I.

The Age of consensus : 1964 – 1979

Successive Labour and Conservative governments tended to follow very similar policies and had few clear answers
to Britain’s problems.
Governments : Wilson 1964-1970 / Heath 1970-1974 / Wilson 1974-1976 / Callaghan 1976-1979

The main changes since 1945 (also issues which dominated politics in the second half of the century):
- Introduction of the welfare state
- Rise of the standard of living of the people
- Heavy defence commitments and expenditure
- Shift from a manufacturing to a service economy
- The decline in trade union strength reflecting this economy change
- Significant level of immigration which change Britain in a multi-racial society
- The weakening of the parliament as an institution with the growing power of central government
- The retreat from Empire and the abandonment of Britain’s economic ties with the Commonwealth
- A loss of sovereignty entailed by Britain’s entry in the EEC

These are the issues which dominated politics in the second half of the century and distinctive feature of the years
before 1979.
Labour and Conservatives tended to have very similar responses to these issues. Even if they were criticizing
each-other fiercely they were making very little changes in the policies they inherited from the other.

A) “Britain in decline”: the economy

• This was a period of change of the economy: from industrial to post-industrial economy.
Shrinking of the manufacturing industries, rise of finance and services.
The transition from industrial to post-industrial economy was harsh. There was considerable social disruption 
Major difficulties in adjusting economic and social structures.

As it was not able to reach the same level of growth as other countries in Europe or elsewhere, Britain was seen by
some as in decline.
Growth from 1960-1979
UK 1.9 %
Germany 3.4 %
USA 2.8 %
France 4,1%
Japan 5,8%

One explanation for GB’s decline: too much spending on defence, too little on investment in industry (1/3 of the
budget of Research and Development (R&D) was spent on defence, in Japan less than 1 % was spent on military.

1) Industrial relations were strained.

a) Were trade unions (TU) a powerful obstructive force? (Some view things in this way)
• Argument / Unions used strike action or go-slow tactics to force weak employers into granting rights, wages
or preservation of jobs supposed to be scrapped.
This led to overmanning and low productivity, no real modernisation of industry and GB industries not competitive.
Union were seen as refusing to cooperate in industry modernisation
Feeling that strikes were politically motivated and damaging for the economy
 Unions were accused of attempting to destroy the economic welfare of the nation.

b) In retrospective this view can be seen as a distortion based on a misunderstanding of the Trade
Union strength. Some would answer that :

• Trade Unions were reacting to economic circumstances, not creating them

• Unions were not powerful in a weak economy ; basically a conservative force.
Britain’s manufacturing force was in decline for reasons outside trade union control.
• Unions were fighting a rear guard action to keep job losses to a minimum
• Most of it was done through responsible employer union negotiations
• Then only going to confrontation if negotiations broke down

However, Trade Unions were usually seen as easy scapegoats for the predominantly anti-union press.

c) The government and unions

Both parties made moves toward introducing statutory rules into industrial relations but neither was pushing too
hard to risk unpopularity.
Labour feared antagonising its chief supporters and financial backers by interfering in their right to
bargain with employers. Example Wilson tried to outlaw unofficial strikes (white papers 1969)
Conservative failed to reconcile the thought of impositions on employers and workers with their belief in
free market. Attempt by Heath to do the same as Wilson but start of a running battle with the TU.
In 1972, loss of 23 Million working days ; worse in 1974 with the industrial crisis and 14 M working days lost.

Unemployment figures rose :

1960 461 000

1968 631 000
1971 868 000
1975 1 152 000
1978 1 608 000

2) Consumerism

Despite economic difficulties it was a period of continuous rise in living standards, and especially the
purchasing power of the population.
Critics asserted that it was achieved by ignoring reality; wages and purchases were increasing while the
basic economy was going into decline.
Consumerism was not helping manufacturing industries as goods on which earnings were spent were mainly
imported products.

3) The international oil price rise 1973.

A crisis in 1973 which shows how British economy was susceptible to events in the outside world.
OPEC was created in 1961 by oil producing countries to resist foreign oil company demands.
Before there was a supply of cheap oil by large Western TNC’s but with creation of OPEC in the 60’s there was
greater control over their own oil industries.

