THE SOCIAL CONTRACT
Labour Government 1974-1979
The Labour government lost no time in repealing the 1971 Industrial Relations Act. Like the 1945-51 Labour Government's repeal of the 1927 Act, Wilson had a debt to repay the trade union movement in return for their unstinting support. However, unlike the earlier repeal, the trade union leadership were not content to merely return to the previous legal position. They had evidently drawn the lesson from 1972-4 that the law could not be ignored or flouted with impunity. They now wanted the security of positive legal rights both at the workplace and at the institutional level. Wilson responded with the 1974 Trade Union and Labour Relations Act (TULRA). The positive right not to be unfairly dismissed, which the 1971 Act had provided, was kept and strengthened. The 1974 Health and Safety at Work Act (HASAWA), prepared by the Robens Commission appointed by the Heath Government, was enacted and then amended to make the qualification for workplace safety representatives that they should be "trade union representatives".
Within one year, the Wilson government enacted a raft of positive legal rights for union lay representatives and full-time officials, including paid release from work to undertake training in industrial relations and health and safety. These were, however, not counter-balanced by any incumbent statutory duties or responsibilities. Though the trade union leadership conceded voluntary restraint and an abundance of good will, the problems of how to maintain orderly collective bargaining, deal with demarcation disputes and ensure that individual workers received protection within the system of the closed shop remained unresolved. As a result, the duties which TULRA placed on employers, e.g. in regard to union recognition and collective bargaining, were not given the full force of the law. The government evidently felt constrained to be seen to be even-handed. As the dispute over union recognition in 1976-8 at Grunwick's, a small film processing factory in North West London showed, many perceived gains now appeared to be illusory.
An additional cause for concern was the increasing number of unofficial strikes in engineering in the 1970s. Some factories seemed to be particularly strike-prone. Workers went on strike, it seemed, not to gain significant concessions, but for a small point of principle. Because there was no requirement for pre-strike ballots in engineering at the factory level, either in law or in union rules, union leaders argued publicly that there was little they could do to contain unofficial strikes. In fact, their lack of effort to resolve them was in contrast to their predecessors who had kept a comparatively tight rein on shopfloor industrial conflict.
The 1974-9 Labour government also had to confront the perennial, painful dilemma of how to deal with the effects of Britain's continuing industrial decline. With employers' profits continuing to contract, it was increasingly difficult for unions to win advances in real wages. One solution, adopted by both sides, was for employers to concede significant increases in money wages and then to increase prices to compensate. This inflationary wage-price / price-wage spiral precipitated problems in maintaining the value of the pound on the international exchange market. Most economists agree that the problem of wage drift was not the sole or even the most significant factor in eroding the international competitiveness of British industry, but it was a contributory factor. There was an apparently inexorable tendency of British wages to rise faster than in competitor countries. British industrialists were at a disadvantage in planning investments in capital equipment and were more cautious about marketing their products aggressively in export markets. They lost key export orders and even domestic market share to their competitors in the U.S.A., Japan and West Germany. The result was rising unemployment in key manufacturing areas as industrialists went out of business.
James Callaghan, who became Prime Minister on Wilson's resignation in 1976, made a strenuous effort to persuade union leaders to agree to a voluntary policy of stringent wage restraint. Though the TUC General Council were willing enough to agree in the abstract, they were not prepared to take responsibility for restraining affiliated unions to moderate wage demands. (1) By 1979, inflation in Britain had reached a postwar high, and there was serious concern about whether the economy could continue to operate satisfactorily. The government suffered a loss of credibility after a rash of strikes in the winter of 1978-9, including in the public sector, which are commonly described as the 'winter of discontent'. As a result, a fresh attempt was made to arrive at a working agreement with the TUC which was signed on Valentine's Day, 14 February. Kenneth O. Morgan considered its terms to be "reasonable enough". However, "In reality, the new social contract did not appear credible to the voters. They no longer believed that the unions could restrain their members. Moss Evans [Jack Jones's successor as TGWU general secretary] hardly symbolized the smack of firm leadership.... no government in British history, Labour or otherwise, had been so helpless in the face of the undisciplined brute force of union power." (2)
The government was voted out of power unexpectedly in March 1979, when Gerry Fitt, the Social Democratic and Labour Party MP voted against it on a comparatively minor issue. (He later said he had never intended to bring the government down.) When the general election was announced, few people expected Labour to lose, but during the five week campaign, the Labour Party had few significant tangible achievements to show for its five years in power. The election result gave the Conservatives a strong working majority and they recorded the highest swing to any party since World War II. Labour's share of the poll was 36.9%, their lowest since 1931. Callaghan himself had felt privately gloomy throughout the campaign. His veteran political instincts had detected a sea-change in politics, an event which occurred "perhaps once every thirty years. I suspect there is now such a sea-change." Callaghan had the bad luck to fight the general election on a well-worn platform of tripartite co-operation between government, unions and employers, which was now rejected by enough voters to produce his party's comprehensive defeat. His biographer observed that the Prime Minister sounded far more like the one nation Victorian Tory Prime Minister Disraeli than his Conservative opponent Margaret Thatcher. (3)
We have seen that Callaghan's attempts to establish a viable incomes policy followed a well-trodden path. Successive governments in the postwar period, from Attlee through Macmillan and Heath to Wilson, tried to establish practical incomes policies to deal with the problem of wage drift. Their sincere attempts foundered, but this was not because it was impossible to achieve, though top civil servants in the Ministry of Labour continued to argue this case. Successful incomes policies were developed in Scandinavia, West Germany and the Netherlands. In Britain, insufficient government attention and energy were focused on achieving agreement between employers and unions about the need to do so. Moreover, governments routinely received insufficient support for their efforts from the opposition.
Civil servants in the Ministry of Labour took care to stress the uniqueness of the British trade union movement, in contrast to its continental counterparts. This was an argument which had great appeal to many trade union leaders in the 1960s and 70s. The TUC General Council had opposed the Conservative government's decision to take Britain into the Common Market, with Jones and Scanlon being the chief protagonists of the anti-EEC position. In 1975, the Wilson government called a referendum on the re-negotiated terms of Britain's membership and individual ministers and MPs were allowed to campaign on either side. The General Council decided not to take a position either for or against, though Jack Jones was one of the chief advocates of a vote against the EEC. After the referendum produced a high turn-out and a resounding vote in favour of staying in the Common Market, the General Council accepted the result pragmatically and ceased their strong opposition to Britain becoming part of Europe. They would not acknowledge that the logic of this position was that British unions also had to accept responsibility to observe an incomes policy.
Professor Nina Fishman, Senior Lecturer, History, University of Westminster, School of Social Sciences, Humanities and Languages
(1) Kenneth O. Morgan, 'Callaghan, A Life', 1997, chapter 27, pp. 653-676.
(2) Morgan p. 672
(3) Callaghan's comment to Bernard Donoughue, quoted in Morgan, p. 697, and p. 691
Further reading for the 1960-1979 period:
Robert Taylor, '"What are we here for?": George Woodcock and Trade Union Reform' in A. Campbell et al, 'British Trade Unions and Industrial Politics', vol. 2, 1999
John Campbell, 'Edward Heath', 1993.
Dave Lyddon and Ralph Darlington, 'Glorious Summer, Class struggle in Britain 1972', 2001.