Labour and Conservative governments 1964-79

Question 1

Why did the Labour Party win in the 1964 election?

Answer 1

In October 1963, Labour party had opinion poll lead of 12% over the Tories, and Wilson enjoyed a 60% approval rating

BUT victory was only small in 1964 (12 mil votes vs 12.2 votes) : Conservatives (365 seats 1959 - 304 seats 1964) & Labour (258 seats 1959 - 317 seats 1964)

WHY?
- Wilson’s leadership of the Labour Party.
- How the electorate regarded the conservatives.
- The revival of the Liberal party.
- Changes in British society during the 1950s.

Question 2

Why did the Labour Party win in the 1964 election?
Conservative Weaknesses

Answer 2

• Voters blame them for growing economic problems ( apparent in early 1960s)
• Didn’t have the answer to rising unemployment, inflation, industrial unrest, and growing disparity in wealth between the regions of Britain = idea of ‘thirteen wasted years’
• Seemed out of touch with a modern democratic society = Scottish aristocrat Douglas-Home as PM was 60yo
• (PREVIOUS CHAPTER) The Economy, ECC Rejection, Night of the Long Knives, Scandals, Social Problems & Riots

Question 3

Why did the Labour Party win in the 1964 election?
The Liberal Party

Answer 3

• middle-class voters, who wanted to protest against the Conservative government were not prepared to vote for liberal = revival of Liberals (SHOWN BY Conservative majority of 14,7000 overturned in Orpington 1962 by-election by Liberal candidate, winning with a majority of 7,850)
• Increased funding, talented, new recruits, more publicity = able to contest more seats

HOWEVER only gained 3 more seats… BUT more than doubled their vote THUS taking from Conservatives to help Labour… EVEN THO overall Labour vote decreased…

Question 4

Why did the Labour Party win in the 1964 election?
Changes in British Society

Answer 4

• PREVIOUS CHAPTER (Youth Sub-Culture) = Improved living standards = people, especially the young, more independent and less, willing to accept additional authority
• Grammar schools gave bright pupils from under privileged, backgrounds, unprecedented opportunities = climate, in which people aspire to create a new, Martin, classless Britain = benefited labour, which was significantly more popular with voters under the age of 44, in opinion polls (LESS SO with older and female voters)
• Culture: plays/novels/TV examined class structure / satirised politicians / challenged attitudes to sex

Question 5

Why did the Labour Party win in the 1964 election?
Labour Strengths

Answer 5

• Much more united (there are divisions over nuclear weapons, Europe, and nationalisation, had not disappeared - GLOSSED OVER by Wilson by presenting Labour as modern, dynamic & progressive)
• Manifesto promised policy is to promote faster economic growth and full employment and improve welfare and health services and better housing and program of comprehensive education.
• Pledge to “harness science to our economic planning” = Britain “forged in the white heat of this [technological and scientific] revolution”
• Wilson personified new progressive Britain: talented person from humble background (stressed his difference from ‘Etonians’) man-of-the-people (Yorkshire-born, grammar-school boy, football fan) - image of a classless professional

Question 6

Why was the result of the 1964 election so close?

Answer 6

If 900 voters in eight crucial constituencies had voted Tory, or not even voted, Labour wouldn’t have won.

• Labour votes decreased from 1959, suggesting the election was more of a rejection of the Conservatives than endorsement of Labour.
• Home’s Leadership: More effective PM than expected, appeared modest and decent and trustworthy, while Wilson had a reputation of political cunning
• Tory Tax Cuts: Chancellor of the Exchequer, Maudling, cut taxes in 1963 budget = earnings rose & number of unemployed dropped from almost 900,000 (Feb 1963) to 300,000 (July 1964) = helped narrow the gap between the parties
• Attitudes towards Labour:
  > People still distrusted Labour links to trade unions (strikes against government pay policy reduced support)
  > Middle-class voters disliked its commitment to nationalisation.
  > Voters doubted ability to handle crisis (especially international / defense) as few leaders had held office.
  > Immigration as sensitive issue - racist Tory campaigns grabbed some Midlands constituencies like Smethwick

Question 7

Harold Wilson
Admirable Qualities vs Problems he faced

Answer 7

POSITIVES (admirable qualities)
- Highly intelligent, hard-working, excellent memory for detail.
- Perpetually, optimistic, resilient, patient, cool in a crisis.
- Personally kind, charming, generous.
- Distrustful of party ideology, preferring practical solutions.
- Sought compromise over conflict.
- Acceptable to both wings of the party.

