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Callaghan - Political

The Labour government never had more than a 3 seat majority in the 5 years because of this The Lib-Lab act in 1977 was created. This was a deal made by James Callaghan and David Steel, committing the Liberal party to vote with the government in the Commons in return for the government’s agreement to consult the Liberals on key issues. The Pact lapsed Autumn 1978.

Callaghan failed to call an election, Autumn 1978 at a time when opinions polls showed his government was picking up support, By waiting he lost any room for manoeuvre since there had to be an election no later than the Autumn of 1979. His relaxed style of leadership had it’s attractions, it was not ideally suited to a desperate situation where a more dynamic approach seemed necessary.

The 1979 Election, 28 March a no confidence vote was called. Obliged by this, Callaghan had to call an election. Conservative – 339 seats, Labour - 292 seats.

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1974-1979, Britain began to suffer worst effects of the rapid inflation that followed the dramatic rise of oil prices following the crisis of 1973, by 1975 inflation was at 24%. The Decline in the value of the pound (1976 fell to $1.57) and growing debit in its trade balance threatened to make GB bankrupt.

IMF loan; in September 1976 the Chancellor of Exchequer Dennis Healy began negotiating a loan of £3 billion from the IMF, in order to obtain the loan the Government must implement a major public spending cuts; this outraged left members of the party and the unions who threatened to make trouble. In October, Healy made an announcement at the Labour Party conference to maintain party unity, and to a point was successful, although it is reported he was jeered off stage by some members of the party. By 1979, the government was in line with the IMF conditions to cut public spending and had done so by £3 billion. The IMF loan was largely successful, confidence in the pound returned helping to stabilise the financial crises and was largely paid off by 1977.

December 1977 Callaghan announced a compulsory 5% ceiling on wage rises (inflation was at 10%), but the unions retaliated by becoming more sweeping in their demands.

Unemployment reached 1.6 million in 1978.

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Due to the conditions in the IMF loan (£3bn - Lynch) the Labour government had to cut public spending, and as a consequence unemployment rose. By 1979 the governement had reduced their spending by 3bn (Lynch). This embittered the traditional support of Labour from the TU and the working class. Tony Benn "opened the way for the Thatcher revolution of the 1980s". 

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Trade Unions

  • A fireman’s strike in 1977 which led the Prime Minister to announce a state of emergency.
  • A year long strike beginning in 1977 at the Grunwick photographic works in North London involved mass picketing and violent clashes with the police.
  • The workers at all 23 plants of Ford Motors went on strike in September 1979; the dispute was settled only by the Ford management; the dispute was settled only by the Ford management giving in and granting a 17% pay rise. 
  • c. 29.5 million working days lost 1970
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Winter of discontent

The Winter of Discontent 1978-1979, not wishing to miss the large pay settlements being achieved by many unions in the private sector, the public sector began to take note and imitate these actions, notably the movements of the NUPE and COHSE unions that called a day of action on the 22nd January. On this day, 1.5 million workers responded to this by coming out on strike in favour of a £60 minimum weekly wage. This was a dramatic shift in the actions of the Trade Unions, this was no longer a problem segregated to the private industry, but was now a direct attack on the government.

The effects of the Winter of Discontent were greatly exaggerated by the media, in Jan 1979 the Sun ran the headline “3 millions face the doll que”, but in reality the number of people having been laid off was closer to c.200,00. 830/33,000 schools closed due to care takers on strike, and only 1/6 lorry drivers. The unions were largely fragmented apart from the NUM which was one large body. During the 1970s the amount of time through illness/unemployment was double the number of days taken by strike action. 

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Callaghan was quietly effective in protecting the nascent democratic revolution in Portugal against American Pressure, also successful in defending the Falklands against Argentina threats and without the implication of war.

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