Labour government of Wilson and Callaghan

• • awful economic problems, inflation at 15% and balance of payment deficit of £3 billion again. :(
  • Labour party less united
  • Minority government, dependent on other parties to pass through legislation
  • October 1974, second election was called which Wilson won and Labour had a majority of 18 seats because the conservative party was associated with the 3-day week and others (319 seats for labour and 277 for conservatives, 39.2% of the vote L and 35.9% C)


  Position of Labour government in 1974
• Involved voluntary pay restraint by the trade unions and in return the government would repeal Heath's Industrial Relations Act which was negotiated in 1973 while the Labour party was still in opposition. Sent out clear message: the government didn't need anymore confrontations. Agreements with the NUM were reached which put an end to the 3-day week. 


  Social Contract
• Put out 2 budgets in March and July aiming to deal with the economic crisis without angering the trade unions

  Denis Healey
• • Needed to deal with rise in inflation which was caused by the massive wage increases
  • January 1975, speech in Leeds which gave them a warning of the issues that inflation had caused on unemployment levels and that it was vital to control public spending.
  • He imposed rise in taxation and public spending cuts

  Healey and the economy
• • Administer governments share holdings in private companies and gave financial aid as it aimed to increase investment.
  • The efficiency of this was questioned in 1975 when the decision to nationalise the failing British Leyland caused controversy in the government trying to save 'lame-duck' companies. 


  The national enterprise board (NEB) 1974
• Social Contract was limiting wages and by 1975, a formal pay restraint policy was introduced. This intensified party divisions as ministers such as Tony Benn and Michael Foot didn't want to pressure the unions as much and believed in more state intervention, not the inverse. 


  Shifts in pay restraints
• 1976


  When did Wilson resign
• Seen as a 'safe pair of hands' who had experience and good links with the unions. He was seen as a good person to solve divisions. This would not be as easy as there still was a with full employment being reached which he outlined in a conference in 1976. He argued that productivity would need to be improved to tackle unemployment and inflation. This speech was delivered to prepare Britain for taking out an IMF loan. 


  Callaghan as leader
• • Took out £3 billion in return the government had to make massive government spending cuts
  • Economy recovered but it reinforced the idea that Britain was in economic decline to the rest of the world

  IMF crisis
• • Left saw this as a betrayal, caving to international financers
  • Although Callaghan did manage to keep the party relatively united, there was a growth in left-militances in some trade unions and local councils.

  Response to Labour to IMF loan
• • North Sea oil came streaming in
  • Inflation rates fell to 10%
  • Unemployment was at 1.6 million but did start to dip
  • Number of days lost in strikes had fallen to a 10 year low

  Economic situation
• • By 1977, the labour majority had disappeared which lead to the creation of the Lib Lab pact so Callaghan wouldn't loose the vote of no confidence triggered by the conservatives. This meant that 12 Liberal MPS agreed to vote in favour of Callaghan in return for a move with devolution.

  Devolution
• Even though there were many who had opposed this such as the conservative party and many within the labour party, the 1978 devolution acts of Scotland and Wales got passed which opened up the way for referendums. A referendum was set with a secret clause inserted by a labour MP who had opposed devolution that ta least 40% of the electorate had to agree to it. 


  Devolution
• In the end devolution was not granted to either of the countries because of the secret clause and because Wales voted against it. Wales voted 80% no and Scotland 51.6% yes

  Why did Scottish nationalist MPS withdraw support form Labour
• • 1978 autumn TUC rejected Labour proposal of keeping wage increase limit to 5% which encouraged unions to demand for a higher increase
  • Ford lorry drivers achieved a 15% increase in December after a 9 week strike
  • Wave of industrial action followed which disturbed transport such as lorries
  • It was bought to an end in March 1979 with an average pay increase of 10% which had an impact on the feelings of the public

  Winter of discontent
• Callaghan decided to wait in 1978 which was a mistake because by spring of 79 the WOD had made the relationship with the trade unions worse and some public citizens considering to vote for conservatives. In March 79, the government lost by a vote of no confidence over the devolution issue in Scotland 


  How did the winter of discontent affect the 1979 election
• • Labour: 269 seats and 36.9% of the vote
  • Conservative: 339 seats and 43.9% of the vote

  Results of 79 election
• • Marking the end of the Sunningdale agreement, Ulster Workers' Councils set up by Harry Murray announced a strike in May 1974 designed to bring him down.
  • Impacted telecommunications and limited power so Britain declared a state of emergency 