NEGATIVES (problems he faced)
- Labour had a majority of only four seats.
- Party promises about modernising needed to be fulfilled.
- Pressing foreign and colonial problems.
- Senior figures disliked one another.
- Serious economic situation.

Question 8

Divisions within the Labour Party

Answer 8

LEFT:
- Believed the task of a labour government was to make Britain fully socialist.
- Bringing more sectors of the economy understate control.
- Remaining outside the EEC.
- Abandoning the countries nuclear weapons.
- Speeding up the process of decolonisation.
- Distancing Britain from US foreign policy.
- Abolishing or reforming institutions that appear to protect privilege, such as independent schools or the House of Lords.

RIGHT:
- Believed that the very left-wing policies will vote, losers and impractical/irresponsible. Government should promote economic growth and a fairer distribution of wealth by economic planning on taxation policy.
- Apply to join the common market (EEC).
- Retain Britain’s nuclear weapons.
- Maintain a close alliance with the USA to guarantee national security.
- Resist the demand for further nationalisation.

Question 9

How effective was Harold Wilson as prime minister?
The Labour government’s small majority

Answer 9

• INITIALLY, majority of four.
• March 1966 General Election, government was returned with a majority of 96 (253 vs 363 seats) = major achievement and showed Wilson’s leadership style had paid off.
• This happened because:
  > Wilson avoided splits in the party.
  > Labour manage to appear purposeful and resolute.
  > Wilson exuded self-confidence and authority, making Heath, Conservative leader since August 1965, seem dogged.

Question 10

How effective was Harold Wilson as prime minister?
The transformation of British Society

Answer 10

The Labour govt’s radicalism lay in its major programme of social change (not nationalising industry): traditionalists were outraged (thought laws on homosexuality, contraception, abortion encouraged promiscuous sex) - believed this would create a ‘permissive’ society, opinion polls said death penalty was popular, Mary Whitehouse led a campaign of 400,000 people against excessive sex, violence & bad language in BBC Programmes

NOV 1965 = Murder (abolition of death penalty) & Race Relations (illegal to discriminate in public facilities) Acts
1967 = Family Planning (free contraception to all), Sexual Offenses (legal gay acts in private) & Abortion (legalised under certain conditions) Acts
1968 = Race Relations (illegal racial discrimination in housing/employment) & Theatres (censorship of plays ended) Acts
1969 = Voting (lowered from 21 to 18) & Divorce (more simply and cheaper) Acts
1970 = Equal Pay (men & women) Act

Question 11

How effective was Harold Wilson as prime minister?
Race Relations

Answer 11

More commonwealth arrivals = found only low paid jobs = settled in working class areas = PROBLEM FOR GOVT because immigration was unpopular with Labour voters in inner-city areas BECAUSE
- racial prejudice
- fear that competition would mean lower wages

SO govt tightened rules of immigration in 1965 & 68 WHILE Race Relations Acts attempted to tackle discrimination BUT enforcement was weak = difficult to secure convictions

Question 12

How effective was Harold Wilson as prime minister?
Eduction Policy

Answer 12

Labour supporters opposed existing system that divided children by 11+ into grammar schools & secondary modern schools.

1965 Anthony Crosland (education secretary) began replacing with comprehensive system = BITTER CONTROVERSIES because grammar schools seen as offering the sort of opportunity usually open only to those at independent schools

Home’s govt had begun to implement recommendations of 1963 Robbins Report = major expansion of university education to produce sufficiently educated workforce = Open University

1951 - 1970, number of people attending university increased: 79,422 - 176,169 (men) & 22,590 - 66,842 (women)

Question 13

How effective was Harold Wilson as prime minister?
The Vietnam War

Answer 13

Wilson believed that economic recovery and security depended on US Alliance, although the left regarded US Policies as aggressive & imperialist!

April 1965: few weeks after Johnson competed troops to Vietnam, Wilson declared ‘plain support of the American stand against the communist infiltration in South Vietnam’ BUT to appease the left didn’t send troops when asked by Johnson
June 1966: Wilson publicly criticised heavy US bombing of North Vietnam & in 1967 attempted to broker a peace deal

FAILURE: Wilson annoyed Johnson BUT didn’t go far enough to appease the left

Question 14

How effective was Harold Wilson as prime minister?
Southern Rhodesia

Answer 14

Illegal deceleration of independence in NOV 1965 by white majority govt of Ian Smith in the British colony of Southern Rhodesia.

