Britain 1.

1
A Changing Political and Economic Environment (1918-79)
 Changing Party Fortunes (1918-31)
The Liberal Party
• Trevor Wilson argued that the Liberal Party was
healthy in 1914 but was run over by 'a rampant
omnibus' (war)
• Liberals traditionally disliked excessive government
interference but the war forced their hand
(rationing, conscription)
• The Liberal Party was split between supporters of
David Lloyd George and supporters of Henry Asquith
after 1916
• The 'Maurice debate' in 1918 cemented the personal
bitterness between Asquith and DLG
• The Conservatives didn’t want to join another coalition
due to rumours of corruption (Cash for honours) and
warmongering (Chanak)
• DLG had amassed a huge fund through the sale of
honours but refused to share it with the Liberal Party
until they began to follow his ideas
• Only when Asquith stepped down in 1926 did DLG
share his funds, but it was too late to take on Labour
now
The Conservative Party
• Despite inheriting a fortune from his family's steel
company, Stanley Baldwin managed to present himself
as an ordinary man of the people
• He ran his factories fairly and was keen to promote
harmony between workers and employers in the
British economy
• Baldwin was a key speaker again DLG at the 1922
Carlton Club meeting in which the Tories abandoned
the Coalition
• Baldwin won over DLG's remaining supporters by
adopting protectionism (protecting domestic goods)
• Until the 1948 Representation of the People Act, the
'plural vote' allowed Oxford and Cambridge
Universities and the City of London to return 14 MPs
(always tory)
• In 1921 the Irish Free State gained independence from
the UK – the Liberals lost the support of around 80
Nationalist Irish MPs but Tories continued to receive
support from 10 Northern Irish MPs
• The First Past the Post system benefited the
Conservatives – in 1918 it took 15,943 vote to return a
Tory MP but 29,868 for Labour and 36,116 for
Liberals
The Labour Party (1900-)
• In the 1923 election, Labour gained more votes the
liberals for the first time
• In 1924, Ramsay MacDonald became the first Labour
Prime Minister – becoming the largest party in
1929, leading to MacDonald's re-election
• Unlike the Liberals, Labour emerged from the war
united, and the war also led to a huge growth in Trade
Union membership (the main source of Labour
funding)
• Labour was able to represent a growing sense of
working-class identity, helping to win supporters from
the Liberals
• Asquith backed a minority Labour govt after 1923
because he thought it would do a bad job and have to
rely on Liberal support – this gamble was a huge
mistake
• MacDonald ruled with economic caution and
impressed everyone with his conduct of foreign affairs
• MacDonald used his political influence to have the J.R.
Campbell case dropped, which led to him losing a vote
of no confidence – not helped by the Zinoviev letter
 The National Government (1931-45)
Why was the N.G formed?
• In 1929 the Wall Street stock exchange in New York
collapsed, leading to a global decline in trade and
production
• Almost all Labour MPs disagreed with making cuts in
spending, but in 1931 MacDonald and Snowden saw
no option but to press ahead (10% cut to
unemployment b.)
• MacDonald and his supporters were expelled from the
Labour Party and he was now ready to resign as PM
• However, on 24 August 1931, MacDonald announced
that he would continue to serve as PM of a 'National
Government' to face the emergency
• The British public overwhelmingly backed calls for
national unity and voted for the N.G in huge numbers
• As MacDonald's health began to fail, Baldwin
effectively served as PM from 1931
• Baldwin was fortunate to hand over the reins to Neville
Chamberlain at an exceptionally difficult time
The Failure of Extremism
• The N.G was meant to be a temporary solution to a
crisis of economic depression but continued through
WW2 until 1945
• One of the main reasons why the N.G was able to last
for 14 years was that it held the centre ground while
extreme parties failed to attract support
• Oswald Mosley founded the New Party at the 1931
election but only gained 0.2% of the vote and became
disillusioned with democracy
• In 1932 Mosley formed the British Union of Fascists,
with the aim of emulating the Italian dictatorship of
Benito Mussolini
• The BUF was racist and anti-semitic, leading the Battle
of Cable Street in 1936
• The Communist Party of Great Britain gained 1 MP in
1924 and 1935, and 2 in 1945. But with a max of only
0.4% of the vote, British people clearly rejected it
• The CPGB began to infiltrate the Labour Party to steer
national politics further to the radical left
Did WW2 affect democracy?
• As with WW1, there were some temporary changes in
government and legislation designed to facilitate the
waging of 'total war'
• A War Cabinet of 5 men (Churchill, 2 Conservative and
2 Labour ministers) was set up to make quick decisions
about the war
• New ministries were created – Lord Beaverbrook
became Minister for Aircraft Production, with no prior
political experience
