The Labour Party is a political party in the United Kingdom. Founded in the early 20th century, it has been since the 1920s the principal party of the
left in England, Scotland and Wales (but not in Northern
Ireland, where the Social Democratic and Labour Party occupies
a roughly similar position on the political spectrum). It has formed the national government of the United Kingdom since 1997. It
is also the largest party in the Welsh Assembly Government in Wales and the
second largest party in the Scottish Parliament. It holds the London mayoralty and is represented in the European
Parliament. Its current leader is Gordon
Brown.
The Labour Party surpassed the Liberal Party as the main opposition to the
Conservatives in the early 1920s. It has had several spells in government, first
as minority governments under Ramsay MacDonald in 1924 and 1929-31, then as a junior
partner in the wartime coalition from 1940-1945, and then as a majority government, under Clement Attlee in 1945-51 and under Harold Wilson in 1964-70.
Labour was in government again in 1974-79, under Wilson and then James Callaghan, though
with a precarious and declining majority.
Labour won a landslide 179 seat majority in the 1997 general election under the leadership of Tony
Blair, its first general election victory since October
1974 and the first general election since 1970 in which it
had exceeded 40% of the popular vote. The Labour Party's large majority in the House
of Commons was slightly reduced to 167 in the 2001 general
election and more substantially reduced to 66 in 2005.
Party ideology
The Labour Party grew out of the trade union movement and socialist political parties of the 19th century, and continues to describe itself as a party of
democratic socialism.[2]
The Labour Party traditionally was in favour of socialist policies such as public
ownership of key industries, government intervention in the economy,
redistribution of wealth, increased rights for workers and trade unions, and a belief in the welfare state and publically funded
healthcare and education.
Since the mid-1980s, under the leadership of Neil Kinnock, John Smith and Tony Blair the party has moved away from
its traditional socialist position towards what is often described as the "Third
Way" adopting some Thatcherite and free market
policies after losing in four consecutive general elections.
This has led many observers to describe the Labour Party as social democratic or
even neo-liberal rather than democratic socialist.[3] Blair himself has described New Labour's political position as a
"Third Way".
Party constitution and structure
-
The Labour Party is a membership organisation consisting of Constituency Labour
Parties, affiliated trade unions, socialist societies, and the Co-operative
Party, with which it has an electoral agreement. Members who are elected to parliamentary positions take part in the
Parliamentary Labour Party (PLP) and European Parliamentary Labour Party
(EPLP). The party's decision-making bodies on a national level formally include the National Executive Committee (NEC), Labour
Party Conference, and National Policy Forum (NPF) — although in practice
the Parliamentary leadership has the final say on policy. Questions of internal party democracy have frequently provoked disputes
in the party.
For many years, Labour has held to a policy of uniting Northern Ireland and the Republic of Ireland by consent,
and had not allowed residents of Northern Ireland to apply for membership,[4] instead supporting the nationalist Social Democratic and Labour Party (SDLP) which takes the Labour whip. Yet Labour has
a unionist faction in its ranks, many of whom assisted in the foundation in 1995 of
the UK Unionist Party lead by Robert
McCartney. The 2003 Labour Party Conference accepted legal advice that the party could not continue to prohibit residents
of the province joining,[5] but the National Executive has
decided not to organise or contest elections there.
The party had 198,026 members on 31 December, 2005 according to accounts filed with the Electoral Commission which was down on the previous year. In that year it had an income of about
£35,000,000 (£3,685,000 from membership fees) and expenditure of about £50,000,000. [1]
Party electoral manifestos have not contained the term socialism since 1992, although when Clause 4 was abolished the words "the Labour Party is a democratic socialist party" were added to the party's
constitution.
History
Early years
The Labour Party's origins lie in the late 19th century numeric increase of the urban proletariat and the extension of the
franchise to working-class males, when it became
apparent that there was a need for a political party to represent the interests and needs of those groups.[6] Some members of the trade union movement became interested in moving into
the political field, and after the extensions of the franchise in 1867 and 1885, the Liberal
Party endorsed some trade-union sponsored candidates. In addition, several small socialist groups had formed around this
time with the intention of linking the movement to political policies. Among these were the Independent Labour Party, the intellectual and largely middle-class Fabian Society, the Social Democratic Federation and the Scottish Labour Party.
