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Harold Wilson’s Labour
governments 1964 - 70
N C Gardner MA PGCE
29/03/2016 Labour Government 1964 to 1970 1
Harold Wilson, Labour prime minister 1964
– 1970; 1974 - 76
29/03/2016 Labour Government 1964 to 1970 2
Key Dates
• 1964 Labour wins the election in October and
Harold Wilson becomes prime minister. The
IMF loaned the UK £1 billion.
• 1965 Race Relations Act.
• 1966 The election gives Labour an increased
majority in Parliament.
29/03/2016 Labour Government 1964 to 1970 3
Harold Wilson’s Labour Party won by a
small majority of just four seats in the
General Election of October 1964.
29/03/2016 Labour Government 1964 to 1970 4
October 1964: the new Labour government
• In October 1964, Labour won the election
beating the Conservatives and Harold
Wilson was appointed prime minister.
• The Conservatives after thirteen years in
power had run out of steam.
• Scandals had tainted the Tory reputation
for integrity in 1963 – 64.
29/03/2016 Labour Government 1964 to 1970 5
James Callaghan, Chancellor of the Exchequer
1964 – 67; Home Secretary 1967 – 70. Callaghan
succeeded Wilson as Labour leader and prime
minister in 1976.
29/03/2016 Labour Government 1964 to 1970 6
Unemployment had reached over 800,000
in 1963
• Another significant factor why the
Conservatives lost the October 1964 election
was that unemployment had reached over
300,000 in 1963.
• The failure of Britain’s application for
membership of the European Economic
Community (EEC) in 1963 was another factor in
the Conservative defeat.
29/03/2016 Labour Government 1964 to 1970 7
James Callaghan, Labour’s Chancellor of the
Exchequer 1964 – 67, faced a serious balance of
payments crisis.
29/03/2016 Labour Government 1964 to 1970 8
Balance of payments in crisis in October
1964
• The balance of payments were in crisis in
October 1964. The Treasury forecast for the
year’s deficit was £800 million.
• The Treasury briefs given to the new Chancellor
of the Exchequer, James Callaghan, also
pointed out that the deficit was deteriorating
so that when the Conservatives left office it
was running at a rate of £1,000 million a year.
29/03/2016 Labour Government 1964 to 1970 9
The balance of payments deficit was worse
than expected
• The balance of payments deficit was worse
than anything Wilson or Callaghan had
expected, even though Labour had sharply
attacked Conservative economic policy during
the run-up to the election.
• Harold Wilson said when asked what his
greatest shock was on coming to power: ‘It was
to discover that everything we’d said about our
opponents was true.’
29/03/2016 Labour Government 1964 to 1970 10
Reading books
such as ‘Britain
since 1945’ by
David Childs will
be required at
Advanced Level.
Essentially the
key passages for
homework and
exams.
29/03/2016 Labour Government 1964 to 1970 11
The office of Prime Minister
• If any single person occupies a position of supreme
governing power, it is the prime minister.
• And increasingly since the 1960s, the onset of the
television age, the British Prime Minister has
occupied a position which has become more and
more presidential in style and presentation.
• Many political scientists noted a marked
presidential style during the premierships of
Thatcher and Blair.
29/03/2016 Labour Government 1964 to 1970 12
29/03/2016 Labour Government 1964 to 1970 13
The office of Prime Minister
• The Prime Minister is the principal adviser to
the crown and thus also the principal inheritor
of its powers.
• The Prime Minister is usually leader of the
majority party as well as head of government.
• Above all, the Prime Minister appoints the
other members of the governmental team.
29/03/2016 Labour Government 1964 to 1970 14
29/03/2016 Labour Government 1964 to 1970 15
The responsibilities of the Prime Minister
• The Prime Minister may at any time call upon
any government member to resign, or may
move the person to a new post.
• The Prime Minister must have an eye not only
for the effectiveness of his/her administration
and its inner harmony, but also and above all
to its ability to attract and hold the support of
his/her party and the public.
29/03/2016 Labour Government 1964 to 1970 16
Prime Minister Blair with President George W
Bush and their respective wives
29/03/2016 Labour Government 1964 to 1970 17
Limitations upon the Prime Minister
• To hold the support of the party and the public,
a Prime Minister cannot pass over the other
leading figures in the party.
• There are always some leading party figures
that a Prime Minister must include in the
Cabinet because of the party and public
support they command, and not only, if at all,
because of their administrative ability.
29/03/2016 Labour Government 1964 to 1970 18
29/03/2016 Labour Government 1964 to 1970 19
A Prime Minister has the freedom to decide
• A Prime Minister has the freedom to decide
which particular post should go to each of
his/her senior colleagues.
• In general, a Prime Minister is free to build as
he/she wishes so long as the administration as
a whole is reasonably representative of the
principal political forces within the party.
29/03/2016 Labour Government 1964 to 1970 20
29/03/2016 Labour Government 1964 to 1970 21
The Prime Minister’s special status
• The Prime Minister’s special status continues
throughout his/her tenure of office.
• One cannot ignore the importance of the prime
minister’s position as chairman of various
committees and his/her power to draw up the
agenda.
• Subject to Cabinet ratification, he/she may make
important decisions on his/her own and, by
announcing them publicly in his/her capacity as
chief spokesperson for the government, make the
ratification more likely.
29/03/2016 Labour Government 1964 to 1970 22
29/03/2016 Labour Government 1964 to 1970 23
The Prime Minister is the party leader
• The prime minister draws his/her strength from
the twin sources of party and public support.
• As party leader he/she becomes both a focus
for party loyalty and the chief party
spokesperson with the final voice in the
presentation of party policy and the
formulation of the election platform.
29/03/2016 Labour Government 1964 to 1970 24
29/03/2016 Labour Government 1964 to 1970 25
The most important national leader
• Because he/she is a party leader, he/she
normally becomes prime minister and thus the
most important national leader.
