After Britain emerged victorious from the Second World War, the Labour Party under Clement Attlee won the 1945 general election in a landslide, applying Keynesian Economics, and created a comprehensive welfare state, with the establishment of the National Health Service giving free healthcare to all British citizens, and other reforms to social welfare. The Bank of England, railways, heavy industry and coal mining were all nationalised. Unlike the others, the most controversial issue was nationalisation of steel, which was profitable. Economic recovery was slow, housing was in short supply and bread was rationed along with many necessities in short supply. It was an "age of austerity". American loans and Marshall Plan grants kept the economy afloat. India, Pakistan, Burma and Ceylon gained independence. Britain was a strong anti-Soviet factor in the Cold War and helped found NATO in 1949. Many historians describe this era as the "post-war consensus", emphasising how both the Labour and Conservative Parties until the 1970s tolerated or encouraged nationalisation, strong trade unions, heavy regulation, high taxes, and a generous welfare state.
The Labour Party introduced charges for NHS dental services and glasses in 1951. The Conservatives returned to power in 1951, accepting most of Labour's post-war reforms but introducing prescription charges to the NHS in 1952 and privatising steel in 1953. They presided over thirteen years of economic recovery and stability. However, the Suez Crisis of 1956 demonstrated that Britain was no longer a global superpower. Ghana, Malaya, Nigeria and Kenya were granted independence during this period. Labour returned to power under Harold Wilson in 1964 and oversaw a series of social reforms including the partial decriminalisation of homosexuality and abortion, the relaxation of divorce laws and the end of capital punishment. The Conservative Party led by Edward Heath returned to government from 1970-74 and oversaw the decimalisation of British currency, the accession of Britain to the European Communities and the height of the Troubles in Northern Ireland. In the wake of the 1973 oil crisis and a miner's strike, Heath introduced the three-day working week to conserve power.
After two general elections were held in 1974, Labour made a return to power, but a series of strikes carried out by trade unions over the winter of 1978/79 (known as the Winter of Discontent) paralysed the country and Labour lost its majority in parliament. The 1979 general election resulted in the Conservative Party led by Margaret Thatcher gaining power, effectively ending the postwar state-interventionist consensus that followed since the end of the Second World War; despite initial intense Labour opposition.
Labour Government, 1945–1951 Following the Second World War, the landslide 1945 election returned the Labour Party to power and Clement Attlee became Prime Minister of the United Kingdom. The party quickly nationalised critical sectors of the economy, especially declining industries. The Bank of England was nationalised along with railways (see Transport Act 1947), coal mining, public utilities and heavy industry. The most controversial case was the takeover of the highly profitable iron and steel industry, which was opposed and finally reversed by the Conservatives.Kenneth O. Morgan, Labour in Power, 1945–1951 (Oxford UP, 1985) pp. 94 – 141.
Welfare state
A comprehensive welfare state was created with the National Insurance Act 1946, in which people in work paid a flat rate of National Insurance. In return, they (and the wives of male contributors) were eligible for flat-rate pensions, sickness benefit, unemployment benefit, and funeral benefits. Various other pieces of legislation provided for child benefit and support for people with no other source of income.Morgan, Labour in Power, 1945–1951 (1985) pp. 142–87.
In the estimation of historians, and later politicians of the major parties, the most successful and permanent program was the creation of a National Health Service which started operations in 1947.Morgan, Labour in Power, 1945–1951 (1985) pp. 152–63. It entitled all citizens to healthcare, which, funded by taxation, was free at the point of delivery. The opposition from physicians was bought off by allowing them to keep lucrative private practices on the side. All hospitals were nationalised and brought into the system. John Carrier and Ian Kendall find that the mission of the Minister of Health Aneurin Bevan was resolving "The potential conflict between the aim of providing a universalist, comprehensive health service of a good standard and that of containing health costs to a reasonable level, and how to finance the system in such a way that certainty and sufficiency of funds could be guaranteed." Michael Foot adds that Bevan had to persuade "the most conservative and respected profession in the country to accept and operate the Labour government's most intrinsically socialist proposition."Michael Foot, Aneurin Bevan (1975) 2: 105 In the end historians give Bevan the major credit for the success.Frank Honigsbaum, Health, happiness, and security: the creation of the National Health Service (1989).
One of the main achievements of Attlee's government was the maintenance of near full employment. The government maintained most of the wartime controls over the economy, including control over the allocation of materials and manpower, and unemployment rarely rose above 500,000, or 3% of the total workforce. In fact labour shortages proved to be more of a problem. One area where the government was not quite as successful was in housing, which was also the responsibility of Aneurin Bevan. The government aimed to build 400,000 new houses a year to replace those destroyed in the war, but shortages of materials and manpower meant that less than half this number were built.Nicholas Bullock, "Plans for post‐war housing in the UK: The case for mixed development and the flat." Planning Perspectives 2.1 (1987): 71-98.
Foreign affairs
Despite the heavy American grants of Lend-Lease food oil and munitions (which did not have to be repaid) plus American loans, and a grant of money and loans from Canada at the end of the war Britain was on the verge of bankruptcy. John Maynard Keynes argued the only solution was to drastically cut back the spending on the British Empire, which amounted to £2,000 million.Robert Skidelsky, John Maynard Keynes, Vol. 3: Fighting for Freedom, 1937–1946 (2001) pp 403–58. The post-war overseas deficit was £1,400 million, warned Keynes. and, "it is this expenditure which is wholly responsible for either financial difficulties." Both Churchill and Attlee ignored his advice and kept spending heavily, in part by borrowing from India. The United States provided a large 50-year loan in 1946, and the sudden grant of independence to India and Pakistan in 1947 sharply cut expenses. Marshall Plan money began flowing in 1948, and by the time it ended in 1951 the financial crisis was over.John Bew, Clement Attlee: The man who made modern Britain (2017) pp 371–85. The new Labour government knew the expenses of British involvement across the globe were financially crippling. The post-war military cost £200 million a year, to put 1.3 million men (and a few thousand women) in uniform, keep operational combat fleets stationed in the Atlantic, the Mediterranean, and the Indian Ocean as well as Hong Kong, fund bases across the globe, as well as 120 full Royal Air Force squadrons.Victor Sebestyen, 1946: The making of the modern world(2014) pp 72–78. Britain now shed traditional overseas military roles as fast as possible.Michael Asteris, "British Overseas Military Commitments 1945–47: Making Painful Choices." Contemporary British History 27.3 (2013): 348–371. online American financial aid was available on Washington's terms, as seen in the 1945 loan, the convertibility of sterling crisis of 1947, the devaluation of sterling in 1949, and the rearmament program in support of the U.S. in the Korean War, 1950–53. On the other hand, he had some success in convincing Washington to take over roles that were too expensive for Britain, including the rebuilding of the European economy and supporting anti-communist governments in Greece and elsewhere.Martin H. Folly, "‘The impression is growing...that the United States is hard when dealing with us’: Ernest Bevin and Anglo-American relations at the dawn of the Cold War." Journal of Transatlantic Studies 10.2 (2012): 150–166. online Bevin had the firm support of his party, especially Prime Minister Attlee, despite a left-wing opposition. Top American diplomats such as Dean Acheson trusted Bevin and worked through him.
India