Keir Hardie, one of the Labour Party's founders and first leader
In 1899 a Doncaster member of the Amalgamated Society of Railway
Servants, Thomas R. Steels, proposed in his union branch that the Trade Union
Congress call a special conference to bring together all the left-wing organisations and form them into a single body
which would sponsor Parliamentary candidates. The motion was passed at all stages by the TUC, and this special conference was
held at the Memorial Hall, Farringdon Street, London on February 27-28, 1900. The
meeting was attended by a broad spectrum of working-class and left-wing organisations; trade unions representing about one third
of the membership of the TUC delegates.
The Conference created an association called the Labour Representation
Committee (LRC), meant to coordinate attempts to support MPs, MPs sponsored by trade unions and representing the
working-class population. It had no single leader. In the absence of one, the Independent Labour Party nominee Ramsay MacDonald was elected as Secretary. He had the difficult task of keeping the various strands of
opinions in the LRC united. The October 1900 'Khaki election' came too soon for the new party to effectively campaign. Only 15
candidatures were sponsored, but two were successful: Keir Hardie in Merthyr Tydfil and Richard
Bell in Derby.
Support for the LRC was boosted by the 1901 Taff Vale Case, a dispute between strikers and a
railway company that ended with the union ordered to pay £23,000 damages for a strike. The
judgement effectively made strikes illegal since employers could recoup the cost of lost business from the unions. The apparent
acquiescence of the Conservative government of Arthur Balfour to industrial and business
interests (traditionally the allies of the Liberal Party in opposition to the
Conservative's landed interests) intensified support for the LRC against a government that appeared to have little concern for
the industrial proletariat and its problems. The LRC won two by-elections in 1902–1903.
Labour Party Plaque from Caroone House 8 Farringdon Street (demolished 2004)
In the 1906 election, the LRC won 29 seats — helped by the
secret 1903 pact between Ramsay Macdonald and Liberal Chief Whip Herbert Gladstone, which aimed at avoiding
Labour/Liberal contests in the interest of removing the Conservatives from office.
In their first meeting after the election, the group's Members of Parliament decided adopt the name "The Labour Party"
(February 15, 1906). Keir Hardie, who had taken a leading role in getting the party
established, was elected as Chairman of the Parliamentary Labour Party (in effect, the Leader), although only by one vote over
David Shackleton after several ballots. In the party's early years, the
Independent Labour Party (ILP) provided much of its activist base as the party
did not have an individual membership until 1918 and operated as a conglomerate of affiliated bodies until that date. The
Fabian Society provided much of the intellectual stimulus for the party. One of the first
acts of the new Liberal government was to reverse the Taff Vale judgement.
The recession of 1908-09 and subsequent rise in unemployment led to increased industrial unrest and the desire for radical
change among the working class. There was increasing support both for syndicalism and for
change through parliament. In the two 1910 elections, Labour gained 40 seats and then 42 seats. Support grew further for during
the 1910–1914 period along with an unprecedented level of industrial action with Seamen, rail workers, cotton workers,
coal miners, dockers and many
other groups all organising strikes. This was called the period of 'Great Unrest' with many sympathy strikes also occurring. This
was no doubt helped by the sometimes heavy-handed measures of the Liberal government (e.g., Winston Churchill's sending troops to the Rhondda valley
in 1910 against coal miners, with some fatalities resulting).
World War I and the lead up to the first Labour government (1914-1923)
During the First World War the Labour Party split between supporters and opponents of the
conflict and opposition within the party to the war grew as time went on. Ramsay
MacDonald, a notable anti-war campaigner, resigned as leader of the Parliamentary Labour Party and Arthur Henderson became the main figure of authority within the Party and was soon accepted into
H. H. Asquith's War Cabinet.
Despite mainstream Labour Party's support for the Coalition, the Independent Labour
Party was instrumental in opposing mobilisation through organisations such as the Non-Conscription Fellowship and a Labour Party affiliate, the British Socialist Party organised a number of unofficial strikes.
Arthur Henderson resigned from the Cabinet in 1917 amidst calls for Party unity,
being replaced by George Barnes. The growth in Labour's local activist base and
organisation was reflected in the elections following the War, with the co-operative
movement now providing its own resources to the Co-operative Party after the
armistice. The Co-operative Party later reached an electoral agreement with the Labour Party.
The Liberal Party splitting between supporters of leader David Lloyd George and former leader H. H. Asquith allowed the Labour Party to co-opt some of the Liberals' support, and by the
1922 general election Labour had supplanted the Liberal Party as the second party in the United Kingdom and as the official opposition to the
Conservatives. After the election, the now rehabilitated Ramsay MacDonald was
voted the first official leader of the Labour Party.
