The Labour Party governed the United Kingdom from 1974 to 1979. During this period, Harold Wilson and James Callaghan were successively appointed as Prime Minister by Queen Elizabeth II. The end of the Callaghan ministry was presaged by the Winter of Discontent, a period of serious industrial discontent. This was followed by the election of the Conservatives led by Margaret Thatcher in 1979.
The government consisted of three ministries: the third and fourth Wilson ministry, and then the Callaghan ministry. After the 1979 election defeat Labour would not return to government for another 18 years until 1997 and the first Blair ministry. __TOC__
History
Formation
Following the February 1974 general election, no party had a majority of seats. The incumbent Conservative Party won the popular vote, but Labour took a plurality of seats. Edward Heath, the Conservative Prime Minister, attempted to negotiate a coalition agreement with the Liberal Party, but resigned as prime minister after failing to do so. The Labour Party, led by Harold Wilson, then established a minority government, which took office on 4 March 1974.
It was recognised that this had no long-term stability, and that another general election was likely within a few months. On 20 September Wilson called another snap election for 10 October, which resulted in a narrow victory for the Labour Party with a slim majority of three seats.
The economy was in recession by the time of the February 1974 election, but economic growth was re-established by 1976—although inflation, which had run into double digits before Labour came to power, was now above 20%. It would remain high for the rest of this ministry, rarely falling below 10%. Unemployment was now well in excess of 1,000,000 people, whereas it had been less than 600,000 at the start of the decade. This was the result of the economic decline, as well as advancing engineering techniques which required fewer personnel, along with other factors including the closure of unprofitable factories and coalmines. The government was forced into an interventionist policy to protect jobs - the most symbolic example being the largest home producer of cars, buses and trucks - British Leyland (BL) - which had been beset with poor profitability and a myriad of industrial relations problems was forced into public ownership in 1975, and became part of the newly established National Enterprise Board. BL would remain a major headache for the remainder of the government's term in office and for the Conservatives subsequently with full re-privatisation not occurring until the late 1980s.
On 16 March 1976, having just turned sixty years old, Wilson resigned as prime minister, ending his leadership of the Labour Party after thirteen years, and a total of nearly eight years as prime minister. He was replaced by James Callaghan, who had held senior government positions during both of Wilson's ministries, and had served as a Shadow Cabinet member in the early 1960s.
In 1976, Britain faced financial crisis. The Labour government was forced to apply to the International Monetary Fund (IMF) for a loan of nearly $4 billion. IMF negotiators insisted on deep cuts in public expenditure, greatly affecting economic and social policy.
Within a year of Callaghan taking office, the narrow Labour majority was eliminated due to by-election defeats, prompting a vote of confidence which prevented the government's collapse and a general election from being called. In order to sustain the government, Labour formed the Lib–Lab pact in March 1977 and this remained in force for sixteen months. This minority government also managed to stay in power with unofficial deals with the Ulster Unionist Party and Scottish National Party.
By September 1978, economic growth was firmly re-established and inflation was below 10%, although unemployment now stood at a post-war high of 1.5 million. With most of the opinion polls showing a clear Labour lead, it was widely expected that Callaghan would call a general election that autumn, despite having another year to do so, in order to gain a majority and give his government the chance of surviving in office until 1983.
However, he resisted these calls and Britain began 1979 with Labour still in power and Callaghan still in charge, but his failure to call a general election during the autumn of 1978 would prove to be the end of this Labour government.
