Britain Transformed 1918-1979 PDF

Britain transformed, 1918-97 1.1 A changing political and economic environment, 1918-79 Key Questions To what extent did the political landscape change 1918-79? In what ways and with what success did governments deal with economic change 19...

Britain transformed, 1918-97 1.1 A changing political and economic environment, 1918-79 Key Questions To what extent did the political landscape change 1918-79? In what ways and with what success did governments deal with economic change 1918-79? How effectively did governments respond to change in the workplace 1918-79? This first section examines the political and economic changes that took place in Britain from the end of the First World War in 1918 to the election of Margaret Thatcher in 1979. It was a period when the basic assumptions of how the state, society and political parties worked and interacted together fundamentally changed. From 1918 onwards millions of working-class male voters were enfranchised, alongside women over 30 who met property qualifications. In 1928 all women over 21 were enfranchised on the same terms as men, and Britain became a mass democracy. This extension of the vote to working-class men, and eventually women, helped the development of the Labour Party, which formed its first government in 1924. As the Labour Party developed as an electoral force, the Liberal Party went into terminal decline, never forming a government after 1922 for the rest of the twentieth century. The interwar years saw a series of minority governments or coalition National Governments dominate politics. This was closely related to the other main feature of the period: the economic problems that Britain was encountering in the aftermath of the war. When the Second World War broke out in 1939, a national coalition government made up of Conservative, Labour and Liberal ministers united to win the war. After the end of the war a broad consensus about the role of the state, the management of the economy and the relationship between the government, industry and the trade unions emerged. Both Conservative, Labour and Liberal politicians broadly agreed on economic and social policy throughout the 1950s and 1960s. The goal of full employment and the involvement of trade unions in pay negotiations were accepted by all parties. But as economic performance declined at the start of the 1970s, and the number of working days lost to strikes and industrial protests increased, this political consensus began to change. During the 1970s Britain was gripped by major economic crises. The consensus that had existed since the end of the Second World War broke down. Rising inflation led to waves of trade union unrest, which neither the Conservative or Labour governments were able to defeat. By 1979 the election of Margaret Thatcher indicated an end to the post-war consensus and its rejection by much of the population. 1 Introduction  For over 200 years, the Conservative and Liberal parties (Tories and Whigs) had dominated British politics.  The gap between rich and poor widened. The working class needed an appeal = rise in Labour party.  The economic environment changed = Industrialization increased in the 19th century, so trade union membership increased as well = The Labour party was formed in 1900 to represent the unions.  Trade unions = an organization of workers who have come together to achieve common goals such as protecting the integrity of its trade, improving safety standards, achieving higher pay and benefits such as health care and retirement = better working conditions = maintaining or improving the conditions of employment  Ramsay MacDonald became the first Labour prime minister in 1924.  The biggest challenge was recovering after WW2  1945, = British people rejected the wartime leadership of Winston Churchill in favour of Labour’s Clement Attlee = Attlee showed socialist policies with the aim of creating full employment and a welfare state with free healthcare for all.  The consensus years: Broad agreement between Labour and Conservatives = attempting to manage the economy between 1945 and 1979 with varied success.  Both parties broadly agreed with each other on economic policy = that full employment was more important than tackling inflation was shattered in 1979 when Margaret Thatcher was elected prime minister. To what extent did the political landscape change 1918-79? This chapter explores the changing political landscape of Britain in the twentieth century and how the country’s political parties attempted to deal with the external and internal challenges that faced them through the following sections:  Changing party fortunes, 1918-31  The National government, 1931-45  The rise of consensus politics and political challenge, 1945-79 Changing party fortunes, 1918-31 2 The decline and fall of the Liberal Party: democracy and division George Dangerfield 1936 (historian) argues that the Liberal Party was doomed even before WW1:  Failure of liberalism to cope with the threat of trade union strikes  Suffragette militancy  Problems with Northern Ireland  1986, George Bernstein spoke of the failures of the party to adapt to more class-based voting habits. Working-class men rejected to vote by the Liberals - Representation Act 1918  Rise of the ‘New Liberalism’, with direct state intervention to support the vulnerable, poor, sick, young and old, could have maintained working-class support and kept Labour in third place.  Trevor Wilson, 1966, argues that the Liberal party was healthy in 1914, but was run over by ‘a rampant omnibus’ (the war). Liberals normally disliked government interference in the economy and in people’s lives, yet the war forced the Liberals to go against their values. They had to take economic control, conscription (compulsory enlistment for state service) and rationing to avoid defeat. David Lloyd George, in favour of the il-liberalism, drove out the tradition Liberal Henry Asquith as prime minister of a coalition government in December 1916. Many saw Lloyd George as a traitor to the party and continued to support Asquith as Liberal leader: the party was split and failed to reunite in time for the 1918 election.  The ‘Maurice debate’ 1918, = caused more bitterness between Asquith and Lloyd George. General Maurice (a French army general) wrote a public letter accusing Lloyd George of lying to parliament about the number of British troops on the Western Front; Asquith led the attack on Lloyd George when the issue was discussed in parliament, but failed to drive out the prime minister.  Lloyd George then relied on Conservative support in what became known as the ‘Coupon Election 1918’. The Coupon was a letter issued by Lloyd George and Conservative leader, Andrew Bonar Law, to parliamentary candidates who stood for the coalition. The conservatives who had not won an election since 1900, felt they needed ‘the man who won the war’ to boost their votes, while Lloyd George needed Conservative support because many Liberal MP’s stayed loyal to Asquith. The Liberals were divided into two camps - wartime divisions, no sense of national unity and patriotism that other parties had.  Representation of the People Act 1918 = Historians are divided on the extent this caused the downfall for the Liberal Party. For some it paved the way for the rise of the Labour party at the expense of the Liberals, while others argue it had only a limited impact. The Act meant that all men over the age of 21 were allowed to vote, with no wealth or property restrictions (considered unacceptable that many men who had fought in the war would not be allowed to vote under the terms of the 1884 Reform Act). The act also allowed some women to vote in a general election for the first time as a reward for their wartime contribution. Until 1928, there were several restrictions on which women could vote, the most important being that they had to be aged 30 or over.  Women then made up 43% of the electorate.  Electorate voters: 7.7 million in 1910 to 21.4 million in 1918. The industrial working classes now made up 80% of the electorate.  In the 1960s, Henry Pelling argued that the Labour Party was bound to benefit from the franchise extension due to a growing tribal working-class identification with Party issues = ‘Labourism’.  However, Duncan Tanner and Michael Hart’s analysis of the electorate reveals only a small increase in the working-class majority in 1918, from 76% to 80%. This is because the removal of residency restrictions for voting affected younger men of all classes rather than just manual workers. They also point out that the working-class vote was split between all three parties throughout the 1920s.  Working-class women were most likely to vote Conservative = stood for stability and family values.  Historians such as Paul Adelman have explained the fall of the Liberals with a focus on mistakes made and problems that faced the party after 1918:  The Asquith-Lloyd George split was never healed and had an impact on the party: in May 1920, Asquith Liberals voted to eject Lloyd George supporters from the Leamington party conference, partly because Lloyd George had made unsuccessful efforts to covert the temporary Liberal- Conservative coalition into a permanent anti-Labour ‘Centre Party’.  Rumours of corruption ‘cash for honours’ = when honours (usually titles like Lords) are granted in exchange for political donations or direct cash payments to politicians). Lloyd George had gathered a huge political fund through the sale of honours (a knighthood could be bought for £10,000) but refused to share barely any of it with the Liberal Party until they started to follow his ideas and gave his supporters top party jobs in place of Asquith’s men. Without this money, the Liberals could not 3  maintain an effective local party machine; nor could they afford to field enough candidates at general elections in 1922, 1923, 1924. Only when Asquith stepped down as leader in 1926 did Lloyd George finally agree to hand over substantial sums of money to the party. The party then put forward some impressive, innovative policies but, by this point, it was too late: even though the Liberals could afford to field as many candidates as their two rivals at the 1929 election, Labour had replaced them as the preferred party.  Warmongering against Turkey in September 1922 the ‘Chanak incident’ = the Turks wanted to force Greek, British and French troops out of occupied positions in Turkey. When Turkish troops marched on British positions Lloyd George (and Churchill) wanted war. Army generals and the public opposed war and a negotiated settlement was agreed, led most Tories to eventually reject the coalition. Lloyd George was forced to resign as prime minister the following month and led a much smaller group of Liberal MP’s after the general election.  