Labour governments of Wilson and Callaghan

What Problems did the labor government come back to in March 1974?

-Harold Wilson in worse position than in 1964

-Inflation was at 155 and balance of payment deficit was £3 billion

-Trade unions needed to be dealt with

-Northern Ireland situation was precarious

-Labor was less united and had a minority so had to depend on support from other parties to pass legislation

What happened in the election in October 1974?

-Voters associated Heath and the Conservatives with the 3 day week and conflict with the miners

-Wilson only just won his majority

-Labour gained 18 seats and conservatives lost 21

-Labour had a 3 seat majority

Industrial relations 1974-76

-Wilson needed to act quick to demostrate lanour was better euqiped wioth TUs

-73-negociated social contract withy the TUC

-Agreement was quickly reached with the NUM allowing Wilson to end the state of emergency and 3 day week

-Two left wingers Tony Benn and Michael Foot were in charge of departments of Industry and employment

-Denis Healey issued budgets aiming to deal with the economic cisis without annoying unions

Economic reforms 1974-76 -Inflation

-First major problem was inflation due to large wage increases that were deemed necessary to get out of the industrial crisis that had brought down heath

-January 1975 Chancellor Denis Healey made a speech in Leeds giving a stern warning of the dangers: caused unemployment and it was vital to control public spending

-April 1975 Healey’s budget imposed steep rise in taxes and public spending was cut

What was the National enterprise board?

-The NEB was set up in 1974 under Tony Benn to administer the governments share holdings in private companies

-Could also give financial aid

-Its aim was to increase invenstment but by 75 its effectivness was being questioned

Economic reforms,1974-76 -Nationalisation

-The governments decision to nationalize the failing car manufacturer British Leyland caused renewed controversy about the role of government in rescuing lame duck industries

What did nationalization and the social contract not limiting wage demands lead to?

-By 1975 a more formal pay restraint policy was introduce

What was an political impact of the economic reforms 1974-76?

-These shifts in policy intensified party divisions

-Left wingers like Michael Foot and Tony Benn did not want to put so much pressure on the unions and they also believed in more state intervention in industry

-In march 1976 Wilson resigned as party leader

Who replaced Harold wilson?

James Callaghan with long experience and good links to the unions so was seen as the ideal leader to maintain party unity

What economic problems did Callaghan face?

-Throughout 1976 the poor balance of payments was putting pressure on sterling and there were concerns that Britain did not have enough reserves of currency to support it

What was contained in Callaghan’s speech to the Labor party conference in 1976?

-He warned the ‘cozy world’ whereby the government could ensure full employment was gone

-Productivity would need to be improved to avoid what he called the ‘twin evils’ of unemployment and inflation

-Criticizing both previous labor/con

What was the International monetary Fund-1976?

-Callahan speech was preparing for the application for an emergency loan

-It was anxious that there might be a run on the pound

-In December Healey received a loan of £3 billion in return gov had to make big spending cuts

What were the effects of the IMF loan?

-Callaghan handled the crisis well and the economy recovered but it reinforced the image of Britain being in economic decline

-Conservatives denounced this as a national humiliation and the left of labor saw it as a betrayal

-Callahan maintained unity among labour MP’s there was a growth of leftist militancy in some public sectors TU and local councils

How did the economic situation begin to improve under Callaghan?

-North sea oil came on stream

-By 1978 there were nine oilfields in production

-Inflation rates fell to 10% and unemploymnt was cisidered high at 1.6 million but began to fall

-Number of days left lost to industrial disputes had fallen to a ten-year low

What was the Lib-Lab pact?

-By 1977 the labor majority had disappeared so Callaghan had to strengthen government by making the pact

-He was able to defear a vote of no confidence tabled by the conservative party