Labour in office 1974-79

Question 1

Inflation

Answer 1

Britain began to suffer the worst effects of rapid inflation that followed the 1973 oil price rise.
The decline in the value of money and the growing debt threatened to make Britain bankrupt.
In March 1976, for the first time in history, the pound dropped to below $2 in exchange value.

Question 2

IMF crisis 1976

Answer 2

In September 1976, Denis Healey had to begin negotiating a loan of £3 billion from the IMF.
Loan required Britain to make major cuts in its public expenditure.
By 1979, the government had cut back its spending programme by £3 billion, but this led to rising unemployment.
Many saw this loan as further evidence of Britain’s decline.

Question 3

Labour and the unions

Answer 3

Cuts in public spending and the rising unemployment embittered the unions and weakened their traditional loyalties to the Labour party.
Social contract- agreement between Wilson and Vic Feather, the TUC general secretary, that when Labour returned to power, the unions would follow a wage restraint policy.

Question 4

Referendum on Europe, 1975

Answer 4

Government began renegotiations in regard to agriculture budget payments and Commonwealth imports.
The economic advantaged of the EEC appeared illusory due to the oil prices rises.
Net effect of membership was greatly increased financial costs with no real trade benefit.

Question 5

Callaghan’s problems

Answer 5

Wilson intended to break from the stop-go economic policies associated with the Tories. The 1973 oil prices crises destroyed any hope of doing this.
Scarcely a month were a strike didn’t occur.
Most disruptive industrial action:
Firefighters strike of 1977 led the government to declare a state of emergency.
In December 1977, Callahan announced a compulsory 5% ceiling on wage rises.

Question 6

The winter of discontent

Answer 6

1978-79
Not wishing to miss out on the large pay settlements achieved by many private sector unions, public service unions began to make demands.
On 22nd January, around 1,5 million workers came out on a strike.

Question 7

1979 general election

Answer 7

Labour party had been gravely damaged by:
Economic and financial crises.
Rising unemployment.
Combative trade unionism.
Political misjudgements.
In Autumn 1978, they allowed the Lib Lab pact to lapse.
Effective campaign posters: Labour isn’t working.