the 70s as a left wing socialist and became the leading figure on the Labour left – an increasingly numerous and vocal element within the party.
Outline the assessment of ‘Sunny Jim holding the fort’
- March 1976 shock as Wilson to retire, only 60, given his crooked reputation, speculation as to his motives was rife, Jim Callaghan to succeed, Wilson’s fabled memory failing and the appetite for power flagging
- Succession was smooth and painless, Foot the leading left candidate, Callahan won the votes of 176 MPs to Foot’s 133
- Jenkins left politics to serve as President of the European Commission in Brussels, Foot became Leader of the Commons, Healey continued as Chancellor, only real victim was Castle who Callaghan fired and had never got on with
- Both Healey and Benn felt Callaghan was a considerable improvement on Wilson, firm but fair, parliamentary control, dominated PMQT, almost patronising Thatcher who appeared to be trying too hard
- A reassuring figure on television, sufficiently working class to appeal to Labour votes, patriotic as a naval officer in WW2 and a man of Conservative personal tastes, didn’t frighten middle classes
- Expressed concern to Benn of the growing Trotskyite influence in local Labour politics and determined to defend the party of Atlee and Bevin
Examine the crisis and recovery of the era
• By 1976, government spending as GDP rose 6% in 2 years, out of control, tax had reached punitive height, not just affecting the rich, 1949 a man with two children and average earnings escaped income tax, now a man earning half the national average paid
• Unemployment climbing to a quarter of a million more than had the million that had caused Heath’s 1972 U-turn
• Inflation at 16% despite pay restraint, interest rates at 15% and the £ falling despite a vast loan at the end of 1975, BoP deficit of £1bn, September the selling of sterling threatened a collapse of the currency and Healey and Callaghan needed another massive loan, went to the IMF which usually dealt with the third world – humiliation, Healey would need to make savage central government spending cuts – unpopular
• Callaghan backed his Chancellor – death of Keynesian economics, forced £2bn in cuts and the IMF agreed a £3bn loan, a national turning point, end of consensus, Healey began the process of privatisation with the sale of £500m government-owned BP shares
• Cuts and crisis brought unpopularity on the government, by-elections lost threatening the slender majority, Callaghan skilfully negotiated a pact with Liberal leader David Steel 1977-78
• Nationalists kept on side with the promise of parliaments in Edinburgh and Cardiff, recovery took place with the steadily increasing flow of North Sea Oil, helped BoP and government revenue, £ began rising, reaching $2, interest rates 5% in October 1977
• Summer of 1978 Labour had recovered in the opinion polls, chance of winning election that Autumn, Callaghan held out on election as private polls suggested an unconvincing result, a mistake
• Lib-Lab pact ended and the two devolution bills passed, little to keep nationalists loyal to Labour, TUs refused to cooperate
• By late 1970s half the workforce was unionised, 13 million being members, retirement of Jack Jones a blow to Callaghan, his successor Moss Evans showed no interest in cooperation
• PM determined to bring inflation below the 8% of 1978 and decided to try and sell 5% pay limit to achieve it, unions refused and 1978-79 one of the worst periods of striking in history
• Trouble in the car industry at Ford, where the TGWU backed a pay rise of £20 a week smashing the 5% guidelines, they got 17%, firemen 22%, nationwide strike of lorry drivers in January, gained 17-20%, public sector workers entered, Health Service, grave diggers and dustmen went on strike, rotting rubbish piled the streets
• Tory lead in opinion polls shot up 20% Callaghan privately appalled by union behaviour, first time since 1841 the government brought down by a vote of no-confidence at the end of March, 1 March Wales voted decisively to reject devolution, in Scotland only 33% approved, not the required 40%
• Nationalists and Liberals voted with the Tories to topple Labour, government lost by one vote, Tories played on the ‘winter of discontent’ and unemployment, ‘Labour isn’t working’, unemployment 1.3 million
• Callaghan was exhausted and dispirited, Thatcher pointed out the things in life taken for granted were no longer – money that keeps its value, real jobs that last, safety in the streets
Her appeal seemed to work, large swing from Labour to Conservatives in the south east, Labour’s vote fell to 37% lowest since 1931, Conservatives gained 43.9%, considerably less than Heath in 1970, Thatcher’s majority was 44
Examine the problems faced by the incoming government
- The incoming government faced three major problems:
- A rampant world economic crisis. The long post-war boom came to an end with the 1970s oil shock which produced a UK inflation rate of 28% at the end of 1974. In addition, share prices were falling and unemployment rising.
- Rampant trade unions. The unions had seen off the Wilson government in 1970 and the Heath government in 1974. They were as well accustomed to winning in wage disputes with employers. Other European countries had to contend with the effects of the oil crisis, but not with the UKs union problem. Britain was seen by the outside world in the 1970s as having serious governability problems – something which impacted on the value of the £.