Major contributions Although the 1974–1979 Labour Government faced a number of economic difficulties, it was nevertheless able to carry out a broad range of reforms during its time in office. During Harold Wilson's final premiership, from 1974 to 1976, a number of changes were carried out such as the introduction of new social security benefits and improvements in the rights of tenants. In March 1974, an additional £2 billion was announced for benefits, food subsidies, and housing subsidies, including a record 25% increase in the state pension. Council house rents were also frozen. Council house building continued on a substantial scale, although there was now a greater emphasis on modernising older properties rather than replacing them with new ones. That year, national insurance benefits were increased by 13%, which brought pensions as a proportion of average earnings "up to a value equivalent to the previous high, which was reached in 1965 as a result of Labour legislation." In order to maintain the real value of these benefits in the long term, the government introduced legislation which linked future increases in pensions to higher incomes or wages.Taxation, Wage Bargaining, and Unemployment by Isabela Mares In 1974–1975, social spending was increased in real terms by 9%. In 1974, pensions were increased in real terms by 14%, while in early 1975 increases were made in family allowances. There were also significant increases in rate and rent subsidies, together with £500 million worth of food subsidies.Socialists in the Recession: The Search for Solidarity, Giles Radice and Lisanne Radice
An independent Advisory, Conciliation and Arbitration Service (now simply called Acas) (regarded as the brainchild of the trade union leader Jack Jones) was established, which according to Robert Taylor continues to provide "an impartial and impressive function in resolving disputes and encouraging good industrial relations practice." A Manpower Services Commission was set up to encourage a more active labour market policy to improve job placements and deal with unemployment. The Pay Board was abolished, while the Price Commission was provided with greater powers to control and delay price increases. In addition, the Rehabilitation of Offenders Act 1974 prohibited employers from discriminating against ex-offenders where offences were minor and committed a long time ago, and the Housing Rents and Subsidies Act 1975 gave power over rents back to local authorities.New Labour, Old Labour: The Wilson and Callaghan Governments, 1974–79 edited by Anthony Seldon and Kevin Hickson
To help those with disabilities, the government introduced an Invalid Care Allowance, a Mobility Allowance, a Non-Contributory Invalidity Pension for those unable to contribute through national insurance, and other measures. To combat child poverty, legislation to create a universal Child Benefit was passed in 1975 (a reform later implemented by the Callaghan government). To raise the living standards of those dependent on national insurance benefits, the government index-linked short-term benefits to the rate of inflation, while pensions and long-term benefits were tied to increases in prices or earnings, whichever was higher.Labour in power? A study of the Labour Government 1974–1979, David Coates
A State Earnings Related Pension Scheme (SERPS) was also introduced. A new pension, which was inflation-proofed and linked to earnings, was added to the basic pension which was to increase in line with earnings for the first time ever. This reform assisted women by linking pensions to the 'twenty best years' of earnings, and those who worked at home caring for children or others were counted as contributors. This scheme was reformed by the subsequent Thatcher ministry.Labour's First Century by Duncan Tanner, Pat Thane, and Nick Tiratsoo while the wage stop was finally abolished.Poverty and the development of anti-poverty policy in the United Kingdom: a report to the Commission of the European Communities, Richard Berthoud, Joan C. Brown and Steven Cooper, Commission of the European Communities, Policy Studies Institute
A Resource Allocation Working Party was also set up to produce a formula for a more equitable distribution of healthcare expenditure. Anthony Crosland, while serving as a minister during Wilson's second ministry, made a decision to reform the level of Rate Support Grant, introducing a standard level of relief across the country to benefit poorer urban areas.
The Damages (Scotland) Act of 1976 “amended the law relating to damages in respect of personal injuries and of death caused by such injuries, and abolished the action of indemnification.” The Education Act of 1976 also repealed part of the Education (Milk) Act 1971 “whereby local authorities were to charge for school milk.”Social Trends 9, 1979 Edition, A publication of the Government Statistical Service, P.220 The Bail Act of 1976 “created a presumption in favour of the grant of bail in criminal proceedings, required courts to give reasons when refusing bail, replaced the system of personal recognisances for defendants by a new offence of absconding while on bail, required that a person who is remanded in custody more than once should have the opportunity of obtaining legal aid, and effected certain improvements to the surety system.” The Fair Employment (Northern Ireland) Act of 1976 barred discrimination in employment in Northern Ireland on the grounds of religion and politics, and also established the Fair Employment Agency for Northern Ireland to promote equal job opportunity.
In April 1976, a Child Interim Benefit for single-parent families was introduced, which was preceded by a universal Child Benefit scheme introduced the following year. The Supplementary Benefit (Amendment) Act of 1976 amended the amount of earnings and other income of the parent in a one-parent family to be disregarded in calculating resources for comparison with requirements, and also amended certain social security and other allowances for children.Social Trends 9, 1979 Edition, A publication of the Government Statistical Service, P.221 The Industrial Common Ownership Act of 1976 gave the Secretary of State the power to “give up to £30,000 in grants and up to £250,000 in loans to common ownership enterprises, that is those bodies without share-capital and controlled by a majority of their workers.” The Rent (Agriculture) Act of 1976 gave security of tenure to certain agricultural workers, ex-workers and their successors living in housing provided by farmers, and also laid duty on housing authorities to rehouse occupiers of ‘tied cottages’ when dwellings are needed to house incoming workers.Social Trends 9, 1979 Edition, A publication of the Government Statistical Service, P.222
The Congenital Disabilities (Civil Liability) Act 1976 provided that children injured while in utero could sue after birth.Common Law and Civil Law Perspectives on Tort Law By Mauro Bussani, Anthony James Sebok, Marta Infantino, 2022, P.71 The Policyholders Protection Act 1975 introduced safeguards for customers of failed insurance companies.