Wilson + Callaghan Governments, 1974-79

• The economic crisis that faced Heath had worsened under Labour. The issue of inflation ran rampant.
• Commodity prices increased 160% between 1971 and 1974.
• The end of fixed exchange rates in 1972 allowed for money to find its own value in the free market. Sterling fell in value.
• Inflation became more difficult to control as a result of ending fixed exchange rates in 1972. Imports became more expensive.
• Britain had to phase out tariffs with Commonwealth countries after joining the EEC. The Common Agricultural Policy (CAP) was introduced as food prices rose.
• Labour's principal policy to tackle inflation was the Social Contract. The 1971 Industrial Relations Act was repealed.
• The Social Contracted ended free-market controls of wages and prices. The provisions of welfare and nationalisation was expanded.
• Chancellor Healey's first budget saw increases in benefits and subsidies. Defence was cut to fund this.
• The balance of payments deficit grew between 1974 and 1979.
• The National Enterprise Board (NEB) was set up in 1975. The Board invested in businesses.
• The NEB invested heavily in British Leyland during 1975. British Aerospace was nationalised in 1976.
• Inflation increased to 24% by 1975. Inflation decreased to 16.5% by 1976 as a result of TUC pay rises.
• The TUC increased pay rises to tackle inflation. The maximum amount of pay that increased per week was £6/
• £1 was worth $2.75 in 1975. £1 was worth $1.50 by October 1976.
• The government had to apply to the International Monetary Fund (IMF) for a loan in November 1976. $3 billion was obtained.
• A condition that was attached to the IMF loan was reduced government spending. Spending decreased by 7% in 1978.
• Sterling began to increase in value post-IMF. North Sea Oil brought in big revenue.
• Jack Jones resigned as Union leader in 1975. Moss Evans was his successor who was less keen on the Social Contract.
• The pay of Ford workers increased 17% in 1978. The pay of lorry drivers increased 20%.
• Unemptied bins, hospital workers on strike and Liverpudlian workers not burying bodies were things that happened during the Winter of Discontent.
• Labour's special relationship with the trade unions had collapsed by 1978. Callaghan did not see the Winter of Discontent coming when he didn't call a general election in 1978.
• The Tories had a 70 seat majority in the 1979 general election. Thatcher's government would be radical compared to Labour.
• The Northern Ireland Troubles continued under the Labour government. The IRA continued to bomb mainland Britain and target soldiers.
• The IRA assassinated Lord Mountbatten in August 1979. 18 British soldiers were killed by the IRA in Warrenpoint.