- Leftwards drift within the Labour Party. As the generation of 1940s and 50s activists died out, Labour’s membership shrank and it became relatively easy for extremists to take control of constituency parties, especially in the big cities – the Trotskyite ‘Militant Tendency’ in Liverpool was an example. The ‘Loony Left’ as it was christened by the tabloids was in concert with militant union leaders able to make life seriously difficult at party conferences and the like for a government still dominated by Labour’s Right.
- The one bright spot on the horizon was North Sea Oil, which first came on stream in 1975.
Briefly outline the government’s approach to difficulty
• The government – necessarily, given its precarious political position – set its sights low. One main objective was survival as a government, another to somehow chart a course through economic crisis and union problems.
Assess the survival of the government
- A general election was called in October 1974, with Labour hoping to end its minority status and secure a clear mandate. Labour won its overall majority, but it was an overall majority of only 3 (L 319, C 277, L 13, O 26).
- Labour sought EEC entry in 1967 but opposed it in 1972. Wilson had the problem of EEC membership when Labour was seriously divided, the Labour right being mostly pro and the left strongly anti. He resolved this by renegotiating the terms of entry and giving the British electorate a referendum on the new terms. The government recommended a ‘yes’ vote but anti-EEC ministers like Foot and Benn were allowed the ‘no’ campaign. The 1975 referendum was 2:1 in favour with the Labour left bowing to the people. Cynical politics on Wilson’s part perhaps, but adroit in that it prevented his government falling apart.
- By 1977 by-election defeats had robbed the government of its overall majority, leaving it vulnerable to defeat in the Commons. Callaghan responded by negotiating the Lib-Lab pact with Liberal leader David Steel. The Liberals pledged support in parliament in return for a veto over proposed new laws and a promise of ‘consideration’ of proportional representation.
- The Liberals pulled out of the pact in late 1978, Labour left a minority government. Its enemies – Conservatives, Liberals, Welsh and Scottish Nationalists - were not natural bedfellows. Allowing Labour’s minority to limp on into March 1979 when it was defeated on a vote of censure in parliament, forcing a general election.
Examine the Economy and role of the unions
- The government’s economic strategy was built around securing voluntary pay restraint from the unions in return for political concessions. In 1972 when in opposition Labour negotiated with the TUC along the Social Contract.
- In 1974 Labour kept its side of the bargain repealing the 1971 Industrial Relations Act legalising the closed shop and increasing pensions. The Unions did not keep theirs. A wage explosion that took place in 1974-5 with industrial earnings rising by 19% in 74 and 23% in 75.
- In 1975 Jack Jones of the TGWU persuaded unions to offer a new voluntary pay agreement – on which held until 1978, bringing inflation to 7%.
- This was not enough to prevent a sterling crisis. Confidence in the UK economy was sapped by the impression of ungovernability and the parlous state of the UK’s public finances (declining income and rising spending). By autumn 1976 the £2.40 to the $ when it was ‘floated’ by the Heath government in 1972 had fallen to £1.70 – fuelling inflation by forcing up import prices. Britain forced to go to the IMF for a £3bn loan. In return the IMF demanded £3bn in expenditure cuts ‘as if Britain were a bankrupt banana economy’ (Jeremy Black, Modern British History, 2000)
- 1977-8 there was modest economic recovery, inflation fell and share prices rose with the benefits of North Sea Oil more apparent. The government picked up in the opinion polls drawing level with the Conservatives- serious talks of an autumn 1978 GE.
- For the government things then fell apart. The unions abandoned voluntary pay restraint in 1978 and in the private sector began to demand and win pay deals approaching 20%. Public unions like NUPE and NALGO fearing they would be left behind took strike action in early 1979. ‘Winter of Discontent’ in which there were instances of the dead being left unburied, ambulances being turned away from hospitals by union pickets and uncollected rubbish piled on the streets. The public perception, hugely damaging to the government, was of ‘an industrial system out of control and a government in a state of near paralysis’ (K.O. Morgan, The People’s Peace, 1990)
- Outside of its political and economic struggles the Labour government of 1974-79 achieved little of nothing of consequence. The 1975 Industry Act set up the National Enterprise Board which was empowered to buy shares in potentially profitable companies but Tony Benn was the only serious enthusiast. The 1978 Scotland Act and 1978 Wales Act offered devolution subject to a favourable referendum vote, but in 1979 Wales voted ‘no’ and the majority in Scotland was insufficient (more than 40% had to be in favour)
Why did the Conservatives win the 1979 Election
• Not because Thatcher who had challenged and unexpectedly defeated Heath in a bitter contest in 1975. According to polls her leadership ratings lagged behind Callaghan’s.