• He/she is the automatic spokesperson for the
nation in international and domestic affairs, the
person to whom people instinctively turn in
times of crisis or upon formal state occasions
for an authoritative expression of policy and
opinion.
29/03/2016 Labour Government 1964 to 1970 26
The supreme
example of the
Prime Minister
as national
leader,
Winston
Churchill, the
saviour of his
country and of
Western
civilisation.
29/03/2016 Labour Government 1964 to 1970 27
The Prime Minister is news
• Above all, as national and party leader, the
prime minister is news and, more than any
other politician, will benefit from that tendency
to personalise ideas.
• For many the prime minister is the party, is the
government and, at times, may become the
personification of the political nation, as
Churchill symbolized and articulated the
national resolve to continue the war in 1940
and after.
29/03/2016 Labour Government 1964 to 1970 28
Devaluation of the pound
• Devaluation of the pound was discussed by Wilson
and Callaghan in 1964.
• Devaluation would reduce the value of the pound
in relation to other currencies and therefore make
British exports cheaper and boost the national
economy.
• However, the Bank of England was opposed to
devaluation and therefore it did not take place in
1964 and not until 1967.
29/03/2016 Labour Government 1964 to 1970 29
Economic difficulties 1964 - 67
• There was little chance of the new Labour
government devaluing the pound anyway.
Wilson announced he opposed devaluation
and Callaghan (the Chancellor of the
Exchequer) acquiesced. The Deputy Prime
Minister, George Brown also ruled out
devaluation.
• All three, Wilson, Brown, and Callaghan agreed
that the pound would be defended to the very
end and also agreed that there would be no
discussion of it inside government.
29/03/2016 Labour Government 1964 to 1970 30
An essential book to
refer to for ‘The
Making of Modern
Britain’ is by Andrew
Marr. A key
ingredient for
passing the exams
with high grades.
29/03/2016 Labour Government 1964 to 1970 31
Import surcharges and tax increases
• The Labour government led by Harold Wilson
responded to the balance of payments crisis with
an import surcharge and tax increases, rather than
spending cuts, and thus fell out both with the City
of London and with international investors.
• Economic modernization was pursued through the
establishment of the Department of Economic
Affairs (DEA), which was to be responsible for
long-term planning while the Treasury ‘managed’
the economy.
29/03/2016 Labour Government 1964 to 1970 32
The dominant politician of the Sixties, Harold
Wilson, with the dominant pop group and
cultural trend-setters of the Sixties, The Beatles.
29/03/2016 Labour Government 1964 to 1970 33
Import surcharges and tax increases, 1964
• Callaghan, Chancellor of the Exchequer,
believed that the import surcharges
would go sufficiently far towards closing
the deficit so that he would not need to
restrain the domestic economy.
• However, Britain was accused of breaking
the rules of the General Agreement on
Tariffs and Trade (GATT).
29/03/2016 Labour Government 1964 to 1970 34
Callaghan’s first budget, November 1964
• In British politics, new Chancellors of the
Exchequer normally introduce budgets
(financial statements) in the House of
Commons soon after taking office.
• Callaghan, as the new Chancellor of the new
Labour government, introduced his budget in
November 1964 and it carried out Labour’s
manifesto promises to raise pensions and
abolish NHS prescription charges.
29/03/2016 Labour Government 1964 to 1970 35
James Callaghan, Labour’s Chancellor of the Exchequer
1964 – 67. From 1976 to 1979, Callaghan served as
Prime Minister but his government was defeated by the
Conservatives at the 1979 election.
29/03/2016 Labour Government 1964 to 1970 36
Corporation and Capital Gains Tax
• To pay for the raising of pensions and the
abolition of NHS prescription charges,
Callaghan raised the standard rate of income
tax, and increased duty on petrol.
• However, the following year, 1965, Callaghan
introduced corporation and capital gains tax.
The taxes were unpopular in the City and
Callaghan did not say how they would work, or
what rates he intended.
29/03/2016 Labour Government 1964 to 1970 37
Callaghan’s corporation and capital gains tax,
1965
• The City and overseas bankers reacted as
anyone would who knew that something nasty
was going to happen, but did not know exactly
what it was or how nasty it would be. They
panicked. Sterling continued to leave the
country and pressure mounted for the
Government to raise the Bank Rate (the official
interest rate).
29/03/2016 Labour Government 1964 to 1970 38
The City. London is the world’s main
financial centre, along with New York.
29/03/2016 Labour Government 1964 to 1970 39
Sterling weak, 1965
• When sterling is weak, but the Prime Minister
says he will preserve its value, it is taken
universally as a sign that the Bank Rate (the
minimum lending rate) is to be raised, so that
London’s higher interest rates will attract
money back to the City.
• Instead of raising the Bank Rate, Wilson
contacted President Johnson of the United
States and asked for a loan to help Britain until
the weak sterling crisis passed.
29/03/2016 Labour Government 1964 to 1970 40
Reaction from London’s financial markets, 1965
• Wilson and Callaghan delayed raising the Bank
Rate and reserves fell another £20 million, and
shares also slid.
• The Bank Rate was eventually raised but the move
failed: the Bank of England reported ‘massive and
growing’ sales of sterling.
• However, soon after the pound was saved by a $3
million loan arranged by eleven central banks.
29/03/2016 Labour Government 1964 to 1970 41
Troubled labour relations
• Trade unions during the 1960s and 1970s were
sometimes seriously at odds with management.
Management often failed to foresee trouble
and had no means of settling it simply and
quickly when it arose.
• Union leaders took advantage of this state of
affairs to compel the meeting of greater and
greater demands.
29/03/2016 Labour Government 1964 to 1970 42
Trade Unions in New Labour Britain
1997 to 2010 and since continue to
defend the rights of workers.