Labour left & Commonwealth countries of black Africa wanted govt to send troops toc rush rebellion INSTEAD govt used economic sanctions = didn’t work = nonetheless Wilson believed he old find a workable compromise = twice tried personal diplomacy

Wilson proposed settlement that would have left Smith in power PROVIDED that majority rule was introduced = this offer risked inflaming left-wing opinions / unity of party / future of multi-racial Commonwealth BUT Smith refused, allowing him to maintain stance of opponent to rebellion

EXTREMELY RISKY TACTICS but there was no easy solution (wasn’t settled until 1980)

Question 15

How effective was Harold Wilson as prime minister?
The Common Market

Answer 15

Wilson believed he could persuade Charles de Gaulle to change mind about ECC after Britain’s application in 1963. FAILURE = NOV 1967 de Gaulle repeated veto

BUT Wilson succeeded in maintains cabinet & party unity over Europe (pro were pleased by application, anti pleased by its failure)

Question 16

How effective was Harold Wilson as prime minister?
Management of the Labour Cabinet

Answer 16

• showed considerable political skill in avoiding splits on foreign issues & used cabinet effectively pass major modernising social policy
• anxious to avoid internal squabbling that had weakened party in 1950s = hoped to achieve this by giving ministerial jobs to senior party figures from all shades of opinion (not just supporters) = BITTER QUARRELS = cabinet in-fighting reached peak 1969 when govt tried to reform industrial relations
• Barbara Castle observed in daisy Jan 1968 ‘we spent 3/4 of out time in these personal pro and anti intrigues instead of getting down to real job’

BUT (as Denis Healey, defence minister admitted) such disputes were ‘all too common in governments of all parties’ AND there were only 4 cabinet resignations during the life of the Labour govt (record similar to Macmillan)

Question 17

How effective was Harold Wilson as prime minister?
1964-70

Answer 17

POSITIVES:
- Transformation of Labour’s small majority
- Transformation of British society / social reforms (BUT controversies)
- Education Policy (BUT controversies)
- Southern Rhodesia (BUT risky tactics)
- Common Market (BUT rejection)

NEGATIVES:
- Race Relations
- Vietnam War
- Cabinet Management (BUT quite usual / avoided split of party over foreign issues)

Question 18

Britain’s Economic Difficulties in the 1960s

Answer 18

Inherited £800 million balance of payments deficit from Conservatives & believed this to be symptomatic of Britain’s lack of competitiveness = must produce better goods, cheaper than foreign products, SO…

• British firms had to improve efficiency by investing in new tech & grant wage increase only if workers were more productive
• Govt had to maintain investment in nationalised industries, ensure Britain had well-trained workforce & use revenue from taxation to develop transport network

Question 19

Britain’s problems with Trade Unions 1960s

Answer 19

• Union leaders used threat of strike action to demand wage increases in times of inflation.
• Strongly resisted government trying to apply pay increase restrictions / making wage increases dependent on improved productivity (wages that rose not from this increased inflation / made industry labour cost higher).
• High labour costs reduced amount of profit that employers could invest & made goods more expensive (= balance of payments deficit)
• the labour government had to take account of the demands of the trade union because the party was allied to them and they provided most of its money, and in the 1960s, almost half of the British workforce belong to a trade union.

Question 20

Economic Policies of Wilson Government 1964-70

Answer 20

• Had to take immediate steps to tackle the balance of payments, deficit, or government would gain a reputation abroad for economic incompetence = discourage foreign investment and damage earnings of the City of London.
• Two choices;
  > deflation through tax rises or cuts in government expenditure = money out of consumers pockets and reduce spending power of industries and businesses = decrease import bill = decrease gap between imports.
  > devaluation = reducing the exchange value of the pound, which had been fixed since WWII (1949 £1:$2.80) = make British products, cheaper = boosting exports = however, cost of living would rise as Britain relied on imports

Question 21

Wilsons’ Deflationary Measures

Answer 21

Autumn 1964, Chancellor of the exchequer Jim Callaghan, negotiated foreign loans to prevent a run on the pound = in return for US financial assistance, he had to agree to maintain British far Eastern bases = British forces already fighting in Borneo to defend Commonwealth state of Malaysia against Indonesia, and Americans, already embroiled in Vietnam, wanted continued British support in the region.

