In February 1974 the Conservative Party, led by Edward Heath (1916-2005), was defeated in a General Election which had been precipitated by the government’s failure to cope with the trades unions, most especially the National Union of Mineworkers. Keith Joseph (1918-96), a member of Heath’s cabinet, attributed Britain’s ills to the harmful effects of socialism:

He went further, saying that Tory governments had travelled this path as surely and enthusiastically as Labour ones.

Was Joseph right? Was Britain socialist in the 1970s, and if so, how did it get that way?

The Labour Party had grown in the first half of the 20th century into a mass party, and had won a decisive victory in the General Election at the end of the Second World War. The Election was held in early July 1945 when the Allies had achieved victory over Hitler in Europe but were still at war with Japan. Conservative Prime Minister Winston Churchill (1874-1965) came back from the peace negotiations in Potsdam with his deputy, Labour leader Clement Attlee (1883-1967), for the announcement of the results on 25 July 1945.

Furthermore, the Labour victory was overwhelming. They captured 393 seats in the House of Commons to the Conservatives’ 189.

Some were surprised that the war leader and hero, Churchill, should be booted out, but others who had followed the findings of Mass Observation, had listened to the ordinary voter and seen the reaction to the Beveridge Report, were not.

They wanted what Sir William Beveridge (1879-1963), director of labour exchanges 1909-16 and a director of the London School of Economics 1919-37, had suggested in his report to the House of Commons in 1942. What was the Beveridge Report?

Social insurance should be part of a general policy of social progress. Social security can only be achieved through co-operation between the individual and the state.

Special benefits should be provided for unusual expenses in connection with birth, marriage and death.

Pensions should be available for all.

There should be a free medical service.

The Report was universally acclaimed.

The Labour Party elected in 1945 on a wave of enthusiasm for collective security and the effectiveness of planning – after all, the War had been won by planning, hadn’t it? – legislated in its administration up to 1950 to bring in what became known as The Welfare State.

The nationalization of the means of production, distribution and exchange – the famous Clause 4 of the Labour Party constitution – was tackled with vigour and enthusiasm by the incoming Labour administration.

The following nationalizations took place under the new Labour government:

And, towering above all, the National Health Services Act (1946), providing “free” health care for all, described even by the Conservative MP, Derick Heathcoat-Amory (later Chancellor of the Exchequer) as: “By any test, a tremendous measure.”

The intellectual justification for this planned approach to the economy came from John Maynard Keynes (1883-1946).

Keynesianism required that the large institutions, corporations and unions should drive the country’s economy and that the government should intervene constantly to balance the situation, increasing or decreasing financial stimuli where necessary.

After a shaky start in the last decades of the 19th century, both the trade union movement and the Labour Party were given a great boost by the outrage in the working class following a court decision in 1901.

The first case was a great step forward for the unions and the Labour Party. The Act gave the unions formidable power to live outside the law, later to be greatly abused.

By 1945, the unions were a very powerful force within the labour movement and the Labour Party. Denis Healey (b. 1917), long-time Labour MP, Chancellor of the Exchequer and Foreign Secretary in Labour administrations, said in his autobiography, The Time of My Life…

But if the leaders of the unions could dominate the Executive of the Labour Party, ironically they were not as powerful within their own unions. Denis Healey again …

The real power lies not in the union headquarters but with the local shop stewards … Moreover, the TUC [Trades Union Congress, i.e. all the bosses of the unions] has no real power over its constituent unions, unlike its equivalents in Scandinavia, Germany and Austria; in those countries, governments have normally been able to rely on the annual agreements made at national level between centralized organizations of unions and employers, without direct government intervention. This is even more true of Japan, where the recognized need for a national consensus on all major economic issues has made possible 40 years of high growth, full employment, rapidly rising living standards and exceptionally low inflation.

Appeasement of the unions...