Was the Labour Government 1974-79 successful?

  • Created by: hastr010
  • Created on: 15-05-18 21:18
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  • How successful was the Labour Government of 1974-79?
    • Minority Government
      • Wilson chose to hold another election but the results were still slim
    • Relations with Trade unions
      • Labour and TUC reached an agreement called the social contract which the unions agreed to co-operate to control wages
        • there would be a return to free collective bargaining over wages.
        • did not solve the economic difficulties as wages continued to exceed the inflation rate, however it brought a degree of control to the unions.
    • divisions over Europe
      • Wilson promised to negotiate terms of British membership of the EEC and hold a referendum on the issue. the new terms suggested that Britain's contribution to the budget would decrease
      • Wilson allowed the cabinet to campaign for either side; resulted in a 2:1 split in favour of membership
      • this buried the issue of membership and showed the party to have unity
    • Wilson's resignation
      • 1976 Wilson resugned due to memory loss - Callaghan replaced him
    • Economic difficulties
      • Stagflation
        • Labour gov. gave miners 29% wage increase to settle strike, however it caused inflation to increase
          • Inflation increased to 30% by 1975 - unions were still demanding a larger pay rise creating further inflation.
        • World recession hit British exports which caused unemployment to boom - to 1.3million
        • Chancellor exchequer said the economic recovery depended on:
          • 1975 budget increasing taxed and cutting gov.spending in order to reduce prices
          • formal incomes policy setting £6 a week ceiling on wage increases
            • then narrowed to £4
          • inflation dropped but economic recovery didn't as poor productivity led to small exports
      • 1976 - IMF loan
        • Callaghan asked IMF for a loan of £3900 million
          • gov. spending had to decrease by 2 billion but Callaghan had prevented a severe economic crisis
    • Lib-Lab pact 1977-78 - on opinion polls Labour were 25% behind Tories so made a deal with liberals for support in the government
    • Winter of Discontent
      • 1978-9 - multiple strikes from different workers unions - form the discontent of Healey's policies.
  • Conservatives won the 1979 election by 1 vote - the people had lost faith in Tories and Labour

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