• Churchill approved of men with a proven track record
of getting things done rather than slavishly following
procedure
• The Emergency Powers Act (1940) gave wide-ranging
powers over the British people to the government
• Churchill became Minister for Defence as well as PM.
He not only oversaw the home front but also played a
leading role in military strategy
• Churchill was careful to maintain the support and
prestige of Parliament in a way that DLG had not done
 The Rise of Consensus Politics and Political Challenge
(1945-79)
Why did Labour win the 1945
election by such a large margin?
• Many people, including Labour Leader Clement Attlee,
were shocked by the results of the 1945 election
• Conservative defeat was, in part, due to voters'
memories of the failure to build a 'home fit for heroes'
after WW1 and a failure to solve the Depression in the
1930s
• It was also due to a lacklustre campaign by Churchill
who assumed that victory was assured; he was
criticised for besmirching Labour as a dangerous party
who, if elected, might use secret police to enforce
radical change
• Attlee also worked very hard to secure votes
– Labour was far more in tune with the demands and
expectations of the British people after 6 years of
suffering and sacrifice
• Unlike the Conservatives, the Labour party also
promised the implement the Beveridge Report of 1942
• Labour was seen as a responsible party thanks to the
wartime contributions of its leading figures:
 Attlee (often acted as PM)
 Ernest Bevin (minimised strikes during the
war)
 Herbert Morrison (helped to cope with Blitz)
 Hugh Dalton (Minister for War Economy)
Why was there a post-war
consensus?
• The war not only represented the victory of democracy
over fascism but also the success of collectivism
• The common experience of a successful state-led
struggle caused the British public, and even most Tories,
to accept policies that previously would have been
'socialist'
• Although the Tories were in power for 17 years between
1945-79, they did remarkably little to roll back Labour's
extension of state management and provision
• Labour reforms were not as radical or socialist as they
might have been – Labour had a huge majority in 1945
and could have implemented a throughgoing socialist
shakeup of the economy and society
• Yet Attlee and his colleagues never attempted this –
instead they wanted to create a 'middle way'
• Many leading Conservatives were genuinely
progressive:
 Churchill (Old, but wanted to appear electable)
 Anthony Eden (a 'one nation' tory)
 Harold Macmillan (wrote a book called 'The
Middle Way' in 1938)
 R.A. Butler (passed the 1944 Education Act)
Building the 'middle way':
Attlee's post-war government
Nationalisation
• Bank of England (1946), Air Transport (1946), Coal
mining (1947), Public Transport (1948), Electricity
(1948), gas (1949), Iron and Steel (1951)
• The government's aim nationalisation was:
 Improve efficiency and save jobs
 Improve worker-employer relations
 Put needs of community over profit
Planning
• The Economic Planning Council was established in
July 1947 with several committees to check on issues
such as levels of production and imports
• The National Agricultural Advisory Service gave
advice to farmers on how best to use subsidies to
improve efficiency
• Some MPs felt it was not ambitious enough
Control Measures
• A period of austerity was enforced by Chancellor
Stafford Cripps (1947-50) to aid Britain's recovery
• Wartime rationing on several foods was extended until
1951 (tea, sugar, bacon and butter)
• Even some staple foods (bread, potatoes) which had
not been rationed during the war were included in the
'fair shares' scheme
• Coal was rationed in the harsh winter of 1947-48
Boom, Crisis and Recovery: the response to economic problems (1918-
31)
The Economic Legacy of WW1
Loss of Trade
• Before 1914, Britain had been the world's leading trading nation
• The war led to a collapse in trade (20% of all merchant ships were sunk)
• Economic rivals like Japan and USA filled the gap left by Britain
• Britain was unable to recovery its previous domination of that market after WW1
Debt
• Once Britain had spent its reserves of gold and sold its overseas assets, it was forced to
borrow £850m to fight the last two years of the war
• This reduced the stability of the pound and the state
The Value of the Pound
• Before the war, the value of the pound was fixed to the price of gold
• This guarded against inflation as governments could not simply print more money
• The cost of the war meant that Britain had to abandon the Gold Standard in 1914
• The government now instead printed more paper money
Inflation
• Inflation increased to 25% by 1918 and was a major cause of concern
Technological Development
• This was accelerated by the war, with major advances in the aircraft industry, radio
communications, the car industry and medical science
• Also wider use of machine tools and assembly line techniques which encouraged the
employment of semi-skilled labour
Poverty of Post-War Economic Solutions
(1920s)
• The war cannot be blamed for all of Britain's economic problems in the 1920s