In 1973 Arab members chose to use oil as a weapon in the conflict with Israel : reduction of the oil supplies
to Western states and rise of the prices (rise from 2 $ to 35 $ between 1972 and 1980)
Pressure on the USA but also on other economies dependent on oil (for example for plastic)

The immediate effects in Britain : economic recession.

Balance of payments deficit rose to 1 billion of £
Annual inflation rose to 16 % (rapid and severe).
Drop in the value of sterling to 1.57 $ -
A record budget deficit
Between 1974 and 1976 unemployment doubled to 1.44 M

Paradox as oil will also offer economic salvation: North Sea oil, discovered in 1974 began to be extracted at
the end of the 80’s. By 1980 UK was exporting more than importing.

B) Harold Wilson governments, 1964 - 1970

In 1964 Labour won a marginal electoral majority in the Commons.

Narrow defeat result (only 13 seats of difference 43.6 – 44.1 % ; overall majority of 4 seats)

Summary : reasons for economic difficulties.

Costly military and defence commitments
Legacy of the two WW with GB financially exhausted
High costs of running a welfare state
Troubled industrial relations with lessened productivity
Problems of going through a transition in the economy to a service-based one
Heavy costs by joining the EEC in 1973
Oil price rise in 1973

Reasons for Labour victory :

* Presented a more youthful image (not only age of Wilson but also connection with the progressive ideas of the
youth) >>> Notion of the swinging sixties ; willingness of the Labour politicians not to appear unfashionable.

* Wilson played on the contrast between him and Home (huntin’, fishin’, shootin’ aristocrat) not in touch with the
real people and their wants.
* Successfully stand as the forces of progress standing against the political establishment
* Critics of the conservative electors who wanted a change from their position of a planned economy and no
distinction from the Labour Party.
Wilson’s first two years were relatively successful :
- Creation of a new department of Economic Affairs under George Brown : National Plan
- New Ministry of Technology >> intention of modernism
Labour became popular and it obtained a new majority in 1966 (comfortable majority of 110 seats)
• Then problems :
- opposition inside his own party on his financial strategy
- long strikes of the seamen’s and dockers unions in 1966 and 1967  balance of payments deficit.
- GB had to ask for a new loan from the IMF >>> financial difficulties which pushed Wilson to call for the
devaluation of the pound
- Devaluation introduced late and in theatrical manner (on TV) ; could not pass as a technical financial adjustment
>>> political and economical failure of the government.

Perception not only inside but also outside the party.

Trade Unions were angered by Wilson blaming difficulties on the strikers
- When he introduced the set of proposals aimed at preventing future strikes the TU in the party rebelled and
forced it to be withdrawn.
- End feeling that the first Wilson government had not lived up to the expectations.
- The worse was inside the core and traditional Labour supporters who felt Gov had promised much and
done little, contrary to Attlee’s time, reforms seemed unimpressive.
- Reforms seemed to have the same content if not the style from the Conservative before
- Reforms in the industry were done but globally the modernisation of the industry was not achieved
- On the other hand some historians are bringing back the social reforms of this period :
° Legalisation of abortion
° Decriminalisation of homosexual acts
° Abolition of death penalty
Issues which are controversial as people called this period the “permissive age”
In any case seen as isolated in the global perception of the governments achievements.
Left of the party and the youth were the more disillusioned as it seemed it was not a new departure but the
continuation of the same politics as previously with Conservatives.

For the leftists, Wilson was accused of :

-Rising unemployment, inflation, wage control
-Restriction of TU freedoms
-Immigration control, reintroduction of prescriptions charges
-Retention of UK nuclear weapons, support of the Vietnam war.

Wilson believed that despite these criticisms his basic support was solid.
Surprise of the result :
loss of the moderate voters (economic policies and failure to control the unions)
5 % swing from Labour to Conservative ; majority of 30 seats (46.4 v 43.0 %)

C) The Heath Government, 1970-74 (Conservatives)

Quite the same process as Wilson in 1964 :
Declared his government was adopting a new style of government: aimed to reduce the rise in prices,
increase productivity and reduce unemployment.

