1

28. Gran Bretaa, del laborismo de Attlee al neoliberalismo de

Thatcher (1979)
* Siglo XIX: Tories (conservadores) vs. Whigs (liberales)
* Ampliaciones del sufragio en Gran Bretaa con los Reform Acts de
1867 y 1885
* 1868: Creacin de la federacin sindical Trades Union Congress (TUC)
* 1884: Creacin de la Fabian Society (socialismo reformista)
* 1893: Creacin del Partido Laborista Independiente (ILP), liderado por
Keir Hardie
* Febrero 1900: Creacin del Labour Representation Committee (LRC) en
un encuentro de representantes de organizaciones obreras y de
izquierda para tener diputados propios.
* 1901: La primera decisin Taff Vale da impulso al Labour
Representation Committee: los sindicatos son condenados a pagar los
daos y perjuicios ocasionados por una huelga
* 1906: El LRC pasa a llamarse Labour Party y gana 29 escaos en las
elecciones generales
* Las reformas sociales de Lloyd George, Chancellor of the Exchequer
(12 abril 1908 - 25 mayo 1915) durante el gobierno liberal de Herbert
Henry Asquith y luego primer ministro (7 diciembre 191622 octubre
1922): una serie de esfuerzos legislativos y administrativos dirigidos a
atraer a la clase obrera al estado, ante el inminente estallido de una
guerra mundial, sientan las bases de un estado de bienestar: 1)
enseanza primaria gratuita a los nios de padres indigentes y
alimentacin en comedores instalados en las escuelas. 2) La Old-Age
Pensions Act de 1908 estableci jubilacin mnima para personas
mayores de 70 aos que no hubieran hecho contribuciones. 3) La Trade
Boards Act (Ley de Juntas de Comercio) de 1908 establece por primera
vez en un salario mnimo. 4) se crearon Bolsas de Trabajo (Labour
Exchanges) en 1909 para ayudar a desempleados a encontrar trabajo. 5)
El Presupuesto Popular (People's Budget) de 1909, que introdujo
impuestos a los ricos, en particular a los grandes terratenientes y a las
herencias, fue rechazado por la Cmara de los Lores, y finalmente
aprobado despus de que el mandato de la Cmara de los Comunes fue

confirmado mediante la celebracin de elecciones en enero de 1910. 6)

La Ley de reforma parlamentaria (Parliament Act 1911) elimin el
derecho de los Lores de vetar las leyes presupuestarias (money bills) por
completo, y sustituy su derecho de veto sobre otros proyectos de ley
por una demora mxima de dos aos. 7) La National Insurance Act de
1911 estableci por primera vez un seguro de desempleo y enfermedad.
* 1915-18: El Partido Laborista se une a los gobiernos de Asquith y Lloyd
George en WWI
* Labour's 1918 program 'Labour and the New Social Order', Clause IV,
demands the Common Ownership of the Means of Production
* Enero-noviembre 1924: Primer gobierno laborista de Ramsay
MacDonald dura 9 meses Debido a que el gobierno dependa del apoyo
de los liberales fue incapaz de conseguir que la Cmara de los Comunes
aprobara legislacin social. Derribado por la carta de Zinoviev
* 4-13 mayo 1926: Huelga general de 9 das abarca 1,7 millones de
trabajadores (derrota)
* 1929-31: El segundo gobierno laborista de Ramsay MacDonald y la
Gran Depresin: MacDonald y Philip Snowden, Chancellor of the
Exchequer, finalmente traicionan al Partido Laborista y forman un
Gobierno Nacional con los Conservadores y los Liberales.
* El Partido Laborista pasa a la oposicin durante los aos 30 y sufre dos
escisiones: MacDonald y sus seguidores (1931) y el Independent Labour
Party (ILP) en 1932.
* 1935: Clement Attlee pasa a dirigir el Partido Laborista por 20 aos
(hasta 1955).
* Durante la Segunda Guerra Mundial, el Partido Laborista se suma al
primer gobierno de Winston Churchill (10 mayo 1940-26 julio 1945):
Ernest Bevin, lder de la Transport and General Workers Union, sirvi
como Minister of Labour de 1940 a 1945. Herbert Morrison fue Minister
of Supply en 1940 and luego Home Secretary hasta 1945. Hugh Dalton
fue Minister of Economic Warfare de 1940 a 1942 y luego President of
the Board of Trade hasta 1945. Clement Attlee fue Deputy Prime Minister
de 1942 a 1945.

* Marzo 1944: Friedrich von Hayek, El camino a la servidumbre: idelogo

neoliberal que forma en 1947 la Sociedad Mont-Plerin, la cual incluye a
Milton Friedman y Keith Joseph.
* 5 julio 1945: Las elecciones generales dan la victoria al Partido
Laborista: Clement Attlee reemplaz a ltimo momento a Churchill en la
conferencia de Potsdam en julio de 1945: 26 julio 1945 26 octubre
1951: El gobierno de Clement Attlee y el estado de bienestar
* 1) The Family Allowances Act 1945 (ley de asignaciones familiares por
nios). 2) The Industrial Injuries Act of 1946 (ley de accidentes
laborales). 3) The National Insurance Act of 1946 (Ley del Seguro
Nacional). Todas las personas en edad de trabajar tenan que pagar una
contribucin semanal y a cambio tenan derecho a una serie de
beneficios, incluyendo 1) asignaciones por hurfanos (a sus custodios),
2) subsidios por defuncin, 3) seguro de desempleo, 4) pensin por
enfermedad, 5) jubilacin universal.
* The National Health Service (NHS): Servicio Nacional de Salud: Seguro
Mdico Universal: Los doctores reciban un pequeo salario y honorarios
por cada paciente atendido (capitation fees). Se nacionalizaron todos los
hospitales, si bien los mdicos tambin podan tratar a pacientes
privados en "camas pagas de los hospitales del estado. El seguro
mdico cubra totalmente lentes y dentadura postiza.
* Construccin de 1 milln de council houses (viviendas sociales) entre
1945 y 1950
* Nacionalizaciones con compensacin (2.700 millones de pounds) y sin
representacin de los trabajadores a nivel directivo (capitalismo de
estado sin control obrero o participacin de los trabajadores en las
decisiones de gestin) de: 1) Banco de Inglaterra, 2) minas de carbn, 3)
hierro y acero (el estado se transform en el nico accionista de las
principales 80 compaas), 4) transporte (ferrocarriles, canales,
transporte de carretera, autobuses y camiones), 5) aviacin civil, 6)
telfonos y telgrafos, 7) suministro de electricidad, 8) 1062 compaas
de gas. En 1951 uno de cada diez hombres trabajaba para las industrias
recin nacionalizadas y el sector pblico representaba el 20% de la
economa britnica. Pero no hubo ninguna redistribucin significativa de
la riqueza en 1945-1951. En 1950, el 1% de la poblacin posea el 50%
del capital privado del pas.

* La posicin financiera de Gran Bretaa fue ayudado de manera

significativa por el Plan Marshall de 1948, recibiendo casi $ 3.000
millones de un total de $ 12.000 millones, ms que cualquier otro pas
destinatario.
* Descolonizacin: Palestina (mayo 1948), India y Pakistn con
Bangladesh (junio 1948), Burma, Ceiln (Sri Lanka), etc. En 1951 slo 70
millones de personas fuera del Reino Unido eran gobernados por Gran
Bretaa, en comparacin con 457 millones en 1945.
* 25 junio 1950 27 julio 1953: Guerra de Corea: aumento dramtico del
gasto militar, reduccin de la cobertura de salud y renuncia de Aneurin
Bevan, extensin de la conscripcin de 18 meses a 2 aos,
intensificacin del racionamiento.
* En 1951, Gran Bretaa decidi no unirse a la Comunidad Europea del
Carbn y del Acero
* 15 octubre 1951: El Partido Laborista es derrotado en las elecciones
generales.
* 1951-5: El segundo gobierno de Winston Churchill y el de Anthony
Eden (1955-7): Tories
* 4 julio 1954: Fin del racionamiento de carne y de los alimentos en
general.
* 29 octubre7 noviembre 1956: La Guerra de Sina: subordinacin a
EEUU, acercamiento de Francia a Alemania: Tratado de Roma (25 marzo
1957): Comunidad Econmica Europea
* 1964-70: 1 gobierno de Harold Wilson (Labour) legaliza el aborto y la
homosexualidad.
* 1970-74: El gobierno de conservador Edward Heath: el Labour Party
pasa a la oposicin. Edward Heath appoints Margaret Roberts Thatcher
as Secretary of State for Education and Science - She attracted
widespread publicity for withdrawing free school milk from children over
the age of seven: slogan Maggy Thatcher, milk snatcher.
* Agosto 1971: Richard Nixon suspende la convertibilidad del dlar en
oro debido a dficit ocasionado por la Guerra de Vietnam: fin de los
acuerdos de Bretton Woods de 1944

* 6-25 octubre 1973: Primera crisis del petrleo debido a la Guerra de

Yom Kippur.
* La entrada del Reino Unido en la Unin Europea en 1973: referndum
el 5 junio 1975
* Marzo 1974-mayo 1979: Los gobiernos laboristas de Harold Wilson II y
James Callaghan.
* Febrero 1975: Margaret Thatcher se transforma en lder de la oposicin
* 1976: Prstamo del FMI de $ 3.900.000 y plan de ajuste del gobierno
laborista.
* La stagflation (inflacin con estancamiento econmico) y el
neoliberalismo: Keith Joseph del Institute of Economic Affairs, siguiendo
las teoras de la escuela de Chicago (liderada por los economistas antikeynesianos Friedrich Hayek y Milton Friedman de la Sociedad MontPlerin) llam a aplicar polticas deflacionistas y recortes para combatir
la inflacin
* 1978-9: The "Winter of Discontent": huelgas contra el congelamiento
salarial impuesto por el Social Contract entre el gobierno laborista y
las unions, en un marco inflacionario
* 3 mayo 1979: Elecciones generales y triunfo de Margaret Thatcher,
quien ganara otras 2 elecciones generales (4 elecciones consecutivas
contando a John Major, hasta mayo 1997)
* 4 mayo 1979 - 28 noviembre 1990: Gobiernos de Margaret Thatcher
(neoliberalismo) y Ronald Reagan (20 enero 1981 - 20 enero 1989)
(keynesianismo militar)
* Poltica deflacionista: 1) Reduccin del gasto pblico y contraccin de
la emisin monetaria. 2) Reduccin de los impuestos sobre la renta
(impuestos directos) y aumento del IVA (VAT) (impuesto indirecto). 3)
Privatizaciones, comenzando con la vivienda pblica y pasando a
industrias bsicas como el acero, la electricidad, el petrleo, el gas y el
agua. 4) Abolicin de las restricciones a la exportacin e importacin de
capitales (desregulacin financiera). 5) Legislacin anti-sindical contra
piquetes y ataques al Closed Shop.
* En los tres primeros aos del gobierno de Thatcher (1979-82), casi
10.000 policas adicionales fueron reclutados. El gasto en justicia

criminal aument de 2 mil millones en 1979 a 3,9 mil millones en

1984. El nmero de delitos registrados aument entre un 5% y un 7%
por ao durante el gobierno de Thatcher (1979-90), de alrededor de 2,5
millones por ao a aproximadamente 4,5 millones, debido al aumento
del desempleo y la pobreza.
* Consecuencias: Recesin inicial,
aumento del desempleo,
desindustrializacin en Escocia, Gales y el norte de Inglaterra,
terciarizacin (aumento del sector servicios).
* En 1979-81 Gran Bretaa perdi un 25% de su capacidad de
produccin manufacturera. Slo el aumento de los suministros de
petrleo y gas del Mar del Norte en ms de un 70% durante este periodo
permiti al gobierno de Thatcher para evitar la quiebra.
* Impuestos: 38,5% del PIB en 1979 y 40,75% en 1990: el gasto pblico
no se redujo por el aumento en los subsidios de desempleo (3 millones
en 1982 y 3,2 millones en 1985)
* Aumento del desempleo: 9,1% en 1979-89 (era 3,4% en 1973-9 y el
1,9% en 1960-73)
* No hubo ningn progreso en la cuestin femenina, a pesar de que
Thatcher fue la primera jefa de gobierno en Europa, y la nica primera
ministra britnica hasta hoy: durante su tercer gobierno (1987-90), solo
el 4,5% de los Tory MPs eran mujeres.
* Abril 1980-1: Disturbios (riots) en Bristol, Londres, Liverpool, Brixton y
Manchester.
* 2 abril-14 junio 1982: Guerra de Malvinas: A comienzos de 1982,
Thatcher era sumamente impopular, y hubiera perdido las elecciones del
ao siguiente de no ser por la guerra de Malvinas: 250 muertos
britnicos y casi 1.000 muertos argentinos.
* 9 de junio 1983: Elecciones y reeleccin de Margaret Thatcher.
* 25 octubre 1983: Invasin yanqui de Grenada, una isla miembro de la
Commonwealth.
* Privatizaciones: La privatizacin tuvo tres aspectos principales: 1)
desnacionalizacin directa de las empresas de propiedad pblica, 2), la
subcontratacin de bienes y servicios, como la recogida de basuras y la
provisin de comidas a los hospitales, financiada por el gobierno, y 3) la