Labour's electoral base resided in the industrial areas of Northern England, the
Midlands, central Scotland and Wales. In these areas Labour Clubs were founded to provide recreation for working men, with many of these clubs
becoming affiliated to The Working Men's Club and Institute Union. Because of the concentrated geographical nature of Labour's
support, industrial downturns tended to hit Labour voters directly. Anecdotal evidence suggests that party membership was often
working-class but also included many middle-class radicals, former liberals and socialists. Accordingly, the more middle-class
branches in London and the South of England tended to be more left-wing and radical than those in the primary industrial
areas.
The first Labour government (1924)
-
The 1923 general election was fought on the Conservatives'
protectionist proposals; although they got the most votes and remained the largest party,
they lost their majority in parliament, requiring a government supporting free trade to be
formed. So with the acquiescence of Asquith's Liberals, Ramsay MacDonald became Prime
Minister in January 1924 and formed the first ever Labour government, despite Labour only having 191 MPs (less than a third of
the House of Commons).
The government collapsed after only nine months when the Liberals voted for a Select Committee inquiry into the
Campbell Case, a vote which MacDonald had declared to be a vote of confidence. The
ensuing general election saw the publication, four days before
polling day, of the notorious Zinoviev letter, which implicated Labour in a plot for a
Communist revolution in Britain, and the Conservatives were returned to power, although Labour increased its vote from 30.7% of
the popular vote to a third of the popular vote - most of the Conservative gains were at the expense of the Liberals. The
Zinoviev letter is now generally believed to have been a forgery.
The General Strike (1926)
The new Conservative government led by Stanley Baldwin faced a number of labour
problems most notably the General Strike of 1926. Ramsay MacDonald
continued with his policy of opposing strike action, including the General Strike, arguing that the best way to achieve social reforms was through the ballot box, although
Labour claimed that the BBC was biased in its reporting against the party over the issue.[7][8][9]
The split under MacDonald
the original 'liberty' logo, in use until 1983
The election of May 1929 left the Labour Party for the first
time as the largest grouping in the House of Commons with 287 seats, and 37.1% of the popular vote (actually slightly less than
the Conservatives). However, MacDonald was still reliant on Liberal support to form a minority government.
The Wall Street Crash of 1929 and eventual Great Depression occurred soon after this election, and the crisis hit Britain
hard. By 1930 the unemployment rate had doubled to over two and a half million.[10] The government found itself struggling to cope with the crisis. Under pressure from its Liberal
allies as well as the Conservative opposition, the Labour government appointed a committee headed by Sir George May to review the state of public finances. The May
Report of July 1931 urged public-sector wage cuts and large cuts in public spending (notably in payments to the
unemployed) in order to avoid a budget deficit.
This proposal proved deeply unpopular within the Labour Party grass roots, the trade
unions, which along with several government ministers refused to support any such measures. MacDonald, and the
Chancellor of the Exchequer, Philip Snowden, insisted that the Report's recommendations must be adopted to avoid
incurring a budget deficit.
One junior minister Oswald Moseley put forward a memorandum in January 1930, calling
for the public control of imports and banking as well as an increase in pensions to boost spending power. When this was turned
down, Moseley resigned from the government and went on to form the New Party, and later
the British Union of Fascists.
The dispute over spending and wage cuts split the Labour government; as it turned out, fatally. The resulting political
deadlock caused investors to take fright, and a flight of capital and gold further de-stabilised the economy. In response,
MacDonald, on the urging of King George V, decided to form a
National Government, with the Conservatives and the Liberals.
On August 24 1931 MacDonald submitted the resignation of his ministers and led a small
number of his senior colleagues, most notably Snowden and Dominions Secretary J. H.
Thomas, in forming the National Government with the other parties. MacDonald and his supporters were then expelled from
the Labour Party and formed the National Labour Party. The remaining Labour
Party, now led by Arthur Henderson, and a few Liberals went into opposition. The Labour
Party denounced MacDonald as a "traitor" and a "rat" for what they saw as his betrayal.
Soon after this, a General Election was called. The 1931 election resulted in a Conservative landslide victory, and was a disaster for
the Labour Party which won only 52 seats, 225 fewer than in 1929. MacDonald continued as Prime Minister of the Conservative
dominated National Government until 1935.
Opposition during the time of the National Government
Arthur Henderson, who had been elected in 1931 as Labour leader to succeed
MacDonald, lost his seat in the 1931 General Election. The only former Labour cabinet member who survived the landslide was the
pacifist George Lansbury, who accordingly became party leader.