29/03/2016 Labour Government 1964 to 1970 43
The Labour Government and the Trade
Unions
• The Labour Government of 1964 – 70 claimed
to be able to speak the worker’s language, and
the Labour Party itself was mainly financed by
the unions.
• A Prices and Incomes Board was set up in 1966
with the power to regulate pay settlements.
Unions and management alike were invited to
sign a Declaration of Intent, the intent in
question being that they would keep down
respectively price rises and wage demands.
29/03/2016 Labour Government 1964 to 1970 44
‘This island is made of coal and surrounded
by fish’
• ‘This island’, Nye Bevan (Labour’s Health Minister
1945 – 50) once said, ‘is made of coal and
surrounded by fish; it would take an organizing
genius to engineer a shortage of either.’
• During the Sixties, coal was back in the middle of
the industrial and political argument, and its
fortunes, and the relations of the coal industry with
the providers of other fuels and with the
Government, were providing countless symbols of
Britain’s economic sickness and her hopes for a
cure.
29/03/2016 Labour Government 1964 to 1970 45
29/03/2016 Labour Government 1964 to 1970 46
The two sides of
industry:
management
versus unions,
Capital versus
Labour.
29/03/2016 Labour Government 1964 to 1970 47
The coal industry and its issues
• The coal industry had long been running down; it
was the crudest as well as the most cruel of all
ways of firing the homes and factories of Britain,
and the decision had been taken at the beginning
of the Sixties to reduce, and ultimately to end,
Britain’s reliance on it.
• Oil was providing more and more of Britain’s fuel
needs, and whatever the instabilities of the Middle
East, nobody seriously contemplated the
possibilities of supplies drying up, or even being
seriously interrupted.
29/03/2016 Labour Government 1964 to 1970 48
A coal mine in Yorkshire
29/03/2016 Labour Government 1964 to 1970 49
Coal and other sources of power in the
Sixties
• Coal, on the other hand, was becoming
increasingly expensive to provide, as more and
more seams were worked out and the political
dangers of pit-closing meant that more and more
hopelessly uneconomic mines were kept in
operation.
• The Wilson government nerved itself to work out a
future run-down for the coal industry that rested
on the provision of increasing quantities of cheap
power not only from oil, but from nuclear reactors
and from natural gas, discovered in large quantities
beneath the North Sea at the start of the Sixties.
29/03/2016 Labour Government 1964 to 1970 50
British miners in a coal mine in Wales.
29/03/2016 Labour Government 1964 to 1970 51
‘In Place of Strife’ 1969
• Wages were the only area where the Wilson
Government felt it could take effective
measures counter-inflationary measures. This
in turn implied the need for some action to
deal with trade union powers, a need made
more urgent by the rash of ‘unofficial’ strikes
that had followed the increasing
decentralisation of wage bargaining from
industry-wide to plant level during the Sixties.
29/03/2016 Labour Government 1964 to 1970 52
Shirley Williams, Wilson, Barbara Castle
29/03/2016 Labour Government 1964 to 1970 53
Barbara Castle’s ‘In Place of Strife’
• Barbara Castle, Employment Secretary, drew up
a White Paper entitled ‘In Place of Strife’
(January 1969) envisaged sweeping changes in
the relationship between unions and the state.
• Some of these were anathema to the unions:
for example, the Secretary of State would have
the power to order a 28-day ‘conciliation
pause’ before a strike could commence.
29/03/2016 Labour Government 1964 to 1970 54
The Labour party and the trade unions
• Although the Labour Party is not wholly a trade union party,
many constituency members are very active in their unions,
and loyal to basic trade union attitudes.
• The Parliamentary Labour Party – the Labour Members of
Parliament – are sometimes cut off from the grassroots of
the party, the constituency members.
• Under New Labour, the acceptance of market capitalism
adopted by its leadership, Tony Blair, Gordon Brown and
Peter Mandelson, was not always in accordance with
constituency party members, who remained faithful to social
democratic values.
29/03/2016 Labour Government 1964 to 1970 55
The class struggle: workers versus management.
Trade unions represent workers in an industry,
whereas the police defend the interests of
capitalist owners and managers.
29/03/2016 Labour Government 1964 to 1970 56
Seamen’s strike, June 1966
• After the General Election in March 1966, Labour
increased its majority from four seats to 98 seats
and therefore the Government decided to take on
the unions, the issue of unofficial strikes and the
increasing wage demands which were contributing
to the rise of inflation.
• The National Union of Seamen (NUS) began its
strike in May 1966 for better wages and conditions.
There is indeed often a conflict of interest between
the workers and managers. Managers wish to keep
wage costs low but to maximise profits with more
faster paces of working.
29/03/2016 Labour Government 1964 to 1970 57
Seamen’s strike, June 1966
• The NUS had always been one of the staunchest
supporters of the Labour Party. The attack on them
by the Labour Government led by Harold Wilson
deeply hurt them. It caused much bitterness
among seamen at the time and for long
afterwards.
• The Wilson Government invoked the Emergency
Powers Act since they were hard pressed on the
economic front. Harold Wilson went on television
and virtually declared war on the seamen.
29/03/2016 Labour Government 1964 to 1970 58
‘The history of all hitherto existing society is the
history of class struggles.’ Karl Marx. The class
struggle continued after 1945 around the world
including in Britain.
29/03/2016 Labour Government 1964 to 1970 59
Barbara Castle,
Employment Secretary
1968 – 70, introduced
the ‘In Place of Strife’
White Paper which
recommended penal
sanctions to enforce
strike ballots and a
‘cooling-off’ period for
unofficial strikes.
However, Castle’s White
Paper was defeated by
the Trades Union
Congress (TUC).
