Strangest of all, by the end of 1975 the trade unions had come to a voluntary agreement to restrict the pay demands of their members - at a time when inflation was up to 22%.
The 1976-1979 Labour government did however hold a residual amount of radicalism, and this prompted the enforcement of a compulsory comprehensives policy for local authorities from 1976. Some councils, such as Tameside in Lancashire, were to successfully fight a bitter rearguard fight to preserve grammar schools. However, the widespread establishment of comprehensives as a principle was finally enacted.
As in so many other areas of the 1974-1979 government, the actual outcome was to disappoint many, with early criticism of standards in the new schools. The continuation of the public schools sat uneasily with the abolition of the "assisted places" scheme, which had succeeded in creating upwards mobility for a number of select students from less privileged backgrounds. In addition to this, the economic hardships of the time were starting to adversely affect the running of the schools and the morale of the teaching profession.
In other fields of social affairs, such as housing, there were also efforts to improve the conditions of working people, through introducing a quasi-successful rent-control mechanism in the private sector, whilst improving the rents system and improving the security of tenure for council tenants. This fell short of the 1973 programme's demand for the designation of "stress areas" in which local authorities would be required to municipalise virtually all rented property.
In 1976 a new Race Relations Act was passed which established the Commission for Racial Equality. The CRE was able to conduct its own investigations, call people to account and enforce the law against racial discrimination. On the whole, it has generally been regarded as a success.
Whilst the small majority of the government didn't help, the onset of a sort of intellectual fuzz was beginning to hinder government policy in many areas. Public expenditure was seen as being a "threat to democracy," in the words of Roy Jenkins. The White Paper on Public Expenditure was to enshrine unnecessary slashing cuts in public services for the duration of the Parliament.
In contrast, the Conservatives in this time were becoming increasingly focused towards a new right-wing dynamic. Academics such as Keith Joseph provided a superficially cohesive, if often electorally dangerous programme. This contributed to a general rise in Tory confidence, echoed in massive local government and by-election victories. The fact that Mrs Thatcher was apparently failing to make much of a personal impact until 1978 did not delay what now seems an inevitable growth of neo-liberalism. The ideas of Hayek and Freidman were on the ascendant.
The "air of confidence" which surrounded Callaghan can therefore be seen as slightly surprising. Following harshly deflationary policies and being responsible for a number of failed government initiatives and enterprises could be a stressful thing for many politicians. In addition to this, Callaghan's first reshuffle had fuelled resentment - Roy Jenkins felt particularly upset by his lack of promotion from the Home Office.
During the summer of 1976 there was yet more economic turbulence, as the financial markets produced a massive run on sterling which threatened to reduce the overall wealth of Britain to a fraction of its former level. To prop up the pound a deal was hammered out between Chancellor Denis Healey and the International Monetary Fund. The result was a loan in accordance with IMF conditions. These conditions were to entail a 1 billion pound cut in public spending during 1977.
In addition to this, by 1977 the interest rate was raised to 15 per cent, food subsidies were slashed and there were massively increased duties on alcohol and tobacco.
The cuts have been shown at the time to be based upon faulty statistics, namely an overestimation of the public sector borrowing requirement. In fact, questions have been asked of the Bank of England and the Treasury regarding the way the currency crisis was handled. Suspicions have been aroused that there were more sinister factors than merely faulty statistics.
Even if it were the case that civil servants deliberately undermined a democratic government, the fact that they were allowed to mislead to such disastrous extent indicates the tenuous and shaky grip of the government on the levers of power.
Despite Callaghan's confident assertion that "you could not spend your way out of a recession," many in the labour movement viewed the spending cuts with absolute horror, as a return to the days of the early 1930s. Unemployment was to rise to one and a half million by 1977, a shockingly high figure at the time. This fuelled the growing discontent and "disorder" in the cities and among young people.
The crisis was resolved, yet a few great legacies were to remain; that of working class alienation from a "pink monetarist" Labour government, public perception of total economic chaos and the onset of a real underinvestment in some of the post- war public services. It was this last legacy which was to make embryonic Thatcherism particularly potent in the 1980s, as many state- funded services became inextricably linked with industrial conflict and gross inefficiency.
In the government's defence, they could see no practical alternative at the time, and in pure economic terms there was success in driving down inflation. By 1977 the inflation rate was down to 9 per cent.
Whilst economic planning was fast becoming politically unfashionable, to some extent the work of the NEDC alleviated some of the worst effects of the spending cuts in the regions, and subsidies still remaind for those companies involved in socially and technologically useful work. These subsidies were to be attacked by those on the right and left of politics, for rather different reasons.
Cuts in public spending demanded a programme for the regeneration of urban areas, and whilst the administration fell short of this, the Home Office did begin co- operation with local authorities and local groups to combat the worst of the growing urban decay.
With some amount of foresight, a few in the government were beginning to place more emphasis on the scientific, technical and cultural industries. The results of this were seen in the early eighties. What emerged was an excellent government-sponsored British computer, the Acorn BBC B Micro, a new and sometimes innovative independent television channel, Channel 4, and an energetic drive to develop general fitness, Denis Howell's "Sport for All" campaign.
As Energy Minister Tony Benn had some stressful moments, such as dealing with a strike at a nuclear power station, but it was from this ministry that the best economic news would emerge. From 1977 North Sea oil and gas started to be extracted in serious quantities. By 1980 this was improving the balance of payments and providing a an excellent source of revenue after Benn had struggled with the oil companies for the government's fair share.