reduccin o la eliminacin de la supervisin o del de monopolio estatal,

en reas tales como la regulacin del transporte, licencias de
telecomunicaciones, etc. Principales privatizaciones: British Petroleum,
British Aerospace, British Sugar Corporation (1981), British Telecom
(1984), British Gas (1986) y British Rail en el gobierno Major (1995)
* Venta obligatoria de las viviendas sociales a sus inquilinos (council
house sales): 55.000 viviendas del sector pblico se vendieron en el
primer ao del gobierno de Thatcher, y esto se elev a un mximo de
204.000 en 1982-83. la proporcin de viviendas que pasaron a ser
propiedad de sus inquilinos aument del 55% al 63% en la dcada
posterior a 1979.
* Legislacin antisindical: El Employment Act of 1982 restringe la
definicin de huelgas legales a las que tenan lugar entre los
trabajadores y sus empleadores. Las huelgas en solidaridad con otros
trabajadores se convirtieron prcticamente en ilegales. Las Trade Union
and Employment Acts of 1988 restringen la inmunidad legal de los
sindicatos contra el juicios por los daos sufridos durante la huelga: slo
si se haba celebrado una votacin secreta de sus miembros y se haba
obtenido una mayora para declarar la huelga
* 12 marzo 1984-3 marzo 1985: Huelga de los mineros: dura 1 ao y es
derrotada: El presidente del sindicato de los mineros, Arthur Scargill, no
llam a votacin antes de llamar a la huelga, lo que le sirvi de excusa
el nuevo lder del Labour Party, Neil Kinnock, para no apoyarla. El
sindicato de mineros perdi el 72% de sus miembros en 1979-1986.
* La huelga de prensa de Wapping (24 enero 1986 - 5 febrero 1987):
6.000 trabajadores grficos son derrotados por el magnate australiano
luego de una huelga de 1 ao y 1 mes: Rupert Murdochs News
Corporation: News of the World, The Sun, the Times, Fox News, Twentieth
Century Fox (1985), HarperCollins (1989), The Wall Street Journal (2007).
* Disminucin de la afiliacin sindical: de 13.212.000 en 1979 a
7.801.000 en 1997
* Septiembre de 1985: Disturbios (riots) en Brixton y Handsworth.
* Transferencia de servicios bsicos de las autoridades locales a
operadores privados

* Reduccin de empleados pblicos en 22,5% entre 1979 y 1990, de

732.000 a 567.000.
* Ley de Educacin de 1988: Reduccin del gasto pblico en escuelas en
un 10% (1979-86)
* Desmantelamiento del Servicio Nacional de Salud (NHS): Unos 300
"Hospital trusts" pasaron a administrar los grandes hospitales, las
autoridades de salud deban "comprar" sus servicios. La gestin de los
nuevos trusts fue puesto en manos de administradores de empresas, no
de mdicos, a quienes slo les interesaba la reduccin de costes. Esto
dio lugar a oportunidades de tratamiento cada vez ms desiguales para
los pacientes.
* 31 marzo 1990: El impuesto de capitacin municipal y los disturbios
del Poll Tax: Thatcher es forzada a renunciar por su propio partido el 28
de noviembre de 1990.
* Elecciones generales del 9 de abril 1992: Gana John Major, el sucesor
de Thatcher
* 28 noviembre 1990 2 mayo 1997: El gobierno conservador de John
Major.
* 21 marzo 1991: John Major anuncia la supresin del impuesto de
capitacin Poll Tax.
* 1995: Privatizacin de la empresa estatal de ferrocarriles British Rail.
* 1995: El Partido Laborista elimina la clusula 4 "socialista" de su
Constitucin
* Elecciones generales del 1 de mayo 1997: triunfa el New Labour de
Tony Blair: Los gobiernos laboristas de Tony Blair (19972007) y Gordon
Brown (2007-2010)
* Intervenciones en Kosovo (1999), Sierra Leone (2000), Afganistn
(2001) e Irak (2003)
* David Cameron y el retorno de los Tories (conservadores)
La prioridad ms inmediata del neoliberalismo fue detener la inflacin de
los aos 70. En este aspecto, su xito fue innegable. En el conjunto de
los pases de la OECD, la tasa de inflacin cay de 8,8% a 5,2% entre los
aos 70 y 80 y la tendencia a la baja continu en los aos 90. La

deflacin, a su vez, deba ser la condicin para la recuperacin de las

ganancias. Tambin en este sentido el neoliberalismo obtuvo xitos
reales. Si en los aos 70 la tasa de ganancia en la industria de los
pases de la OECD cay cerca de 4,2%, en los aos 80 aument 4,7%.
La razn principal de esta transformacin fue la derrota del movimiento
sindical, expresada en la cada dramtica del nmero de huelgas
durante los aos 80 y en la notable contencin de los salarios. Esta
nueva postura sindical, mucho ms moderada, tuvo su origen en un
tercer xito del neoliberalismo: el crecimiento de las tasas de
desempleo. La tasa media de desempleo en los pases de la OECD, que
haba sido de alrededor de 4% en los aos 70, lleg a duplicarse en la
dcada del 80. Finalmente, el grado de desigualdad social aument
significativamente los pases de la OECD: la tributacin de los salarios
ms altos cay un 20% a mediados de los aos 80 y los valores de la
bolsa aumentaron cuatro veces ms rpidamente que los salarios. Pero
entre los aos 70 y 80 no hubo ningn cambio significativo en la tasa
media de crecimiento.

10

Gordon Phillips, The Rise of the Labour Party 1893-1931

1893 Foundation of the Independent Labour Party.
1896 ILP proposed co-operation for electoral purposes with TUC and
Fabians.
1899 Resolution of the Trades Union Congress to hold a conference with
other labour and socialist organizations on parliamentary representation.
1900 Foundation of Labour Representation Committee.
1900 General Election (September-October): LRC wins two seats.
1901 First Taff Vale decision upheld by House of Lords, exposing trade
unions to financial penalties for offences arising out of strike activity.
1902-3

LRC gains three more parliamentary seats at by- elections.

1903 LRC establishes political fund and compulsory financial levy on

affiliates.
1903 LRC secretary, Ramsay MacDonald, negotiates a secret electoral
understanding with the Liberal party whip, Herbert Gladstone.
1906 General Election (January-February): LRC wins 29 seats. Alters
name to Labour party.
1907 Labour party introduces its first Right to Work Bill.
1908 Arthur Henderson
Parliamentary party.

succeeds

Keir

Hardie

as

chairman

of

1908 Miners Federation of Great Britain ballots in favour of affiliation to

Labour party.
1909 Osborne judgment, upheld by House of Lords, declares the
illegality of diverting trade union funds to the support of the Labour
party.
1910 General Election (January). Labour party representation falls from
45 to 40.
1910 George Barnes succeeds Henderson as party chairman.
1910 General Election (December): Labour party wins 42 seats.

11

1911 Ramsay MacDonald succeeds Barnes as party leader.

1913 Trade Union (Political Levy) Act, allows unions to give financial
support to the Labour party, through separate political funds approved
by their membership.
1914 Outbreak of war. MacDonald resigns as party leader, succeeded by
Arthur Henderson. Creation of War Emergency Workers National
Committee by party and trade unions.
1915 Labour party joins the first (Asquith) Coalition government.
1916 Lloyd George succeeds Asquith as Prime Minister. Labour party
secures increased Cabinet representation.
1917 Arthur Henderson resigns from the Cabinet, and gives way as party
leader to William Adamson. Begins work on a new party constitution.
1918 Representation of the People Act, enfranchises all adult men over
21 and women over 30.
1918 Labour party approves its first national programme, Labour and
the New Social Order.
1918 Labour party withdraws from Coalition government at the
Armistice, and fights General Election independently (December). Gains
59 seats, increased to 63 by subsequent adhesions.
1920 Labour party joins with TUC in the Council of Action, to resist
British military involvement in Russia.
1921 J.R. Clynes replaces Adamson as party chairman.
1922 General Election (November). Labour gains 142 seats.
1922 Ramsay MacDonald elected leader of the Parliamentary party.
1923 General Election (December). Labour wins 191 seats.
January-November 1924: First Labour
MacDonald ministry

government

or

First

1924 Labour government resigns. General Election (October). Labour

strength reduced to 151 MPs.
1926

General, or National, Strike organized by TUC General Council.

12

1927
Trade Union and Trade Disputes Act, allows unions to levy
contributions for political purposes only with the explicit assent of
individual members.
1928 Labour party approves new political programme, Labour and the
Nation.
1929
General Election (May). Labour, with 288 seats, forms second
minority government.
5 June 1929 24 August 1931: Second Labour government under
MacDonald
1930
Oswald Mosley resigns as junior minister over the failure of the
government to tackle unemployment effectively.
1931
Labour government resigns through inability to agree on budget
economies. MacDonald made head of a National Government, including
Liberals, Conservatives, and three of his ministerial colleagues in the
Cabinet.
1931

General Election (October). Labour wins only 52 seats.

In opposition during the 1930s

10 May 1940 - May 1945: Wartime coalition or Churchill war
ministry
8 May

1945: VE (Victory in Europe) Day.

5 July 1945: General election: Clement Attlees Third Labour

government (19451951)
26 July 1945 26 October 1951: Clement Attlee Prime Minister (welfare
state)
14 August 1945: Keynes warned politicians of a financial Dunkirk.
15 August 1945: Japan surrendered unconditionally.
21 August 1945: Truman abruptly ended Lend-Lease.
14 October 1945: Troops called in to unload food during dock strike.
6 December 1945: US loan agreement signed in Washington; accepted
by the House of Commons later in the month.

13

1946
1 March 1946: Bank of England nationalised.
22 May 1946: Trade Disputes Act repealed.
30 May 1946: Bread rationing began.
22 July

1946: King David Hotel blown up in Jerusalem.

1 August 1946: National Insurance Act received royal assent.

1947
1 January 1947: Nationalisation of coal and of Cable and Wireless.
8 January 1947: Attlee and other ministers authorised the manufacture
of a British atomic bomb.
24 January 1947: Severe weather hit Britain, causing economic crisis.
14 February 1947: Palestine issue referred by Britain to the UN.
20 February 1947: Mountbatten appointed Viceroy of India. Power to be
transferred not later than June 1948.
15 March 1947: Worst floods recorded in England.
1 April 1947: School-leaving age raised to 15.
3 June 1947: Power to be transferred in India on 15 August 1947.
5 June 1947: George Marshalls speech on aid to Europe.
15 July 1947: Sterling made convertible into dollars.
15 August 1947: India and Pakistan became independent.
21 August 1947: Sterling convertibility suspended.
29 September 1947: Cripps became Minister of Economic Affairs.
8 November 1947: Potato rationing introduced.
13 November 1947: Dalton resigned; Cripps became Chancellor of the
Exchequer.
1948

14

1 January 1948: Nationalisation of the railways.

4 January 1948: Independence of Burma.
10 February 1948: Independence of Ceylon.
27 February 1948: Communist coup in Czechoslovakia.
1 April 1948: Nationalisation of electricity.
14 May 1948: End of the mandate in Palestine.
26 May 1948: Berlin airlift began.
28 June 1948: State of Emergency declared as dockers began unofficial
strike.
5 July 1948: National Health Service inaugurated.
25 July

1948: Bread rationing ended.