By 1974 he was not successful in any of these goals:

Rapid inflation after 1973 made the holding down of prices impossible.
The wage demands of the unions and the working days lost  even more productivity loss.
This meant that unemployment couldn’t be reduced (1972 worse year since the Depression of the 30’s)

4 years in office were overshadowed and ended by the problem of industrial relations :
First try in having discussions and agreements with the Trade Unions : offered a package in which in return for
cooperation in imposing wages policy they would be directly involved in gov economic policy. Unions were
suspicious.

First government measures:

1970 Industrial Relation Act : based upon the proposals of the Labour.
Restricted the right of workers to strike by introducing the concept of “unfair industrial practices.
A National Industrial Relations Court (NIRC) with authority to judge validity of strike action was created and TU
were required to put themselves on a register if they wanted to retain their legal rights –
The National Union of Miners forced the issue:
1972: they called for a strike which used pickets to stop the movement of coal. –
Disruption of the fuel and electricity supplies and reduced industries production –
The government introduced a series of restrictions on the use of fuel, which recalls the austerities of the 40’s to
pressure the union.

Finally the dispute was settled in 1973, with a 21 % wage increase gained by the Trade Unions.
They went again on strike in 1974 in order to regain wage increase –
Heath called an immediate election on the issue of who runs the country : miners or government.
The answer was not what he was expecting.
Labour obtained a majority of 42 over the Conservative + support of the 14 liberal MPs.
Wilson embarked on his second mandate.

A) Labour in office, 1974 - 1979

From the beginning of the Labour government, three restrictions :
• Thinness of its overall majority in the Commons - After the October 1974 elections, majority of 42 over
the Conservatives but overall majority of only 3 seats - This meant influence of the Liberal party which it
had not enjoyed since the 20’s. Normal as they got only 13 seats while having half of the votes of Labour.
• Labour held office during the economic crisis : UK began to suffer the worse effects of the economic
crisis.
1976 : loan from the IMF of 4 billion £, with an obligation to cut public spending.
By 1979, cut in public spending was approximately from 1 billion £  (this led to) an increase of
unemployment which reached 1.6 million in 1978.
Consequences: Trade Unions became bitter and their loyalty to Labour weakened >>> “Winter of
discontent”.
The Winter of Discontent refers to the winter of 1978–79 in the United Kingdom, during which there were widespread strikes
by public sector trade unions demanding larger pay rises, following the ongoing pay caps of the Labour Party government (led
by James Callaghan) against Trade Union opposition. These pay caps were meant to control inflation, during the coldest winter
for 16 years. The phrase "Winter of Discontent" is from the opening line of William Shakespeare's Richard III.
The strikes were a result of the Labour government's attempt to control inflation by a forced departure from their social contract
with the unions by imposing rules on the public sector that pay rises be kept below 5%, to control inflation in itself and as an
example to the private sector.
From Wikipedia.

Heath tried at first to inject a more free-market approach into economic management, but he was forced into a
humiliating U-turn as unemployment passed the 1 million mark. The government then went on such a huge
spending binge to bring unemployment down that by 1975 inflation had reached 25% and people began to hoard
food.
th
The Economist, April 13 2013 on Margaret Thatcher
• - Struggle to come to terms with the unions was related to inflation.
Credit for repealing the Industrial Relations Act (1970) was lost by the failure to push the Trade Unions to
cooperate. Quite the same troubles as during the Heath government.
- People believed in the government’s good relations with some of the moderate unions and ability to end
the “stop and go” policies, but the economic crisis destroyed that hope (rising prices and IMF injunctions
forced the government to follow the same “stop and go” policies)
- Action of especially the public service workers.
Short chronology taken from Modern British History 1900-1999 by Michael Lynch; Hodder and Stoughton, 2001,
p161
 II. THE THATCHER REVOLUTION 1979 – 1990
Detailed framework: The significance of Thatcherism and the impact of government policies.

