Britain in the postwar world

Britain at war’s end Exhausted but victorious Labour government elected in 1945 – first time with a majority –Nationalizes several industries: Rail, coal, gas & electricity, trucking, iron and steel –Establishes universal welfare state on the basis of Beveridge report: Flat rate benefits, flat rate premiums for old age pensions, unemployment insurance Establishes National Health Service – system of socialized medicine

Post-war consensus – 1950s and 1960s Agreement between Labour and Conservatives on –Mixed economy, managed by gov’t to ensure full employment –Desirability of welfare state to ensure minimum levels of subsistence Consensus reflects: –Conservatives’ acceptance of most of Labour’s nationalizations –Labour leadership’s recognition that most of its goals can be achieved in the context of a mixed economy –Agreement on tools of Keynsian economics – demand management 1950s as time of relative prosperity: –Harold MacMillan: ‘you never had it so good”

Economic problems: the 1960s Slower rates of economic growth Frequent strikes, problematic labour relations –Strong trade unions, craft-based, frequent jurisdictional disputes Aging industrial plant reflecting –Earlier industrialization –Relative lack of wartime destruction

Attempted Solutions Attempt to imitate French economic planning in the early 1960s: –Establish National Economic Development Council (NEDC), attempt to elicit cooperation from unions and employers Attempts by both Labour and Conservatives to regulate trade unions –“Battle of Downing Street” (1969): Labour fails to regulate unions – backbench rebels – law is not passed –Conservative government passes Industrial Relations Act in 1971 Trade unions refuse to comply with provisions for registration, regulation Attempt to join European Community (vetoed by De Gaulle)

The 1970s: fading consensus Context: increasing economic problems –Major industries – steel, shipbuilding, air craft in need of state subsidies to continue operating –Hyper-inflation as result of energy crisis Parties’ response: –Labour, increasingly divided, moves to the left – re- embraces state ownership, socialism (but party divided at all levels –Conservatives under Margaret Thatcher, move to the right -- reject state ownership or extensive involvement in the economy

Prelude to Thatcherism Heath government ( ) –Attempts to regulate unions – fails –Attempts to avoid subsidies to declining industries –Miners strike 1974 – results in new election Labour governments ( ) –Harold Wilson ( ) & James Callahan ( ) attempt Social Contract with trade unions: Unions agree to restrict wage demands, provide labour peace in exchange for longer term benefits Social contract succeeds in damping down wage demands from Wave of strikes – winter of discontent – breaks out in 1979

Thatcher and Thatcherism Margaret Thatcher ousts Heath as leader of Conservatives in 1975 Thatcher’s vision – an end to the “nanny- state” – a neo-liberal view –State to withdraw from the economy –Foster enterprise culture –Promote market relationships –Preference for monetarism (regulation of money supply rather than Keynsianism)

Thatcher’s policies Privatization of nationalized industries Elimination of subsidies to declining industries Curb trade union power –Regulation of trade unions –1984 miners strike Trims welfare state (but doesn’t eliminate) Attacks bastions of Labour Party power: –Sale of council (public) housing –Restrictions on local council taxation and spending Reserved attitude toward the European Union – favour larger market –Oppose any form of federal Europe

Transformation of the party system Conservative Party abandons postwar stance (one-nation conservatism) and embraces neo- liberalism – –Favours a weak state – except in the administration of justice Labour initially moves further to the left –Re-embraces socialism in early 1980s –Following election defeats in 1979, 1983, 1987 begins move back toward centre Liberals Democrats (Liberals and Social Democrats) gain votes in the centre –But few seats under single-member plurality system

Transformation of British society Decline of industrial north Increased wealth of south – especially areas around London Eventual recovery of British economy –Prosperity of financial and business centre in the south –A cheap labour zone – able to attract new plants on basis of lower labour costs Sharp disparities in the distribution of wealth

Labour’s return to power Thatcher ousted by her own party in 1990 Replaced by John Major Labour begins slow march to centre under –Neil Kinnock – –John Smith – –Tony Blair –1994-present Blair brings Labour back to power by remaking the party

New Labour vs. Labour Abolition of point IV of party constitution (public ownership of means of production – promote a ‘third’ way: social liberalism rather than socialism New emphasis on inclusiveness –Reaching out to marginal or excluded groups replaces redistribution of wealth Mimics Conservatives on spending –Fiscally sound New Labour instead of ‘tax and spend’ –Emphasis on ‘private finance initiatives Tough love in administration of justice, response to refugees, asylum seekers