• Nor because the Conservatives offered a dramatic programme. The 1979 Conservative Manifesto was very light on specific pledges. It didn’t indicate the full extent of the radicalism which was to come e.g. no mention of privatisation.
• The 1979 result was the result of Labour’s failure:
o Labour was blamed for dangerously high inflation, the IMF resort in 1976 and the ‘Winter of Discontent’
o The 12 million strong TU movement was deeply unpopular by 1979 – opinion polls found that 80% of the electorate believed unions had too much power – Labour associated with unions historically, guilty by association.
o Though, the Conservatives fought a shrewd, well-judged campaign. They promised to limit union power and cuts in inflation control of the money supply: they said they would enable council tenants to buy their homes – hugely popular in ‘new town’ marginal like Basildon and Stevenage, which swung to the Conservatives; played on Labour’s weakness, Saatchi ‘Labour isn’t working’ poster.
o Conservatives won an overall majority of 43 (C 339, L 269, L 11, O 16) on 43.9 % of the vote
Explain why 1964 to 1979 was a period of relative political instability in Britain
- Political instability here means governments which are short-lived, weak and ineffective
- Britain did not experience instability in 1964-79 anything like Weimar Germany, early twentieth century Italy or Fourth Republic France, but this is by British standards
- The superficial answer is that the general and by elections threw up periods in which governments had precarious parliamentary majorities (1964-6, 1974-77) or no majority at all (1974, 1977-78)
- These results were no accident. In the 1960s and 70s British voters became more volatile – liable to switch their votes from parties. One indication of this was the changing level of Liberal support. In the three 1950s elections the Liberals won between 2.5 and 5.9%: in October 1974 they won 19%. Reasons: a better educated electorate and the erosion of class loyalties as the economy became more service industry based, for example – but one factor was disillusionment with the two major parties due to their failures in government.
- It was above all in the economic sphere that the Heath, Wilson and Callaghan governments failed, this was not just the product of incompetence though. Britain had long standing economic problems which came to a head in the 70s due to turbulence in the world economy – during the 50s and 60s the long post-war boom allowed the cracks to be papered over. The roots of political instability in the 60s and 70s lay in economic difficulties and the failure to overcome them.
To what extent does the period 1945-79 reflect a post war consensus?
• The extent to which there was a continuity of policy, or ‘consensus’, between the two major parties in this period is a hotly debated issue by historians
• The first advocate of the consensus idea was Paul Addison who argued in The Road to 1945 that shared understandings between the parties emerged out of wartime cooperation: ‘Britain was reconstructed in the image of the war effort’. Other advocates include Kenneth O Morgan and Denis Kavanagh.
• The chief critic of this idea was Ben Pimlott, biographer of Hugh Dalton and Harold Wilson: The Myth of Consensus’ in Echoes of Greatness.
• Supporters of the ‘consensus idea’ point to:
o Commentators at the time picked up the fundamental similarities between the two major parties – The Economist in the 1950s coined the term ‘Butskellism’ and in 1966 a Liberal poster asked ‘Which twin is the Tory?’ under pictures of Heath and Wilson
o Consensus is most evident in the economic sphere, where, after the Conservatives 1947 Industrial Charter, there was agreement on: full employment as a central policy objective the use of Keynesian techniques of demand management; a mixed economy; and the welfare state
• There was a high degree of consensus in other areas too: the handling of the Northern Ireland issues after the start of the troubles in the late 60s; some aspects of foreign policy (not Suez or Europe); the need in the 50s and 60s for immigration controls – the Conservatives introduced the first restrictions with the Commonwealth Immigrants Act, 1962; Labour followed with the 1968 Commonwealth Immigrants Act, designed to exclude East African Asians; the Conservatives’ 1971 Immigration Act effectively ended ‘primary’ immigration.
• Pimlott’s arguments are:
o Viewing the politics of the 60s from the perspective of the radical changes of the Thatcher era can lead to an overestimate of the degree of consensus
o Voters at the time certainly thought there were major differences between the parties – evidence can be seen in both voting behaviour (the low incidence of ‘floating’ voters especially in the 50s) and in opinion polls – in a 1955 Gallup poll 74% said they thought there were important differences between the parties, while only 20% though the parties were much of a muchness
o There were ideological differences between the parties, with Labour’s egalitarian ‘fair shares for all’ approach contrasting with the Conservatives emphasis on empowering favouring local council provision and the Conservatives owner occupation, is one area where differing philosophies were apparent.
• Alongside centrist politicians in both parties there were radicals with more extreme views – the Socialist of the Tribune group were a long way away from any Tory, while the Conservatives in the 50s had their ardent, proto-Thatcherite free marketers like Powell and Thorneycroft