The first past the post (An electoral system in which the candidate receiving the highest number of votes in a constituency is returned to parliament. None of the other votes cast in that constituency count for anything) favoured a two-party contest; despite sizeable electoral support, the Liberals failed to convert this into parliamentary seats and remained a small third party in the 1930s and beyond. The failure of the liberals to explore a revision of the FPTP system in 1917-18 made life very difficult for them in the 1920s: a system of proportional representation (an electoral system in which the percentage of seats allocated to a party in parliament matches the percentage of votes gained in an election. Only votes for parties who gain too small a percentage to claim a seat are wasted) would have helped the party avoid such decline.  1914 = the Act granting Home Rule (The principle or practice of self-government in the internal affairs of a dependent country or other political unit) to Ireland had been suspended for the duration of war.  Earl Rising 1916 = Group of Irish Nationalists seized the General Post Office in Dublin and presented a signed declaration announcing the establishment of the Irish Republic. The ‘rebels’ hoped for: 1. an invasion of Ireland by German forces 2. A nationwide rising by the Irish people. The Germans were against sending military force but cooperated with the arms problems, 20,000 rifles with ammunition were to be sent but the British authorities had broken the German codes. Four days of fighting. Republicans overwhelmed by British force and stopped. Became a ‘terrible beauty’ = great modern Irish legend. The individuals who had signed the proclamation, plus eight others, were all shot. Lloyd George communicated with Redmond, the Irish Nationalist leader, and Carson, leader of the Ulster Unionists (political party for Northern Ireland.) Main objective = prevent the Irish problem from undermining the British war effort. Lloyd George compromise with both, ‘Heads of Agreement’, granting immediate Home Rule for the 26 counties of southern Ireland, while the Six Counties of Ulster remained part of the United Kingdom until after the war when their permanent constitutional status would be decided by an imperial conference. Lloyd George gave Redmond the impression that the separation of Ulster from the rest of Ireland was purely temporary: and reassured Carson it would be permanent. Lloyd George and Liberal party lost support from the Irish Nationalists. Summarized: Split between Asquith and Lloyd George Liberal values been compromised by restrictive government measures during the war. Liberalism lost its moral authority. Radical but not revolutionary The Liberal Party strapped for cash Used to rely on Irish Nationalist support, lost after the Sinn Fein boycotted the House of Commons in 1918 and Home Rule for southern Ireland was implemented in 1922 Decline in enthusiasm among the party’s grassroots workers in the constituencies The ‘first past the post’ electoral system The rise of the Labour party: trade unions and moderate leadership  The Labour Party (known as the Labour Representation Committee until 1906) had only been formed in 1900. It had done modestly well in the pre-war general elections, but it was very much the junior party to the Liberals before 1918. 4  1923 election = Labour gained more votes than the Liberals for the first time and, in 1924, Ramsay MacDonald became the first Labour prime minister.  Labour became the largest parliamentary party in May 1929 and MacDonald became prime minister for the second time.  There are several reasons for this rise:  Unlike the Liberals, Labour emerged united at the end of the war: there had been splits in 1914 over whether to support the war, but in 1917 Labour ministers in the wartime coalition resigned and the party was reunited.  The war also led to a huge growth in trade union membership. This was significant as the unions funded the party from membership fees and provided the vast bulk of party membership. Thanks to union banking, Labour, unlike the Liberals, ran a successful local political machine and fielded similar numbers of candidates to the Conservatives in the 1922, 1923 and 1924 elections.  Historian Ross Mckibbin has argued that Labour’s ability to represent a growing sense of working- class identity helped to win supporters from the Liberals.  Other historians have pointed to the significance of the Liberal split: Asquith backed a minority Labour government after the 1923 election because he thought it would do a bad job and would be forced to rely on Liberal support (Lloyd George feared losing a separate Liberal identity as the party of opposition to the Conservatives and attacked Labour). Asquith made a mistake, MacDonald ruled with economic caution and impressed everyone with his conduct of foreign affairs. Although MacDonald made it clear that the country was safe in Labours hands, he was compelled to resign.  A left-wing journalist, J.R. Campbell, had written an article in the Communist newspaper Workers’ Weekly, calling on working-class soldiers not to shoot at fellow workers on the other side in any future war. When Campbell was threatened with prosecution for inciting mutiny (encouraging open rebellion), MacDonald used his political influence to have the case dropped. MacDonald now faced - and lost - a vote of no confidence. His resignation resulted in a general election. Four days before the election, the Daily Mail printed a letter supposedly written by Gregory Zinoviev (a leading Soviet politician) to the British Communist Party, which said that Labour had promoted Communism by recognising the Soviet Union. The Campbell case and Zinoviev letter clearly helped boost Conservative votes in 1924, but Labour won the 1929 election in part because of MacDonald’s earlier economic good judgement. Conservative success: Stanley Baldwin and ‘Safety First’  Given that around 80% of the British electorate were working class and that the Conservatives are often seen as the party of wealth and privilege, Conservative success is an interesting historical problem.  Conservative success between the wars was in part due to a successful rebranding of the party, which began in 1872 under the leadership of Benjamin Disraeli. He promoted the Conservatives as a ‘one- nation tory’ (that views society as organic and values paternalism and pragmatism), party of empire, national defence and patriotism, things that appealed to many working-class voters. The conservatives value paternalism and pragmatism.  Stanley Baldwin was able to build upon this rebranding after he became prime minister in 1923. Despite being from wealth from his family’s steel company, he presented himself as an ordinary man of the people.  He pioneered the use of radio to talk directly to the people and had a reputation for calling a spade a spade (calling something as it is and not beating around the bush.)  He ran his factories fairly and was keen to promote harmony between workers and employers in the British economy.  He promoted class-based politics.  Baldwin was a key speaker against Lloyd George at the October 1922 Carlton Club meeting at which the Conservatives abandoned the coalition. He won over Lloyd George’s remaining supporters by adopting protectionism (the use of import taxes (tariffs) to make foreign goods more expensive than domestic ones. This protects domestic producers from foreign completion but increases the cost of imports, including food items) in 1923 then dropping it after it was rejected by voters in the 1924 election; in doing so, Baldwin removed the one issue that had reunited the Liberals: free trade (the rejection of tariffs. this was opposed by British arable landowners, who suffered from cheaper imports of grain from abroad, but promoted by industrialists who wanted to sell their products abroad cheaply). Although Baldwin was accused of being dull (his lacklustre 1929 election slogan: ‘Safety First’), many working-class people respected his financial capability. His aim to attract the remaining 5  wealthy, middle-class Liberals to the Conservatives as the best defence against Labour socialism succeeded brilliantly.  Carlton Club meeting: a meeting of Conservative Party MP’s, held on 19 October 1922. The meeting was held in order to discuss whether the Conservatives should stay in coalition with Lloyd George’s Liberals. Stanley Baldwin and Andrew Bonar Law spearheaded the opposition to the coalition and, when the MP’s voted on whether to remain part of the government, the opposition won by 187 votes to 87. When the meeting ended, Conservative ministers who had served in the coalition and votes against it resigned from government, triggering Lloyd George resignation. Bonar Law was declared the new Conservative leader and became prime minister.  The conservatives also benefited electorally in the interwar period from the following:  Until the 1948 Representation of the People Act, the ‘plural vote’ (one person might be able to vote multiple times in an election) allowed Oxford and Cambridge Universities and the City of London to return 14 MPs, almost always Tory, between them. Because of a loophole, graduates who resided for part of the time in a university town were able to vote in more than one constituency, and some landowners were able to vote in three. Those who resided in these places were more likely to have connections with the establishment and vote Conservative.  In 1921, the Irish Free State failed independence from the UK. While the Liberals lost the support of around 80 Irish Nationalist MPs, the Conservatives continued to receive the support of Northern Irish MPs.  The first post the post system, together with the uneven distribution of votes in different constituencies benefited the Conservatives. In 1918, it took an average of 15,943 votes to return each Conservative MP, 29,868 for a Labour MP and 36,116 for a Liberal MP. The National government, 1931-45  National government = a coalition government, especially one subordinating party differences to the national interest in a time of crisis - Britain under Ramsay MacDonald in 1931-35.  In October 1929, the Wall Street stock exchange in New York collapsed, leading to a global decline in trade and production.  Almost all Labour ministers and MPs disagreed with making cuts in spending (especially a proposed cut of 10% on unemployment benefits), which were thought necessary to avoid economic catastrophe. But, in 1931, MacDonald and his Chancellor or the Exchequer, Philip Snowden, saw no option but to press ahead with the cuts.  