• Other nations such as France and Germany had more serious economic problems in
1918 but were able to recover more effectively
• Several British industries (shipping, mining, iron, steel and textiles) were old and
struggled to compete with new international rivals
• British trade unions had also never been more powerful with a high of 8.3 million
members in 1920
Tax, Spending and Balancing the Budget
• To try and reduce inflation, and repay debts as quickly as possible, taxes were raised
each year after 1918 from £18 per capita in 1919 to £24 per capita in 1922
• The 1922 Geddes Axe led to cuts in housing, health, education, pensions and
unemployment benefits from £206m to £182m - also £190m to £111m in defence
Interest Rates and the Value of the Pound
• The government set a high rate of interest to cut inflation and encourage buying
pounds
• This increased the value of the pound against other currencies
• The goal was to restore the pound to its pre-war value of $4.86 ($3.81 in 1919)
• Parliament's suspension of the Gold Standard expired in 1925 but high interest rates
made it more expensive for businesses to borrow and invest and made people likely to
save
Protectionism
• The serious threat to British industry led the largely Conservative coalition to
introduce duties to protect 'key industries' in 1921.
• Old industries were hit particularly hard by new competition abroad and campaigned
for greater protection
• Baldwin tried to go further in 1923 with more protection but it was rejected by the
electorate who feared more expensive food imports
• More limited tariffs were added in 1925 and 1932 – reduced long term competitiveness
 Response to Economic Problems of the
Great Depression and Second World War
• The Wall Street Crash led to a collapse of global trade and meant many European nations were unable to repay debts to Britain
• British bankers began to panic about the loss of money loaned to Germany; they demanded further spending cuts to boost economic confidence
• Although MacDonald imposed a fresh round of cuts in 1931, a loan of £80m was quickly used up
• The trigger for change in economic policy was the mutiny of 12,000 sailors in opposition to pay cuts at Invergordon, Scotland on 14 September 1931
• It was clear that the cuts could not continue – 5 days later, Britain left the Gold Standard
• The pound was allowed to 'float' against other currencies and quickly depreciated in value from $4.80 to $3.40
• It was clear by the mid 1930s that the change in priorities had led to greater economic success
 British exports quickly became 25% cheaper and far more competitive
 Interest rates could now be cut from 6 to 2%
 The rate on long-term government borrowing was cut from 5 to 3.5%
 This 'cheap money' allowed businesses to borrow and invest more
 The availability of cheaper mortgages fuelled a boom in house construction – this created 1/3 of all new jobs between 1931-34
 Employment was boosted by rearmament in 1935 - a further 15% of the unemployed found work in old industries like steel, iron and shipbuilding
 The Economic Legacy of WW2: The
Managed Economy (1939-51)
• Unlike the Liberals in 1914, the National Government had no reservations about interfering in people's lives as far as was necessary to wage total
war
• Rationing and conscription were introduced almost immediately
• Registration for employment was made compulsory in 1941 - the government issued 8.5m Essential Work Orders which forced people to do
particular jobs
• By 1945, 3.2m had worked in munitions, 4m in other war work and 5.5m were conscripted to the Armed Forces
• Although there were some strikes, these were to boost wages rather than attack government planning
• In 1944, the government declared its long term responsibility for the maintenance of high employment
• The war also lent weight to the theories of leading Cambridge economist John Maynard Keynes
• He argued that rather than aim to balance the budgets in hard times, governments should borrow and spend more money to stimulate recovery
• This view was rejected prior to the 30s but became the dominant economic policy until the 1970s
 The Response to Economic Challenges (1951-79)
Butskellism and 'stop-go' policies: the
Conservatives in power (1951-64)
• The Economist magazine coined the phrase 'Butskellism' to sum up the almost
identical economic policies of Labour and the Conservatives in the 1950s
• R.A. Butler was the Tory Chancellor (1951-55) while Hugh Gaitskell was leader of
the Labour Party (1955-63)
• Apart from the reprivatisation of steel and road haulage, the Conservatives accepted
Labour's post war reforms and also subscribed to the Keynesian approach
Inflation
• A major priority was to maintain inflation at a healthy, low level
• If prices began to rise, steps were taken to 'stop' the economy (e.g. raising tax)
• Such policies worked in the short term but failed to prevent the build up of pressure
Unemployment
• The Conservatives also pledged to maintain full employment
• If the economy began to dip, expansionary measures were taken (e.g. cutting taxes)