29/03/2016 Labour Government 1964 to 1970 60
Seamen’s strike, summer 1966
• Wilson said on TV: “To accept the seamen’s
demand would breach the dykes. This would
mean higher and higher living costs and we
would be priced out of the export market.”
• The seamen and indeed other workers who
took strike action in post-war Britain did not do
so lightly, since strikes cause hardship to the
worker and their families.
29/03/2016 Labour Government 1964 to 1970 61
Strikes are a product of capitalist society
• Industrial relations lawyers recognised then
and now that conflict was an inevitable
element in industrial relations. Conflict would
always arise between employer and employee,
since each is pursuing their economic freedom
to increase their income.
• Conflict arises over the economic freedom and
many other individual freedoms of workers.
29/03/2016 Labour Government 1964 to 1970 62
As long as class society exists, industrial
conflict will exist
29/03/2016 Labour Government 1964 to 1970 63
Class struggle
• The working person has only one commodity
to sell, that is her/his labour power and seeks
to sell it for the highest price.
• If the price is not right, then the working
person withholds her/his labour to obtain
better terms.
• The class struggle was a fact in Britain after
1945 and continues in the present day.
29/03/2016 Labour Government 1964 to 1970 64
Class struggle and affluence
• Consumption rose after 1955, hours of work
declined also until the 1980s when the long-
hours culture returned to Britain. Industry
came to be owned by diverse groups, replacing
the old type of individual owner.
• Many workers copied the lifestyles of the
middle-classes. But economic recessions and
public spending cuts from 1979 onwards
revealed that a class structure remained in
Britain.
29/03/2016 Labour Government 1964 to 1970 65
Britain after 1945 remained a class society:
upper, middle, and lower.
29/03/2016 Labour Government 1964 to 1970 66
The TUC’s response to Barbara Castle’s
White Paper
• In June 1969, the Trades Union Congress (TUC)
held a special congress in Croydon and put
forward their “Programme for Action”:
• To affirm that the trade union movement is
unalterably opposed to the proposal that the
Government should take powers to impose
statutory financial penalties on the workpeople
or on trade unions in connection either with
industrial disputes or with the compulsory
registration by trade unions of their rules.
29/03/2016 Labour Government 1964 to 1970 67
The TUC response to Barbara Castle’s ‘In
Place of Strife’ White Paper
• To affirm that some of the other proposals made
by the Government for changes in the system of
industrial relations and in the law relating to trade
unions could in principle help to improve industrial
relations and to promote trade union objectives.
• To empower the General Council to take further
action which they propose for the purpose of
assisting in the improvement of procedures and in
the settlement of disputes; and to submit to the
1969 Annual Congress for formal approval
appropriate changes in the relevant Rules of
Congress.
29/03/2016 Labour Government 1964 to 1970 68
Jack Jones, General Secretary of the Transport and
General Workers’ Union (TGWU), 1969 – 1978. Jones is
addressing a rally of pensioners in Trafalgar Square, 1974.
In 1977 an opinion poll stated that the majority of the
public believed Jones was “the most powerful person in
Britain.” Some historians have found evidence that Jones
passed Labour Party documents to the Soviet Union in
return for cash.
29/03/2016 Labour Government 1964 to 1970 69
Pressure on Barbara Castle to change the
policy
• Some Labour MPs tried to get Barbara Castle,
Employment Secretary, to soften her attitude. Her ‘In
Place of Strife’ White Paper was trying to impose prison
sentences to enforce strike ballots.
• However, Castle argued strongly that her White Paper
was crucial and that the policy simply had to be carried
out.
• Labour MPs were dispirited that Castle would not back
down and all the pleading with her, threats of revolt,
and fears of break-up of the Party, were of no avail.
29/03/2016 Labour Government 1964 to 1970 70
The response of James Callaghan, Home
Secretary
• James Callaghan, Home Secretary 1967 – 70, was a
former trade unionist and spoke out on behalf of the
trade unions. He said that the Cabinet could not ignore
the fact that its major policies were likely to be
defeated at the Labour Party and TUC Conferences in
the autumn. If that happened the tension between the
Government and the rest of the labour movement
would increase and become unbearable.
• However, the Government intended to go ahead with a
short Bill which incorporated some of the provisions of
the White Paper.
29/03/2016 Labour Government 1964 to 1970 71
The Trade Unions had founded the Labour Party
in 1900 and remained a main source of party
funding.
29/03/2016 Labour Government 1964 to 1970 72
The Labour Government’s Bill, spring 1969
• The Labour Government’s Bill proposed:
• It would establish the statutory right of every worker to
belong to a trade union.
• It would give the Government power to order an employer
to recognise a trade union when this had been
recommended by the Code of Industrial Relations (CIR).
• It would give the Government power to impose settlements
in anti-union disputes under pain of fines, but only after first
the TUC and second the CIR had failed to promote voluntary
agreement.
29/03/2016 Labour Government 1964 to 1970 73
The Labour Government’s Bill, 1969
• It would give the Government power to impose a 28-
day conciliation pause in an unconstitutional dispute
and to order that the status quo be restored and
maintained. These powers would also be backed with
financial penalties.
• It would remove the disqualifications from
unemployment benefit from workers laid off in
consequence of a dispute in which they were planning
no direct part.
29/03/2016 Labour Government 1964 to 1970 74
1969 Labour Party Conference
• The 1969 Labour Party Conference openly
declared its opposition to anti-union legislation
and to the Prices and Income Policy. Barbara
Castle’s White Paper had caused great tension
within the labour movement.
• In November 1969, Barbara Castle had said to
the Institute of Directors that: “Real power now
resides in the workshop and on the office
floor.” She further said: “Workpeople have a
veto they are increasingly prepared to use.”
29/03/2016 Labour Government 1964 to 1970 75
The Trade Unions continued to defend
working people and the welfare system.