The Wall Street Crash: 28-29 October 1929, the American stock market saw $30 billion wiped off the value of stocks and shares, almost a quarter of the total value of all assets. The crash was due to fears that shares were over-priced: owners tried to sell them before they lost any more value. The price of shares had risen steadily throughout the 1920s but a slowdown in sales in important industries such as cars and houses, together with concern about the extent of borrowing to pay for shares, led to a loss of confidence in the market. The collapse in share prices meant many borrowers could not repay loans to banks. American banks recalled international loans in an often unsuccessful bid to avoid going bust. The banking crisis, together with a sharp fall in demand for imports, meant the economic depression spread throughout the world. 6  MacDonald and his supporting ministers were expelled from the Labour Party and a popular radical, George Lansbury, became the new party leader. MacDonald, like Lloyd George, had become a prime minister without a party and was ready to resign.  24 August = MacDonald announced that he would continue to serve as the prime minister of a ‘National government’ to face the emergency. He had been persuaded to stay on by King George V, largely due to his sense of patriotic duty: to have governmental instability at such a time could only make things worse for Britain. The Conservatives could have formed a separate government, yet chose to support MacDonald: Baldwin saw that MacDonald would bear the blame for unpopular economic measures, leaving the way clear for a Conservative triumph when the situation improved. The British public overwhelmingly backed calls for national unity in the face of the economic crisis and voted for the National government in huge numbers.  As MacDonald’s health began to fail Baldwin effectively served as prime minister from 1931.  When MacDonald finally resigned in 1935, Baldwin was elected for a third time. His premiership got off to a rocky start: a plan to appease fascist Italy by giving them 2/3 of Abyssinia (modern Ethiopia) was hugely unpopular when leaked to the press. Baldwin, and Foreign Secretary Samuel Hoare, had to abandon the plan and pledge to work with the League of Nation (a forerunner of the United Nations) to achieve peace in Abyssinia.  Baldwin's also under attack from all sides over rearmament: some wanted rapid rearmament to face the growing threat of Nazi Germany; others wanted disarmament and clear co-operation with the League of Nations.  In 1935, Baldwin offered the electorate a clever, if unpopular, fudge: Britain would increase spending on rearmament to fulfil any military requests from the League. No one in 1935 (Churchill aside) could have predicted the course of events that culminated in the outbreak of the Second World War in September 1939, yet Baldwin was attacked in the 1940s and 1950s as one of the ‘Guilty Men’ who had appeased Hitler.  Baldwin was fortunate to recover his popular reputation before he stepped down in May 1937. He advised the popular playboy King Edward VIII to resign the throne rather than attempt to marry Mrs Wallace Simpson, an American divorcée, while king. The monarch was still head of the Church of England (which frowned upon divorce) and divorce was a source of social stigma into the 1960s. Baldwin gained popular credit for the calm, dignified way in which he managed a potential crisis.  Baldwin was also fortunate to hand over the reins to Neville Chamberlain at a difficult time. Chamberlain was well-linked for his successful creation of new homes and for his assured, personable performances on cinema newsreels as Chancellor of the Exchequer. His attempts to find ‘peace in our time’ were also hugely popular with the British public.  In September 1938, he flew three times (when travel was very rare) to meet Adolf Hitler to resolve a crisis brought on by Hitler’s expansionism. Chamberlain thought he had been successful but was unfortunate to have to deal with a cruel, lying megalomaniac (obsessive desire for power). Churchill was critical of Chamberlain’s appeasement of Hitler from the start, many others poured contempt on his lack of courage/confidence once war had broken out. Yet there were many solid reasons for Chamberlain’ policy, not least the memories of the last war and the fear of modern weapons, especially bombing raids.  Once the war began in earnest (after the so-called ‘Phoney War’, where nothing much happened in Western Europe until April 1940), it was clear that Chamberlain did not have the confidence of parliament to wage a victorious struggle. Having waited so long to be prime minister, he was forced from office after a vote of no confidence and replaced with the man who had consistently urged armed careful observation against Hitler: Winston Churchill. Churchill was appointed thanks to his backing among Labour and Liberal MPs; the king would have preferred Lord Halifax (who almost certainly would have left Britain to a negotiated peace with Germany). The failure of extremism  The national government was meant to be a temporary solution to the national crisis of economic depression but continued through the Second World War until 1945.  One reason why the National government lasted for 14 years was that it held the centre ground while extreme political parties failed to attract support.  Oswald Mosley had been a promising Labour MP before he became disillusioned with the lack of innovation in tackling the economic crisis. He found the New Party to promote his own ideas at the 1931 election, but only gained 0.2 percent of the vote. After this abysmal result, he became 7  disillusioned with democracy itself. In 1932, he formed the British Union of Fascists (BUF), with the aim of emulating the Italian dictatorship of Benito Mussolini. The BUF was racist and anti- Semitic; in October 1936, a BUF march through East London, an area home to too many Jewish and Irish immigrants, turned into a violent clash that became known as ‘the Battle of Cable Street’. The struggle against racism in the Second World War made Mosley and the BUF even more unpopular. Mosley was imprisoned for three years and the BUF was banned. He was released in 1943, when he was deemed not to be a threat to the war effort.  The far left was marginally more successful. The Communist Party of Great Britain (CPGB) gained one MP in 1924 and 1935, and two in 1945. However, with a maximum 0.4 percent of the vote, it is clear that British voters rejected communism. This was largely due to the traditions and strength of the trade union and Labour movements. This home-grown socialism was far more practical than the ideological, revolutionary socialism advocated by communists. The CPGB gained some support due to the role of Soviet Russia (the only communist state) in defeating Nazi Germany. However, the CPGB had clearly placed the needs of Moscow ahead of Britain: until Hitler attacked Russia in June 1941, the party had followed Soviet orders to oppose the war (a cynical Nazi-Soviet pact for peace had been agreed in August 1939). The only way forward for the CPGB was in a few inner-city councils, and through ‘entryism’ into the Labour Party: communists would conceal their true loyalties and infiltrate the Labour Party to try and steer national politics further to the radical left. This became problematic for labour later in the century. How far did the Second World War affect British democracy? As with the First World War, there were some temporary changes in government and legislation designed to facilitate the waging of ‘total war’ = a war which is unrestricted in terms of the weapons used, the territory or combatants involved, or the objectives pursued, especially one in which the accepted rules of war are disregarded.  A War Cabinet of just five men (Churchill, plus two Conservative and two Labour ministers) was set up to make quick decisions about the war  New ministries were created: Lord Beaverbrook, a newspaper magnate with no prior political experience, became Minister for Aircraft Production. Churchill approved of men with a proven track record of getting things done rather than submissively following procedure  The Emergency Powers Act (May 1940) gave wide-ranging powers over the British people to the government  Churchill took the post of Minister for Defence as well as prime minister. His role = he oversaw the home front and played a leading role in military strategy. His most significant success was in the maintenance of domestic morale and purposefulness: his speeches were inspirational, as were his will to win and his dynamic leadership. He was careful to maintain the support and prestige of parliament in a way that Lloyd George had not done; there was no question of these expedient wartime changes outliving the war. However, there were some political changes that Churchill, despite this popular and essential role as a war leader, was powerless to counteract. The rise of consensus politics and political challenge, 1945-79 8 Why did Labour win the 1945 election by such a large margin? Many people, Labour leader Clement Attlee included, were shocked by the results of the first election since 1935, The British voters decided that, although Churchill had won the war, he was not the best man to lead the nation in peacetime.  Conservative defeat was due, in part, to voters’ memories of the failure to build a ‘home fit for heroes’ after the First World War and of the failure to solve the Depression in the 1930s.  It was also due to a lacklustre election campaign by Churchill, who assumed victory was assured; he was criticised for tarnishing Labour as a dangerous party who, if elected, might use secret police to enforce radical change. Given the excellent service by a range of Labour ministers during the war, this claim rang false.  Attlee worked hard to secure the votes. After victory in Europe in May 1945, he broke off the coalition to fight the election as a separate party. Labour was far more in tune with the demands and expectations of the British people after six years of suffering and sacrifice: unlike the Conservatives, Labour promised to implement the recommendations of the 1942 Beverage Report in its 1945 manifesto, ‘Let Us Face the Future’.  Despite Churchill’s claims, Labour was seen as a responsible party of government thanks to the wartime contributions of its leading figures:  Attlee had served with distinction as deputy prime minister, often acting as prime minister in the Commons while Churchill was busy with war business  Ernest Bevin, with his trade union roots, successfully minimised strikes and maximised output as Minister for Labour. He became Foreign Secretary after the war  Herbert Morrison served as Home Secretary, his finest work was the coordination of efforts to cope with the effects of the Blitz. He became deputy prime minister after the war  Hugh Dalton was respected for his economic competence as Minister for war Economy and then President of the Board of Trade. He became Chancellor of the Exchequer after the war. Why was there a post-war consensus?  