• Over the next nine months he introduced a series of deflationary measures = higher taxes on tobacco and alcohol, and a temporary import surcharge = Wilson didn’t want devaluation because:
  > believed it would reduce savings of working-class families
  > it had destroyed on Labour government in 1931 and in 1949 had severely damaged Attlee govt ( which Wilson had served in )
  > did it want voters to associate Labour with ‘the easy way out’ of economic difficulties
  > tiny Commons majority so another election inevitable and devaluation would be unpopular
  > didn’t want to upset US who also had balance of payments deficit = US Treasury fear that if Britain devalued, currency traders would assume US would to = run on the dollar

Question 22

The National Plan

Answer 22

Published in by Wilson’s new department - the Department of Economic Affairs (DEA) - in SEPTEMBER 1965 with two aims:
- annual growth rate of 3.8% over 6 years
- increase in exports of 5.25% each year to wipe out BoP deficit

Required Government to:
- Create new National Board for Price & Incomes (NBPI) to ensure that wage increases would only be granted for increase in productivity
- Provide investment funds for modernising industry & improvement of workers’ skills

Reasons for Inevitable Failure:
- Treasury jealously guarded role as government’s economic ministers = no cooperation with DEA
- National Plan recommendations undermined by Treasury’s deflationary measures
- NBPI had no power to enforce decisions = relied on trade union cooperation (didn’t support wage restraint)
- In-fighting = DEA closed 1969

BUT National Plan contributed to March 1966 victory (coherent vision for the future), deflationary measures reduced BoP deficit & prevented run of the pound

Question 23

Wilson & Devaluation

Answer 23

Labour Majority after 1966 BUT NOVEMBER 1967 had to devalue the pound = seemed no other way out of economic difficulties = humiliating = 18 November from $2.80 - $2.40

WHY
- 16 May 1966 = seamen strike over pay to exceed govt guidelines = damaged British exports = poor trade figures threatened run on pound = govt chose deflation over devaluation when strike ended July
- Autumn 1967 = unemployment high ( 1964 - 67, 1.7 mill to 2.5 mill ) = another BoP deficit put pound under pressure gain = DEVALUATION

Question 24

How succesful was Wilsons’ devaluation?

Answer 24

• trade figures stubbornly slow to improve / BoP deficit remained / cuts in spending stayed
• Roy Jenkins replaced Callaghan = concluded that severe deflationary measures STILL NEEDED, for example
  > prescription charges, abolished in 1964, were introduced.
  > Raising of the school leaving age from 15 to 16 was deferred from 1971 to 73 = undermine educational reforms.
  > January 1968, government announced all British forces east of Suez to be withdrawn by end of 1971.
  > budget of March 1968, Jenkins and increased taxation by £923 million to achieve deflation and overcome balance of payments deficit = 1969, signs of improvement = finally a BoP surplus, value of sterling rose and interest rates reduced

Question 25

Wilson & Investment

Answer 25

HIGH defence expenditure/more national resources to military than any other NATO country (bar USA) equals reduced investment in other sectors

• endeavours to improve Britain’s transport network by building motorways in the north of England.
• EncourageD development of manufacturing sites in south Wales, and Scotland
• HOWEVER: sustained improvement in industrial productivity was undermined by government deflationary policies which imposed cutbacks to government investment.

Question 26

Economic Record of Government

Answer 26

SEEN AS FAILURE:

• short-term focus on the balance of payment and the value of the sterling = labour no more successful than Tories in tackling underlying weakness of economy.
• Rate of inflation have not slowed.
• Unemployment was higher in 1970 then in 1964.
• Britain’s relative decline also continued 1950: BRITAIN PRODUCED 25% OF WORLD EXPORTS OF MANUFACTURED GOODS - 1960 16% & 1970 11%
• by not tackling long-term problems, Labour couldn’t achieve ambitious aims of modernisation!