  Why was Wilson forced to impose direct rule again
• • terrorist prisoners would be no longer seen as political prisoners but would be treated as criminals
  • Paramilities didn't like this as they were still treated as prisoners, they viewed this as a sign of war so in protest 'blanket protestors' started where they just wore blankets or were naked.
  • They refused to leave their cell, some smeared faeces on prison walls and by 11979 250 prisoners took part in this protest 


  1976 Special Category Status
• • narrow majority of 4 seats
  • effects of inflation rise due to the oil crisis in 1973
  • struggle with trade unions continued 


  From the beginning the Labour government struggled because....
• • Labour: 11.4 million votes, 319 seats and around 40% of the vote
  • Conservatives: 10.4 million votes, 277 seats and around 36% of the vote 


  Results of 1974 election in October
• Agreement committing the Liberals to vote with the government in the Commons which meant they gained 13 more seats for their majority of 42 beforehand .


  Lib-Lab Pact 1977
• First time in history that the pound dropped before $2

  March 1976
• • Healey had been negotiating a IMF loan of £3 billion and its terms required Britain to make major public spending cuts
  • This made the left and unions angry again so much so that Healey had to delay a flight to Manila (where the IMF negotiations took place) to the go to the Labour conference to preserve party unity which only partially worked. 


  IMF crisis 1976
• • It accused the government of following conservative policies by trying to solve Britain's financial issues by using policies shaped by international financers.
  • The centre-right was warning the leaders that it if it would alienate the unions once again that it would not be able to govern by itself again and it was alienating itself from the ordinary British workers. 


  Why was the party opposed to the IMF loan
• • unemployment reached 1.6 million in 1978


  What was the effect of meeting the conditions of the IMF loan in 1979
• • weakened traditional loyalty with unions at this point due to the IMF loan and decrease in public spending
  • Credit for repealing the Industrial Relations Act in 1974 was gone and lost it's ability to persuade workers to co-operate with the government. 


  Labour and the unions
• An informal 1972 agreement between Wilson and Vic Feather the TUC General Secretary, that when Labour would return back to power it would put a restraint on wage increases in return for a pro-worker industrial policy passed by the government. 


  Social contract
• • Wilson pledged this referendum would happen to the suspicions that the left and unions still had towards it 


  Referendums on Europe
• In December 1977 he passed a compulsory 5% ceiling on wage rises, to which the unions became more hostile again. 


  Callaghan's and unions
• • 1976: 3.2 million
  • 1977: nearly 10 million
  • 1979: 29.5 million


  Number of working days lost:
• • Firefighter's strike in 1977, led government to announce a state of emergency
  • Grunwick Film Processing Laboratories in North London: mass picketing and violence towards the police
  • Lorry drivers strike January 1979: threatened nation's food supplies, it was called off after the drivers gained a 20% wage risse


  Industrial action in Callaghan's office
• • Workers didn't want to miss out on the large pay rises the private sector workers got as they felt like they suffered the most from the governments wrongdoing to them
  • On January 22nd 1.5 million workers went out on strike
  • The alienation of this big of group of people led to such significant opposition. 


  Winter of discontent
• The outcome of this election would have been very different if Callaghan had called it in 1978 as his opinion polls were doing pretty well

  • tiny majority had its effects
  • failed to provide mandate for devolution
  • defeated with a vote of no confidence
  • effective campaign posters with a caption of 'Labour isn't working'

  1979 election
• • Conservative: nearly 14 million votes, 339 seats and ~44% of the vote
  • Labour: 11.5 million votes, 269 seats and ~37% of the vote


  Result of 1979 election
• British troops sent to NI: 1969

  Callaghan sent troops to try to keep the peace in NI. At first the trips were welcomed by the Catholic community. This didn’t last as the IRA reorganised itself and attacked unionists and started a Catholic nationalist protest movement.
• What had led to Bloody Sunday becoming so big:

  • 1972: prohibited civil rights movement in Londonderry ended in 14 demonstrators being shot by the British Troops
  • it is unclear what actually happened but Lord Widgery believes: “the shots that had been fired at the soldiers before they started the firing led to the causalities”.
• Widgery Report In May 1972:

  • further convinced the Catholic population that the British Government was hostile
  • increased tensions between London and Dublin governments
  • gap between IRA and SDLP widened
  • gap between Official Unionist Party and DUP widened
• What we’re catholics angered at before Bloody Sunday (and after really):

  • unemployment which always affected them the most
  • continued presence of the British Army
  • slow progress in gaining their civil rights
  • the way that law seemed titled against them
• What did Wilson have to deal with straight away when he was in office:

  May 1974, the province was paralysed by a massive 15 Day strike organised by Paisley supporter Ulster Workers Council in protest against Sunningdale.

  min a TV interview Wilson backed Rees, the NI Secretary, who tried to take a tough line and refuse to negotiate with the UWC