5 November 1948: Wilsons bonfire of controls.

1949
15 March 1949: Clothes rationing ended.
4 April
1949: North Atlantic Treaty Organisation agreement signed in
Washington.
24 April 1949: Chocolate and sweet rationing ended.
27 April 1949: The London Declaration on the nature of the
Commonwealth: the King was Head of the Commonwealth, and thus
republican status was compatible with Commonwealth membership.
1 May 1949: Nationalisation of gas industry.
12 May 1949: End of Berlin blockade.
1 July 1949: Three-week dock strike began in London. Troops were used
to move food.
18 September 1949: Devaluation of sterling from $4.03 to $2.80.
Reserves fell alarmingly, by 30 % between March and September 1949.
The Chancellor, Stafford Cripps, set his face against devaluation, but in

15

the end the decision was taken to reduce the value of sterling by 30%,
from $4.03 to $2.80, where it stayed until 1967.
26 October 1949: Britain recognised Maos Peoples Republic of China.
24 November 1949: Nationalisation of iron and steel to become effective
after another general election.
16 December 1949: Parliament Bill received royal assent.
1950
23 February 1950: General election: Labour won an overall majority of
five seats.
19 April 1950: Two-week London dock strike. Troops used.
25 June 1950: Cabinet rejected the Schuman Plan for a European Coal
and Steel Community.
25 June 1950: Beginning of the Korean War
2 September 1950: TUC voted against continuing the wage freeze.
15 September 1950: National service extended from eighteen months to
two years.
19 October 1950: Gaitskell replaced Cripps as Chancellor.
1951
17 January 1951: Aneurin Bevan became Minister of Labour.
28 January 1951: Reduction of the meat ration.
15 February 1951: Iron and steel nationalisation.
9 March 1951: Morrison succeeded Ernest Bevin as Foreign Secretary.
15 March 1951: Iran nationalised Anglo-Iranian Oil Company.
14 April 1951: Death of Ernest Bevin.
21 April 1951: Resignation of Bevan over health service charges.
22 April 1951: Resignation of Wilson.
3 May 1951: Festival of Britain opened.

16

25 October 1951: General Election. Labour won most votes but

Conservatives gained overall majority of seventeen.
Opposition during the 1950s
16 October 1964 19 June 1970: First Wilson ministry (Fourth Labour
government)
In opposition (1970-1974)
Labour Governments 19741979
1. Harold Wilson's Cabinet, March 1974 April 1976
2. James Callaghans Cabinet, April 1976 May 1979
El gobierno de Margaret Thatcher en Gran Bretaa (19791990) y el
neoliberalismo
* 19th ct.: Tories (conservadores) vs. Whigs (liberales)
* Abolition of the Corn Laws introduced by the Importation Act 1815
(1846)
* Ampliaciones del sufragio en Gran Bretaa con los Reform Act de 1867
y 1885
* La reforma agraria irlandesa: Wyndham Land (Purchase) Act
1903 (Irish Land Acts)
El gabinete conservador resolvi efectuar en Irlanda una reforma agraria
radical y, no obstante los enormes gastos que ello demandaba, convertir
al arrendatario irlands carente de tierra, revolucionario eterno y
natural, en pequeo propietario, devolviendo la tierra que le haba sido
quitada a los irlandeses en forma definitiva en el siglo XVII, a los
campesinos de esa isla, carentes de ella; y en cuanto a los landlords
esto es, a los terratenientes que explotaban a los irlandeses mediante el
arriendo de esas mismas tierras, compensndolos en una u otra medida
a costa de los fondos del Estado. Esto se llev a cabo en 1903, cuando el
gabinete conservador de Balfour hizo aprobar en el parlament la
reforma agraria (Wyndham Act), que destin un crdito de 112 millones
de libras esterlinas para rescatar la tierra a los mencionados
terratenientes, y entregarla a los campesinos-granjeros (farmers),
pagadera en condiciones aliviadas y a largos planos. El rescate total de
la tierra por los farmers se prorrogaba para ellos a 68 aos de plazo, con

17

pagos considerablemente inferiores (cerca del 25%) al arriendo que

hasta entonces tenan que pagar. En 1909 fue introducida la
expropiacin forzosa de los landlords (por supuesto con compensacin)
si se negaban a vender sus tierras a los arrendatarios irlandeses.
It differed from earlier legislation which initially advanced to tenants the
sum necessary to purchase their holdings, repayable over a period of
years on terms determined by an independent commission, while the
Wyndham Act finished off landlordism control over tenants and made it
easier for tenants to purchase land, facilitating the transfer of about 9
million acres (36,000 km2) up to 1914. By then 75% of occupiers were
buying out their landlords under the 1903 Act and the later Augustine
Birrell Land Purchase (Ireland) Act 1909 which extended the 1903 Act by
allowing for the compulsory purchase of tenanted farmland by the Land
Commission, but fell far short in its financial provisions. Under these pre1921 Land Acts over 316,000 tenants purchased their holdings
amounting to 11.5 million acres (47,000 km2) out of a total of 20 million
acres (81,000 km2) in the country.
* Las reformas sociales de Lloyd George (12 abril 1908 - 25 mayo
1915)
Lloyd George fue Chancellor of the Exchequer (12 abril 1908 - 25 mayo
1915) durante el gobierno liberal de Herbert Henry Asquith y luego
primer ministro (7 diciembre 1916 22 octubre 1922). Aprob leyes que
otorgaban enseanza primaria gratuita a los nios de padres indigentes,
as como alimentacin en comedores instalados en las escuelas.
La Old-Age Pensions Act de 1908 estableci jubilacin mnima para
personas mayores de 70 aos que no hubieran hecho contribuciones.
La Small Holdings and Allotments Act de 1908 fue una ley para la
consolidacin de las pequeas explotaciones y huertas en Inglaterra y
Gales, destinada a afianzar a la pequea burguesa agropecuaria.
En 1908, la Trade Boards Act (Ley de Juntas de Comercio) establece por
primera vez en un salario mnimo Gran Bretaa.
En 1909, se crearon Bolsas de Trabajo (Labour Exchanges) para ayudar a
los desempleados a encontrar trabajo. Vemos as, en 1906-1909, una
serie de esfuerzos legislativos y administrativos dirigidos a atraer a la
clase obrera al estado.

18

El Presupuesto Popular (People's Budget) de 1909 del gobierno liberal

del primer ministro britnico H.H. Asquith, (defendido por el Ministro de
Hacienda Lloyd George y su aliado Winston Churchill, Presidente de la
Cmara de Comercio, el do se llam los "gemelos terribles" por sus
contemporneos) introdujo impuestos sin precedentes a los ricos, en
particular a los grandes terratenientes y a las herencias, as como
programas de bienestar social. Este presupuesto fue rechazado por la
Cmara de los Lores, lo que condujo a su reforma por la ley conocida
como Parliament Act 1911. Tras el rechazo del presupuesto de 1909, la
Cmara de los Comunes trat de establecer su dominio formal sobre la
Cmara de los Lores, que haba roto la convencin en su oposicin a la
ley. El presupuesto fue aprobado finalmente por los Lores despus de
que el mandato de los Comunes fue confirmado mediante la celebracin
de elecciones en enero de 1910.
Los Lores tambin se opusieron a la Ley de reforma parlamentaria
(Parliament Act 1911), que estaba destinada a evitar la repeticin de los
problemas de presupuesto, sobre todo debido a la aplicabilidad de la ley
propuesta para aprobar un proyecto de ley de autonoma irlandesa (Irish
home rule bill). Despus de una segunda eleccin general en diciembre
1910, la Ley de reforma parlamentaria fue aprobada con el apoyo del
monarca, George V, quien amenaz con crear suficientes Lores liberales
para superar la mayora conservadora. La Ley elimin el derecho de los
Lores de vetar las leyes presupuestarias (money bills) por completo, y
sustituy su derecho de veto sobre otros proyectos de ley por una
demora mxima de dos aos. La Ley tambin introdujo la remuneracin
de los miembros del parlamento y redujo el plazo mximo de un
parlamento de 7 a 5 aos.
Como consecuencia de estas reformas, la National Insurance Act de
1911 estableci por primera vez un seguro de desempleo y enfermedad
contributivo en Gran Bretaa.
In the 1895 general election, the Independent Labour Party put up 28
candidates but won only 44,325 votes. Keir Hardie, the leader of the
party, believed that to obtain success in parliamentary elections, it
would be necessary to join with other left-wing groups.
In 1899, a Doncaster member of the Amalgamated Society of Railway
Servants, Thomas R. Steels, proposed in his union branch that the Trade
Union Congress call a special conference to bring together all left-wing
organisations and form them into a single body that would sponsor

19

Parliamentary candidates. The motion was passed at all stages by the

TUC, and the proposed conference was held at the Memorial Hall on
Farringdon Street on 26 and 27 February 1900. The meeting was
attended by a broad spectrum of working-class and left-wing
organisations trades unions represented about one third of the
membership of the TUC delegates. After a debate, the 129 delegates
passed Hardie's motion to establish "a distinct Labour group in
Parliament, who shall have their own whips, and agree upon their policy,
which must embrace a readiness to cooperate with any party which for
the time being may be engaged in promoting legislation in the direct
interests of labour." This created an association called the Labour
Representation Committee (LRC), meant to coordinate attempts to
support MPs sponsored by trade unions and represent the working-class
population. It had no single leader, and in the absence of one, the
Independent Labour Party nominee Ramsay MacDonald was elected as
Secretary. He had the difficult task of keeping the various strands of
opinions in the LRC united. The October 1900 "Khaki election" came too
soon for the new party to campaign effectively; only 15 candidatures
were sponsored, but two were successful; Keir Hardie in Merthyr Tydfil
and Richard Bell in Derby.
Support for the LRC was boosted by the 1901 Taff Vale Case, a dispute
between strikers and a railway company that ended with the union being
ordered to pay 23,000 damages for a strike. The judgement effectively
made strikes illegal since employers could recoup the cost of lost
business from the unions. The apparent acquiescence of the
Conservative Government of Arthur Balfour to industrial and business
interests (traditionally the allies of the Liberal Party in opposition to the
Conservative's landed interests) intensified support for the LRC against a
government that appeared to have little concern for the industrial
proletariat and its problems.
In the 1906 election, the LRC won 29 seatshelped by
pact between Ramsay MacDonald and Liberal Chief
Gladstone that aimed to avoid splitting the opposition
Labour and Liberal candidates in the interest of
Conservatives from office.

a secret 1903
Whip Herbert
vote between
removing the

In their first meeting after the 1906 election the group's Members of
Parliament decided to adopt the name "The Labour Party" formally (15

20

February 1906). Keir Hardie, who had taken a leading role in getting the
party established, was elected as Chairman of the Parliamentary Labour
Party (in effect, the Leader), although only by one vote over David
Shackleton after several ballots. In the party's early years the
Independent Labour Party (ILP) provided much of its activist base as the
party did not have individual membership until 1918 but operated as a
conglomerate of affiliated bodies. The Fabian Society provided much of
the intellectual stimulus for the party. One of the first acts of the new
Liberal Government was to reverse the Taff Vale judgement.
The 1910 election saw 42 Labour MPs elected to the House of Commons,
a significant victory since, a year before the election, the House of Lords
had passed the Osborne judgment ruling that Trades Unions in the
United Kingdom could no longer donate money to fund the election
campaigns and wages of Labour MPs. The governing Liberals were
unwilling to repeal this judicial decision with primary legislation. The
height of Liberal compromise was to introduce a wage for Members of
Parliament to remove the need to involve the Trade Unions. By 1913,
faced with the opposition of the largest Trades Unions, the Liberal
government passed the Trade Disputes Act to allow Trade Unions to fund
Labour MPs once more.
During the First World War the Labour Party split between supporters and
opponents of the conflict but opposition to the war grew within the party
as time went on. Ramsay MacDonald, a notable anti-war campaigner,
resigned as leader of the Parliamentary Labour Party and Arthur
Henderson became the main figure of authority within the party. He was
soon accepted into Prime Minister Asquith's war cabinet, as President of
the Board of Education, becoming the first Labour Party member to
serve in government. On 5 December 1916 David Lloyd George forced
Asquith to resign and became Prime Minister. Henderson became a
member of the small War Cabinet with the job of Minister without
Portfolio. Other labour and union representatives to join Henderson in
Lloyd George's coalition government were; John Hodge and George
Barnes. John Hodge became Minister of Labour whilst Barnes became
Minister of Pensions. Henderson resigned in August 1917 when his idea
for an international conference on the war was voted down by the rest of
the cabinet; shortly afterwards he resigned as Labour leader.
Despite mainstream Labour Party's support for the coalition the
Independent Labour Party was instrumental in opposing conscription

21

through organisations such as the Non-Conscription Fellowship while a

Labour Party affiliate, the British Socialist Party, organised a number of
unofficial strikes.
Arthur Henderson resigned from the Cabinet in August 1917 amid calls
for party unity, to be replaced by George Barnes. Labour's 1918 program
'Labour and the New Social Order'. In the words of Clause IV, the aim of
the party was
to secure for the producers by hand or by brain the full fruits of their
industry and the most equitable distribution thereof that may be
possible, upon the basis of the Common Ownership of the Means of
Production and the best obtainable system of popular administration and
control of each industry and service.