Question 27

Labour Government 1964-70 & Industrial Relations

Answer 27

Wilson’s perescpective:
- Wanted to improve industrial relations and win, trade unions support for efforts to modernise. He believed strikes for higher, pay or disrupting production, forcing up labour costs and contributing to inflation. Believed that industrial relations needed to be more strongly regulated if controlling prices and wages were to succeed.
- difficult situation because trade unions were there traditional allies, and provided most of their money plus the bloc votes at conferences could often prove decisive in determining party policy + trade unions held considerable economic power in the closed shop policy, and strikes in nationalised industries, which could cause disruption.

Trade Unions perspective:
- Countries lack of competitiveness should be blamed on employers and government.
- Attempts to limit wage increases on family, penalised, low-paid workers.
- Right of unions to bargain freely with their employers should not be restricted.

Question 28

‘In Place of Strife’

Answer 28

In April 1968, Wilson asked Barbara Castle to lead the newly established Ministry of
Employment and Productivity to reform industrial relations, worried by press criticism and Conservative announcement of this plan to reform them. In January 1969, her white paper was published:

• Employees, have legal right to join trade union.
• Government could order ballot to be held before the strike if serious threat to national interest.
• Government could order a return to work for a 20 day cooling off period.
• Industrial commission had a legally binding decision about union disputes. Financial penalties if commission was not obeyed.
• Unfairly dismissed workers would be entitled to compensation/their job back.

LED TO 50 Labour MPs rebelling (wider resistance within party, TUC & Cabinet, led by Home Secretary Jim Callaghan) = contributed to fall of Labour 1970 (convinced others that unions had too much power & Labour resistant to change)

HOWEVER traditional industries declined and white collar employment grew = most powerful unions lost members (NUM 1960 - 1970, 586,000 - 279,000) EVEN THOUGH membership of unions representing public centre of government, administration, health and teaching crew, this was not matched by private sector where many employers discouraged union membership)

Question 29

Reasons for 1970 Election Result

Answer 29

LABOUR LOST
- Wilson’s Complacency
- Disillusionment of Labour Supporters
- Failure of ‘In Place of Strife’

CONSERVATIVES WON
- Conservative Policy Proposals
- Heath’s Leadership

Question 30

ARGUMENT: Labour Lost the 1970 Election

Answer 30

• Wilson’s Complacency
  Early opinion poll suggested Wilson had 51% approval rating compared to Heath 28% = Wilson exuded confidence = probably too relaxed as publication of portrayed figures, just before election Day dented labours claim that the economy was on the mend.
• Disillusionment of Labour Supporters

Membership of party fell 1964 - 70, 830,000 - 680,000: British foreign policy to supportive of USA (Vietnam - educated youth protesting), too much money on defence & not enough on welfare/education/economic regeneration. Poorer working class because of policies. Abandonment of historic commitment to socialism.

• Failure of ‘In Place of Strife’
  Initially impressed by Wilson’s promise to modernise Britain, BUT showed trade unions to be selfish to preserve power - sign of govt wider failure

Question 31

ARGUMENT: Conservatives Won the 1970 Election

Answer 31

• Conservative Policy Proposals
  Main ideas as application to EEC, attempts to control prices an income below would end, less state intervention, industrial relations law, reform to reduce number of strike days lost.
• Heath’s Leadership
  Relentlessly attacked economic record of labour = inflation, as measured by retail price index, had risen by 35% and employment by over 200,000. Family dealt with major challenge to his authority when he sacked Enoch Powell (fierce opponent of Commonwealth immigration = ‘Rivers of Blood’ speech = resonated with white working class - 2.5 mill votes won = 5% swing - BUT letters of complaint to Heath) in 1968 from shadow cabinet

Question 32

Heath’s Aims as PM

Answer 32

1970. Policy proposal suggested they would allow market forces to determine prices and wages. BUT Heath did not regard high levels of unemployment as acceptable/believes that government should use investment to regenerate rundown parts of the country = IN PRACTICE Heath’s aims were not that different from Wilson’s.

Question 33

Heath’s Overall Economic Record

Answer 33

• Conservatives inherited inflation rate of 5% per annum = reached 10% for years later.
• Level of employment in 1974 no higher than 1970 BUT the number of working days lost to strikes during Heath’s four years was double that of Wilson’s six.
• Heath inherited a balance of payment surplus, but left a substantial deficit.
• Coincided with a ‘world economic blizzard’, so how much of what went wrong was Heath’s fault?

Question 34

Joining Europe under Heath

Answer 34

Became full member of EEC on 1 January 1973.