29/03/2016 Labour Government 1964 to 1970 76

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Making of Modern Britain Wilson Governments 1964 to 1970

  • 1. Harold Wilson’s Labour governments 1964 - 70 N C Gardner MA PGCE 29/03/2016 Labour Government 1964 to 1970 1
  • 2. Harold Wilson, Labour prime minister 1964 – 1970; 1974 - 76 29/03/2016 Labour Government 1964 to 1970 2
  • 3. Key Dates • 1964 Labour wins the election in October and Harold Wilson becomes prime minister. The IMF loaned the UK £1 billion. • 1965 Race Relations Act. • 1966 The election gives Labour an increased majority in Parliament. 29/03/2016 Labour Government 1964 to 1970 3
  • 4. Harold Wilson’s Labour Party won by a small majority of just four seats in the General Election of October 1964. 29/03/2016 Labour Government 1964 to 1970 4
  • 5. October 1964: the new Labour government • In October 1964, Labour won the election beating the Conservatives and Harold Wilson was appointed prime minister. • The Conservatives after thirteen years in power had run out of steam. • Scandals had tainted the Tory reputation for integrity in 1963 – 64. 29/03/2016 Labour Government 1964 to 1970 5
  • 6. James Callaghan, Chancellor of the Exchequer 1964 – 67; Home Secretary 1967 – 70. Callaghan succeeded Wilson as Labour leader and prime minister in 1976. 29/03/2016 Labour Government 1964 to 1970 6
  • 7. Unemployment had reached over 800,000 in 1963 • Another significant factor why the Conservatives lost the October 1964 election was that unemployment had reached over 300,000 in 1963. • The failure of Britain’s application for membership of the European Economic Community (EEC) in 1963 was another factor in the Conservative defeat. 29/03/2016 Labour Government 1964 to 1970 7
  • 8. James Callaghan, Labour’s Chancellor of the Exchequer 1964 – 67, faced a serious balance of payments crisis. 29/03/2016 Labour Government 1964 to 1970 8
  • 9. Balance of payments in crisis in October 1964 • The balance of payments were in crisis in October 1964. The Treasury forecast for the year’s deficit was £800 million. • The Treasury briefs given to the new Chancellor of the Exchequer, James Callaghan, also pointed out that the deficit was deteriorating so that when the Conservatives left office it was running at a rate of £1,000 million a year. 29/03/2016 Labour Government 1964 to 1970 9
  • 10. The balance of payments deficit was worse than expected • The balance of payments deficit was worse than anything Wilson or Callaghan had expected, even though Labour had sharply attacked Conservative economic policy during the run-up to the election. • Harold Wilson said when asked what his greatest shock was on coming to power: ‘It was to discover that everything we’d said about our opponents was true.’ 29/03/2016 Labour Government 1964 to 1970 10
  • 11. Reading books such as ‘Britain since 1945’ by David Childs will be required at Advanced Level. Essentially the key passages for homework and exams. 29/03/2016 Labour Government 1964 to 1970 11
  • 12. The office of Prime Minister • If any single person occupies a position of supreme governing power, it is the prime minister. • And increasingly since the 1960s, the onset of the television age, the British Prime Minister has occupied a position which has become more and more presidential in style and presentation. • Many political scientists noted a marked presidential style during the premierships of Thatcher and Blair. 29/03/2016 Labour Government 1964 to 1970 12
  • 13. 29/03/2016 Labour Government 1964 to 1970 13
  • 14. The office of Prime Minister • The Prime Minister is the principal adviser to the crown and thus also the principal inheritor of its powers. • The Prime Minister is usually leader of the majority party as well as head of government. • Above all, the Prime Minister appoints the other members of the governmental team. 29/03/2016 Labour Government 1964 to 1970 14
  • 15. 29/03/2016 Labour Government 1964 to 1970 15
  • 16. The responsibilities of the Prime Minister • The Prime Minister may at any time call upon any government member to resign, or may move the person to a new post. • The Prime Minister must have an eye not only for the effectiveness of his/her administration and its inner harmony, but also and above all to its ability to attract and hold the support of his/her party and the public. 29/03/2016 Labour Government 1964 to 1970 16
  • 17. Prime Minister Blair with President George W Bush and their respective wives 29/03/2016 Labour Government 1964 to 1970 17
  • 18. Limitations upon the Prime Minister • To hold the support of the party and the public, a Prime Minister cannot pass over the other leading figures in the party. • There are always some leading party figures that a Prime Minister must include in the Cabinet because of the party and public support they command, and not only, if at all, because of their administrative ability. 29/03/2016 Labour Government 1964 to 1970 18
  • 19. 29/03/2016 Labour Government 1964 to 1970 19
  • 20. A Prime Minister has the freedom to decide • A Prime Minister has the freedom to decide which particular post should go to each of his/her senior colleagues. • In general, a Prime Minister is free to build as he/she wishes so long as the administration as a whole is reasonably representative of the principal political forces within the party. 29/03/2016 Labour Government 1964 to 1970 20
  • 21. 29/03/2016 Labour Government 1964 to 1970 21
  • 22. The Prime Minister’s special status • The Prime Minister’s special status continues throughout his/her tenure of office. • One cannot ignore the importance of the prime minister’s position as chairman of various committees and his/her power to draw up the agenda. • Subject to Cabinet ratification, he/she may make important decisions on his/her own and, by announcing them publicly in his/her capacity as chief spokesperson for the government, make the ratification more likely. 29/03/2016 Labour Government 1964 to 1970 22
  • 23. 29/03/2016 Labour Government 1964 to 1970 23
  • 24. The Prime Minister is the party leader • The prime minister draws his/her strength from the twin sources of party and public support. • As party leader he/she becomes both a focus for party loyalty and the chief party spokesperson with the final voice in the presentation of party policy and the formulation of the election platform. 29/03/2016 Labour Government 1964 to 1970 24
  • 25. 29/03/2016 Labour Government 1964 to 1970 25