Nevertheless, the Communist Party of Great Britain was refused

affiliation between 1921 and 1923. The unions were the dominant
element in the party, providing the funds without which it could not
survive, and although groups like the miners were calling for the
nationalisation of their industries as the best means of securing better
conditions, most unionists were predominantly interested in the solution
of immediate problems.
Meanwhile the Liberal Party declined rapidly and suffered a catastrophic
split that allowed the Labour Party to co-opt much of their support. With
the Liberals in disarray Labour won 142 seats in 1922, making it the
second largest political group in the House of Commons and the official
opposition to the Conservative government. After the election the nowrehabilitated Ramsay MacDonald was voted the first official leader of the
Labour Party.
January-November 1924: First Labour
MacDonald ministry

government

or

First

After the election of December 1923 Labour had the chance to form a
minority government. Not even the largest single party, it would be in
office but not in power. Yet MacDonald seized his opportunity. Because
the government had to rely on the support of the Liberals it was unable
to get any socialist legislation passed by the House of Commons. The
only significant measure was the Wheatley Housing Act, which began a
building programme of 500,000 homes for rental to working-class
families. The first Labour government lasted only nine months. The
elections held on 29 October 1924 were marked by the red scare, the

22

Zinoviev letter. The letter had little impact on the Labour vote--which
held up. It was the collapse of the Liberal party that led to a
Conservative landslide.
The 1926 general strike in the United Kingdom was a general strike that
lasted nine days, from 4 May 1926 to 13 May 1926. It was called by the
general council of the Trades Union Congress (TUC) in an unsuccessful
attempt to force the British government to act to prevent wage
reduction and worsening conditions for 800,000 locked-out coal miners.
Some 1.7 million workers went out, especially in transport and heavy
industry. The government was prepared and enlisted middle class
volunteers to maintain essential services. There was little violence and
the TUC gave up in defeat. Ramsay MacDonald hastily dissociated
himself from the General Strike of 1926.
5 June 1929 24 August 1931: Second Labour government under
MacDonald
In the 1929 general election, the Labour Party became the largest in the
House of Commons for the first time, with 287 seats and 37.1% of the
popular vote. However MacDonald was still reliant on Liberal support to
form a minority government. MacDonald went on to appoint Britain's first
female cabinet minister, Margaret Bondfield, who was appointed Minister
of Labour.
The government, however, soon found itself engulfed in crisis: the Wall
Street Crash of 1929 and eventual Great Depression occurred soon after
the government came to power, and the crisis hit Britain hard. By the
end of 1930 unemployment had doubled to over two and a half million.
The government had no effective answers to the crisis. By the summer
of 1931 a dispute over whether or not to reduce public spending split the
government. As the economic situation worsened MacDonald agreed to
form a "National Government" with the Conservatives and the Liberals.
On 24 August 1931 MacDonald submitted the resignation of his ministers
and led a small number of his senior colleagues in forming the National
Government together with the other parties, led by Labours two bestknown figures, Prime Minister MacDonald and Chancellor of the
Exchequer Philip Snowden. This betrayal caused great anger in the
Labour Party, and MacDonald and his supporters were promptly
expelled. MacDonald went on to form a separate National Labour
Organisation. The remaining Labour Party (again led by Arthur
Henderson) and a few Liberals went into opposition. The ensuing general

23

election resulted in overwhelming victory for the National Government.

Labour seats declined catastrophically from 288 to 52, 225 fewer than in
1929. The Second MacDonald ministry continued until 7 June 1935.
In opposition during the 1930s
Arthur Henderson, elected in 1931 to succeed MacDonald, lost his seat
in the 1931 general election. The only former Labour cabinet member
who had retained his seat, the pacifist George Lansbury, accordingly
became party leader.
The party experienced another split in 1932 when the Independent
Labour Party, which for some years had been increasingly at odds with
the Labour leadership, opted to disaffiliate from the Labour Party and
embarked on a long, drawn-out decline.
Lansbury resigned as leader in 1935 after public disagreements over
foreign policy. He was promptly replaced as leader by his deputy,
Clement Attlee, who would lead the party for two decades. The party
experienced a revival in the 1935 general election, winning 154 seats
and 38% of the popular vote, the highest that Labour had achieved.
Under Attlee, Labour became more closely associated with the trade
unions and thus with the moderate reformism of union leaders like
Ernest Bevin. As the threat from Nazi Germany increased in the 1930s
the Labour Party gradually abandoned its earlier pacifist stance and
supported re-armament, largely due to the efforts of Ernest Bevin and
Hugh Dalton, who by 1937 had also persuaded the party to oppose
Neville Chamberlain's policy of appeasement. When the Second World
War started in September 1939, Labour agreed to an electoral truce so
that by-elections would not be contested by the main partiesbut would
not enter a coalition.
The ending of the Phoney War in April 1940 transformed British politics
and Labours fortunes. Chamberlain, who had long treated Labour as
dirt, could no longer command the support of the Commons and was
replaced by Churchill. Labour played a key role in this. Chamberlains
only hope of remaining Prime Minister was to form a coalition, but
whereas Attleeafter consulting the party executivemade known
Labours willingness to enter a coalition, he insisted that this would only
be under a new premier. It was a wise decision. The year 1940 marked a
turning point for the party.

24

10 May 1940 - May 1945: Wartime coalition or Churchill war

ministry
Total war necessitated state direction of the economy. No industries were
nationalised, but almost the whole economy came under state direction
and control. Britain saw war socialism to an even greater extent than in
1914-18. Labour Party minister in Churchills war ministry included
Ernest Bevin, the leader of the Transport and General Workers Union,
who before the war had not even been an MP. He served as Minister of
Labour and National Service from 1940 to 1945. Herbert Morrison was
Minister of Supply in 1940 and then Home Secretary (4 October 1940
23 May 1945). Hugh Dalton was Minister of Economic Warfare from 1940
to 1942 and then President of the Board of Trade until 1945. Several
other Labour men also held key and prominent positions, including
Stafford Cripps. One man who did not hit the headlines was party leader
Clement Attlee. He served as a member of the war cabinet for the
duration of the coalitionthe only man other than Churchill to do so
and as Deputy Prime Minister from 1942 to 1945.
8 May

1945: VE (Victory in Europe) Day.

At the end of the war in Europe, in May 1945, Labour resolved not to
repeat the Liberals' error of 1918, and so promptly withdrew from
government, on trade's union insistence, to contest the 1945 general
election in opposition to Churchill's Conservatives. When Victory in
Europe was achieved in May 1945 the prestige of Winston Churchill
stood toweringly high, and yet, when in his first election broadcast on 4
June 1945 he warned that a Labour government would ultimately
introduce some form of Gestapo, few took him seriously.
5 July 1945: General election: Clement Attlees Third Labour
government (19451951)
Labour won 393 seats, just under 50% of the vote with a majority of 159
seats to the Tories 213. Attlee hastily replaced Churchill at the Potsdam
Conference in late July 1945.
26 July 1945 26 October 1951: Clement Attlee Prime Minister of
the United Kingdom
Attlees Cabinet: Ernest Bevin was Foreign Secretary until shortly
before his death in April 1951. Hugh Dalton became Chancellor of the
Exchequer, but had to resign in 1947, while James Chuter Ede was Home

25

Secretary for the whole length of the party's stay in power. Other notable
figures included: Herbert Morrison, Deputy Prime Minister and Leader of
the House of Commons, who replaced Bevin as Foreign Secretary in
March 1951; Stafford Cripps was initially President of the Board of Trade
but replaced Dalton as Chancellor of the Exchequer in 1947; Hugh
Gaitskell held several minor posts before replacing Cripps as Chancellor
in 1950; Nye Bevan was Minister for Health; Arthur Greenwood was Lord
Privy Seal and Paymaster General while future Prime Minister Harold
Wilson became the youngest member of the cabinet in the 20th century
(at the age of 31) when he was made President of the Board of Trade in
1947. The most notable of the few female members of the government
was Ellen Wilkinson, who was Minister for Education until her early death
in 1947.
August 1945: Atomic bomb dropped on Hiroshima. Nagasaki bombed
three days later. On 15 August 1945 Japan surrendered unconditionally.
Britains economic problems
Fewer Britons had perished than in the First World War (400,000 as
opposed to 750,000), but in every other way the scale of destruction was
much more significant in 1939-45. As many as half a million houses may
have been destroyed, while millions of houses, factories, shops and
warehouses were in a state of poor repair. In addition, almost a third of
Britains prewar shipping tonnage had not been replaced after wartime
losses. Problems were compounded by the tremendous financial cost of
the war. The basic rate of income tax had been raised to 50%, while
compulsory savings schemes were inaugurated, but even so Britain had
to sell off foreign investments to the tune of 1,000 millionso that
never again could invisibles compensate for large deficits on visible
tradeand to run up debts amounting to 3,500 million, compared with
less than 500 million back in 1939. Indeed in 1945 Britain had the
largest external debt in history. About 15 % of Britains wealth had been
lost in the First World War; and now the Second drained another 30 %. In
the words of Maynard Keynes, Britain had thrown good housekeeping to
the winds.
14 August 1945: Keynes warned politicians of a financial Dunkirk.
21 August 1945: Truman abruptly ended Lend-Lease.

26

In August 1945 Keynes informed the new government that the country
faced a financial Dunkirk, a dramatic phrase implying the likelihood of
catastrophe. Overseas financial expenditure would, in his opinion, have
to be drastically cut, and even then Britain would be virtually bankrupt
and the economic basis for the hopes of the public non-existent unless
the American Lend-Lease programme of aid were continued. A few days
later President Truman abruptly terminated Lend-Lease and handed
Britain a bill of $650 million for goods in the pipeline. The country no
longer faced war, wrote the Chancellor of the Exchequer, only total
economic ruin.
New crises erupted in 1947, dubbed by Hugh Dalton the annus
horrendus. In the early months of the year Britain suffered one of the
worst winters on record. February 1947 saw the longest period without
sunshine in recorded history, while temperatures were the lowest for
over 100 years. The whole of the United Kingdom was covered with snow
from the end of January until the middle of March. One historian has
called this a unique aggregation of climatic malevolence. When the
thaw began, in the wettest March on record, 32 counties experienced
serious flooding. The economic effects of the weather were devastating.
About 90 % of Britains industrial and domestic energy was derived from
coal, and the disruption of road, rail and sea traffic meant that stockpiles
at the collieries could not reach the power stations. Industry soon ground
to a halt, while domestic electricity was restricted for five hours a day.
Industrial production fell by 50 % in February, and unemployment surged
from 400,000 in January to around 2.5 million at the end of February.
On 15 July 1947 sterling was made convertible into dollars, resulting in a
run on the pound. Those with sterling assets rushed to change them into
dollars; British reserves became dangerously depleted; and bankruptcy
loomed menacingly close. The situation bore an uncomfortable
resemblance to the 1931 crisis which had broken the second Labour
government. The root cause of the convertibility crisis was probably the
general state of the British economy, and in particular the trade deficit
(dollar gap) with the USA: convertibility had merely emphasised British
vulnerability. In November 1947, Dalton increased taxation, cut
government spending and imposed limits on food imports, necessitating
more stringent rationing. A reduction in domestic demand, such as this
budget would engineer, would channel a greater proportion of Gross
National Product into exports. The basic effect of this policy was
domestic austerity, identified especially with Daltons successor at the

27

Treasury, Stafford Cripps. Cripps insisted that the first national priority
should be the needs of industry; second came the necessity for further
capital investments; and a lowly third came the consumption
requirements of the people. Hence the wartime regime of queues and
shortages was intensified. It was calculated at the end of 1947 that the
average British woman spent at least one hour of every day in a queue.
Both bread and potatoes were rationed for the first time, by Minister of
Food John Strachey, and the public were urged to eat such exotic items
as whalemeat steaks, reindeer cutlets and the inedible South African fish
snoek, soon sold off as cat food. This was certainly the age of austerity
and ration books.
Britains financial position was helped significantly by Marshall Aid from
1948. The Americans had been deaf to Keyness advice in 1945 that free
grants would, in the end, rebound to US advantage, but in June 1947
Secretary of State George Marshall mooted, even if rather tentatively,
the US administrations willingness to make such grants. Perhaps he
realised he was launching a vital aid programme, but it was Ernest
Bevin, who had not been officially alerted of his speech, who then seized
the initiative and helped form the Organisation for European Economic
Co-operation, through which aid was co-ordinated. Britain received
almost $3,000 million out of a total amount of $12,000 million, more
than any other recipient.
The balance of payments was the key problem, and here there was
considerable success. Exports rose significantly faster than imports
exports grew in 1945-50 by 77 %, while imports grew by only 15 %and
by 1948 there was a trade balance, earlier than even the optimists had
expected. A surplus existed in 1948-50, though the unfavourable terms
of trade associated with the Korean War caused temporary problems in
1951.
Except during the winter of 1946-7, Britain experienced full employment,
in sharp contrast to the interwar period when at least 10 % of the
insured workforce were continuously out of work. Labour seemed to
have achieved the aim of jobs for all set out in its manifesto.
Unemployment in 1948-50 averaged about 1.6 %, and in 1951 it stood
at a mere 1.2 %. Labour also avoided the industrial strife which had
scarred 1918-22: far fewer days were lost in industrial action after the
Second World War than after the First (about 14 million in 1945-51
compared to 192 million in 1918-24).

