(2) CALLAGHAN 1976-1979

Wilson’s retirement
1. What was the problem?
  1. Wilson was old, tired and unwell. In 1970 he had led the nation to believe that Labour would break from the ‘stop-go’ economic policies associated with the Conservatives but the 1973 oil price crisis destroyed any hopes of doing this.
  2. Good qualities of Callaghan
    1. He was a firm but fair leader of a team
    2. Disciplined debate in Cabinet and a masterly and kindly control of parliament
    3. Dominated PMQT
    4. Reassuring figure on television
    5. Appeal to traditional Labour voters due to working class origins
    6. Appeared solidly patriotic, a naval officer in WW2 and a man of conservative personal tastes
2. How did they deal with it?
  1. Resigned in March 1976 to be succeeded by Jim Callaghan. Some suggest Wilson left to avoid the economic situation worsening under his watch, others suggest it was because he was being blackmailed by the KGB over an affair he supposedly had with his personal secretary. Or he just retired at 60 because of the stress and ill heath. Some reshuffling at Callaghan’s appointment
    1. Wilson had been hinting for a long time that he would not serve a full term
    2. Callaghan won the leadership election with 176 votes to Foot's 133
    3. Jenkins chose to leave British politics all together with the prestigious post of President of the European Commission in Brussels
    4. Foot became leader of the House of Commons and Lord President in charge of managing government business
    5. Healey continued as the Exchequer and these three were clearly the dominant figures
IMF Crisis
1. What was the problem?
  1. Oil price rise 1973, decline of value of money, growing debit in trade balance made for a precarious British economy. Inflation reached 27% in 1975. March 1976 the pound dropped below $2 in exchange value for the first time. Interest rates at 15% and balance of payments deficit on trade of £1bil
2. How did they deal with it?
  1. Denis Healey (CofE) began negotiating a loan of $3bil from IMF in Sept 1976. Would require major cuts in British public expenditure (£2bil). Left and Unions outraged so Healey tried to calm at Labour Party Conference in Oct 76.
    1. The impact of the Loan
      1. By-election lost, threatened the slender majority
      2. A pact with the Liberal Party and its new Leader David Steel
      3. The nationalist party's were kept onside with the prospect of devolution
    2. It marked not the end of consensus politics but the beginning of a new consensus no longer based on an absolute faith in Keynes
Unions
1. How did they deal with it?
  1. December 1977 Callaghan announced a compulsory 5% ceiling on wage rises, causing Unions to become more sweeping in their demands and more aggressive in their methods. Disturbing industrial actions included:
    1. Fireman’s strike 1977 – PM declared a state of emergency
    2. Year long stroke beginning in 1977 at Grunwick photographic works involving mass picketing and violent clashes with police.
    3. Workers at all 23 plants of Ford Motors went on strike in Sept 1979 (Ford management settled by giving a 17% pay rise)
    4. Lorry drivers strike, called for Jan 1979, threatened nation’s food supplies and called off after drivers gained a 20% wages rise.
2. What was the problem?
  1. Cuts in public expenditure and consequent rise in unemployment following the IMF agreement embittered Trade Unions and weakened their traditional loyalty to the Labour Party. There was scarcely a month in which a strike did not occur throughout Callaghan’s three years as PM, even more moderate Unions were involved.
    1. Half of the work force was unionised with 13 million being members
    2. The giant TGWU had 2 million members
Winter of Discontent - cause Labour GE lose?
1. Yes
  1. Crisis? What Crisis?
    1. Callaghan had returned from an economic summit. He was ask about the mounting chaos. He replyed "I don't think that other people in the world share the view that there is mounting chaos " this was at the same week that NUPE and NALGO called for 24 hour general strike - 1.5 million people went on strike on 22 January 1979
2. No
  1. Long term
    1. Commitment to full-employment means that jobs will be protect at all cost - this fuels inflation as there is more demand - this stimulate further wages icreases thus increasing inflation - causing the cycle to happen again.
    2. Lack of appetite union reform - social contract -working with the union not against them
  2. Political misjudgment
    1. Callangham's chose not to call an election in 1978
      1. Privet party poll suggest that the Labour lead was not strong
      2. It turned out to be a mistake not to call an election
  3. Conservative campaigning
    1. The Tories played on the "winter of discontent" and unemployment with an effective election poster showing a long queue of the unemployment with the caption "Labour isn't working". Unemployment was 1.3 million
  4. The Labour party low morale
    1. By March Jim was exhausted and dispirited.
      1. This lead to the Attlee Government to defeat in 1951
    2. "I believe that if we struggled on a little longer we might have cut Mrs Thatcher's majority by a few seats for each week we moved further away from the Winter of Discontent.
3. Callaghan gravely damaged
  1. Economic and financial crises
  2. Rising unemployment
  3. Belligerent trade unionism
  4. Political misjudgements

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(2) CALLAGHAN 1976-1979

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	Created by Marcus Danvers about 11 years ago