The Second World War contributed to short-term Labour success; however, it shaped British politics in a more profound sense for a generation = it brought Conservative and Labour ministers together in a successful National government.  This was an important foundation for the ‘post-war consensus = broad agreements  The war represented the victory of democracy over racism and the success of collectivism (a political approach to problems whereby individuals give up some rights to work with the state for a common purpose. This is different to fascism, where the will of the state is imposed on individuals). The common experience of a successful state-led struggle to overcome difficult challenges caused the British public, and the Conservative MPs, to accept economic and social policies that would previously have been branded ‘socialist’ or ‘radical’.  The most important of these were the nationalization (the process by which governments take over the ownership and running of private firms) of some major industries (including coal-mining) and the creation of a National Health Service.  Although the Conservatives were in power for 17 years between 1945 and 1979, they hardly went against Labour’s state management and provision. One reason for this is that the Labour reforms were not as radical or socialist as they might have been.  Labour had a huge majority in 1945 and could have implemented a thorough socialist change of the economy and society. Yet Attlee and his colleagues never attempted this. Instead, they wanted to create a ‘mixed economy’ or ‘middle way’ to prevent the failures and curb the excesses of capitalism that had led to misery for many in the 1930s. This was a compromise that many Conservatives could accept.  Another reason is that several leading Conservatives were genuinely progressive (they wanted to improve life for the average person) as a result of their experiences during the war and the Depression.  Aged 77 in 1951, Churchill was too old to change his ways, yet, mindful of defeat in 1945, he was keen to make himself electable as a peacetime prime minister  Anthony Eden (prime minister 1955-57) was a ‘one nation’ Tory (Benjamin Disraeli coined this term in the 1840s and called for Conservatives to care for the poorer sections of society as a father cares for his children. He also called for them to build positive relations with the poor based on shared 9  identities such as national greatness.) who was anxious for social cohesion to ensure Britain was taken seriously in foreign affairs  Harold Macmillan (prime minister 1957-63) was shocked at the suffering of his Stockton constituents in the 1930s. In 1938, he wrote a book called The Middle Way in which he set out his sympathy with more radical solutions.  Richard A. Butler (Chancellor of the Exchequer 1951-55) was a leading reformer who was the driving force behind the 1944 Education Act.  Building the ‘middle way’: Attlee’s post-war government  Although Attlee’s government shied away from a genuine socialist revolution, they built on the experience of wartime planning with economic initiatives:  Nationalisation: Bank of England (1946), air transport (1946), cable and wireless (1947), coal- mining (the National Coal Board took over 1,500 collieries in 1947), public transport (under the British Transport Commission in 1948), electricity generation (1948), gas (1949), iron and steel (after bitter Tory opposition, in 1951).  The government’s aim in taking ownership of these industries was:  to improve the efficiency of failing industries and save jobs  to improve worker-employer relations in industries with a poor track-record such as coal mining  to put the needs of the community above profit (for example, through the creation of a national transport system that provided a service even for a remote settlements).  Planning: The Economic Planning Council was established in July 1947 with several committees to check on issues such as levels of production and imports. The National Agriculture Advisory Service gave advice to farmers on how best to use subsides to improve efficiency. Many Labour MPs felt planning should have been far more ambitious.  Control measures: A period of austerity (a hard and disciplined approach. The word summed up the tough times the British public went through in order to restore economic stability after the Second World War) was enforced by Chancellor Stafford Cripps (1947-50) to aid Britain’s economic recovery: wartime rationing on several foods was extended until 1951 (tea, sugar, butter, bacon); even some state foods (bread 1946-48), which had not been rationed during the war, were included in the ‘fair shares’ scheme. Coal was rationed during the harsh winter of 1947-48, and building materials were only allocated to essential reconstruction projects and industrial recovery. Controls were placed on maximum levels of rent, profits and interest rates. Cripps did not cap wage increases as such, but he did successfully negotiate with trade unions to voluntarily waive pay rises.  The government received criticism from the right (for too much interference and spending), the left (who thought there was not enough planning or real change) and, by 1950-51, from the people who States’ European Recovery Programme (usually called Marshall Aid), enabled some remarkable reforms in welfare provision at a time of severe economic difficulty. How much political consensus was there by 1979?  In 1979, the British voted for an end to the post-war consensus.  Margaret Thatcher became Britain’s first female prime minister. She wanted to kill of ‘creeping socialism’ in the Conservative Party and in Britain.  There are several reasons why many Britons, despite all the social advances that had been made since 1945, rejected the post-war consensus:  The Keynesian economic policies (An economic theory named after John Maynard Keynes. He argued that governments should borrow in a time of recession to spend and stimulate demand and growth in the economy. This went against the classic view that the government should aim to balance the books and not interfere too much on the economy) followed by governments since the war was felt to be failing by the early 1970s. Leading Conservatives began to call for a return to more free- market solutions to problems such as inflation and unemployment. Efforts to implement such solutions inflamed already tense relations between workers and employers. Conservatives increasingly felt that trade unions had gained too much power and that something must be done to stop them using strike action to hold a democratically elected government to ransom for higher wages. 10  Edward Heath (Conservative prime minister 1970-74) had tried but failed to break the post-war political consensus. Labour Prime ministers Harold Wilson (1964-70 and 1974-76) and James Callaghan (1976-79) were too dependent on trade union support to effectively tackle the growing problems.  The lack of success or choice on offer from both sides allowed for a remarkable comeback of support for the Liberal Party under the dynamic leadership of Jeremy Thorpe. Unfortunately for him, just as in 1929, the FPTP system prevented the recovery of the Liberals in parliament.  It took a ‘Winter of Discontent’ in 1978-79, where rubbish piled up on city streets and the dead went unburied in Liverpool, before the British electorate opted for Thatcher’s tough solutions. Chapter Summary  In 1918 Britain saw the extension of the franchise.  When war broke out with Germany in 1939, This radically altered the political landscape in Neville Chamberlain presided over a failed Britain. The main beneficiary of this change was military expedition to Norway that saw his the Labour Party. government fall in May 1940.  The war had elevated Lloyd George to the office  Chamberlain’s replacement was Winston of prime minister but the coalition he led Churchill, a unifying figure who led Britain to unravelled in peacetime. Lloyd George was victory in 1945. eventually deposed by a meeting of the  From 1945 to the mid-1970s a consensus Conservative Party in 1922 which voted to end the existed in British politics which favoured coalition. nationalisation, full employment, an  Labour had governments in 1924 and 1929 but acceptance of a certain degree of inflation both were minority governments, making it and a conciliatory approach to union difficult for them to legislate effectively. disputes.  The Liberal Party went into decline in the 1920s,  In 1945 the Labour Party introduced the eclipsed by Labour who took on the mantle of most far-reaching social reforms to health, social reform. education, housing and the workplace that  Between 1924 and 1929 Stanley Baldwin’s Britain had ever seen. Conservative Party dominated British politics.  By 1951 an inability to end rationing led to  Ramsay MacDonald’s second administration was the end of Labour rule and the start of 13 split over the question of welfare cuts in 1931 and years of Conservative dominance. the government fell. MacDonald and Snowden  Throughout the 1960s inflation and strike formed a National Government dominated by the days steadily increased. Conservatives but led by MacDonald.  By the 1970s both Conservative and Labour  Fascism and communism failed to take hold in governments were facing huge challenges Britain. from the unions.  Until 1938, most British people were keen to  Edward Heath attempted to shift to the right avoid war with Germany, having traumatic and break the consensus in 1970 but was memories of the First World War. The Peace ultimately unable to do so. Ballot and the Peace Pledge Union were clear  Margaret Thatcher finally moved the signals to politicians that aggression would not be Conservative Party to the right in popular. Nevertheless, Britain did rearm from the mid-1970s and won the 1934 onwards. general election in 1979. 