This section will be divided into 5 parts :

A) How did Margaret Thatcher manage to take the leadership of the Conservative Party in 1975
?
B) In which ways is her action considered to be revolutionary ?
C) Key features of Thatcher government.
D) Margaret Thatcher’s fall.
E) The impact of Thatcherism.

A) How did Margaret Thatcher manage to take the leadership of the Conservative
Party in 1975 ?

Her emergence as a party leader was a landmark in the history of British conservatism.
She was a supporter of the New Right thinking and she seemed to be marking a real break with
Heath and the moderate pragmatism for which he stood.
She was the second woman only to achieve a position in a Conservative Cabinet, this
accentuated exceptional character of her position as leader. (Florence Horsbrugh was the first woman to
hold a cabinet post in a Conservative government when she was appointed Minister of Education in 1951.)

Her election took nearly everyone by surprise as no one has considered her campaign as
a serious one until it was all over.

1) Changes in the party

In 1975 gloom within the Conservative party at this point was evident on a number of levels:
- Membership levels had fallen dramatically since the 50’s and organisation such as the Young
Conservatives had almost collapsed.
- The evolution of the character and profile of the Party :
- In the time of McMillan : A Conservative Member of Parliament had been to a Public School, had a
private income, and a paternalist sense of civic responsibilities.
- By the mid 70’s : a Conservative MP would have studied in a grammar school, he would have come
from a middle class suburb and had a more professional and ideological approach to politics.
- Growing frustration about the Party’s approach to economic and social policy.
Heath and followers were seeking kind of domestic appeasement when what was needed was
strong and principled leadership. Moderate choices were beginning to be questioned.

This atmosphere saw the ideas of the right wing thinkers beginning to gain widespread
support.
More right wing positions were seen as
- Radical alternatives, that were increasingly plausible with the failure of the traditional
approaches.
- Possible idea : breaking with the consensus politics that has dominated public life since
1945.

In 1974 the foundation of the Centre for Policy Studies by two Cabinet members Keith Joseph and
Margaret Thatcher confirmed this ideological direction.

« The Centre for Policy Studies (CPS) is a British centre-right policy think tank whose goal is to promote
coherent and practical public policy, to roll back the state, reform public services, support communities, and
challenge threats to Britain’s independence. Although identified as non-partisan, the Centre has strong historical
links to the Conservative Party.
It was co-founded by Conservatives Sir Keith Joseph, Alfred Sherman and Margaret Thatcher in 1974 to
champion economic liberalism in Britain and has since played a global role in the dissemination of free market
economics along monetarist and, what today would be called, neoliberal lines. Its policy proposals are claimed to
be based on the principles of individual choice and responsibility. They also assert that they prioritise the
concepts of duty, family, liberty, and the rule of law. The CPS has a stated goal of serving as the champion of the
small state. »
 Taken from Wikipedia.

2) Margaret Thatcher’s « Coup d’Etat ».

Heath was reluctant to resign from Conservative leadership after the October 1974 election
defeat, on the ground that it would be taken by right-wing extremists. He finally called for election in
the Conservative Party.
No real opponents to Heath, so Margaret Thatcher put herself forward.
She was able to settle with Heath, who had patronized her in Cabinet and the two of them disliked
each other from the moment they had to work with each other.
Keys to her successful campaign :
- Heath underestimated her chances on the ground that the Party will not elect a woman to be
leader.
- She had made a strong impression as Minister for the Environment and the Shadow Finance
Minister
- Clearly seen as a fighter with strong Conservative beliefs, she really made the point
during the campaign facing Heath showing the courage and determination her male
colleagues lacked.
She gained admirers and turned her gender to her political advantage.
- Her campaign was not only luck and grit. It was skilfully managed by Aire Neave with an
interesting strategy.
On 4th of February 1975, she came first with 130 to 119 to Heath. Heath withdrew immediately.
In the second ballot, several candidates entered the fray but Thatcher was in a strong position and she
won the second ballot.
She became the Leader of the Opposition as she was the Leader of the Conservative Party and
she also became the first woman to lead a major political party in Britain’s history.
She became the Prime Minister after winning the 1979 election in May 1979.
43 seats overall majority made it comfortable for her to embark on a policy of radical change.

