Wilson and Callaghan

Question 1

What was the situation of the Labour Party?

Answer 1

• The economic situation in 1974 was awful. Inflation was at 15% and the balance of payments deficit was £3 billion
• The Labour Party was less united than ever and the Trade Unions would need to be dealt with
• The February election returned a minority government and it wasn’t until the October that the Labour were able to govern with a majority
• An agreement was reached with the NUM to bring an end to the 3-day week and Tony Benn and Michael Foot were put in charge of the departments of Industry and Employment
• Chancellor, Denis Healy, attempted to deal with the economic crisis without annoying the TUs

Question 2

What happened during the period of 1974-76?

Answer 2

• The National Enterprise Board was set up in 1974 to administer the government’s shares in private companies.
• By 1975 its effectiveness was being questioned and the government’s rescuing of British Leyland caused controversy
• The Social Contract was not limiting wage demands and by 1975 a more formal pay policy was introduced

Question 3

When did Wilson resign and why?

Answer 3

• He resigned suddenly in March 1976
• He had concerns over his health and had promised his wife that he would step down

Question 4

What was Callaghan’s government like 1976 - 79?

Answer 4

• Callaghan was known as a ‘safe pair of hands’ he gave a speech in 1976 were he warned that the ‘cosy world’ of full employment was gone.
• The government applied for an emergency loan from the IMF in December 1976 and a loan of £3 billion was given
• Big spending cuts were introduced.
• The crisis was well handled and the economy recovered but it had reinforced the image of Britain being in decline
• By 1978 inflation had fallen to 10% and unemployment was 1.6 million
• The number of days lost to strike action had also begun to fall and reached a ten year low

Question 5

Devolution

Answer 5

• The ‘Lib-Lab pact’ was made in 1977 to strengthen the government.
• In return, Callaghan promised devolution for Scotland and Wales. Referendums were held in 1979.
• Wales voted against and Scotland voted in favour but didn’t reach the 40% threshold to pass

Question 6

What happened during the Winter of Discontent?

Answer 6

• The TUC rejected the government’s proposed wage increase limit of 5%.
• Ford lorry drivers achieved 15% after a 9 week strike and more unions walked out
• The strikes were not as serious a threat to the government as the 1974 ministers strike had been, but the psychological impact of the Winter of Discontent was significant.
• The economy had deteriorated, TU reputations had been damaged and in March 1979 the government lost a vote of no-confidence
• They were forced to resign and the 1979 election was run against a backdrop of the Winter of Discontent dominating the press and media.
• The Conservatives (under Thatcher) won a 43 seat majority