Despite the harsh economics, the PLP remained grudgingly supportive of the government, thanks largely to the efforts of Michael Foot in acting as the arbitrator between the varying factions in Parliament. This became increasingly important after the majority of seven evaporated in March 1977 and Labour became dependant upon Liberal support, in the first Lib-Lab pact since 1931.
On the ground level, the situation was less healthy, as constituency branches had become stagnated and often polarised between generations and ideology. As the Cabinet seemed to move to the right of politics, it had failed to carry the majority of members, who had joined the Party to achieve rather different results than what they were now seeing.
Dissent was to spring from Bevanite circles. Whilst Foot remained entirely loyal, a group developed around Vladimir and Vera Dererer. The Campaign for Labour Party Democracy developed as a way of giving the rank and file more control over the Labour Party. A major aim was to bring all sections of the movement together in choosing the leader, rather than restricting voting rights to MPs.
However, in a situation with an ageing and declining membership, it became quite easy for a few younger, politically streetwise people to move in and assume effective control of branches. This caused MPs some amount of fear; the example of Reg Prentice was cited, who was deselected by his constituency. In this case, the sitting MP was generally disliked, and soon ran off to join the Conservatives, but it set a nervous precedant for many on the Right of the party.
They were probably right to be nervous. The mood of disgruntlement in branches and trade unions was beginning to turn to outright rebellion by mid-1978. When the Liberals walked out from the coalition in July 1978 the legislative power of the Labour Party had all but withered.
This did not deter the Party Conference at the time from continuing to demand massive programmes and huge spending increases in various fields. It is in the 1975-1979 period that Labour Party conferences developed their fearsome reputation for heckling, rowdiness and chaos. It could be argued that this is a sign of democratic health, but the level and tone of the "debates" often became feverish. Right-wingers such as Denis Healey often seemed to enjoy goading the delegations, which largely consisted of earnest lefties.
None of this greatly appealed to the public, although it was always more uncomfortable for politicians than electors, and by the autumn of 1978 Labour maintained only a slight lead over the Conservatives. It was felt that the gradually improving economy bolstered by revenues from the North Sea would see a returned Labour government in the following year.
Callaghan was, however, a rather inflexible and austere Prime Minister, and had taken a personal interest in the fight against inflation. Despite the economy moving back into growth, a surplus in the balance of payments and a borrowing situation well under control, the TUC Liason Committee was asked at the end of 1978 to control wage increases to a "norm" of five per cent. With little goodwill remaining among public-sector rank-and-file trade unionists, the demand for higher wages was to take precedant over loyalty to a Government which had arguably reneged on the majority of its promises and failed to deliver much of the Social Contract.
With inflation running at over 8 per cent, a 5 per cent pay rise was a real cut in wages and the trade union leaders were unable to justify this to their members.
In January 1979 the lorry drivers went on strike and achieved a settlement of 14 per cent. In a matter of days, millions of water workers, ambulance drivers, dustmen and sewerage men followed suit. The settlements were higher than the 5 per cent initially offered, but the public suffered massive shortages and risks to general health. Jim Callaghan was caught out by the speed in which the incomes policy collapsed, being at a conference in the Carribbean. Tory newspapers were quick to magnify this apparent impotence into a damaging complacency whilst rubbish piled up on the streets and bodies waited to be buried.
One of the most potent weapons against the labour movement, the collective memory of a "winter of discontent," had been fashioned, aided by the economic orthodoxy of a right-wing Labour Prime Minister. The trade unions were to lose much of their public sympathy because of this. To some extent this brought to a head the simmering media dislike of militant trade unionism, which had brought individuals such Red Robbo at British Leyland onto a national stage. Underlying much of this negative press coverage was the old spectre of Communism, now wheeled gleefully into the open at the beginning of an election year.
The final downfall of the last Labour government happened as a result of the 1978 Scotland Bill. An amendment was inserted requiring the devolution referendum to have 40 per cent of the total electorate vote in favour. Any less than 40 per cent and devolution wouldn't become effective. On 1 March 1979, 32.85 per cent voted in favour, and 30.78 voted against. In a state of fury, the Scottish Nationalist Party soon tabled a motion of no- confidence in the government, and were supported by Liberals, most Ulster Unionists and the Conservatives. The government lost the vote - so arguably the result of what happened afterwards can be attributed, to some extent, to the SNP.
A General Election was called for the 3rd May, with Labour fighting on a very moderate, multilateralist manifesto with few concrete promises. The personal appeal of Jim Callaghan was highlighted in broadcasts, as being a "safe pair of hands" who would hold the ship of state "steady as she goes." In this intense period of politics, this was probably not the best way of proceeding - there had been many mistakes in the previous years. It also seemed to target the older electors rather more closely than younger people, with an air of paternalistic benevolence.
More damaging were the fresh memories of rubbish on streets and a politically chaotic time. The rise of the National Front in the late 1970s reflected fears about the economy, people's living standards and patriotic uncertainty. The Conservatives were able to make muffled, opportunistic soundbites implying that concerns about immigration would be heeded by an incoming administration. This helped in building the first Conservative base of working- class support - to an unknown extent.
Promising law and order, and a largely unspecified "radical" approach, the Conservatives won a majority of 43 seats. As we now know, it spelt the end of the last Labour government with any significant amount of left-wing input, or any pretence to be socialist in action. For the index or close window to return to index