11 In what ways and with what success did governments deal with economic change between 1918 and 1979? This chapter examines the economic challenges of the period through the following sections:  Post-war boom, crisis and recovery: the response to economic problems, 1918-31  Response to economic problems of the Great Depression and Second World War  The economic legacy of the Second World War: the managed economy 1939-51  The response to economic challenges, 1951-79 While the seriousness of certain economic problems changed over time, the range of issues remained roughly the same:  the level of government debt (and extent to which government spending exceeded revenue)  the balance of payments (the extent to which the value of imports exceeded that of exports)  the value of the pound against other currencies  the rate of inflation (the increase in average prices over time - a little is healthy but a lot in dangerous)  the level of unemployment  the competitiveness of British industry against international rivals  the stability of worker - employer relations Britain experienced an extremely tough economic situation between 1918 and 1979 due to growing industrial competition, the impact of two world wars, the Great Depression and an oil crisis in 1973. However, ineffective solutions offered by politicians were also part of the problem. When trying to understand why certain solutions were pursued, it is helpful to consider the following factors:  the extent to which solutions were considered practically achievable and politically acceptable  the level of understanding of the root causes of the problem  the existence of received wisdom (or an ideology) that shaped and informed decision-making  the prioritization of the problem  The Chancellors’ solutions were ineffective until 1931, largely because they prioritized the strength of the pound over dealing with unemployment: they inherited the traditional wisdom that a debt-free balanced budget was crucial to economic stability.  Chancellors exacerbated problems in the 1950s onwards because they prioritized the balance of payments (and political gain) over investment and growth.  Although post-war government attempted greater management of the economy, this proved to be more difficult than anticipated.  However, the economy grew steadily until the mid-1970s and many people enjoyed greater affluence. Post-war boom, crisis and recovery: the response to economic problems, 1918-1931 The economic legacy of the First World War:  Loss of trade: Before 1914, Britain had been the world’s leading trading nation. The war led to a collapse in trade largely because all available shipping had been used to import essential war supplies (20% of all merchant ships were sunk in the process). Economic rivals like the USA and Japan filled the gap left by the decline in British exports. Britain was unable to recover its previous domination of that market after the war.  Debt: The war was expensive. Once Britain had spent its reserves of gold and sold its overseas assets it was forced to borrow £850 million (£35.1 billion in 2014 values) to fight the last two years of the war. Contemporary economists thought that large government spending and debt was bad for the economy because it reduced confidence in the stability of the state.  The value of the pound: Before the war, the value of the pound, like many other currencies, was fixed to the price of gold. This guarded against inflation as governments could not simply print money if they did not have sufficient gold reserves to back up the paper money. The cost of the war meant 12  Britain had to abandon the Gold Standard in 1914 and no longer circulated gold coins. The government instead printed more paper money.  Inflation: Inflation increased to 25% by 1918 and was a major cause of concern to the coalition government  Technological development: This was accelerated by the war, with major advances in the aircraft industry, radio communications, the car industry and medical science. There was a wider use of machine tools and assembly-line techniques, which encouraged the employment of semi0skilled Labour. The poverty of post-war economic solutions: the 1920s  The war cannot be blamed for all of Britain's economic problems in the 1920s: other nations, such as France and Germany, had more serious economic problems in 1918, yet were able to recover more effectively.  Several British industries (shipping, mining, steel, iron and textiles) were old and struggled to compete with new international rivals. British investors were slow to back new industries and continued to seek overseas opportunities for investment, as they had done before the war.  British trade unions had never been larger or more powerful (up from four million members in 1913 to 6.5 million in 1918 and a high of an 8.3 million in 1920). They were able to secure reduced working hours (54 to 47 per week) without pay cuts; this further reduced competitiveness and caused redundancies. A number of ineffective solutions were put forward: Tax, spending and balancing the budget:  To try and reduce inflation, and repay war debts as quickly as possible, taxes were raised each year after 1919 from £18 per capita (person) in 1919 to £24 per capita in 1922.  Government spending was also cut dramatically.  1921 = Lloyd George appointed a Commission on National Expenditure under Sir Eric Geddes to find out where savings could be made.  The 1922 ‘Geddes Axe’ = cuts in spending on education, pensions, unemployment benefit, housing and health from £206 million to £182 million. It also prompted cuts in defence from £190 million to £111 million. Although spending began to creep back up after 1924, these cuts, like the extra taxation, contributed to growing unemployment. Interest rates and the value of the pound:  The government set a high rate of interest to cut inflation, but also to encourage foreigners to buy pounds.  This increased the value of the pound against other currencies, which was desired as a sign of stability and economic strength.  The goal was to restore the pound to its pre-war value of $4.86 (the market valued £1 at $3.81 in 1919).  Gold Standard: the system, abandoned in the Depression of the 1930s, by which the value of a currency was defined in terms of gold, for which the currency could be exchanged.  Parliament’s suspension of the Gold Standard was due to expire in 1925 and Chancellor Churchill announced a return to the Gold Standard in April that year.  However, high interest rates made it more expensive for businesses to borrow and invest and made people more likely to save than spend.  The high exchange rates made British exports more expensive and therefore uncompetitive.  All of this contributed to the end of a brief post-war boom (1919-20) that was based on the expectation of increased peacetime trade. Protectionism:  The serious threat to British industry led the largely Conservative coalition to introduce duties to protect ‘key industries’ in 1921.  The old industries were hit particularly hard by new competition abroad and campaigned hard for protection.  Baldwin tried to go further in 1923, with a more general Programme of tariffs and protection, but this was rejected by an electorate who feared more expensive food imports. 13  More limited tariffs were added in 1925 and at the British Empire Economic Conference held in Ottawa in 1932.  While this helped in the short term, it meant that these industries avoided introducing the changes needed to become competitive in the longer-term.  It also meant that investment was not redirected into newer industries, such as chemicals or cars, in which Britain could have developed an advantage. Other nations also erected their own ‘tariff walls’, which limited international trade.  Unemployment became a huge problem: it never fell below ten percent (About one million workers) between the wars, and rose as high as 23% during the worst years of the slump, 1932-33. These are average figures for the UK and mask some huge regional variations (e.g. 60% unemployment in shipbuilding areas, 49% in iron and steel and 41% in coal mining). Although the government thought employment was not their responsibility, the soaring cost of unemployment insurance was a major cause for concern. Response to economic problems of the Great Depression and Second World War The 1930s: recovery through better solutions or pure luck?  The Wall Street Crash led to a collapse of global trade and meant many European nations were unable to repay debts to Britain.  British bankers especially began to panic about the loss of money loaned to Germany; they demanded further spending cuts to boost economic confidence before they would lend any money to the UK government. Although Ramsay MacDonald imposed a fresh round of spending cuts in 1931, a loan of £80 million was being used up.  The trigger for a change in economic policy was the mutiny of 12,000 sailors in opposition to pay cuts at Invergordon, Scotland, on 14 September. It was clear that the cuts could not continue; five days later, Britain left the Gold Standard. The pound was allowed to ‘float’ against other currencies and it quickly depreciated in value from $4.80 to $3.40.  Although the government had been driven to this difficult decision, it was clear by the mid-1930s that the change in priorities had led to greater economic success.  British exports quickly became 25% and far more competitive.  Interest rates, which had been kept high to prop up the value of the pound, could now be cut from 6% to 2%.  The rate on long-term government borrowing (bond yields) was cut from 5 to 3.5 years. This slashed the cost of government debt repayment and allowed for increased spending in other areas, such as a restoration of unemployment benefits in 1934. This ‘cheap money’ also allowed businesses to borrow and invest more.  The availability of cheaper mortgages fuelled a boom in house construction; this created almost one in three of all new jobs between 1931 and 1934.  Employment was also boosted by the huge expansion of rearmament in 1935; a further 15% of the unemployed found work in old industries such as steel, iron and shipbuilding.  All of this meant that the impact of America’s Great Depression was not as hard on Britain as on continental Europe. The economic legacy of the Second World War, 1939-51  Unlike the Liberal government in 1914, the National government of 1939 had no reservations about interfering in people’s lives as far as was necessary to wage ‘total war’.  Rationing and conscription were introduced immediately  Registration for employment was made compulsory in 1941; the government issued around 8.5 million Essential Work Orders, which forced people to do particular jobs. By 1945, 3.2 million people had worked in munitions, 4 million in other war work and 5.5 million had been conscripted to the armed forces. Although there were some strikes, these were to boost wages rather than attack government planning; people accepted the need to give up certain freedoms in order to defeat fascism.  A longer-term impact of this collective struggle was increased acceptance of government management of the economy. 14  1944 = the government declared its long-term responsibility for the maintenance of high employment. The war also lent weight to the theories of leading Cambridge economist John Maynard Keynes: before 1939, he had argued that, rather than aim to balance the budgets in hard times, the government should borrow and spend more money to stimulate a recovery. This had been rejected by the traditional ‘treasury view’ in the 1930s, but now such thinking came to dominate economic policy until the 1970s. John Maynard Keynes (1883-1946)  In 1999, Keynes was voted one of the 100 most important and influential individuals of the 20th century by Time magazine = in recognition of the huge impact his economic ideas have had on government policy across the world since the 1930s.  