28

The erection of the Welfare State

It is sometimes said that Attlees Labour governments constructed the
welfare state (a term that became popular as Britains constructive
alternative to Hitlers warfare state). In fact Labours achievement was
more one of modernising, improving and greatly extending an existing
structure than of building an entirely new edifice. Much of the
groundwork had been done before the First World War, especially by
Lloyd George. In 1908 he had introduced old age pensions, and in 1911
a system of unemployment and health insurance. The interwar period
saw a significant, if piecemeal and haphazard, extension of these
schemes. By 1925 old age pensions were paid as a matter of right to
insured workers and their wives at the age of 65 and, on a noncontributory basis, to those aged 70 and over whose incomes fell below
prescribed levels. Compulsory health insurance was also extended, so
that by 1939 it covered almost 20 million workers, over half Britains
working population. But their dependants were not covered, and neither
were the self-employed; and no dental or ophthalmic treatment was
included, only the services of a general practitioner. Hospital treatment
was available, at a cost, from about 1,000 voluntary hospitals, which
were dependent on private subscriptions and charitable donations, and
about 2,000 municipal hospitals. But the standard of hospital provision,
and of medical care generally, varied enormously from one part of the
country to another. Unemployment insurance was also extended
between the wars: it covered larger numbers of workers and provided
both allowances for dependants and also uncovenanted benefit (the
dole) to cover workers whose insurance cover had expired, though only
after a hotly resented means test on the whole household. Indeed, by
1939 no fewer than eighteen separate means tests were administered
by seven separate government departments. Social services were
clearly a mosaic - or perhaps a crazy pavingof provisions, rather than a
unified, efficient system. Furthermore, there were obvious and glaring
anomalies. The system of workmens compensation was clearly
inadequate; and a man out of work through unemployment could claim
allowances for dependants which those idle through illness could not. In
many ways it was an administrative nightmare.
The war years saw some changes. In particular the Emergency Hospital
Service was set up. Nazi bombs fell impartially on the insured and the
uninsured alike, and so the government arranged that all hospitals
should set aside beds for war casualties. Above all, the war saw an

29

important rise in the publics expectations. The idea of a better post-war

world, symbolised by the Beveridge Report of November 1942, became
one of the aims for which people believed they were fighting. The
essential novelty was that his scheme was to be universal: everyone
could take out additional, private insurance, but only in addition to, not
instead of, the state provision. Hence all would be entitled to state
benefits as of right, thus avoiding the need for a means test. Beveridge
also insisted that, in order to eliminate poverty, this insurance scheme
should be accompanied by childrens allowances, the setting up of a
free national health service and the maintenance of full employment.
Social security services
1) While the Labour government first paid family (childrens) allowances
from August 1946, it was the coalition which had passed the necessary
legislation namely the Family Allowances Act 1945.
2) The 1946 Industrial Injuries Act
Ministry of National Insurance to
disabled as a result of work-related
industrial injury a social service
individual employers.

provided compensation paid by the

workers who were left injured or
accidents, making compensation for
rather than the responsibility of

3) Most important of all, the National Insurance Act of 1946 established a

comprehensive system of social security throughout the United
Kingdom. It formally abolished the Poor Law system that had existed
since the reign of Elizabeth I (15331603), and established a social
safety net for those who did not pay National Insurance contributions
(such as the homeless, the physically handicapped, and unmarried
mothers) and were therefore left uncovered by the National Insurance
Act 1946 and the National Insurance (Industrial Injuries) Act 1946. It also
provided help to elderly Britons who required supplementary benefits to
make a subsistence living, and obliged local authorities to provide
suitable accommodation for those who through infirmity, age, or any
other reason were in need of care and attention not otherwise available.
All persons of working age had to pay a weekly contribution and in
return were entitled to a wide range of benefits, including Guardians (or
Orphans) Allowances, Death Grants, Unemployment Benefit, Widows
Benefits, Sickness Benefit, and Retirement Pension. There were some
criticisms of the Act, such as the fact that married women and a number
of self-employed workers were not included under the schemes, but it
still provided a comprehensive universal basis for insurance provision

30

hitherto unknown. This universal scheme of compulsory flat-rate

contributions and of flat-rate benefits was administered from a new
Ministry of National Insurance based in Newcastle, with local offices
throughout the country. The insurance fund paid out benefits to those
who were unemployed or ill, as well as maternity and death grants, old
age pensions for women at 60 and men at 65 and widows pensions. The
National Assistance Act meant that those who did not qualify for
insurance benefits, falling through the safety net erected from the cradle
to the grave, could claim means-tested benefits.
The National Health Service (NHS)
Labours Minister of Health from 1945, Aneurin Bevan, drew up plans for
a comprehensive health service. He argued that the previous system
had to be extended to cover the whole population, that it had now to
encompass hospital treatment, and that a way had to be found to
produce equal medical care throughout the country. Under the new
dispensation the bulk of NHS finances would have to come from general
taxation, though a small proportion might come from the National
Insurance Fund. Bevan decided to keep the basis of the old system, in
that each general practitioner would have a panel of patients, but the
remuneration of the doctors would change.
As under the old system, doctors would be paid a capitation fee for each
patient on their panels, but now they would have a small annual salary
as wellvital for young GPs trying to build up their practices. In addition,
the buying and selling of practices was to be abolished, the GPs who had
already bought theirs being compensated by the state (to a total of 66
million). Doctors could also be forbidden by a professional committee
from practising in over-doctored areas and encouraged by financial
incentives to settle in areas with shortages. Members of the public could
choose which GP they signed on with, and the doctors too would have a
choice. GPs were not forced to work for the NHS: they could confine
themselves to private patients or retain private in addition to NHS
patients. Dental and ophthalmic services would also come under the
system.
Perhaps Bevans most creative decision was that all hospitals should be
nationalised, an issue which led to cabinet rows with Morrison, who
wanted to keep municipal hospitals under local authority jurisdiction.
Bevan reasoned that only a unified system of hospitals could hope to
produce common standards of health care. As with the GPs, the hospital

31

consultants could not be forced to work in NHS hospitals, and indeed

there seemed a danger that they might set up private nursing homes of
their own. To reduce the possibility of this, Bevan agreed that NHS
consultants could also treat private patients and that they might do so in
pay beds in the states hospitals.
Bevans scheme met tremendously stubborn resistance from the British
Medical Association, the professional body of GPs. There were fears that
Bevan would interfere with clinical freedom and that doctors were being
transformed into civil servants. GPs voted by large majorities against the
ministers main provisions. The NHS bill became law in November 1946
but the service was not due to come into operation until July 1948, and
for a long time it looked likely to be stillborn. In February 1948 the GPs
voted eight to one against joining the scheme. In fact, Bevan showed a
constructive ability to compromise and to assuage the fears of the
doctors. In particular he insisted that if, after three years, the GPs were
not satisfied with their payment of capitation fees plus salary, they could
be paid by fees alone. Soon the GPs rejected the implacable opposition
of the leaders of the BMA and joined the new service.
The opposition of the BMA convinced Labour supporters that the NHS
was a radical scheme and distracted attention from the compromises
which, as a socialist, Bevan had been reluctant to grant. Disliking
market-place medicine, the minister wanted to ensure that poverty was
no disadvantage, and wealth no advantage, to good health care. He
therefore particularly disliked the existence of pay beds in NHS
hospitals. Private medicine within the NHS could not be defended on
grounds of principle; but such a compromise had been needed to secure
the participation of the specialists.
Bevan hoped that, in time, the NHS would work so well that private
medicine would wither away. Certainly it was immediately popular, and
there was a tremendous call for its services. In the first year of the NHS
18,000 GPs wrote 187,000 prescriptions, 8.5 million dental patients were
treated and 5.25 million pairs of spectacles were dispensed, while
another 3 million were on order. In consequence, the Service in its first
year cost about 250 million, twice the amount originally estimated.
Soon Bevan was submitting supplementary estimates, while his
colleagues were being asked to make cuts. In 1950-1 the bill was around
350 million, and in 1951 charges for false teeth and spectacles were
imposed, resulting in Bevans resignation. And yet, that too little was

32

spent on health care. For instance, not a single new hospital was built
during the first seven years of the NHS.
Housing
Bevan was also the minister in charge of housing. In this sphere he was
less successful. About half a million houses had been destroyed or made
uninhabitable during the war and as many as one third of all houses in
Britain were in need of serious repair. Added to this, the immediate
postwar years saw an unprecedented number of marriages and births.
Never had more people been seeking houses, and never had there been
greater competition for building materials that were in acutely short
supply. Perhaps a separate Ministry of Housing should have been
created. Progress at first was slow, and in 1946 homeless squatters
seized unused army camps. But, in the end, much was achieved. Bevan
channelled government subsidies through local authorities and insisted
that only one privately built house could be erected for every four
council houses, in order to direct limited resources to those most in
need. In addition he ensured that new council houses were of a good
standard and size (at least 93 metros cuadrados, compared with a
prewar average of 74). By 1951 several hundred thousand dwellings had
been repaired or converted and 160,000 prefabricated houses had been
constructed. Most important of all, just over one million new houses had
been built.
Education
Teachers were given a pretty free hand with the content of their
teaching, and the new tripartite division of schoolsinto grammar,
technical and modern schoolswent largely unchallenged. Only as it left
office did Labour commit itself to the more egalitarian comprehensive
system.
Nationalisation
In its 1945 manifesto the party pledged itself to nationalise the Bank of
England, the coal industry, gas and electricity, inland transport and iron
and steel. In addition, it would work towards land nationalisation.
Labours nationalisation plans were justified to the electorate in 1945
simply on grounds of efficiency. The coal industry, which had been
floundering chaotically for decades, was overripe for nationalisation.
Gas was clearly an ailing industry by the end of the war; and, while the

33

generation of electricity had been in public hands since 1926, private

suppliers had failed to standardise voltages and currents. The public
ownership of gas and electricity was therefore expected to lead to lower
charges and better research and development. Similarly, only public
ownership could hope to produce a properly unified transport system. As
for iron and steelincluded in the manifesto as a concession to the 1944
conferenceLabour insisted that the substitution of public ownership for
private monopoly would lead to new efficiency and consequently lower
prices.
Labour pledged itself to provide fair compensation for existing
owners and paid a total of around 2,700 million in
compensation for its whole nationalisation programme.
1) Nationalisation of the Bank of England was first on the agenda. In fact
the Treasury and the Bank already worked closely together, and so in
practice little changed. Nationalisation therefore to a large extent merely
formalised an existing arrangement.
2) Coal nationalisation was scarcely more controversial. Everyone
recognised that only thorough changes could possibly revive this ailing
industry. A tribunal decided that the 850 owners should be compensated
with 164 milliona figure they accepted as reasonable, which probably
meant that it was generous.
3) The nationalisation of civil aviation was also relatively uncontroversial,
even though it had not been included in the manifesto. The new
legislation built on wartime coalition plans: Labour established British
European Airways and British South American Airways to complement
the already existing British Overseas Airways Corporation.
4) The nationalisation of the telephone and telegraph service was carried
out through the Cable and Wireless Act of 1946, which attracted scarcely
any notice: the government bought out the stock of a company
operating telecommunication links within the Commonwealth in which it
already had a minority holding.
5) The Transport Act of 1947, by which the government acquired 52,000
miles of railway track, 2,000 miles of canals and 450,000 road haulage
vehicles, was more contentious. Most people accepted the need to
nationalise the railways but road haulage was problematic. Local bus
services were exempt, but Labour wished to take control of all long-