The party experienced a further split in 1932 when the Independent Labour
Party, which for some years had been increasingly at odds with the Labour leadership, opted to disaffiliate from the
Labour Party. The ILP embarked on a long drawn out decline.
Public disagreements between Lansbury and many Labour Party members over foreign policy, notably in relation to Lansbury's
opposition to applying sanctions against Italy for its aggression against Abyssinia, caused Lansbury to resign during the 1935 Labour Party Conference.
He was succeeded by Clement Attlee, who achieved a revival in Labour's fortunes in the
1935 General Election, winning a similar number of votes to those
attained in 1929 and actually, at 38% of the popular vote, the highest percentage that Labour had ever achieved, securing 154
seats. Attlee was innitially regarded as a caretaker leader, however he turned out to be the longest serving party leader to
date, and one of its most successful.
Labour achieved a number of by-election upsets in the later part of the 1930s despite the world depression having come to an
end and unemployment falling.
Wartime Coalition
When Neville Chamberlain resigned as Prime Minister after the defeat in Norway in
spring 1940, incoming Prime Minister Winston Churchill decided that it was important
to bring the other main parties into the government and have a Wartime Coalition similar to that in the First World War. Clement
Attlee became Lord Privy Seal and a member of the War cabinet, and was effectively (and
eventually formally) Deputy Prime Minister for the remainder of the duration of
the War in Europe.
A number of other senior Labour figure took up senior positions: the trade union leader Ernest
Bevin as Minister of Labour directed Britain's wartime economy
and allocation of manpower; the veteran Labour statesman Herbert Morrison became
Home Secretary; Hugh Dalton was Minister of Economic Warfare and later President of the Board of Trade; and A. V. Alexander resumed the role of First Lord of the Admiralty he had held in the previous Labour government. The party
generally performed well in government, and its experience there may have been partly responsible for its post-war success.
Post-War victory under Attlee
With the end of the war in Europe in May 1945, Labour resolved not to repeat the Liberals' error of 1918, and withdrew from the
government to contest the 1945 general election (July 5) in
opposition to Churchill's Conservatives. Surprising many observers, Labour won a landslide victory, with a majority of 145 seats.
Although the exact reasons for the victory are still debated. During the war, public opinion surveys showed public opinion moving
sharply to the left and in favour of radical social reform[11]. There was little public appetite for a return to the poverty and mass
unemployment of the interwar years which had become associated with the Conservatives.
Clement Attlee's government was one of the most radical British governments of the 20th century. It presided over a policy of
selective nationalisation of major industries and utillities, including the
Bank of England, coal mining, the
steel industry, electricity, water, gas, telephones, and inland transport (including the
railways, road haulage and canals). It developed the "cradle to grave" welfare state conceived by the Liberal economist William
Beveridge. To this day, the party still considers the creation in 1948 of Britain's tax-funded National Health Service under health minister Aneurin
Bevan its proudest achievement.
Attlee's government also began the process of dismantling the British Empire when it
granted independence to India in 1947. This was followed by Burma (Myanmar) and Ceylon (Sri Lanka) the following year.
With the onset of the Cold War, at a secret meeting in January 1947, Attlee, and six cabinet
ministers including foreign minister Ernest Bevin, secretly decided to proceed with the
development of Britain's nuclear deterrent[12], in opposition to the pacifist and anti-nuclear stances of a large element
inside the Labour Party.
Labour won the 1950 general election but with a much reduced
majority of five seats. Soon after the 1950 election, things started to go badly wrong for the Labour government. Defence became
one of the divisive issues for Labour itself, especially defence spending (which reached 14% of GDP in 1951 during the
Korean War[13]).
These costs put enormous strain on public finances, forcing savings to be found elsewhere. The Chancellor of the Exchequer, Hugh Gaitskell
introduced prescription charges for NHS prescriptions, causing Bevan, along with Harold Wilson
(President of the Board of Trade) to
resign over the dillution of the principle of free treatment.
Soon after this, another election was called. Labour narrowly lost the October 1951 election to the Conservatives, despite their receiving a larger share
of the popular vote and, in fact, their highest vote ever numerically.
Most of the changes introduced by the 1945-51 Labour government however were accepted by the Conservatives and became part of
the "post war consensus", which lasted until the 1970s.