Keynes argued that ‘the invisible hand’ (Adam Smith’s phrase to describe the process by which the free market will allocate goods and services in a way beneficial to all) could not solve all economic problems. Keynes argued that, during a bad recession, there was not enough money or confidence for businesses to spend or invest; the economy therefore remained trapped in the doldrums with lots of persistent unemployment.  So rather than cutting spending and increasing taxation to balance the books, the government should spend more money to generate a ‘multiplier effect’: if the state spent £1,000 on roads, the workers employed as a result would have money to spend on other goods and services, and would create more jobs and lead to future demand.  The idea of borrowing money to intervene in the economy was so radical that it was ignored by almost every government. One notable exception was Nazi Germany, where the idea was used to great effect in the short term. The severity of the Great Depression discredited older notions of laissez-faire economics. Successful government borrowing during the Second World War lent weight to Keynes’s arguments.  Although he died in 1946, his ideas shaped the approach of all British governments to the economy until the rise of Margaret Thatcher. Keynesian solutions lost support in the 1970s because of the existence of high unemployment and inflation at the same time.  However, after almost three decades of a free market approach, the financial crisis of 2008 led many governments, including the UK and the USA to revisit Keynesian solutions. The response to economic challenges, 1951-79 Butskellism and ‘stop-go’ policies: the Conservatives in power, 1951-64 The Economist magazine made the phrase ‘Butskellism’ to sum up the almost identical economic policies of Labour and the Conservatives in the 1950s: R. A. Butler was the Tory Chancellor (1951-55), while Hugh Gaitskell was leader of the Labour Party (1955-63). Apart from the reprivatisation of steel and road haulage, the Conservatives accepted Labour’s post-war reforms and subscribed to the same Keynesian approach to managing the economy. However, a range of problems beam to develop that this approach was seemingly unable to solve:  Inflation: A major priority was to maintain inflation at a healthy, low level. If prices began to rise, steps were taken to ‘stop’ the economy (e.g. raising tax or limiting pay increases). Although such policies worked in the short-term, they were unable to prevent the build-up of inflationary pressure.  Unemployment: The Conservatives also pledged to maintain full employment. If the economy began to dip then expansionary measures were taken (e.g. Cutting taxes and interest rates). The Conservatives were accused of using these more popular ‘go’ policies just before elections, putting political gain ahead of economic stability.  Slow growth: The British economy grew at a slower rate than its competitors (2.3% per year compared to 5.6% in Italy and 5.1% in Germany). A key reason for this was a lack of investment in research and development in areas other than defence. Overall, the Conservatives were criticized for responding to short-term problems rather than effectively managing the British economy. The ‘stop-go’ approach papered over problems rather than solving them. By the mid-1960s, the spectra of stagflation’ (economic stagnation and inflation) hung over Britain. 15 The failure to cope with stagflation: 1964-79  The Labour governments of Harold Wilson and James Callaghan failed to improve on the Conservative track record.  Attempts were made to improve planning and increase investment in the ‘white heat’ of new technology, but these failed to make a substantial impact due to continuing inflation, unemployment and slow growth.  The Department of Economic Affairs 1964 under the leadership of the deputy leader George Brown. He devised a ‘National Plan’ to stimulate growth, but this never happened due to a lack of departmental resources, defined authority or decent working relations with the Treasure. A Minister of Technology was created, but suffered from the same lack of funding and authority.  Instead of planning, Labour responded to problems with the same ‘stop-go’ measures as the Conservatives before them. However, the most damaging lack of consistency was over the value of the pound: Wilson made it clear that he was determined to avoid a further devaluation by a Labour government, after the previous one in 1949.  November 1967 = having attempted and failed to borrow his way out of economic trouble, he was forced to cut the value of the pound from $2.80 to $2.40. Although Wilson went on television to explain that the ‘pound in your pocket’ was worth the same within the UK, he suffered a huge loss of credibility. This was exacerbated the same year when his application for Britain to join the European Economic Community (seen as a possible miracle cure for the economy) was vetoed (rejected) by French President Charles De Gaulle.  Unemployment and inflation were boosted in the UK by events in the Middle East. On 16 October 1973, the Organization of Petroleum Exporting Countries (OPEC) - founded in 1960. Members co-ordinate their production of oil to ensure stable prices. They raised old prices by 70% in retaliation for American support of Israel during the Yom Kippur War (fought by a coalition of Arab states led by Syria and Egypt against Israel, 6-25 October 1973). By 1974, oil prices had risen by 400%, this contributed strongly to more general inflation (as high as 25% in 1976), due to the increased cost of energy and feel for transport.  The increased cost of imports forced the Labour government to try and cap prices and wages, and to cut spending. Neither of these measures was popular with voters and especially not with their trade union backers. Unemployment doubled between 1974 and 1976 to just below 1.5 million. These economic issues, together with mounting trade union anger, led to the ‘Winter of Discontent’ (1978- 79), which finally blew consensus politics apart. Thatcher blamed irresponsible trade unions for most of the problem and set out to destroy them. Chapter Summary  After a brief post-war boom, a devastating economic slump  A retreat from empire and mass immigration not only led to a huge increase in unemployment and poverty from reduced government expenditure overseas but also 1920 to 1921. resulted in new skilled workers and low-cost labour in  The Conservatives hoped protectionism and tariffs would Britain. revive the economy but this was electorally unpopular.  The 1950s saw a relaxation in consumer credit and an  The hardest hit areas in Britain were the regions associated increase in new products available to buy, leading to a with heavy industry, the south Wales coal fields, the dramatic increase in consumer spending. shipyards of Tyne and Clydeside and the mining areas of  In the late 1950s the first sign that the consensus on the northern England. economy was being challenged came from within the  Following the Wall Street crash in the USA, Labour’s Conservative Party when senior treasury ministers spending plans in 1929–31 came under immense pressure because of Britain’s struggling economy. resigned, arguing that Macmillan should adopt  During the 1930s the depressed regions suffered monetarist policies. disproportionately to the rest of the country. The National  Macmillan hoped that people would be sensible in their Unemployed Workers’ Movement organised several spending and unions would show restraint in their pay hunger marches, protesting against poverty and the means claims, but this was naive. test.  Throughout the 1960s inflation began to gradually  In more affluent parts of the country the 1930s were a time increase and by the 1970s so did unemployment. of growing living standards, jobs and consumer goods.  Harold Wilson’s attempts to modernise the British  The government took control of large sections of the economy were undermined by his high spending plans, British economy during the Second World War. his refusal to devalue and relative economic decline.  The Labour Party wished to continue government  By 1970 Edward Heath planned to introduce intervention in the economy after the war and pursued a monetarist and free market policies, but trouble with policy of nationalisation. inflation and the unions prevented this.  From 1950 to about 1975 the world experienced a global  In 1976 Britain applied for a loan from the IMF and economic boom that Britain benefited from. was forced to adopt neo-liberal policies, which  During the same period both Labour and Conservative included cuts to state spending and free market parties had a broad agreement over the management of the reforms. economy, with a commitment to full employment, nationalisation and tolerance for a degree of price inflation. 16 17 How effectively did governments respond to changes in the workplace between 1918 and 1979? This chapter explores labour relations from 1918 to 1979 and examines why the trade union movement was able to exercise such power over politics by the end of the period. It also examines how working opportunities changed in Britain as the country’s economy underwent a transition from heavy industry to a service sector economy. It does this through the following sections:  Industrial change and changing industrial relations, 1918-39  Changing working opportunities and conditions, 1939-79  Industrial relations 1939-79 and the reasons for their breakdown in 1960s and 1970s  The response to economic challenges, 1951-79  Industrial change was the result of changing technologies and the growth of international competition. It benefited parts of the country where money was invested in the development and manufacture of new technologies, but caused a great deal of suffering for ordinary workers in the ‘old industries’ such as shipbuilding, steel, textiles and above all, coal.  While governments wanted to maintain a healthy and competitive economy, trade unions existed to defend the pay, jobs and working conditions of its members. This made poor industrial relations difficult to avoid, especially when the government sought to use wage caps to reduce inflation and make exports more competitive.  While several approaches were used to try and improve industrial relations, anger sometimes led to widespread strike action, with especially severe strikes in 1926 and in the early 1970s. The unions saw it as their hard-won, democratic right to protect the interests of vulnerable workers against the might of employers. The government generally saw strike action as undemocratic blackmail: an unelected body disrupting the peace and prosperity of the nation to achieve selfish ends against the wishes of an elected government.  