34

distance road haulage (transporte por carretera), arguing that only then
competition with the railways could be eliminated and a co-ordinated
transport system be achieved. But after debates in parliament it was
decided that there should be no control of local operators covering less
than 40 miles or of hauliers who only carried their own goods.
6) The Electricity Act of 1947 nationalised the numerous municipal and
privately owned electricity generation and supply utilities in Great
Britain. They were replaced with a British Electricity Authority and fifteen
Area Electricity Boards.
7) The Gas Act of 1948 nationalised the UK gas industry and 1062
privately owned and municipal gas companies were merged into twelve
Area Gas Boards each a separate body with its own management
structure. Each Area Board was divided into geographical groups or
divisions which were often further divided into smaller districts.
8) The Iron and Steel Act of 1949, which took effect on 15 February
1951, created the Iron and Steel Corporation of Great Britain, which
became the sole shareholder of 80 of the principal iron and steel
companies (reduced from the 107 proposed in the first draft of the Bill).
The model differed from previous nationalisations in that it was the share
capital of the companies that was acquired, not their undertakings. The
reason was that companies in the iron and steel industry had wideranging ancillary activities, from which the core business of iron and
steel making could not easily be extracted. Firms whose chief activity
consisted in the manufacture of motor vehicles were specifically
excluded from the scheme. Companies not qualifying for acquisition
were to require a licence if producing more than 5,000 tons of ore or
other products. Some 2,000 iron and steel companies remained in
business outside the nationalised sector. Not surprisingly, the Tories put
up their most determined opposition to plans to nationalise iron and
steel, because these were efficient and, above all, profitable firms.
By 1948-9 nationalisation was tending to become unpopular. This was
partly due to the form of nationalisation that had been adopted. Rather
than the state running nationalised industries, as it did with the Post
Office or the royal dockyards and ordnance factories, they were run by
semi-autonomous public corporationsthe National Coal Board, the
British Transport Commission, the Gas Council and so on. The power of
ministers to intervene was uncertain, and there was no provision for
workers representation at board level. Cripps insisted that there could

35

be no worker control or even worker participation in management

decisions. These powerful bodies were run by people of capitalist
outlook. For example, a former mine owner Lord Hyndley became
chairman of the Coal Board, and the former Governor of the Bank of
England, Lord Catto, became the new Governor. The workers in the
newly nationalised industries never felt they were working for
themselves. The public corporation form of nationalisation was not
socialism but state capitalism. By 1951 Labours nationalisation was
complete. Roughly one in ten men and women then worked for the
newly nationalised industries (including 888,000 transport workers and
765,000 miners), and the public sector as a whole accounted for about
20 % of the British economy. After victory in 1951, the Tories only
privatised steel and road haulage.
Foreign Policy
The Labour Foreign Secretary, Ernest Bevin, backed royalists in Greece
and lent British aid to Franco-Dutch attempts to regain control of their
Far Eastern colonies from local nationalists. In Malaya the Labour
government authorised the use of British forces to combat Communist
guerrillas from 1948. Britain aligned with the USA against the USSR in
the Cold War, and as early as the summer of 1946, agreed that in an
emergency the USA could send B-29 bombers from five British bases on
atomic-bomb raids. By mid-1950, before the Korean War, the US Air
Force had 8 airfields in Britain, and the government had little effective
control over the American atomic weapons on its soil. On 8 January 1947
Attlee with an inner core of ministers decided to build the atomic bomb,
a very expensive undertaking and one moreover that was concealed
from the House of Commons, the initial cost of 100 million being
carefully camouflaged in the financial estimates.
The Truman doctrine of March 1947a landmark in the origins of the
Cold Warwas precipitated by Britains unilateral decision to withdraw
support from Greece and Turkey.
In February 1947 Attlee appointed a new Viceroy to India, Lord
Mountbatten, with the specific brief to withdraw from India by June 1948.
Amid escalating communal tensions and violence, Mountbatten brought
forward the date of withdrawal to August 1947, by which date
agreements between the Indian National Congress led by Nehru and the
Muslim League led by Jinnah (the former wanting above all a united India
and the latter calling for the creation of a separate Muslim state of

36

Pakistan) had been hastily secured. India became independent and so

too did Pakistan, despite the fact that it occupied two groups of
provincespresent-day Pakistan and Bangladeshseparated by a
thousand miles of Indian territory. Moreover both India and Pakistan
agreed to join the Commonwealth and so maintained trade and cultural
links with Britain. There was bloody communal slaughter resulting in
hundreds of thousands of deaths and millions of refugees. In 1948
Ceylon and Burma followed the new pattern that had now been set,
though Burma declined to join the Commonwealth.
In Palestine too Britain gave a date for withdrawal and then brought it
forward; but in this case there was no political agreement. The blowing
up of the King David Hotel in Jerusalem in July 1946. Between the end of
the war and the end of the mandate 338 British lives were lost in
Palestine. In September 1947 the government decided to cut its losses
and hand over responsibility to the United Nations, which then
recommended partition. The Arabs refused to accept the UN plan and
the British refused the thankless task of trying to implement it. Instead
Britain simply abdicated. The High Commissioner left on 14 May 1948,
as the new state of Israel was proclaimed. Civil war would determine the
political geography of the region.
Decolonisation: Overall, Labours contribution to the end of the British
Empire was profound. By 1951 only 70 million people outside the United
Kingdom were ruled by Britain, compared with 457 million in 1945. Not
only was the all-white Commonwealth club breached in 1947, when India
and Pakistan opted to join, but further members were being groomed for
admission. Malaya entered in 1957, despite the continuance of guerrilla
warfare. Equally important, the rules for Commonwealth admission were
changed. Hitherto, all member states had accepted the British monarch
as their head of state. But in 1949 it was formally recognised that
republics could enter.
The North Atlantic Treaty Organisation was set up in April 1949. NATO
members, including the USA, Canada, Britain and nine European nations,
agreed to regard an attack on any one of them as an attack on them all
and to take action accordingly.
On 25 June 1950 North Korean troops invaded South Korea. The final
months of Labour administration were economically scarred by the
Korean War. Some said defence spending, and overseas commitments
generally, were already too great for Britains economy to bear. Now

37

Labour decided to increase spending dramatically, to a total of 4,700

million in 1951-4 (around 14 % of total national income), which turned
out to be more than could be spent. With a third world war a real
prospect, it was no time for good housekeeping. The result was a
reduction in NHS provision and the resignation of Bevan. Furthermore
the war led to a decisive movement in the terms of trade against Britain.
A steep rise in import prices had deleterious effects not only on the
balance of payments but also on inflation. Participation in the Korean
War necessitated unpopular policies, including an extension of
conscription from eighteen months to two years and social services cuts
that led to the resignations of Bevan and Wilson. Moreover, the new
international economic climate intensified British rationing at a time
when France and West Germany seemed to be faring much better.
In 1951 Britain decided not to join the European Coal and Steel
Community
The first majority Labour Government was institutionally conservative.
Apart from abolishing the anomalies of University seats in the House of
Commons and the additional business vote (for those who owned
businesses outside their constituency of residence), they made only one
change to the British constitutionrestricting the delaying power of the
House of Lords to two sessionsand this introduced no real change of
principle. Even this minor reform came about by the mistaken belief that
it was needed to get the Steel Bill onto the statute book. The monarchy
experienced no significant change, and the civil service underwent a
return to traditional ways, as businessmen and academics recruited
during the war returned to their former occupations. As for that other
bastion of the establishment, the public school system, it flourished as
never before.
The welfare statewhile advantageous in many waysdid not eliminate
(though it much reduced) poverty. Nor did it alter the class nature of
British society. The fact that benefits were universal proved a boon to
many middle-class and wealthy Britons, who were not only more adept
at claiming their rights than the poor but saved on private insurance. In
short, the welfare state brought about no real redistribution of wealth in
British society. There was certainly no significant redistribution of wealth
in 1945-51. Available figures indicate no more than marginal changes. 1
% of the population owned 50 % of the countrys private capital around
1950.

38

Timeline
8 May

1945: VE (Victory in Europe) Day.

4 June 1945: Churchills Gestapo broadcast.

5 July 1945: General election. Results announced on 26 July. Labour won
393 seats, Conservatives 213.
6 August 1945: Atomic bomb dropped on Hiroshima. Nagasaki bombed
three days later.
14 August 1945: Keynes warned politicians of a financial Dunkirk.
15 August 1945: Japan surrendered unconditionally.
21 August 1945: Truman abruptly ended Lend-Lease.
14 October 1945: Troops called in to unload food during dock strike.
6 December 1945: US loan agreement signed in Washington; accepted
by the House of Commons later in the month.
1946
1 March 1946: Bank of England nationalised.
22 May 1946: Trade Disputes Act repealed.
30 May 1946: Bread rationing began.
22 July

1946: King David Hotel blown up in Jerusalem.

1 August 1946: National Insurance Act received royal assent.

1947
1 January 1947: Nationalisation of coal and of Cable and Wireless.
8 January 1947: Attlee and other ministers authorised the manufacture
of a British atomic bomb.
24 January 1947: Severe weather hit Britain, causing economic crisis.
14 February 1947: Palestine issue referred by Britain to the UN.
20 February 1947: Mountbatten appointed Viceroy of India. Power to be
transferred not later than June 1948.

39

15 March 1947: Worst floods recorded in England.

1 April 1947: School-leaving age raised to 15.
3 June 1947: Power to be transferred in India on 15 August 1947.
5 June 1947: George Marshalls speech on aid to Europe.
15 July 1947: Sterling made convertible into dollars.
15 August 1947: India and Pakistan became independent.
21 August 1947: Sterling convertibility suspended.
29 September 1947: Cripps became Minister of Economic Affairs.
8 November 1947: Potato rationing introduced.
13 November 1947: Dalton resigned; Cripps became Chancellor of the
Exchequer.
1948
1 January 1948: Nationalisation of the railways.
4 January 1948: Independence of Burma.
10 February 1948: Independence of Ceylon.
27 February 1948: Communist coup in Czechoslovakia.
1 April 1948: Nationalisation of electricity.
14 May 1948: End of the mandate in Palestine.
26 May 1948: Berlin airlift began.
28 June 1948: State of Emergency declared as dockers began unofficial
strike.
5 July 1948: National Health Service inaugurated.
25 July

1948: Bread rationing ended.

5 November 1948: Wilsons bonfire of controls.

1949
15 March 1949: Clothes rationing ended.

40

4 April
1949: North Atlantic Treaty Organisation agreement signed in
Washington.
24 April 1949: Chocolate and sweet rationing ended.
27 April 1949: The London Declaration on the nature of the
Commonwealth: the King was Head of the Commonwealth, and thus
republican status was compatible with Commonwealth membership.
1 May 1949: Nationalisation of gas industry.
12 May 1949: End of Berlin blockade.
1 July 1949: Three-week dock strike began in London. Troops were used
to move food.
18 September 1949: Devaluation of sterling from $4.03 to $2.80.
Reserves fell alarmingly, by 30 % between March and September 1949.
The Chancellor, Stafford Cripps, set his face against devaluation, but in
the end the decision was taken to reduce the value of sterling by 30%,
from $4.03 to $2.80, where it stayed until 1967.
26 October 1949: Britain recognised Maos Peoples Republic of China.
24 November 1949: Nationalisation of iron and steel to become effective
after another general election.
16 December 1949: Parliament Bill received royal assent.
1950
23 February 1950: General election: Labour won an overall majority of
five seats.
19 April 1950: Two-week London dock strike. Troops used.
25 June 1950: Cabinet rejected the Schuman Plan for a European Coal
and Steel Community.
25 June 1950: Beginning of the Korean War
2 September 1950: TUC voted against continuing the wage freeze.
15 September 1950: National service extended from eighteen months to
two years.