The "Thirteen Wasted Years"
Following the defeat in 1951, the party became split over the future direction of socialism. The "Gaitskellite" right of the
party led by Hugh Gaitskell and associated with thinkers such as Anthony Crosland wanted the party to adopt a moderate social
democratic position. Whereas the "Bevanite" left, led by Anuerin Bevan wanted the
party to adopt a more radical socialist position. This split, and the fact that the 1950s saw economic recovery and general
public contentment with the Conservative governments of the time, helped keep the party out of power for thirteen years
After being defeated at the 1955 general election, Attlee
resigned as leader and was replaced by Gaitskell. The trade union block vote, which
generally voted with the leadership, ensured that the bevanites were eventually defeated.
The three key divisive issues that were to split the Labour party in successive decades emerged first during this period;
nuclear disarmament, the famous Clause IV of the
party's constitution, which called for the ultimate nationalisation of all means of production in the British economy, and
Britain's entry into the European Economic Community (EEC). Tensions between the two
opposing sides were exacerbated after Attlee resigned as leader in 1955 and Gaitskell defeated Bevan in the leadership election
that followed. The party was briefly revived and unified during the Suez Crisis of 1956. The
Conservative party was badly damaged by the incident while Labour was rejuvenated by its opposition to the policy of prime
minister Anthony Eden. But Eden was replaced by Harold
Macmillan, while the economy continued to improve.
In the 1959 election the Conservatives fought under the slogan
"Life is better with the Conservatives, don't let Labour ruin it" and the result saw the government majority increase. Following
the election bitter internecine disputes resumed. Gaitskell blamed the Left for the defeat and attempted unsuccessfully to amend
Clause IV. At a hostile party conference in 1960 he failed to prevent a vote adopting unilateral nuclear disarmament as a party
policy, declaring in response that he would "fight, fight and fight again to save the party I love". The decision was reversed
the following year, but it remained a divisive issue, and many in the left continued to call for a change of leadership.
The Wilson Years
Following Gaitskell's sudden death in 1963, Harold Wilson took over leadership of the
party.
A downturn in the economy, along with a series of scandals in the early 1960s (the most notorious being the Profumo affair), engulfed the Conservative government by 1963. The Labour party returned to government
with a wafer-thin 4 seat majority under Wilson in the 1964
election, and increased their majority to 96 in 1966
election remaining in power until the 1970 election which,
contrary to expectations during the campaign, they lost.
The 1960s Labour government had a different emphasis from its 1940s predecessor. Harold
Wilson put faith in economic planning as a way to solve Britain's economic
problems. Wilson famously referred to the "white heat of technology", referring to the modernisation of British industry. This
was to be achieved through the swift adoption of new technology, aided by government-funded infrastructure improvements and the
creation of large high-tech public sector corporations guided by a Ministry of Technology. Economic planning through the new
Department of Economic Affairs was to improve the
trade balance, whilst Labour carefully targeted taxation aimed at "luxury" goods and
services.
Labour had difficulty managing the economy under the "Keynesian consensus" and the international markets instinctively
mistrusted the party. Events derailed much of the initial optimism, especially a currency
crisis which mounted until 1967 when the government was forced into devaluation of
the pound and pressure on sterling was intensified by disagreements over US foreign policy. Harold Wilson publicly supported America's engagement in Vietnam but
refused to provide British assistance. This infuriated President Johnson who in
response felt little obligation to support the pound. For much of the remaining Parliament the government followed stricter
controls in public spending and the necessary austerity measures caused consternation amongst the Party membership and the trade
unions, unions which by this time were gaining ever greater political power.
Labour in the 1960s under Home Secretary Roy
Jenkins introduced a number of liberal social reforms, notably the
legalisation of homosexuality and abortion, reform of
divorce laws, the abolition of theatre censorship, and
capital punishment (except for a small number of offences - notably high treason) and various legislation addressing race relations and racial discrimination. Another significant achievement
was the creation of the Open University. In Wilson's defence, his supporters also
emphasise the easing of means testing for non-contributory welfare benefits, the linking of
pensions to earnings, and the provision of industrial-injury benefits.
Wilson's government in 1969 proposed a series of reforms to the legal basis for industrial relations (labour law) in the UK, which were outlined in a White Paper entitled "In Place of Strife", which proposed to
give trade unions statutory rights, but also to limit their power. The White Paper was championed by Wilson and Barbara Castle. The proposals however faced stiff opposition from the Trades Union Congress, and some key cabinet ministers such as James Callaghan. The opponents won the day and the proposals were shelved.