• The Conservatives were accused of using these popular 'go' policies just before
elections
Slow Growth
• The British economy grew at a slower rate than its competitors
• 2.3% per year compared to 5.6% in Italy and 5.1% in Germany
• A key reason for this was a lack of investment in research and development
The Failure to Cope with Stagflation (1964-79)
• The Labour governments of Harold Wilson and James Callaghan failed to improve
on the Conservative track record
• Attempts were made to improve planning and increase investment in the 'white heat' of
new technology, but failed to make a substantial impact due to continuing inflation,
unemployment and slow growth
• The Department of Economic Affairs was launched in 1964 under the leadership of
George Brown
• He developed a 'National Plan' to stimulate growth, but this never got off the ground
due to a lack of departmental resources, defined authority or decent working
relations
• Instead of planning, Labour responded with the same stop-go measures as the
Conservatives before them
• The most damaging lack of consistency was over the value of the pound - Wilson
made it clear that he wanted to avoid a further devaluation, yet in November 1967, he
was forced to cut the value of the pound from $2.80 to $2.40
• Unemployment and inflation were boosted in the UK by the 1973 Oil Crisis
• On 16 Oct 1973, OPEC raised oil prices by 70% in retaliation for US support of
Israel
• By 1974, oil prices had risen by 400% - contributing to inflation as high as 25% in
1976
• Unemployment doubled between 1974-76 to just below 1.5m
 Industrial Change and Changing Industrial
Relations (1918-39)
• Those parts of the country heavily reliant on traditional industries fared worse than those with a growing service sector or where newer industries (e.g. chemicals, cars, electrics)
took off
• Clydeside, Northumberland, Durham, Lancashire and South Wales were key areas of traditional industry, while London and the West Midlands did much better
• Traditional industries were heavily reliant on exports and during WW1 lost their share of the market as rivals were able to fill the gaps left
• Tradional industries also become less competitive compared to their European counterparts whose factories had been damaged/destroyed so owners were forced to invest in
newer machinery
• More efficient American and German steel production undercut British domestic sales due to the retention of free trade until 1932 (no tariffs)
• The Great Depression led to a further contraction in demand for ships, steel, coal and textiles
• Unemployment never fell below 1 million between the wars and rose to almost 3 million in 1932-33
• In 1929, 5% of those who needed relief had been jobless for over a year
• By 1932, this had risen to 16.4% (400,000)
• The government increasingly sought to provide help for the unemployed, but generally sided with employers in industrial disputes during this period
• The most important example of this pattern came during the 1926 General Strike
 The General Strike (1926)
• Coal mining was dangerous - between 1922-24, 3,603 miners were killed and nearly 600,000 were injured
• Despite their wages being improved during WW1's nationalisation of mining, miners felt underpaid for their vital work
• The Miners Federation of Great Britain (MFGB) was a formidable union – representing the interests of over 1 million miners
• In recognition of the poor state of mining before the war, and the threat of the MFGB, the 1919 Sankey Commission recommended that government ownership be continued
• Yet the mines were handed back to private owners in 1921
• Pay soon failed to keep up with prices, especially in unprofitable mines – many owners had not invested in mechanisation (80% of coal was still mined with a pickaxe)
• Mine owners initially agreed to maintain wages throughout 1925 but broke this promise after a surge in German coal production and the return to the Gold Standard
• Despite a campaign to enforce a 6 hour working day, mine owners increased the working day by 1 hour to 8 hours
• The miners were furious – the government subsidised miners' wages for 9 months to avoid a general strike in 1925
• In March 1926, the Samuel Commission recommended a radical restructuring of the coal industry and a pay cut for miners
• Miners rejected this with the slogan 'not a minute on the day, not a minute off the pay' and called for TUC support in a strike
• On the 2 May 1926, Baldwin declared a state of emergency – Churchill believed that strike would be a 'revolutionary movement'
• The TUC followed through with its threat of a General Strike on 3 May
• 3 million workers went on strike in sympathy with the miners - yet just 9 days later it was all over and the miners were left to strike by themselves for another 6 months with no success
 Why did the 1926 General Strike Fail?
1. Not all workers went on strike in sympathy with the miners – only those in printing, heavy industry, energy, textiles and transport
 These workers were not ready for a strike and failed to coordinate their efforts