  • 26. The most important national leader • Because he/she is a party leader, he/she normally becomes prime minister and thus the most important national leader. • He/she is the automatic spokesperson for the nation in international and domestic affairs, the person to whom people instinctively turn in times of crisis or upon formal state occasions for an authoritative expression of policy and opinion. 29/03/2016 Labour Government 1964 to 1970 26
  • 27. The supreme example of the Prime Minister as national leader, Winston Churchill, the saviour of his country and of Western civilisation. 29/03/2016 Labour Government 1964 to 1970 27
  • 28. The Prime Minister is news • Above all, as national and party leader, the prime minister is news and, more than any other politician, will benefit from that tendency to personalise ideas. • For many the prime minister is the party, is the government and, at times, may become the personification of the political nation, as Churchill symbolized and articulated the national resolve to continue the war in 1940 and after. 29/03/2016 Labour Government 1964 to 1970 28
  • 29. Devaluation of the pound • Devaluation of the pound was discussed by Wilson and Callaghan in 1964. • Devaluation would reduce the value of the pound in relation to other currencies and therefore make British exports cheaper and boost the national economy. • However, the Bank of England was opposed to devaluation and therefore it did not take place in 1964 and not until 1967. 29/03/2016 Labour Government 1964 to 1970 29
  • 30. Economic difficulties 1964 - 67 • There was little chance of the new Labour government devaluing the pound anyway. Wilson announced he opposed devaluation and Callaghan (the Chancellor of the Exchequer) acquiesced. The Deputy Prime Minister, George Brown also ruled out devaluation. • All three, Wilson, Brown, and Callaghan agreed that the pound would be defended to the very end and also agreed that there would be no discussion of it inside government. 29/03/2016 Labour Government 1964 to 1970 30
  • 31. An essential book to refer to for ‘The Making of Modern Britain’ is by Andrew Marr. A key ingredient for passing the exams with high grades. 29/03/2016 Labour Government 1964 to 1970 31
  • 32. Import surcharges and tax increases • The Labour government led by Harold Wilson responded to the balance of payments crisis with an import surcharge and tax increases, rather than spending cuts, and thus fell out both with the City of London and with international investors. • Economic modernization was pursued through the establishment of the Department of Economic Affairs (DEA), which was to be responsible for long-term planning while the Treasury ‘managed’ the economy. 29/03/2016 Labour Government 1964 to 1970 32
  • 33. The dominant politician of the Sixties, Harold Wilson, with the dominant pop group and cultural trend-setters of the Sixties, The Beatles. 29/03/2016 Labour Government 1964 to 1970 33
  • 34. Import surcharges and tax increases, 1964 • Callaghan, Chancellor of the Exchequer, believed that the import surcharges would go sufficiently far towards closing the deficit so that he would not need to restrain the domestic economy. • However, Britain was accused of breaking the rules of the General Agreement on Tariffs and Trade (GATT). 29/03/2016 Labour Government 1964 to 1970 34
  • 35. Callaghan’s first budget, November 1964 • In British politics, new Chancellors of the Exchequer normally introduce budgets (financial statements) in the House of Commons soon after taking office. • Callaghan, as the new Chancellor of the new Labour government, introduced his budget in November 1964 and it carried out Labour’s manifesto promises to raise pensions and abolish NHS prescription charges. 29/03/2016 Labour Government 1964 to 1970 35
  • 36. James Callaghan, Labour’s Chancellor of the Exchequer 1964 – 67. From 1976 to 1979, Callaghan served as Prime Minister but his government was defeated by the Conservatives at the 1979 election. 29/03/2016 Labour Government 1964 to 1970 36
  • 37. Corporation and Capital Gains Tax • To pay for the raising of pensions and the abolition of NHS prescription charges, Callaghan raised the standard rate of income tax, and increased duty on petrol. • However, the following year, 1965, Callaghan introduced corporation and capital gains tax. The taxes were unpopular in the City and Callaghan did not say how they would work, or what rates he intended. 29/03/2016 Labour Government 1964 to 1970 37
  • 38. Callaghan’s corporation and capital gains tax, 1965 • The City and overseas bankers reacted as anyone would who knew that something nasty was going to happen, but did not know exactly what it was or how nasty it would be. They panicked. Sterling continued to leave the country and pressure mounted for the Government to raise the Bank Rate (the official interest rate). 29/03/2016 Labour Government 1964 to 1970 38
  • 39. The City. London is the world’s main financial centre, along with New York. 29/03/2016 Labour Government 1964 to 1970 39
  • 40. Sterling weak, 1965 • When sterling is weak, but the Prime Minister says he will preserve its value, it is taken universally as a sign that the Bank Rate (the minimum lending rate) is to be raised, so that London’s higher interest rates will attract money back to the City. • Instead of raising the Bank Rate, Wilson contacted President Johnson of the United States and asked for a loan to help Britain until the weak sterling crisis passed. 29/03/2016 Labour Government 1964 to 1970 40
  • 41. Reaction from London’s financial markets, 1965 • Wilson and Callaghan delayed raising the Bank Rate and reserves fell another £20 million, and shares also slid. • The Bank Rate was eventually raised but the move failed: the Bank of England reported ‘massive and growing’ sales of sterling. • However, soon after the pound was saved by a $3 million loan arranged by eleven central banks. 29/03/2016 Labour Government 1964 to 1970 41
  • 42. Troubled labour relations • Trade unions during the 1960s and 1970s were sometimes seriously at odds with management. Management often failed to foresee trouble and had no means of settling it simply and quickly when it arose. • Union leaders took advantage of this state of affairs to compel the meeting of greater and greater demands. 29/03/2016 Labour Government 1964 to 1970 42
  • 43. Trade Unions in New Labour Britain 1997 to 2010 and since continue to defend the rights of workers. 29/03/2016 Labour Government 1964 to 1970 43
