Labour and Conservative governments 1945â2015
In the 70 years since the Second World War, Labour formed governments for 30 years, the Conservatives, including a Tory-dominated coalition, for 40. In our chosen period since 1976, Labour governed for 16, the Conservatives for 23. The sequence was as follows: Labour 1945â1951 (Attlee), Conservatives 1951â1964 (Churchill, Eden, Macmillan, Douglas-Home), Labour 1964â1970 (Wilson), Conservatives 1970â1974 (Heath), Labour 1974â1979 (Wilson, Callaghan), Conservatives 1979â1997 (Thatcher, Major), Labour 1997â2010 (Blair, Brown), ConservativeâLiberal Democrat Coalition 2010â2015 (Cameron).
The 1970s were a watershed in British politics. The quadrupling of the oil price after 1973 led to extraordinary inflation, which hit a record 25 per cent per annum in 1975. Simultaneously destructive industrial unrest caused the British economy, already weak, to lurch from crisis to crisis. In 1976, Denis Healey, Labour Chancellor of the Exchequer, had to negotiate a huge loan from the International Monetary Fund. The implicit consensus between the two main parties began to break. The final breaking point was the âwinter of discontentâ in 1979 when public sector workers, fighting the attempt of Callaghanâs government to sustain a pay policy, went on strike. Rubbish piled up in the street. Schools closed. A public sense that something was badly wrong helped Mrs Thatcher to power. Conservative policy after 1979 consciously shook off the One Nation Toryism of Macmillan and Heath. Similarly Blairâs New Labour, which emerged in the 1990s, distanced itself in policy as well as in name from the Labour values of Wilson, Callaghan and Attlee, further developing policies initiated by Mrs Thatcher.
The Thatcher/Blair consensus, 1979âthe present
The Thatcher government rejected Keynesianism, which it considered to be the cause of serious inflation and the enemy of private enterprise. Influenced by Friedrich Hayek who argued for a diminished role for the state and by Friedman who considered inflation a greater threat than unemployment and whose monetarist doctrine stated that inflation was best reduced by the government controlling the amount of money in circulation, the Conservative government managed to bring inflation under control but at the price of high unemployment, which reached 3.2 million in 1985. Rather than a mixed economy it proved a firm believer in the superiority of private enterprise over public ownership. Major industries were privatised, for example British Gas and British Rail, and where possible market forces were given ever-greater freedom. The âbig bangâ of 1986 deregulated the financial markets of the City of London and made possible, for good and ill, the rapid expansion of the City as a major player in global finance.
The Centre for Policy Studies, founded by Sir Keith Joseph in 1974 together with Margaret Thatcher and Alfred Sherman, argued the case for a Social Market economy and privatisation of such public monopolies as education and health â more deregulation and liberalisation. It considered âeducational vouchersâ but thought that too big an undertaking. The philosophical thinking of Hayek and Friedman thereby entered into the management of public services in general and education in particular. It was cogently expressed by Sir Keith Joseph, later to become Secretary of State for Education, that:
the blind, unplanned, uncoordinated wisdom of the market is overwhelmingly superior to the well-researched, rational, systematic, well-meaning, cooperative, science-based, forward looking, statistically respectable plans of government.
(Joseph, 1976)
Thatcherâs government kept a strict control over public expenditure, capping the funds it made available to local government, which it regarded as bloated and too close to the unions. As for public services, where she could not privatise, Mrs Thatcher centralised.
A new âmanagement languageâ was emerging in a series of Government White Papers that straddled the Thatcher/Blair years. The shift in the control and management of public services was explained in a series of Government White Papers from HM Treasury and the Cabinet Office: Modern Public Services in Britain: Investing in Reform (1988, Cm. 4011); Public Services for the Future: Modernisation, Reform, Accountability (1998, Cm. 4181); The Governmentâs Measures of Success: Outputs and Performance Analyses (1999, Cm. 4200); Modernising Government (1999, Cm. 4310). One important consequence of these White Papers (and thus of the âmodernisationâ of public services) was what was referred to as âpublic service agreementsâ. These were agreements over funding from HM Treasury, first to Departments of State in terms of overall targets, which were then âcascaded downâ in more precise forms, to the institutions that were the responsibilities of the respective Departments. In education, this was spelt out partly in terms of the pro portion of students at different schools achieving so many GCSEs at different grade levels. But that gradually emerged as a way of rewarding teachers through âperformance-related payâ.
Where possible Thatcherâs government cut income tax (for example, Lawsonâs 1988 Budget, which reduced the tax on the rich to 40 per cent and on everyone else to 25 per cent). As for the trade unions, breaking their power was a Thatcher priority, broadly supported by public opinion. Here 1984 was the key year when Scargill, the Marxist leader of the National Union of Mineworkers, who had humiliated Heathâs government a decade earlier, called an all-out strike to end pit closures. The government was well prepared with plenty of coal stocks and police effectively deployed to prevent aggressive picketing. After a year the miners went back to work, totally defeated. The government passed a series of laws that severely restricted the power of the unions.
The Conservatives were able to stay in power for 18 years, but not because their policies were particularly popular. In the general election of 1987, when Mrs Thatcher was at her strongest, she won only 42 per cent of the vote with a turnout of 75 per cent of the electorate. Labourâs problem in the 1980s was that it was dominated by the Left and the trades unions, and its moderates had split away to form the Social Democratic Party, which was to merge with the Liberals. Social and economic changes had undermined Old Labour and its traditional working class support in declining industrial areas. More voters thought of themselves as middle class. If Labour was ever to gain power, Blair with his small group of allies â Brown, Mandelson and Gould â decided that the party needed to be rebranded as New Labour and to accept the main Thatcherite policies of privatisation, low taxes, friendly towards business, cool towards the unions and local government, and centralising where public services were concerned. With the UK needing to compete in an increasingly global market, Blair and Brown saw no alternative but to encourage free enterprise. Blair, though he thought Mrs Thatcher a bit dotty, had much respect for her achievements, and she came to regard him as her real successor.
Like Thatcher, Blairâs popularity was less well-rooted than it seemed. The main reason for New Labourâs success in 1997 was the unpopularity of the Conservatives. He won only 44 per cent of the vote, less than Attlee and Wilson, and the voter turnout was lower too, at 71 per cent. His popularity declined in 2001 to 42 per cent of the voters, with 59 per cent voting. In 2005, his share of the vote had further declined to 35 per cent, with 61 per cent of the electorate voting. Throughout these years of radical reform neither Conservatives nor Labour had the explicit support of more than one in three of the electorate. After 2001 it dropped to one in four. More and more young people did not bother to vote.
Though in many ways the New Labour government had its distinctive policies, particularly with regard to relieving child poverty and support of minorities, the main thrust of its economics was similar to that of its predecessor, so much so that Peter Riddell writing in The Times commented that âan economist from Mars would conclude that the same government had been in charge throughout the second half of the 1990sâ.