2. The British Government had been preparing for a strike since 1925
 They had created the Organisation for the Maintenance of Supplies - a network of volunteers who could step in to do essential jobs (e.g. delivering food) not done by
striking workers

3. Churchill was put in charge of a government newspaper

 The British Gazette managed to turn public opinion against the strike with its hostile propaganda

4. The TUC did as much as it could to limit violence

 There were some clashes between volunteers and those on strike but no one was killed - easier to handle for the government

5. The Strike was hugely expensive for the TUC

 It spent £4m of its total £12.5m strike fund

6. Herbert Samuel, a respected Liberal politician, offered an unofficial settlement (the Samuel Memorandum) which the TUC hoped would be enacted
 A National Wage Board to be set up, wage subsidies and no pay cuts before the restructuring - the TUC accepted and called off the strike on the 12 May
 Consequences of the 1926 General Strike
• Baldwin pleased the right-wing of the Conservatives by passing the Trade Disputes Act 1927:
 This made sympathetic strikes illegal
 Exposed unions to financial damages during strikes
 Scrapped 'contracting out' (union members now had to opt-in to payment of a 'political levy' for the Labour Party

• The TUC abandoned general strikes as a hopeless method

• Many men became disillusioned with trade unions, particularly the TUC
• TUC membership sank to a low in 1932 before recovering
• Working-class men began to look to the Labour Party to deliver political solutions in parliament rather than direct action
• The strike was a powerful memory for many industrialists and politicians who sought better industrial relations in the decades after 1926
 Changing Working Opportunities and Conditions
(1939-79)
Key changes in the Workplace
• The total number of people working increased despite rises in the school-leaving age
and a fall in the average age of retirement
• There were huge falls in the numbers of miners and shipwrights despite government
efforts to protect these industries
• Although the number of manufacturing workers increased until the 1980s, there was
particularly marked growth in the white-collar sectors. There were several reasons for
this:
Higher Disposable Incomes
• This fuelled a demand for goods and services such as meals out at restaurants
• This previously would have been an unaffordable luxury – this created more jobs
Government Spending
• The government increased spending on services such as health and education
• This created many new jobs in these sectors
Mechanisation
• It is far more difficult to mechanise white-collar jobs than manufacturing jobs
• Fewer white-collar than blue-collar jobs were lost through automation
Industrial Relations
• Managerial structures in white collar firms were far less distant than in industry;
mutual understanding and communication were much better as a result
• White-collar firms were less likely to be unionised and less likely to strike
• The decline in the overall importance of 'masculine' blue-collar employment gave more
work opportunities to women
The Changing Role of Women in the Workplace
• Women made some gains during WW1 but quickly returned to traditional 'women's
work' after 1918 – trade unions were hostile to change and men expected their jobs
back
• While single women could expect to do a certain range of non-professional jobs, the
marriage bar meant most married women stopped work to look after the children
• Until the 1980s, most jobs were still in traditionally male 'blue-collar' areas of
industry and manufacturing
• Educational opportunities limited possible career options; until 1972 most working
class girls left school at 15 - those who stayed on for another year overwhelmingly
took classes in secretarial skills, childcare or hairdressing
• Very few women went to university and even fewer studied science, engineering,
medicine or law; only 15% of doctors and 5% of lawyers were women in the 1960s
• Almost 1/3 of women were still teenagers when they got married in the 60s