41

19 October 1950: Gaitskell replaced Cripps as Chancellor.

1951
17 January 1951: Aneurin Bevan became Minister of Labour.
28 January 1951: Reduction of the meat ration.
15 February 1951: Iron and steel nationalisation.
9 March 1951: Morrison succeeded Ernest Bevin as Foreign Secretary.
15 March 1951: Iran nationalised Anglo-Iranian Oil Company.
14 April 1951: Death of Ernest Bevin.
21 April 1951: Resignation of Bevan over health service charges.
22 April 1951: Resignation of Wilson.
3 May 1951: Festival of Britain opened.
25 October 1951: General Election. Labour won most votes but
Conservatives gained overall majority of seventeen.
In the October 1951 general elections the Conservatives returned to
power under Winston Churchill. Labour was to remain out of office for
the next thirteen years, until 1964, when Harold Wilson became Prime
Minister.
Opposition during the 1950s
Following the defeat of 1951, the party underwent a long period of
thirteen years in opposition. The party suffered an ideological split
during the 1950s, while the postwar economic recovery, given the social
effects of Attlee's reforms, made the public broadly content with the
Conservative governments of the time. Attlee remained as leader until
his retirement, in 1955. His replacement, Hugh Gaitskell, a man
associated with the right-wing of the party, struggled in dealing with
internal party divisions in the late 1950s and early 1960s and Labour lost
the 1959 general election. In 1963, Gaitskell's sudden death from a
heart-attack made way for Harold Wilson to lead the party.
A down-turn in the economy along with a series of scandals in the early
1960s (the most notorious being the Profumo affair) engulfed the
Conservative government by 1963. The Labour Party returned to

42

government with a 4-seat majority under Wilson in the 1964 election but
increased its majority to 96 in the 1966 election.
16 October 1964 19 June 1970: First Wilson ministry (Fourth
Labour government)
Wilson's government was responsible for a number of social and
educational reforms such as the legalisation of abortion and
homosexuality (initially only for men aged 21 or over). The 1960s Labour
government also expanded comprehensive education and created the
Open University. But Wilson's government had inherited a large trade
deficit that led to a currency crisis and an ultimately doomed attempt to
stave off devaluation of the pound. Labour went on to lose the 1970
election to the Conservatives under Edward Heath.
In opposition (1970-1974)
After losing the 1970 general election, Labour returned to opposition, but
retained Harold Wilson as Leader. Heath's government (June 1970-March
1974) soon ran into trouble over Northern Ireland and a dispute with
miners in 1973 which led to the "three-day week". The 1970s proved a
difficult time to be in government for both Conservatives and Labour due
to the 1973 oil crisis which caused high inflation and a global recession.
The Labour Party was returned to power again under Wilson a few weeks
after the February 1974 general election, forming a minority government
with the support of the Ulster Unionists. The Conservatives were unable
to form a government as they had fewer seats despite receiving more
votes numerically. In a bid to gain a proper majority, a second election
was soon called for October 1974 in which Labour, still with Harold
Wilson as leader, managed a majority of three, gaining just 18 seats and
taking its total to 319.

Labour Governments 19741979

1. Harold Wilson's Cabinet, March 1974 April 1976
2. James Callaghans Cabinet, April 1976 May 1979
For much of its time in office the Labour government struggled with
serious economic problems and a precarious majority in the Commons,
while the party's internal dissent over Britain's membership of the

43

European Economic Community (EEC), which Britain had entered under

Edward Heath in 1972, led on 5 June 1975 to a national referendum on
the issue in which two thirds of the public supported continued
membership.
Harold Wilson's personal popularity remained reasonably high but he
unexpectedly resigned as Prime Minister in 1976, citing health reasons
and was replaced by James Callaghan. The Wilson and Callaghan
governments of the 1970s tried to control inflation (which reached
23.7% in 1975) by a policy of wage restraint. This was fairly successful,
reducing inflation to 7.4% by 1978. However it led to increasingly
strained relations between the government and the trade unions.
Fear of advances by the nationalist parties, particularly in Scotland, led
to the suppression of a report from Scottish Office economist Gavin
McCrone that suggested that an independent Scotland would be
'chronically in surplus'. By 1977 by-election losses and defections to the
breakaway Scottish Labour Party left Callaghan heading a minority
government, forced to trade with smaller parties in order to govern. An
arrangement negotiated in 1977 with Liberal leader David Steel, known
as the Lib-Lab Pact, ended after one year. After this deals were forged
with various small parties including the Scottish National Party and the
Welsh nationalist Plaid Cymru, prolonging the life of the government
slightly.
The nationalist parties, in turn, demanded devolution to their respective
constituent countries in return for their supporting the government.
When referenda for Scottish and Welsh devolution were held in March
1979, Welsh devolution was rejected outright while the Scottish
referendum returned a narrow majority in favour without reaching the
required threshold of 40% support. When the Labour government duly
refused to push ahead with setting up the proposed Scottish Assembly,
the SNP withdrew its support for the government: this finally brought the
government down as it triggered a vote of confidence in Callaghan's
government that was lost by a single vote on 28 March 1979,
necessitating a general election.
Callaghan had been widely expected to call a general election in the
autumn of 1978 when most opinion polls showed Labour to have a
narrow lead. However he decided to extend his wage restraint policy for
another year hoping that the economy would be in a better shape for a
1979 election. But during the winter of 1978-79 there were widespread

44

strikes among lorry drivers, railway workers, car workers and local
government and hospital workers in favour of higher pay-rises that
caused significant disruption to everyday life. These events came to be
dubbed the "Winter of Discontent".
In the 1979 election Labour suffered electoral defeat by the
Conservatives, now led by Margaret Thatcher. The number of people
voting Labour hardly changed between February 1974 and 1979 but in
1979 the Conservative Party achieved big increases in support in the
Midlands and South of England, benefiting from both a surge in turnout
and votes lost by the ailing Liberals.
El gobierno de Margaret Thatcher en Gran Bretaa (19791990)
y el neoliberalismo
8 October 1959 9 April 1992: Member of Parliament for Finchley
20 June 1970 4 March 1974: Secretary of State for Education and
Science
(Prime Minister: Edward Heath: 19 June 1970 4 March 1974)
11 February 1975 28 November 1990: Leader of the Conservative Party
4 May 1979 28 November 1990: Prime Minister of the United Kingdom
(11.5 years)
She held the office for a longer continuous period than anyone since
1827, and won three successive general elections. She was the only
woman ever to have held the post. She also led the Conservative Party
for 16 years, from February 1975 to November 1990.
1925: Margaret Thatcher is born, as Margaret Roberts, the daughter of a
grocery retailer, in Grantham (Lincolnshire).
1935-43: Attends Kesteven and Grantham Girls Grammar School.
1943-7: Attends Oxford University, reading for a degree in Natural
Sciences, specialising in chemistry.
1947-51: Works as a research chemist and begins part-time study as a
lawyer.
1950: Fights the constituency of Dartford (Kent) for the Conservatives.

45

1951: Fails in the general election to win Dartford at the second attempt
although the Conservatives win power from Labour. Marries Dennis
Thatcher.
1953: Gives birth to twins: Mark and Carol.
1954: Having qualified as a lawyer, is called to the Bar by Lincolns Inn,
takes her bar finals and begins working as a tax lawyer.
1959: Elected as Conservative MP for Finchley when the Conservatives,
under Harold Macmillan, win the general election with an increased
majority.
1961-4: Takes up her first government post as Parliamentary Secretary in
the Ministry of Pensions and National Insurance.
1964-70: Holds a succession of front-bench posts while the
Conservatives are in opposition under the leadership of Alec DouglasHome and Edward Heath.
1967: Becomes a member of the Shadow Cabinet.
1970: Becomes Secretary of State for Education and Science when the
Conservatives win the general election, a post that she holds throughout
the Heath government (1970-4).
1974: Briefly becomes shadow spokesperson on the environment and on
Treasury matters. The Conservatives lose two general elections under
Heath.
Margaret Thatcher was born Margaret Roberts in Grantham, Lincolnshire,
on 13 October 1925. She spent her childhood in Grantham, where her
father owned two grocery shops. She could engage with the aspirations
of the lower middle classes because she had been brought up as one of
them. Her father was active in local politics and the Methodist church,
serving as an alderman and a local preacher, and brought up his
daughter as a strict Methodist. He was Mayor of Grantham in 194546
and lost his position as alderman in 1952 after the Labour Party won its
first majority on Grantham Council in 1950.
Originally a research chemist before becoming a barrister, Thatchers
upwardly mobile career was massively boosted by marrying a millionaire
businessman, Dennis Thatcher. She was elected Member of Parliament
(MP) for Finchley in 1959. Edward Heath appointed her Secretary of

46

State for Education and Science in his 1970 government. She reversed
Labour policy by halting the drive towards compulsory comprehensive
schooling (A comprehensive school is a state school that does not select
its intake on the basis of academic achievement or aptitude. This is in
contrast to the selective school system, where admission is restricted on
the basis of selection criteria. The term is commonly used in relation to
England and Wales, where comprehensive schools were introduced in
1965). She also attracted widespread publicity for withdrawing free
school milk from children over the age of seven. The slogan Margaret
Thatcher, milk snatcher was regularly heard.
Due to the rapid rise in oil prices in 1973-4, the British economy was
troubled by high rates of inflation. The conservative government of
Edward Heath (19 June 1970 4 March 1974) limited wage increases.
This caused unrest amongst trade unions, notably in the coal mines
where there was a powerful union, the National Union of Mineworkers
(NUM). After an initial strike in January-February 1972 (the first since
1926), in late 1973, the miners once more voted to take industrial action
if their pay demands were not meet. They were not, and so on 9
February 1974 the miners came out on strike. The government refused
to compromise on a 7% pay rise, and the situation lead to Edward Heath,
the Prime Minister, to declare a state of emergency and introduce a
three day working week. Edward Heath called a General Election for 28
February 1974 believing that the country would be in sympathy with
him, but the Conservatives were defeated. The Labour government and
the miners reached a deal shortly afterwards and the strike ended.
Heath lost office in March 1974 and failed to win it back in October 1974,
when the Labour Prime Minister, Harold Wilson, called another election
to secure an overall majority, which he only just achieved. Nevertheless,
the Conservative share of the popular vote dropped from 37.9% in
February to 35.9% - the only occasions it had been below 40% since
1945. Indeed, the partys share in October 1974 was the lowest in the
century until the John Major debacle of 1997. Heath had therefore lost
two desperately close elections within eight months. The Conservative
Party is notoriously intolerant of electoral defeat, and Heaths departure
after the second election of 1974 was inevitable.
February 1975: Thatcher Challenges Heath for the party leadership and
wins on the second ballot, becoming Leader of the Opposition and the
first woman leader of a major political party in the UK.