  • 44. The Labour Government and the Trade Unions • The Labour Government of 1964 – 70 claimed to be able to speak the worker’s language, and the Labour Party itself was mainly financed by the unions. • A Prices and Incomes Board was set up in 1966 with the power to regulate pay settlements. Unions and management alike were invited to sign a Declaration of Intent, the intent in question being that they would keep down respectively price rises and wage demands. 29/03/2016 Labour Government 1964 to 1970 44
  • 45. ‘This island is made of coal and surrounded by fish’ • ‘This island’, Nye Bevan (Labour’s Health Minister 1945 – 50) once said, ‘is made of coal and surrounded by fish; it would take an organizing genius to engineer a shortage of either.’ • During the Sixties, coal was back in the middle of the industrial and political argument, and its fortunes, and the relations of the coal industry with the providers of other fuels and with the Government, were providing countless symbols of Britain’s economic sickness and her hopes for a cure. 29/03/2016 Labour Government 1964 to 1970 45
  • 46. 29/03/2016 Labour Government 1964 to 1970 46
  • 47. The two sides of industry: management versus unions, Capital versus Labour. 29/03/2016 Labour Government 1964 to 1970 47
  • 48. The coal industry and its issues • The coal industry had long been running down; it was the crudest as well as the most cruel of all ways of firing the homes and factories of Britain, and the decision had been taken at the beginning of the Sixties to reduce, and ultimately to end, Britain’s reliance on it. • Oil was providing more and more of Britain’s fuel needs, and whatever the instabilities of the Middle East, nobody seriously contemplated the possibilities of supplies drying up, or even being seriously interrupted. 29/03/2016 Labour Government 1964 to 1970 48
  • 49. A coal mine in Yorkshire 29/03/2016 Labour Government 1964 to 1970 49
  • 50. Coal and other sources of power in the Sixties • Coal, on the other hand, was becoming increasingly expensive to provide, as more and more seams were worked out and the political dangers of pit-closing meant that more and more hopelessly uneconomic mines were kept in operation. • The Wilson government nerved itself to work out a future run-down for the coal industry that rested on the provision of increasing quantities of cheap power not only from oil, but from nuclear reactors and from natural gas, discovered in large quantities beneath the North Sea at the start of the Sixties. 29/03/2016 Labour Government 1964 to 1970 50
  • 51. British miners in a coal mine in Wales. 29/03/2016 Labour Government 1964 to 1970 51
  • 52. ‘In Place of Strife’ 1969 • Wages were the only area where the Wilson Government felt it could take effective measures counter-inflationary measures. This in turn implied the need for some action to deal with trade union powers, a need made more urgent by the rash of ‘unofficial’ strikes that had followed the increasing decentralisation of wage bargaining from industry-wide to plant level during the Sixties. 29/03/2016 Labour Government 1964 to 1970 52
  • 53. Shirley Williams, Wilson, Barbara Castle 29/03/2016 Labour Government 1964 to 1970 53
  • 54. Barbara Castle’s ‘In Place of Strife’ • Barbara Castle, Employment Secretary, drew up a White Paper entitled ‘In Place of Strife’ (January 1969) envisaged sweeping changes in the relationship between unions and the state. • Some of these were anathema to the unions: for example, the Secretary of State would have the power to order a 28-day ‘conciliation pause’ before a strike could commence. 29/03/2016 Labour Government 1964 to 1970 54
  • 55. The Labour party and the trade unions • Although the Labour Party is not wholly a trade union party, many constituency members are very active in their unions, and loyal to basic trade union attitudes. • The Parliamentary Labour Party – the Labour Members of Parliament – are sometimes cut off from the grassroots of the party, the constituency members. • Under New Labour, the acceptance of market capitalism adopted by its leadership, Tony Blair, Gordon Brown and Peter Mandelson, was not always in accordance with constituency party members, who remained faithful to social democratic values. 29/03/2016 Labour Government 1964 to 1970 55
  • 56. The class struggle: workers versus management. Trade unions represent workers in an industry, whereas the police defend the interests of capitalist owners and managers. 29/03/2016 Labour Government 1964 to 1970 56
  • 57. Seamen’s strike, June 1966 • After the General Election in March 1966, Labour increased its majority from four seats to 98 seats and therefore the Government decided to take on the unions, the issue of unofficial strikes and the increasing wage demands which were contributing to the rise of inflation. • The National Union of Seamen (NUS) began its strike in May 1966 for better wages and conditions. There is indeed often a conflict of interest between the workers and managers. Managers wish to keep wage costs low but to maximise profits with more faster paces of working. 29/03/2016 Labour Government 1964 to 1970 57
  • 58. Seamen’s strike, June 1966 • The NUS had always been one of the staunchest supporters of the Labour Party. The attack on them by the Labour Government led by Harold Wilson deeply hurt them. It caused much bitterness among seamen at the time and for long afterwards. • The Wilson Government invoked the Emergency Powers Act since they were hard pressed on the economic front. Harold Wilson went on television and virtually declared war on the seamen. 29/03/2016 Labour Government 1964 to 1970 58
  • 59. ‘The history of all hitherto existing society is the history of class struggles.’ Karl Marx. The class struggle continued after 1945 around the world including in Britain. 29/03/2016 Labour Government 1964 to 1970 59
  • 60. Barbara Castle, Employment Secretary 1968 – 70, introduced the ‘In Place of Strife’ White Paper which recommended penal sanctions to enforce strike ballots and a ‘cooling-off’ period for unofficial strikes. However, Castle’s White Paper was defeated by the Trades Union Congress (TUC). 29/03/2016 Labour Government 1964 to 1970 60