• The situation began to change even before changes in legislation in the 70s. There are
several factors that combined to promote female working opportunities:
 WW2 fuelled female desire to work
 Changes in education increasingly provided a more level playing field
 The number of white collar jobs, more 'suitable for women,' increased
 Some women were more assertive (e.g. Ford Dagenham Strike)
• The Ford Strikes together with the need to mirror EEC laws to join in 1973 led to:
 Equal Pay Act 1970 - 'equal pay for equal work'
 Sex Discrimination Act 1975 - illegal to treat one gender less favourably to
another
 Employment Protection Act 1975 - illegal to sack women for pregnancy
 Industrial Relations 1939-79 and the Reasons
for their Breakdown in 1960s and 1970s
Relations during and after WW2
• There was a shift from boom and bust with high unemployment to
wartime full employment and a post-war commitment by Labour to
maintain it
• Over time, this strengthened the bargaining position of trade unions,
something that contributed to increasingly assertive action in the 60s
and 70s
• The war also led to the inclusion of trade unionists in many
government decision-making bodies (e.g. Ernest Bevin was former
General Secretary for the TGWU)
• Although wartime direction of labour and restrictions on the right to
strike did not survive beyond 1945, trade unionist inclusion
continued after the war (e.g. on the board of the nationalised Bank of
England)
• Governments hoped that unions would voluntarily restrict wage
demands – which lasted until the early 50s
• Thereafter, Governments were faced with whether to keep unions
happy and risk inflation or impose controls on wages and prices,
risking souring industrial relations
Relations before 1972: simmering
• The British economy failed to grow as rapidly as rival economies
abroad – British industry struggled to compete and jobs were lost as a
result
• This, together with government efforts to limit inflation through price
and wage controls, led to a great deal of simmering tension
• There were sporadic, serious strikes throughout the period, including
a national seamen's strike in 1966
• Consensus era governments used appeasement and ineffective
sanctions to deal with industrial unrest – Labour's reliance on Trade
Union funding made it impossible for them to resist their demands
• Barbara Castle's 1969 White Paper 'In Place of Strife' would have
undermined union strength but it was never implemented due to its
unpopularity
• Heath (PM 1970-74) tried but failed to tackle the root causes of
industrial unrest: the Industrial Relations Act didn't force unions to
sign up to the National Industrial Relations Court, so their power
remained
Relations 1972-79: boiling point
• Industrial relations became far worse in the 70s, when wages failed to
keep up with prices for the first time since WW2 – the escalation was
largely due to the failure of government efforts to resist increased pay
demands
1972 National Union of Miners Strike
• In 1971, the NUM demanded a 43% pay rise - the government offered
8%
• The NUM called for all 280,000 miners to strike on 9 January 1972
• The government declared an emergency and a 'three day week' after
flying pickets were used to stop workers
• The strike was called off on 19 February after the government offered
a 27% pay rise
Ford Workers and Gasmen Strike 1973
• Despite the creation of Pay Board to exam wage deals
1973 Oil Crisis
• The NUM demanded a 35% pay increase - a further 3 day week was
introduced in Januray 1974
1978 Ford Car Factory Strike
• Callaghan was determined to stick to 5% pay increases yet a strike in
November at Ford car factories led to a 17% pay rise
1979 Oil Tanker and Lorry Driver Strike
• Tanker drivers quickly won a pay rise and returned to work
• Lorry drivers held out for six weeks
22 January 1979 Strike
• 1.5m public sector workers went on strike (almost all schools shut)
• With binmen on strike, piles of rubbish began to build up in towns
• In Liverpool, the gravediggers went on strike
• The government allowed 10-15% pay increases on 14 February