• 39 Conservative MPs voted against entry in October 1971, and while the Labor Party oppose the terms of entry, 69 voted in favour = not enough to give a comfortable majority.
• By 1970, president de Gaulle had left office = Pompidou to opposed = higher chance for heath (passionate advocate).

BUT had to enter of ‘French’ terms = angered Conservatives who were mistrustful of Europe = Britain had to Sacrifice remaining preferential trade deals with Commonwealth, and accept EEC policy of heavily subsidising French farmers = little immediate effect on Britain & relations with Europe have remained controversial ever since

Question 35

The Industrial Relations Act, August 1971

Answer 35

Aim to balance right of individual workers with those of the union, while reducing the likelihood of strikes:
- Workers have the legal right to join or not join (challenge legality of the closed shop)
- The National Industrial Relations Court (NIRC), and the Industrial Relations Commission (IRC) were established which trade unions were required to register with = members of registered unions would enjoy better protection against unfair dismissal, and those that failed to register would be liable for claims for damages.
- The act gave the government power to order a pre-strike ballot & impose cooling-off period of up to 60 days.

FAILED = Similar to in place of strife = unpopular = TUC set out to make the act unworkable by telling its members to deregister and defy the NIRC = complicated Heath’s efforts to negotiate with TUC over strikes = increased bitterness & trade unions aimed to destroy Act & Heath.

CREDIBILITY destroyed by 1972 ruling to release dock workers who refused to appear before NIRC.

Question 36

Industrial Relations under Heath

Answer 36

Heath was less successful than Wilson = frequency of strikes increased ( 1970 - 74, 11 mill - 14 mill days lost) because of Industrial Relations Act and inflation.

INFLATION was severe because:
- 1971, Nixon ended system of fixed exchange rates = made British exports more expensive in US.
- 1972, pound allowed to float freely, its value determined by the money markets = poor performance.
- Worldwide is increase in commodity (raw materials) price.

Question 37

The Miner’s Strike, 1972

Answer 37

Miner’s claim for 47% pay increase = well above government wage policy / 8% offered by National Coal Board.

January 1972: 280,000 coal miners strike = government forced to declare state of emergency = regular power cuts out the country = by February, government, anxious for settlement and commission of inquiry, awarded the minors a large pay increase.

WHY SUCCESSFUL?
- Skilfully organised by Arthur Scargill = flying pickets.
- Violent incidents, e.g. 15,000 mast pickets successfully prevented large supplies a few leaving Birmingham = did not seriously damaged public sympathy.
- Government poorly organised to cope with strike and severe winter weather.

IMAPCT:
- Encouraged, other workers to strike for pay increase = successful strikes, add to inflationary pressure.
- Government looked weak and emphasised failure of the Industrial Relations Act.

Question 38

Heath’s U-Turn

Answer 38

Began with intention to reduce state intervention in industry, and refusal to rescue, failing enterprises (called ‘lame ducks’) BUT…
- January 1971, aircraft division of Rolls-Royce faced bankruptcy and was nationalised.
- Heath was not prepared to allow unemployment to increase = February 1972, government granted, £35 million to ship guilders to safeguard 3000 jobs, Ministry for Industrial Development set up in April to provide aid for industry in deprived areas, statutory policies in November 1972 to regulate prices (DESTROYED BY OIL SHOCK)

Question 39

Oil Crisis

Answer 39

Middle eastern oil, producing countries, angry at perceived Western support for Israel in war, cut back supplies and quadrupled prices = Britain dependent on oil for 50% of energy needs.

November 1973, Miners began overtime ban in pursuit of pay claim that exceeded government limit = 13th December, declaration of state of emergency and introduction of three day working week to take affect from the 31st December (50mph speed limit on all roads, televisions off at 10.30pm)

Further talks to resolve dispute FAILED and in February miners voted 81% in favour of strike action = Reminiscent of austerities of wartime = miners dispute eventually settled and NUM gained 21% wage increase = major defeat (NUM went on strike in early 1974, emboldened by its success, and he’s called immediate election ‘Who governs Britain?’

Question 40

February 1974 Election

Answer 40

28 February: ‘Who Governs Britain? The govt or the miners?’

Heath hoped to get decisive support for Govt BUT result was unclear (Conservatives 37.9% & 297 seats, Labour 37.1% & 301 seats). Heath’s efforts to form anti-labour coalition failed & on 4 March 1974, Wilson became PM again.