  • 61. Seamen’s strike, summer 1966 • Wilson said on TV: “To accept the seamen’s demand would breach the dykes. This would mean higher and higher living costs and we would be priced out of the export market.” • The seamen and indeed other workers who took strike action in post-war Britain did not do so lightly, since strikes cause hardship to the worker and their families. 29/03/2016 Labour Government 1964 to 1970 61
  • 62. Strikes are a product of capitalist society • Industrial relations lawyers recognised then and now that conflict was an inevitable element in industrial relations. Conflict would always arise between employer and employee, since each is pursuing their economic freedom to increase their income. • Conflict arises over the economic freedom and many other individual freedoms of workers. 29/03/2016 Labour Government 1964 to 1970 62
  • 63. As long as class society exists, industrial conflict will exist 29/03/2016 Labour Government 1964 to 1970 63
  • 64. Class struggle • The working person has only one commodity to sell, that is her/his labour power and seeks to sell it for the highest price. • If the price is not right, then the working person withholds her/his labour to obtain better terms. • The class struggle was a fact in Britain after 1945 and continues in the present day. 29/03/2016 Labour Government 1964 to 1970 64
  • 65. Class struggle and affluence • Consumption rose after 1955, hours of work declined also until the 1980s when the long- hours culture returned to Britain. Industry came to be owned by diverse groups, replacing the old type of individual owner. • Many workers copied the lifestyles of the middle-classes. But economic recessions and public spending cuts from 1979 onwards revealed that a class structure remained in Britain. 29/03/2016 Labour Government 1964 to 1970 65
  • 66. Britain after 1945 remained a class society: upper, middle, and lower. 29/03/2016 Labour Government 1964 to 1970 66
  • 67. The TUC’s response to Barbara Castle’s White Paper • In June 1969, the Trades Union Congress (TUC) held a special congress in Croydon and put forward their “Programme for Action”: • To affirm that the trade union movement is unalterably opposed to the proposal that the Government should take powers to impose statutory financial penalties on the workpeople or on trade unions in connection either with industrial disputes or with the compulsory registration by trade unions of their rules. 29/03/2016 Labour Government 1964 to 1970 67
  • 68. The TUC response to Barbara Castle’s ‘In Place of Strife’ White Paper • To affirm that some of the other proposals made by the Government for changes in the system of industrial relations and in the law relating to trade unions could in principle help to improve industrial relations and to promote trade union objectives. • To empower the General Council to take further action which they propose for the purpose of assisting in the improvement of procedures and in the settlement of disputes; and to submit to the 1969 Annual Congress for formal approval appropriate changes in the relevant Rules of Congress. 29/03/2016 Labour Government 1964 to 1970 68
  • 69. Jack Jones, General Secretary of the Transport and General Workers’ Union (TGWU), 1969 – 1978. Jones is addressing a rally of pensioners in Trafalgar Square, 1974. In 1977 an opinion poll stated that the majority of the public believed Jones was “the most powerful person in Britain.” Some historians have found evidence that Jones passed Labour Party documents to the Soviet Union in return for cash. 29/03/2016 Labour Government 1964 to 1970 69
  • 70. Pressure on Barbara Castle to change the policy • Some Labour MPs tried to get Barbara Castle, Employment Secretary, to soften her attitude. Her ‘In Place of Strife’ White Paper was trying to impose prison sentences to enforce strike ballots. • However, Castle argued strongly that her White Paper was crucial and that the policy simply had to be carried out. • Labour MPs were dispirited that Castle would not back down and all the pleading with her, threats of revolt, and fears of break-up of the Party, were of no avail. 29/03/2016 Labour Government 1964 to 1970 70
  • 71. The response of James Callaghan, Home Secretary • James Callaghan, Home Secretary 1967 – 70, was a former trade unionist and spoke out on behalf of the trade unions. He said that the Cabinet could not ignore the fact that its major policies were likely to be defeated at the Labour Party and TUC Conferences in the autumn. If that happened the tension between the Government and the rest of the labour movement would increase and become unbearable. • However, the Government intended to go ahead with a short Bill which incorporated some of the provisions of the White Paper. 29/03/2016 Labour Government 1964 to 1970 71
  • 72. The Trade Unions had founded the Labour Party in 1900 and remained a main source of party funding. 29/03/2016 Labour Government 1964 to 1970 72
  • 73. The Labour Government’s Bill, spring 1969 • The Labour Government’s Bill proposed: • It would establish the statutory right of every worker to belong to a trade union. • It would give the Government power to order an employer to recognise a trade union when this had been recommended by the Code of Industrial Relations (CIR). • It would give the Government power to impose settlements in anti-union disputes under pain of fines, but only after first the TUC and second the CIR had failed to promote voluntary agreement. 29/03/2016 Labour Government 1964 to 1970 73
  • 74. The Labour Government’s Bill, 1969 • It would give the Government power to impose a 28- day conciliation pause in an unconstitutional dispute and to order that the status quo be restored and maintained. These powers would also be backed with financial penalties. • It would remove the disqualifications from unemployment benefit from workers laid off in consequence of a dispute in which they were planning no direct part. 29/03/2016 Labour Government 1964 to 1970 74
  • 75. 1969 Labour Party Conference • The 1969 Labour Party Conference openly declared its opposition to anti-union legislation and to the Prices and Income Policy. Barbara Castle’s White Paper had caused great tension within the labour movement. • In November 1969, Barbara Castle had said to the Institute of Directors that: “Real power now resides in the workshop and on the office floor.” She further said: “Workpeople have a veto they are increasingly prepared to use.” 29/03/2016 Labour Government 1964 to 1970 75
  • 76. The Trade Unions continued to defend working people and the welfare system. 29/03/2016 Labour Government 1964 to 1970 76