B) In what ways was her action considered to be revolutionary ?

« Several prime ministers have occupied 10 Downing Street for as long as, or even longer than,
Margaret Thatcher. Some have won as many elections—Tony Blair, for one. But Mrs Thatcher (later
Lady Thatcher), Britain’s only woman prime minister, was the first occupant of Number 10 to become
an “-ism” in her lifetime. She left behind a brand of politics and a set of convictions which still resonate,
from Warsaw to Santiago to Washington. »
The Economist, April 13,2013 on Margaret Thatcher.

1) Ideological basis and mentors

! Methodist upbringing and influence of the ideas of F. Von Hayek and Keith Joseph gave her a
set of strong beliefs.
• Friedrich Von Hayek major critic of Keynes, criticized direction of the economy by the state.
The proper role of the state was not to be involved in the welfare of its citizens but simply
provide the conditions of liberty in which individuals were free to make their own choices.
Defender of the free market, seen as a guarantee of political and economic liberty. Trade
Unions were seen as the direct cause of unemployment and the destroyers of democratic
freedoms.
• Keith Joseph : leading Conservative intellectual of the time ; he introduced M. Thatcher to
the ideas of Von Hayek and encouraged her to adopt monetarism (theory of M. Friedman for
whom the basic cause of inflation is the increase in money supply : policy aimed at reducing
the amount of money and cut public expenditure).

2) Main changes
Thatcher government has been referred to as “revolutionary” as she ended the “Consensus Politics”
operating since 1945. Consensus was seen as a creeping socialism.
She felt that Conservatives had fallen into the same policy traps followed by Labour and she
formulated criticisms:
• In economic areas, there was:
-too much state direction in the economy,
-too much input from undemocratic Trade Unions,
-too many subsidies to private and public companies,
-not enough free markets and free enterprise.
 THIS RESULTED in inefficiency and low growth for Britain’s economy.

• Concerning the Welfare system :

- Welfare undermined personal responsibilities.
- It created a dependency culture: hard-working members of society were subsidising the work-shy.
Initiative was stifled.
- the state should not reward the incompetent and the half hearted  Bad social practice.
Thatcher introduced the idea of a return to the principle of individual accountability.

Thatcher’s views can be seen as an ideology based on a set of moral values :

 faith in individual responsibility
 importance of hard work,
 the importance of the traditional family,
 the need to limit the role of the state,
 the importance of patriotism, and
 the revulsion against socialism

Mrs Thatcher believed that societies have to encourage and reward the risk-takers, the entrepreneurs,
who alone create the wealth without which governments cannot do anything, let alone help the weak.
A country can prosper only by encouraging people to save and to spend no more than they earn;
profligacy (and, even worse, borrowing) were her road to perdition. The essence of Thatcherism was a
strong state and a free economy.
The Economist, April 13,2013 on Margaret Thatcher

• Determination to restore these moral values to the centre of British political culture.
In that sense not a radical reforming PM, but much more a “reaction period to the reforms of the
previous generation, seen as a period of moral and economic decline”
• People were thinking she would be tamed by the pressures of office, as its election manifesto
was not extreme.
The programme was based on:
* promises of inflation reduction,
* trade union reform,
* sale of council housing,
* reduction of taxation and public spending,
* firm handling of immigration and
* a strong defence policy.
Thatcher’s programme was successful especially among the skilled workers.

C) Key features of Thatcher government.

C-1) Global policies

These have to be understood as a set of aims which she sought to achieve :
• Keynesian theories has to be abandoned and the free market allowed to operate.
Reminder: Keynesian theories were applied after 1929 crisis to rebuild economies through state
financial intervention in the economy and support of lower classes’ buying power so that renewed
consumption would stimulate industrial production and the economy as a whole.’

• Monetarism would end wasteful government spending.

• The undemocratic power of the Trade Unions to be broken and the union leaders to be made
fully responsible to their members.

• Companies to be removed from government control and privatisation to be introduced.

• Government subsidies for unprofitable industries to end and the competition spirit to be promoted.

• Income tax and corporation tax reduced so that individuals and companies could keep their
money.
• Public institutions and bodies in particular local government to be made truly accountable to
the public they existed to serve.