They key question was whether the trade unions or the government were more to blame for the periods of miserable disruption.  A further question was how far women should benefit from improvements in pay and working conditions: it is arguable that the government did more for female workers than the unions that were meant to represent them. Industrial change and changing industrial relations, 1918-39  Those parts of the country heavily reliant on traditional industries fared worse than those with a growing service sector or where newer industries (such as chemicals, electrical engineering or car production) took off.  Clyde side, Northumberland, Durham, Lancashire and South Wales were key areas of traditional industry, while London and the West Midlands did much better, even during the ‘hungry’ 1930s. Traditional industries were heavily reliant on exports and during the Great War lost their share of the market as rivals were able to fill the gaps left in the global market when British cotton and steel products were not available.  Traditional industries also became less competitive compared to their European counterparts whose factories had been damaged or destroyed and so owners were forced to invest in newer machinery. More efficient American and German steel production undercut British domestic sales due to the retention of free trade (until 1932).  The Great Depression led to a further contraction in demand for ships, steel, coal and textiles. Unemployment, which never fell below a million between 1921 and 1940, rose to almost three million in 1932 and 1933. Although unemployment had existed before 1918, what surprised contemporaries was the extent of long-term unemployment: in 1929, five percent of those in need of relief had been jobless for over a year; by 1932 this had risen to 16.4 percent - over 400,000 people. Against this tough economic backdrop it was unsurprising that workers in traditional industries fought to maintain jobs and pay while employers sought to cut costs and improve productivity. The government 18  increasingly sought to provide help for the unemployed. The most important example of this general pattern came during the 1929 General Strike. The causes and impact of the General Strike  Coal mining was dangerous: between 1922 and 1924, 3,603 miners were killed and 597,158 were injured.  Despite the fact that their wages had improved during the wartime nationalization of mining, miners felt underpaid for their vital work.  The Miners Federation of Great Britain (MFGB) was a formidable union, representing the interests of over a million miners. In recognition of the poor state of mining before the war, and the potential threat posed by the MFGB, the 1919 Sankey Commission (A group set up by the government to investigate wages, working hours and nationalization in the coal industry. It was led by a judge, Sir John Sankey. Three mine owners and three miners also sat on the commission, which reported in 1919) recommended that government ownership be continued: yet the miners were handed back to private owners in 1921.  Pay soon failed to keep up with prices, especially in unprofitable mines: unlike their German and Polish rivals, many owners had not invested in mechanization and 80 percent of British coal was still mined with a pickaxe.  Mine owners initially agreed to maintain wages throughout 1925, but broke this promise after a surge in German coal production and the return to the Gold Standard led to a further fall in exports.  Despite a campaign to enforce a six-hour working day, mine owners increased the working day by one hour to eight hours. The miners were furious. The government subsidized miners’ wages for nine months (at a cost of £23 million) to avoid a general stir; this only served to give mine owners and the government time to prepare for the unavoidable clash.  In March 1926, the Samuel Commission (A group set up in light of the tense stand-off between mine owners and the MFGB. It was led by Liberal politician Sir Herbert Samuel, with a banker, an industrialist and Sir William Beveridge) recommended radical restructuring of the coal industry, but also a pay cut for miners.  Miners rejected this with the slogan ‘Not a minute on the day, not a penny off the pay’ and called for TUC (The Trade Union Congress) - founded in Manchester in 1868 as a ‘unions of unions’. There were many small unions which, while weak by themselves, were stronger when they worked together. They supported the strike.  Although the miners and the mine owners were highly inflexible, the TUC was prepared to negotiate with the government.  However, Baldwin used a strike by printers at the Daily Mail on 2 May as a pretext to end the talks and declare a state of emergency. Churchill and Home Secretary William Joynson-Hicks had urged such action because they agreed that the strike would be a ‘revolutionary movement, intended to inflict suffering upon the great mass of innocent persons in the community’.  The TUC then followed through with its threat of a general strike on 3 May. Three million industrial workers went on strike in sympathy with the miners. Yet, just nine days later, it was all over and the miners went left to strike by themselves for another six months without success.  The General Strike failed for several reasons:  Not all workers went on strike in sympathy with the miners, only those in printing, heavy industry, energy, textiles and transport. These workers were not ready for a strike and did not coordinate their efforts.  The government had been preparing for a strike since July 1925: they had created the Organization for the Maintenance of Supplies, a network of volunteers who could step in to do essential jobs (such as unloading and delivering food) not done by striking workers.  Churchill was put in charge of a government newspaper, The British Gazette, which turned public option against the strike with its hostile propaganda. It was made clear to the TUC that the government would not be held hostage to strike action.  The TUC tried to limit violence. There were some clashes between volunteers and those on strike but no one was killed. This made the strike easier to handle for the government.  The strike was hugely expensive for the TUC: it spend £4 million of its £12.5 million total strike fund.  Herbert Samuel, a respected Liberal politician invited to look into mining industry by Baldwin ,offered an unofficial settlement (the Samuel Memorandum), which the TUC hoped would be enacted by the government: a National Wage Board to be set up, wage subsides and no pay cuts before the restructuring of mining. The TUC accepted this proposal and called off the strike on 12 May. 19  Miners, left to struggle on alone, gradually went back to an eight-hour day and reduced pay in late 1926 = failure Changing working opportunities and conditions, 1939-79 The total number of people working increased despite rises in the school-leaving age and a fall in the average age of retirement. There was huge falls in the numbers of miners and shipwrights despite government efforts to protect these traditional industries. Although the number of manufacturing workers increased until the 1980s, there was particularly marked growth in the ‘white-collar’ sectors (A white- collar worker performs administrative, managerial or professional work, often in an office. A blue-collar worker performs manual Labour. Terms were first coined in 1924 and referred to the typical colour of office workers’ shirts and manual labourers’ overalls) There were several reasons for the growth of white-collar work:  High disposable income = increased demand for goods and services, such as meals out at restaurants, which had previously been seen as unaffordable luxuries. This created more jobs.  Governments increased spending on services such as health and education = creating lots more public sector jobs.  It is far more difficult to mechanize white-collar jobs than manufacturing jobs. Fewer white-collar than blue-collar jobs were lost through automation.  This shift in the balance of employment had some impact on industrial relations:  First, managerial structures in white collar firms were far less distant than in industry; mutual understanding and communication were much better as a result.  Second, while collar firms were less likely to be unionized and less likely to strike than industrial or manufacturing employees.  Third, the decline in the overall importance of ‘masculine’ blue-collar employment gave more work opportunities to women. The changing role of women in the workplace  Women had made some gains in terms of the opportunities for work open to them during the First World War, but quickly returned to traditional ‘women’s work’ after 1918.  Trade unions were hostile to more permanent change and men returning from the armed forces expected employment. While single women could expect to do a certain range of non-professional jobs, the ‘marriage bar’ meant most married women stopped work to look after the home and children. This situation only began to change gradually after the Second World War.  There was a range of reasons for the persistence of limited opportunities for women. Until the 1980s, most jobs were still in traditionally made ‘blue-collar’ areas of industry and manufacturing. Educational opportunities limited possible career options: until 1972, most working-class girls left school at 15; those who stayed on another year overwhelmingly took classes in secretarial skills, childcare or hairdressing. Very few women went to university and even fewer studied science, engineering, medicine or law; only 15 percent of doctors and five percent of lawyers were women in the 1960s. Throughout that decade, almost a third of all women were still teenagers when they got married; nine times as many women as men were married before the age of 19. Most women gave birth to their first child in the first three years of marriage and employers were not prepared to hire mothers. No legislation was passed to promote equal opportunities for women until 1970.  The number of women, especially married women, did increase in the workplace.  The situation began to change even before changes in legislation in the 1970s. Again, there are several factors that combined to promote female working opportunities:  The Second World War fuelled female desire to work: many women made new friends and found a new sense of fulfilment outside the home, even though some jobs were tedious or dangerous.  Changes in education increasingly provided an equal platform for girls  The number of white-collar jobs, which were deemed ‘more suitable’ for women, increased throughout the century.  