Wilson Gov 1974-76, Callaghan 1976-79

why did Labour win the most seats in the February 1974 election

• Heath’s ‘who governs’ campaign had failed

• Powell had joined the Ulster Unionists and campaigned against Heath

• Wilson was a more confident performer

• however - it was a hung parliament (noone had a majority) people not enthusiastic about either party and labour had a minority gov.

Why did Labour win the October 1974 election?

• Wilson felt safe enough to call another election

• voters still associated Heath with the Miners conflict and Three day week

why was the gov. in a precarious position to start

• only a small majority (3)

• party split over Europe

• ongoing OPEC/Yom Kippur crisis

• power of unions

• inflation was uncontrollable

problems of inflation

huge surge to increase wages to settle industrial disputes

early 1975 - wage increase was up to 30%

overall inflation running at 20% - consequence of oil price crisis

decline in trade balance and value of money, continued stagflation

Labour divisions

• left wingers like Foot and Benn did not want to put so much pressure on unions

• gov caused controversy by nationalising British Leyland - saving ‘lame-duck’ industries

Chancellor Healey’s budgets

angered the rich - top income tax rate reached 83%

appeased the unions in redistributing wealth - the money was used to increase pensions and housing subsidies

The Social contract

1974 - aimed to deliver wage settlements with government working with TUC

whilst some initial success, this was not successful in bringing down the massive wages needed to settle industrial dispute (high as 30% increase in 1975)

Wilson repeals the Industrial relations act

1974 - a popular decision with the unions

State earnings Related Pensions (SERPs)

1974 - linked pensions to rises in earnings or prices, a generous scheme

evidence of some success under Wilson reducing union powers

1974-75 the number of days lost to strike action halved and then halved again the following year

the EEC referendum

1975 - on the issue that divided the party, 64.5% voted remain

Wilson allowed free voting within his party and the remain win seemed to diminish the splitting issue

Why did Thatcher become tory leader

1975 - a surprising win

• Heath’s unpopularity

• Thatcher’s self-confidence/conviction

• Effective campaigning by Airey Neave

• Funding from Denis Thatcher

why did Wilson resign

1976

• potentially leaving before economic situation got worse

• possible Russian blackmail to expose affair with Marcia Williams

• promised his wife only 2 years after the 1974 election

• strain of office

• potential early Alzheimers

why did Callaghan succeed Wilson

• had held other offices of state (Chancellor, Foreign and Home Secretary)

• was well liked within the party

• had links to the unions and could possibly ‘sort them out’

Need for IMF loan - context

the value of the pound declines in March 1976 to below $2

stagflation had returned

the IMF loan

1976 - Chancellor Healey had to get emergency help of £3 billion from the International Monetary Fund

• ‘the end of post-war consensus’ - the terms of the loan included drastic spending cuts (unlike trad Labour policy)

• the loan was actually not necessary - paid back in full 1979

• reinforced that the Uk was in economic decline

• Tories - ‘gives away British independence’

• Labour - ‘capitalism is being give in to’, rise of militant left in the party

Compulsory ceiling on wages (Callaghan)

• July 1978 - Cabinet approves a compulsory 5% ceiling on ages rising to bring down inflation

• this was not popular with unions, too tough (eroded real wages of most people) and companies such as Ford breached this

Success? North Sea oil

went into production in 1975 and Britain was beginning to feel the economic benefits of it under Callaghan

More than half a million barrels came ashore every day, meeting 1/3 of Britain’s oil needs

By 1980, Britain would be self-sufficient for oil

Lib Lab Pact

1977 - ensured Labour’s policies would be supported in Parliament, helping their small majority

some deals made - only if Britain agreed to move ahead with devolution for Scotland and Wales (did not happen)

Winter of Discontent

1978-79 many public sector workers go on strike for higher wages

• eg, 8500 petrol drivers strike in January

• roughly 30 million days of work lost in strike efforts

WOD was not a threat

• did not challenge the government in key sectors like the 1974 strikes had done (NUM national strike in 1974 was damaging due to need for fuel)

  • strikes ended by March 1979 - not a long-term threat

WOD was a threat

• had a psychological impact on the electorate, ‘reinforced that ‘Labour’s not working’

• Callaghan was at an international summit at Guadeloupe - his reaction to journalists asking about the strikes (‘Crisis? What Crisis?’ ) was damaging to political reputation