Callaghan 1976-79

Question 1

IMF loan

Answer 1

Labour government had to borrow $3.9 billion from the International Monetary Fund (IMF), with the intention of maintaining the value of sterling. IMF negotiators insisted on deep cuts in public expenditure, greatly affecting economic and social policy

Question 2

What is devolution?

Answer 2

Transfer of powers to a lower level of government

Question 3

How many seats had Labour lost in by-elections?

Answer 3

4 seats= ruling by MINORITY

Question 4

Lib Lab pact 1977

Answer 4

• Liberals would vote in favour of Labour if Labour party agreed to push Liberal policies.
• Labour agreed to a referendum on the devolution of Scotland/Wales.
• Both referendums were voted against.
  Fell apart in 1978.

Question 5

Who opposed devolution?

Answer 5

Majority of Conservative MPs and many within the Labour Party

Question 6

What were passed in 1978?

Answer 6

Devolution Acts for Scotland and Wales which opened the way for referendums

Question 7

Scottish and Welsh referendums

Answer 7

A clause of the referendums: 40% of entire electorate had to approve of devolution in order to pass it

Results:
- Scottish - 51.6%= YES but only 32% of electorate
- Welsh - 20.3%= YES but only 12% of electorate

Question 8

Callaghan political divisions

Answer 8

• Government faced issues internally and within British politics.
• Labour Party became increasingly split, larger issues emerged concerning Britain’s entrance into the EEC.
• Many members of parliament saw Britain’s entrance to EEC as betrayal of democracy, as Heath’s government entered Britain into the EEC without a referendum vote.
• In 1975, Wilson held a referendum about EEC membership but many argued it was to provide an illusion of democracy.
• The ‘stay’ campaign had a larger budget and threatened that leaving would damage Britain.
• There were debates about loss of British sovereignty/democracy through union with Europe

Question 9

Trade unions

Answer 9

• Cuts to public expenditure as a result of the IMF loan.
• They made several Trade Unions abandon their loyalties to the Labour party.
• Wilson’s “social contract’ with trade unions had fallen through.
• After this, there was barely a month in which there wasn’t a strike.
• The government saw more moderate unions begin to become increasingly militant.

Question 10

Education

Answer 10

• Callaghan attempted to reform education, and proposed a series of questions to do this during the Great Debate in 1976.
• However, the government soon had to focus again on the economy so the proposed Education Bill was not passed

Question 11

Inflation

Answer 11

• Inflation reached around 15% during Callaghan’s time in office.
• This was influenced by the 1973 oil crisis and the continuous wage increases.
• Mounting economic issues threatened bankruptcy.
• So, to stop the economy from declining further, the Chancellor of the Exchequer tried to reduce government spending.
• In the 1976 budget, Healey also imposed large tax increases and tried to impose a 3% limit on wage increases

Question 12

Winter of discontent

Answer 12

Period of unrest, centered around strikes against wage restrictions, accompanied by storms that occurred during 1978-1979 in the UK

Question 13

What Callaghan faced

Answer 13

~ Serious party divisions.
~ A narrow House of Commons majority.
~ Trade union unrest.
~ The Winter of Discontent.
~ The fallout of the 1975 referendum.
~ Economic instability.

Question 14

Callaghan leaving power

Answer 14

• The IMF loan, Labour party disunity, economic crisis, and the Winter of Discontent led to the end of the Labour party’s control of government.
• In 1979, Callaghan called a general election, but it was too late and Labour had lost a lot of support.
• As a result, Margaret Thatcher secured a Conservative majority and became the next Prime Minister.

Question 15

What happened to unemployment?

Answer 15

High=1.6 million but had started to fall