II- the Welfare State and the “post-war consensus” (1945-1979)

Major reforms: Ignorance

1944 Education Act (Butler Act):

→ free secondary education

→ school leaving age raised to 15

Major reforms: Want

(poverty)

→ 1946 National Insurance Act (widow, unemployed, sick, maternity,...)

→ 1948 National Assistance Act (homeless, destitute, …)

Major reforms: squalor

1947 Town and country planning act : 1945-1951: 1.2 million council houses built

Major reforms: Idleness

Nationalisation of industries (1947: railways and coal ; 1949: steel)

Keynesian policies

The creation of the NHS

National Health Service

operational in 1948 (set up 2 years before)

Universal Healthcare

doctors registered and paid by govt

The return of the Conservatives to power

13 years of conservative govt (1951-1964)

Churchill / Eden / Macmillan / Douglas

The optimism of the 50s:

Welfare state

spectacular rise in living standards (consumer society)

full employment

Why “post-war consensus”?

similar policies btw Labour and Conservatives

broad agreement on basic principle:

→ Welfare state: duty of the state to take care of its citizens

→ mixed economy (keynesian consensus)

The gradual fall of the consensus years

1964-1979

Characteristics of UK economy:

-public debt (since WW2)

-keynesianism , welfare state 

-strong trade unions (high salaries, boosted demand)

-low productivity (low supply)

=demand > supply

Consequences:

-inflation

-balance of payments deficit

-1967: devaluation of the livre → more inflation

Edward Heath’s struggles with the unions dates

1970-1974

1970

“stagflation”  

Conservatives blamed the trade unions (high salaries…)

1970 election

Edward Heath’s Conservatives won with a very right-wing manifesto, but…

U-turn

▪ Promised to cut public spending, but… 

▪ Rising unemployment, strikes → back to interventionism/Keynesian policies 

▪ Promised to curb the power of the unions, but… unions resisted.

miners strikes

1972-1974

1974: Heath called an election → lost. 

1975: replaced as Conservative leader by Margaret Thatcher.

The return of Labour

PM =Harold Wilson, then James Callaghan  

BUT… no improvement in industrial relations  

Tried to limit salaries → unpopular…

the “Winter of Discontent”

1978-1979

 -3 months of strikes in many sectors (public + private) → shocked public opinion 

→ May 1979: Conservative victory in general election (new PM: Margaret Thatcher).

Conclusion

Post-war consensus = about 2 decades, then crumbled  

1960s & 1970s = period of turmoil (politically & economically  

“Sick man of Europe”  

1979 = end of the consensus, beginning of a new era: Thatcherism