Some women became more assertive because of a range of social changes in the 1960s and 1970s. An important example of this was a successful strike by female sewing machinists at Ford car plants in Halewood (Liverpool) and Dagenham (East London) in 1968. Having closed the factories for three weeks, and gained a lot of popular support, the women won a pay deal of just over 90 percent of the men’s rate for similar work. 20  The Ford strikes, together with the need to mirror EEC laws in order to join in 1973, were a catalyst for the passage of three Acts in 1970s designed to stop discrimination against women at work:  The Equal Pay Act in 1970 called for ‘equal pay for equal work’. It remained voluntary for businesses until 1975. Many employers (in 80 percent of cases) successfully claimed that the work men and women did was different, so the law did not apply. This loophole was removed in 1983 by replacing ‘equal work’ with ‘work of comparable value’.  The Sex Discrimination Act in 1975 made it illegal to treat workers of one gender less favourably than those of the other gender. While this helped in theory, in practice it was difficult and expensive for women to bring their discrimination claims to court.  The Employment Protection Act in 1975 made it illegal to sack women because they were pregnant; it gave women the right to maternity pay and to return to their jobs if they wished.  Although there were clearly problems with the legislation, the Acts contributed to a general understanding that it was not acceptable to treat women unfairly if they wanted to work. Despite this, women were still disproportionately employed in lower-paid, lower-skilled and part-time jobs. Women were also under-represented in senior management positions =‘glass ceiling’. Industrial relations 1939-79 and the reasons for their breakdown on 1960s and 1970s Industrial relations during and after the Second World War:  The war led to several important developments in British industrial relations. Perhaps the most important was the shift from boom and bust with high unemployment to wartime full employment and a post-war commitment by Labour and the Conservatives to maintain it.  Over time, this strengthened the bargaining position of trade unions, something that contributed to increasingly assertive action in the 1960s and 1970s.  The war also led to the inclusion of trade unionists in many government decision-making bodies; the most famous example of this was the appointment of Ernest Bevin (then General Secretary of the Transport and General Workers Union) as Minister for Labour and National Service in 1940.  Although wartime direction of Labour and restrictions on the right to strike did not survive beyond 1945, trade unionist inclusion continued after the war, for example on the board of the nationalized Bank of England. Working with the unions, and an effort not to make industrial relations a party political dispute, were clear signs of consensus about minimizing industrial disputes. Governments hoped that unions would voluntarily restrict wage demands; the spirit of wartime co-operation persisted until a spike of inflation in the early 1950s.  Thereafter, governments were faced with the dilemma whether to keep the unions happy and risk inflation, or impose controls on wage and prices and risk souring industrial relations. Governments tried a range of more or less forceful methods to limit pay demands, but none of them were particularly effective. Industrial relations before 1972: simmering tension  Although the British economy continued to grow throughout this period, it failed to grow as rapidly as rival economies abroad. British industry struggled to compete and jobs were lost as a result. This together with government efforts to limit inflation through price and wage controls, led to a great deal of simmering tension. There were occasional serious strikes throughout the period, including a national seamen’s strike in 1966.  Consensus-era governments used appeasement and ineffective sanctions to deal with industrial unrest. Labour’s reliance on trade union funding (since the repeal of the Trades Dispute Action in 1946) and party membership made it impossible for them to resist union demands. Barbara Castle’s 1969 White Paper (A document produced by the government that sets out details of a proposed future policy. Discussion of the White paper allows the government to form a bill to put before parliament) ‘In Place of Strife’ would have undermined union strength, but it was never implemented due to its unpopularity.  Conservatives also tended to shy away from confrontation because they valued order and electability over a long-term solution to industrial issues. Heath (Prime minister 1970-74) tried but failed to curtail union power because unions were not forced to sign up to the National Industrial Relations Court, which would have judged the legality of strike action. 21 Industrial relations, 1972-79: boiling point Industrial relations became far worse in the 1970s, when wages failed to keep up with prices for the first time since the Second World War. The escalation of industrial action was largely due to the failure of government efforts to resist increased pay demands:  In 1971, the National Union of Miners (NUM) demanded a 43% pay increase. The government offered eight% in order to try and stick to inflation targets. The NUM called for all 280,000 miners to strike on 9 January 1972. The government was forced to declare a state of emergency and a ‘three-day week’ in February, after flying pickets (groups of striking workers who travelled to other places of work and formed lines to stop anyone getting in) were used to shut down coal distribution depots and power stations. The strike was only called off on 19 February after the government meekly offered a 27 percent pay rise.  The miners’ victory merely encouraged other sectors to press for pay rises. Despite the creation of a Pay Board to examine wage deals that affected more than 1,000 workers and a Price Commission to limit price increases for some companies, teachers, hospital staff, train drivers, Ford car workers and gasmen went on strike in February 1973.  The 1973 oil crisis led to even higher wage demands: the NUM demanded a further 35% pay increase. A further ‘three-day week’ was introduced on 1 January 1974. On 4 February, 81 percent of miners voted to go on strike. Heath’s attempt to use a general election, campaigning on the slogan ‘Who governs Britain?’ to defeat the miners.  Callaghan was determined to stick to a five percent limit to pay increases in 1978, yet only had a vague ‘Social Contract’ of agreement with the unions to enforce this policy. In November, a strike from Ford car factories led to a 17% pay rise and embarrassment for the government.  On 3 January 1979, oil tanker and lorry drivers went on strike. The tanker drivers quickly won a pay rise and returned to work. The lorry drivers held out for six weeks. In that time they not only refused to deliver goods but also picketed ports to stop supplies reaching industry, shops an even hospitals. People began to panic-buy in case the shops ran out of food.  On 22 January, 1.5 million public sector workers went on strike: almost all schools shut, as did museums, libraries and other public buildings. With no porters, cooks or cleaners, hospitals were only able to treat emergency cases. With dustman on strike, huge piles of rubbish began to build up in parts of towns and cities across the UK. In Liverpool, the gravediggers went on strike; by the end of January, there were 225 corpses stored in a factory awaiting burial. The government accepted defeat on 14 February and allowed pay increases of 10-15 percent. By mid-March, all those who had been on strike were back at work.  By this stage, the public had been frightened and disgusted by the impact of the strikes; a vast majority now believed that the unions were too powerful and that something had to be done to limit their power. Conservative leader Margaret Thatcher promised to do just that; she won the May 1979 general election. 22  Chapter Summary  The short post-war economic boom in 1919–20  Wildcat strikes by 1969 had become a major led to an increase in Labour disputes, which political problem for the government, though decreased in times of economic hardship from they were less of an economic problem than 1921. they appeared.  The failure of Ramsay MacDonald’s Labour  Barbara Castle was tasked with the job of government led to increased militancy and the drafting union reform legislation and she General Strike of May 1926. produced ‘In Place of Strife’ in 1969. The  The failure of the strike led to a decrease in union proposals had widespread public popularity but power throughout the late 1920s and 1930s, union opposition. Wilson eventually abandoned further weakened by mass unemployment. the proposals, fearing for his own position.  The relationship between government and labour  Edward Heath’s government passed the changed during the war as the government once Industrial Relations Act (1971) but met with again took control over the economy; strikes were opposition from the unions who refused to co- illegal but that did not prevent them happening operate. and the government was generally conciliatory.  A miners’ strike over pay paralysed Heath’s  The experience of wartime controls of industry government in 1972 and when they went on raised workers’ hopes for full nationalisation after strike again in 1974 they brought down the the war. Heath government.  The 1950s and 1960s saw mass union  In the late 1970s the unions went on strike membership and high employment, though again causing the ‘winter of discontent’, giving resentments towards union attitudes were Margaret Thatcher a mandate for her growing. Strikes were increasingly the result of policies of union reform in the militant shop stewards. 1979 election. Key Question Topics Changing party fortunes, 1918-31 To what extent did the political landscape The National government, 1931-45 change 1918-79? The rise of consensus politics and political challenge, 1945-79 Post-wat boom, crisis and recovery: the response to economic problems, 1918-31 In what ways and with Response to economic problems of the Great Depression and the Second World what success did War, 1931-39 governments deal with economic change 1918-79? The economic legacy of the Second World War: the managed economy, 1939-51 The response to economic challenges, 1951-79 Industrial change and changing industrial relations, 1918-39 How effectively did governments respond Changing working opportunities and conditions, 1939-79 to change in the workplace 1918-79? Industrial relations 1939-79 and the reasons for their breakdown in 1960s and 1970s 23