• Welfare dependency to be discouraged by targeting benefit on those who genuinely needed it.

• The maintenance of law and order to be given priority : provide greater protection to ordinary
citizens.

• British independence and sovereignty to be enhanced by resisting EEC encroachments.

• Britain would promote the cause of world freedom in the face of the Communist oppression.

The first real actions were the privatisation* of 50 enterprises sold during the Thatcher years :
British airways, British Steel, British Coal, Cable and wireless, British Telecom, and the regional
electricity and water boards.
•Government revenue derived from privatisation :
1979-80 : 377 M £ ;
1985-86 : 2.6 B £ ;
1988-1989 : 7 B £

« Government spending was curbed to control the money supply, exchange controls were abolished
and the currency was allowed to continue to float (rather than joining the new European Monetary
System) —all decisive breaks with post-war orthodoxies. Industrial subsidies were cut, sending many
firms to the wall. Against the background of a world recession, the result was a sharp rise in
unemployment. By 1981, when joblessness stood at 2.7m, police were battling Molotov-cocktail-
throwing protesters on many city streets in Britain. »
The Economist, April 13,2013 on Margaret Thatcher

* Privatisation: it is the selling of nationalised (government-owned) companies fully or in part to private buyers and
investors. As well as providing the Treasury with large additional funds, the policy aimed at increasing popular capitalism by
giving far more ordinary people the chance of becoming shareholders. Between 1979 and 1990, the number of shareholders
rose from 3 to 9 million.

C-2) The Falklands War 1982

In 1982 Britain went to war with Argentina.
The context:
The Falkland islands lie 300 miles off the coast of the southern tip of Argentina, 75 00 miles
from Britain.
They have no valuable resources, other than a strategic value as a stop-off point for travellers
around the world.
The British established their claim to these islands in 1833, in spite of the interest of other
nations like France, Spain or Argentina.
In 1945 Argentina began claiming the islands at the UN. The British said they would leave
the islands to Argentina only if the population voted their departure, since the population was mostly
British (98% of 2000 inhabitants were British) this wasn’t likely to happen. The issue of disputed
sovereignty was unresolved.

The Falklands War:

On April 2nd, 1982, General Galtieri, the Argentine leader of the military junta in power ( a
group of generals that had seized power by force), ordered the seizure of the islands and overcame
the resistance of the garrison of 80 Royal Marines. Galtieri’s wanted to distract public opinion from
domestic economic problems in Argentina.
His intention was to gather a swift military victory.
M.Thatcher ordered immediately the re-seizure of the islands, refusing to follow a diplomatic
channel first. Although diplomacy did work all throughout the conflict, military decisions took
precedence over the diplomatic channel.
th
A fleet left England between the 5 and 8th of April. The British Task Force arrived April 19 and
operations began.
 nd
On May 2 , Thatcher ordered the submarine HMS Conqueror to attack an Argentinian light cruiser
called the General Belgrano.
It was sunk and the 368 crew members were killed.

Controversy:
The sinking of the General Belgrano led to controversy in the UK. It was reported that the ship was
sailing out of the Total Exclusion Zone (TEZ) and away from the islands, so it was wrong to torpedo a
ship leaving the zone and not threatening British troops.
Some critics of Mrs Thatcher said that she :
-purposefully had the ship torpedoed to boost her popularity.
- she refused diplomatic settlement to prefer military show of force.
Outcome:
The fighting led to the destruction of the only Argentine cruiser and of three British frigates ;
The conflict claimed the lives of 255 British and 665 Argentine servicemen and cost £3 million.

Thatcher had many critics for her tough monetarist measures and there was fear among the
Conservatives of an economic recession which would be fatal for the coming elections however the
Falklands conflict turned attention to other issues and boosted Conservative image.
The way Thatcher handled the war with Argentina was seen as enhancing her popularity and helped
her stay in office. The popularity from the war enabled her to gain the election of 1983 and 1987 since
the Falklands war led to surge of pride and patriotism among the British people and they associated
their victory with Margaret Thatcher’s firm position during the conflict.