The 1970s
In the 1970 general election, Edward Heath's Conservatives narrowly defeated Harold Wilson's government reflecting some disillusionment
amongst many who had voted Labour in 1966. The Conservatives quickly ran into difficulties, alienating Ulster Unionists and many Unionists in their own party after signing the Sunningdale Agreement in Ulster. Heath's government also faced the 1973
miners strike which forced the government to adopt a 'Three-Day Week'. The 1970s
proved to be a very difficult time for the Heath, Wilson and Callaghan administrations. Faced with a mishandled oil crisis, a
consequent world-wide economic downturn, and a badly suffering British economy.
Following the perceived disappointments of the 1960s Labour government. The party moved sharply to the left during the early 1970s. 'Labour's Programme 1973', pledged to bring about a 'fundamental and
irreversible shift in the balance of power and wealth in favour of working people and their families.' This programme referred to
a 'far reaching Social Contract between workers and the Government.' Wilson publicly
accepted many of the policies of the Programme but the condition of the economy allowed little room for manoeuvre.
Return to power in 1974
Labour returned to power again under Wilson a few weeks after the February 1974 general election, forming a minority government with Ulster
Unionist support. The Conservatives were unable to form a government as they had fewer seats, even though they had received more
votes. It was the first General Election since 1924 in which both main parties received less than 40% of the popular vote, and
was the first of six successive General Elections in which Labour failed to reach 40% of the popular vote. In a bid for Labour to
gain a majority, a second election was soon called for October
1974 in which Labour, still with Harold Wilson as leader, scraped a majority of three, gaining just 18 seats and taking
their total to 319.
European referendum
Britain had entered the EEC in 1973 while Edward Heath was Prime Minister.
Although Harold Wilson and the Labour party had opposed this, in government Wilson switched to backing membership, but was
defeated in a special one day Labour conference on the issue[14] leading to a national referendum on which the yes and no campaigns were both cross-party -
the referendum voted in 1975 to continue
Britain's membership by two thirds to one third. This issue later caused catastrophic splits in the Labour Party in the 1980s,
leading to the formation of the SDP.
In the initial legislation during the Heath Government, the Bill affirming Britain's entry was only passed because of a
rebellion of 72 Labour MPs led by Roy Jenkins and including future leader John Smith, who voted against the Labour whip and along with Liberal MPs more than countered
the effects of Conservative rebels who had voted against the Conservative Whip.[15]
Wilson steps down
In April 1976 Wilson surprisingly stood down as Labour Party leader and Prime Minister claiming a long-standing desire to
retire on his sixtieth birthday. There was immense suspicion of his reason for his resignation but it is now known that he was in
the early stages of Alzheimer's. He feared following his mother's path who had been
a towering, impressive personality but who did not accept her failing abilities and carried on for too long spoiling her
reputation. He was replaced by James Callaghan who immediately removed a number of
left-wingers (such as Barbara Castle) from the cabinet.
In the same year as Callaghan became leader, the party in Scotland suffered the breakaway of
two MPs into the Scottish Labour Party (SLP). Whilst ultimately the SLP
proved no real threat to the Labour Party's strong Scottish electoral base it did show that the issue of Scottish
devolution was becoming increasingly contentious, especially after the discovery of
North Sea Oil.
Economic and political troubles
The 1970s Labour government faced enormous economic problems and a precarious political situation. Faced with a global
recession and spiralling inflation. Many of Britain's traditional manufacturing industries
were collapsing in the face of foreign competition. Unemployment, and industrial unrest were rising.
In the autumn of 1976 the Labour Government was forced to ask the International
Monetary Fund (IMF) for a loan to ease the economy through its financial troubles. The conditions attached to the loan
included harsh austerity measures such as sharp cuts in public spending, which were highly
unpopular with party supporters. This forced the government to abandon much of the radical program which it had adopted in the
early 1970s, much to the anger of left wingers such as Tony Benn.
The 1970s Labour government adopted an interventionist approach to the
economy, setting up the National Enterprise Board to channel public investment
into industry, and giving state support to ailing industries. Struggling companies such as British Aerospace and British Leyland were
nationalised. The Government succeeded in replacing the Family Allowance with the
more generous child benefit, and introduced redundancy
pay.
The Wilson and Callaghan governments were hampered by their lack of a workable majority in the commons. At the October 1974
election, Labour won a majority of only three seats. Several by-election losses meant that by 1977, Callaghan was heading a
minority government, and was forced to do deals with other parties to survive. An arrangement was negotiated in 1977 with the
Liberals known as the Lib-Lab pact, but this ended after one year. After this, deals were
made with the Scotish National Party and the Welsh nationalist