Question 41

Problems faced by Wilson 1974-76

Answer 41

• Minority government.

After indecisive February election, Wilson held another to try to secure a majority. Wasn’t a ringing endorsement = small overall majority of three seats in October, but won fewer votes than in February. (Conservative 35.8% & 277 seats, Labour 39.2% & 319 seats).

• Relations with trade unions.
• Drift to the left in the labour party.
• Labour party divisions over Europe.
• Economic difficulties (stagflation, IMF loan)
• Failure of Lib-Lab packed.
• Winter of discontent.

Question 42

Relations with Trade Unions under Wilson (2nd time)

Answer 42

To demonstrate 1971, industrial relations act had been unnecessary, Labor Party and TUC reached an agreement in 1973, called the Social Contract:
- unions agreed to cooperate in trying to control wage increases.
- Government promised to try to keep down prices and provide improved welfare benefits.
- There would be a return to free, collective-bargaining over wages and no statutory income policy.
BUT did not solve economic difficulties = wage increases continued to exceed inflation rate = view that the ‘govt gave and the unions took’. Jack Jones seen as most powerful man in country (leader of transport workers’ union). Suggested some shared objectives between govt and unions BUT only lasted until winter of 1978-79.

Question 43

Internal Labour Party Difficulties under Wilson (2nd Time)

Answer 43

Labour Party move to left during four years of opposition, reflected in Cabinet appointments of Michael Foot at Department of Employment and Tony Benn as secretary of state for industry.

Wilson promised to renegotiate terms of British membership of EEC and hold a referendum = new terms where British wins contribution to EC budget would be reduced were announced in March 1975, and date for nation’s first referendum was fixed for fifth of June 1975.
- Wilson allowed Cabinet ministers freedom to campaign for either side.
- Result was a 2:1 vote in favour of continued membership = seen as way to overcome economic difficulties.
- SUCCESS = buried issue of Europe and appeared to pressure Labour Party unity BUT NONETHELESS March 1976 Wilson’s announced resignation at 60 years old,

Question 44

Economic Difficulties faced by Labour 1974

Answer 44

Inflation reached nearly 30% by the middle of 1975, as wages rose faster than growth. World recession hit British exports and unemployment steadily increased from 542,000 in1974, to over 1.3 million two years later.

Actions of Denis Healey:
- 1975 budget increase taxes and cut government spending.
- July 1975, formal incomes policy, setting is £6 per week ceiling on wage increases. This was later reduced to £4, the result was a gradual fall in the average level of wage increases from 26% in 1975 to 15% in 1976, and a 10% in 1977 = unpopular with left, reluctantly agreed to by TUC.

UNSUCCESSFUL = 1976 crisis in confidence in pound anyway - Callaghan realised this was a result of Stagflation

Question 45

IMF Loan

Answer 45

September 1976; Healey resorted to asking the International Monetary Fund (IMF) for a loan of $3.9 billion = FORCED TO cut govt spending by $2 billion = cabinet eventually accepted terms in December = deepened rift between Labour leadership & left of party BUT Callaghan had prevented severe economic crisis (similar to 1931 - lost office for 14 years) becoming a political one.

Question 46

Lib-Lab Pact, 1977-78

Answer 46

Public confidence in government undermined by economic issues = November 1976 opinion poll gave Tories a 25% lead of the labour.

By-election losses meant government slim overall majority disappeared = March 1977 Callaghan negotiated deal with new Labour leader, David Steele = 13 liberal MPs agreed to support the government. The pact lasted until 1978.

Question 47

The Winter of Discontent, 1978-79

Answer 47

Government strategy for controlling inflation depended on union agreement to pay rises of no more than 5% = unions. Disliked Healey’s policies / believed he had abandoned social contract.

• December, Ford workers 15% pay increase after 3 month strike
• January 1979, lorry drivers demanded 30% rise in strike = petrol shortages
• National Union of Public Employees (NUPE) demanded 40% increase followed = involved dustmen && gravediggers = rubbish piled up = unsympathetic portrayal of Labour in media.

Callaghan appeared to be complacent and out of touch = ‘CRISIS? WHAT CRISIS?’ headlines / govt resort to pay increase created perception govt couldn’t manage economy or unions