47

Thatcher allied herself with the radicals on the right of the Tory Party.
She was not, however, their intellectual leader. That role was fulfilled by
Keith Joseph, connected to the neoliberal Institute of Economic Affairs,
who advocated most of the economic policies that later became known
as distinctively Thatcherite. He called for a smaller role for the state,
steep cuts in taxation and greater incentives for businesses to chase
markets. The state had to abandon its Keynesian commitment to full
employment. The state could not guarantee jobs. It could only pay for
them on borrowed, or printed, money. This frontal assault on the central
tenet of Keynesianism - the dominant economic belief of both Labour
and Conservative governments since 1945 that governments could
manage demand in order to secure full employment - proved
immensely influential. Above all, following the theories of the so-called
Chicago school of anti-Keynesian economists, Friedrich Hayek and Milton
Friedman, Joseph called for strict control of the money supply.
The Austrian economist Friedrich von Hayek had created the MontPlerin Society (named after the Swiss spa where they first met) in 1947.
The notables gathered around him included Friedrich Hayek, Karl Popper,
Ludwig von Mises, George Stigler, and Milton Friedman. Prominent MPS
members who advanced to policy positions included the Chancellor
Ludwig Erhard of West Germany, President Luigi Einaudi of Italy,
Chairman Arthur F. Burns of the U.S. Federal Reserve Board and U.S.
Secretary of State George Shultz. The Institute of Economic Affairs in
London and the Heritage Foundation in Washington were offshoots of the
Mont-Plerin Society. It had a growing influence within the academy,
particularly at the University of Chicago, where Milton Friedman
dominated. Neoliberal theory gained in academic respectability by the
award of the Nobel Prize in economics to Hayek in 1974 and Friedman in
1976. But the dramatic consolidation of neoliberalism as a new
economic orthodoxy regulating public policy at the state level in the
advanced capitalist world occurred in the United States and Britain in
1979.
Although Keith Joseph was the intellectually best equipped advocate of
the neoliberal policies that were becoming increasingly influential within
the Conservative Party, he was not a good candidate, and he stood aside
when the challenge to Edward Heaths leadership was launched in
November 1974. Into the breach stepped Margaret Thatcher, now the
only Cabinet minister prepared to oppose Heath. Her performance in the

48

first leadership ballot by Tory MPs vindicated her decision. She won 130
votes to Heaths 119.
1975-9: Thatcher is Leader of the Opposition during a period when
Labour either has a very small majority or, from 1978, is kept in office
only with the support of the Liberal Party. During the winter of 1978-9,
the so-called Winter of Discontent, there is a rash of strikes and
growing fears about trade union power works against Labour.
Great Britain experienced growing economic troubles during the period
of the so-called Keynesian consensus, roughly from 1945 to 1973. This
period saw both unprecedented social advance - characterised by
effective welfare provision, better housing, sharply rising living
standards and successive consumer booms - and accelerating relative
economic decline. In the period 1950-70, economic output, which had
increased by approximately two-thirds. The problem was that other
nations output had been increasing much faster. During the decade
1962-72, for example, France sustained an annual growth rate of 4.7 %,
while Britain could manage only 2.2 %.
A second factor was the crisis of confidence caused by the end of the
long post-war boom in the late 1960s. By the early 1970s, the Bretton
Woods international agreements on fixed exchange rates were breaking
down, creating a volatile economic climate, which was substantially
worsened by the oil crisis of 1973-4. Britain, like many countries
following Keynesian prescriptions, attempted to sustain domestic
demand in order to keep unemployment levels low. Even so, by 1971,
the number of people out of work reached almost a million, roughly
three times the average levels of the 1950s and 1960s. Keynesian antiunemployment policies could be pursued only at the risk of building up
inflationary pressures. These were exacerbated during periods of
economic growth when British consumers developed a preference for
overseas manufactures - particularly Japanese cars and electronics.
Adverse balance of payments figures mounted alarmingly. A trade deficit
of 110 million in 1965 had reached 1,673 million by 1975. At the end
of 1973, the quadrupling of oil prices, which brought a short period of
growth to a shuddering halt, threatened to put inflation into orbit. In
Britain, it reached a peak of 26.9 % in August 1975. The value of the
pound continued to plummet on international markets. Formally
devalued in 1967, it lost a further 30 % of its value between 1971 and
1975. By the middle of the 1970s, the tide seemed to have turned

49

decisively in favour of monetarism, i.e. restrictions on money supply and

tight restrictions on government expenditure.
The third contextual factor were the economic policies of the Wilson and
Callaghan Labour governments, which staggered on, first with a tiny
parliamentary majority and later by virtue of a pact with the Liberal
Party, from 1974 to 1979. Harold Wilson was twice Prime Minister of the
United Kingdom (16 October 1964 19 June 1970 / 4 March 1974 5
April 1976) while James Callaghan served once (5 April 1976 4 May
1979). A Social Contract was cobbled together whereby the governing
party agreed to discuss with union leaders, almost on a basis of equality,
the major questions of the day. In return for this the unions agreed to
restrain their members demands for wage rises. For a time, the Contract
delivered. In 1978, North Sea oil produced more than one-half of the
countrys energy needs. The prospects both of energy self-sufficiency
and perhaps even of permanent economic recovery began to brighten.
But when a short-term crisis broke out in 1976, Labours Chancellor of
the Exchequer, Denis Healey, proposed to deal with yet another run on
the pound by a strict set of economic measures: stringent reductions in
expenditure, wage restraint and moves towards a balanced budget.
These, of course, were the key tenets of monetarist economic policy. It is
worth stressing that the first post-war moves towards deflation and
sound money came not from Thatcher or her new-right gurus, but from a
Labour government. Callaghan told the Labour Party conference directly
in 1976: You cannot spend your way out of recession. Neither he nor
Healey was a free agent. The Bank of Englands reserves were so
depleted, and the currency so depreciated, that the government felt an
international loan necessary to stave off the prospect of currency
collapse or even bankruptcy. The International Monetary Funds loan of
$3.9 million in 1976 (by far the largest amount ever requested from the
IMF) naturally came with deflationary strings attached in the form of
additional expenditure cuts. Although in part externally imposed, and
therefore divisive internally, monetarist economic policies were alive and
well within the Treasury and the upper echelons of the Labour Party in
the years 1976-8. Monetarism in Britain pre-dated the Thatcher
government.
Two factors brought the Callaghan government down. The first were the
internal contradictions of maintaining a deflationary policy in a party
whose paymaster was the trade unions. This proved too much during the
winter of 1978-9, the so-called winter of discontent following the

50

unions rejection of yet another pay restraint, this time a 5 % limit. There
were widespread strikes by local authority trade unions demanding
larger pay rises for their members. The Social Contract finally fell apart.
The rash of strikes brought back to the centre of debate claims about
ungovernability and the need for firm action. Popular hostility to unions
holding the nation to ransom was gleefully stoked by a generally antiLabour press. The second factor in Labours demise was the partys
failure to carry through its proposals for devolution in Scotland and
Wales that alienated the minority parties and which left Callaghan
vulnerable to a vote of no confidence, which he eventually lost by a
single vote on 28 March 1979.
The United Kingdom general election on 3 May 1979. The Conservative
Party, led by Margaret Thatcher ousted the incumbent Labour
government of James Callaghan with a parliamentary majority of 43
seats. The election was the first of four consecutive election victories for
the Conservative Party, and Thatcher became the United Kingdom's and Europe's - first female head of government. Labours long-term
position had been jeopardised by a decline in the number of manual
workers in the electorate. Twice as many manual workers normally voted
Labour as voted Conservative, but they now constituted only 56 % of the
electorate. When Wilson won narrowly in 1964, they had accounted for
63 %. The Tories election advertising was also superior to Labours. One
spectacularly effective poster depicted a dole queue snaking into the
distance and it carried the caption Labour isnt working. It was perfectly
true that deflationary policies had driven unemployment comfortably
over the million mark. Naturally, the Tories concealed the fact that they
planned to see it rise much higher still.
1979: Labour loses a confidence vote in the House of Commons, which
precipitates a general election, held in May. The Conservatives win with
an overall majority of 43. Thatcher becomes Prime Minister. The change
in economic policy is signalled by a reduction in the rate of income tax
and a substantial increase in the rate of value added tax (VAT). Thatcher
begins to implement stringent deflationary economic policies, which lead
to sharp rises in unemployment amid a general recession. The
Conservatives also win 60 of the 78 seats in elections for the first
European Parliament. The Lancaster House Conference agrees to free
elections in Southern Rhodesia (Zimbabwe), leading to that countrys
independence. Conservative legislation restricts trade union rights to
picketing and attacks the closed shop. closed shop: empresa con todo

51

el personal afiliado obligatoriamente a un solo sindicato. Changes in

immigration regulations remove the automatic right of the husbands or
fiancs of those settled in the UK to join them.
Under the influence of Keith Joseph, Thatcher accepted that
Keynesianism had to be abandoned and that monetarist supply-side
solutions were essential to cure the stagflation that had characterized
the British economy during the 1970s. This entailed confronting trade
union power, dismantling or rolling back the commitments of the welfare
state (housing), the privatization of public enterprises, reducing taxes,
and deregulation of capital movements in and out of the country. Large
pay rises were immediately granted to the police and armed forces. The
first budget of the new Chancellor, Geoffrey Howe, actually raised taxes.
However, Howe initiated a radical shift from direct to indirect taxation.
The top rate of income tax was, therefore, reduced from 83 % to 60 %;
at the same time, the standard rate went down from 33 % to 30 %. The
key indirect tax, VAT, was almost doubled - from 8 % to 15 %. Although
VAT did not apply to food and some other necessities, taxes on
consumption always hit the poor hardest.
Year 1 of the Thatcher regime (1979) also saw other neoliberal moves,
notably the abolition of restrictions on the import and export of capital.
In year 2, the gloves came off. Howes 1980 budget unleashed an
unprecedentedly fierce attack on public spending. The thinking behind
Monetarism was brutally simple: restrict the supply of money and reduce
government borrowing needs and you squeeze inflation out of the
system. Howe and Thatcher were prepared to create an economic slump
in order to kill inflation.
Howes 1980 budget, the direction of which was confirmed by its
successor the following year, achieved its deflationary ambitions with
spectacularly gruesome effect. In 1980-1, manufacturing production fell
by 14 %, gross national product (GNP) actually contracted by 3.2 % and
unemployment rose to 2.7 million. Adult unemployment rose more
rapidly in 1980 than in any single year since 1930, when the world
absorbed the consequences of the Wall Street Crash. In April 1980, riots
broke out in Bristol. Britain lost approximately 25% of its manufacturing
production capacity in 1979-81, becoming ever more dependent upon
the provision of services. Had North Sea oil and gas supplies not
increased by more than 70 % during this very period, the government
could not have avoided bankruptcy. Thatchers inheritance depended

52

critically on North Sea oil. On the positive side, the productivity of those
who remained in work during this period increased sharply. This was a
key element in the governments drive towards greater international
competitiveness. Inflation also began to come down; by the spring of
1982, it was back in single figures.
The effects of the slump were felt unequally across the country. Old
manufacturing areas were hardest hit; those that specialised in services,
and particularly financial services, got off more lightly. Meanwhile,
despite the governments best endeavours, public expenditure
continued obstinately to rise. It reached 44.5% of GDP in 1982. An
important reason for its growth was the huge increase in unemployment
benefit payments. Taxes were also still rising. The overall burden of
taxes, direct and indirect, was calculated at 34% of GDP in 1978-9; by
1982-3, this had risen to almost 40 %.
As a consequence of this sado-monetarism, during 1981 a number of
riots took place in the inner-city areas of London, Liverpool, Brixton
(April), Manchester (July) and Bristol.
In January 1981, Margaret Thatcher undertook her first Cabinet reshuffle. James Priors replacement at Employment was Norman Tebbit,
one of the first of the younger group of able Thatcherites to be promoted
to Cabinet office because he was of the truth faith. Along with Nigel
Lawson, who replaced Howell at the same time, he was the newcomer to
make the greatest impact. His promotion boded ill for the trade unions
and symbolised Thatchers long-delayed feeling that she was at last in
control of her government team.
No progress on the woman question: The first woman Prime Minister did
little to advance the political cause of women. Minimal progress was
made during the 1980s. At the 1983 general election, women
Conservative MPs numbered thirteen. In 1987, only forty-six of the 633
Conservative candidates (7.3%) were women. This paltry proportion considerably lower than Labours (14.6 %) and that of the Liberal/SDP
alliance (16.6 %) - was nevertheless larger than ever before. However,
only 17 female Conservative candidates were actually elected. Thus,
only 4.5% of the parliamentary party that supported Thatchers last
government were women.
By 1982, unemployment exceeds 3 million. In late 1981 and early 1982,
Thatcher was deeply unpopular, as shown by the miserable opinion poll

53

findings and spectacular by-election losses. She was saved by the

stupidity of the Argentine generals.
2 April - 14 June 1982: Falklands War
During the Falklands War in May 1982, the Labour Party leader Michael
Foot gave noticeably warm support to her plans to reconquer the islands.
About 250 British and almost 1.000 Argentinian troops lost their lives in
a conflict that lasted only three weeks. The Falklands factor was the
single most important factor in the large Conservative election victory of
1983.
9 June 1983: United Kingdom general election
25 October 1983: US invasion of Grenada
November 1983: US cruise missiles are sited at Greenham Common
11 June 1987: United Kingdom general election
Thatcher achieved two successive spectacular election victories, in 193
and 1987. In 1983, Conservatives won 397 seats to Labours 209;
Labours share of the popular vote (at 27.6%) was only 2% higher than
that of the newly formed Alliance Party (an amalgam of defectors from
Labour in 1981 - the Social Democrats - and the Liberals). Although
Labour, under a new leader, Neil Kinnock, succeeded in seeing off the
challenge from the Alliance, in 1987, the partys recovery against the
Conservatives was hardly noticeable. The Conservatives won 376 seats
to Labours 229, and maintained their share of the popular vote at
42.3%. The 1987 election, however, also confirmed the growing trend
towards two nations. The Conservatives won 227 (87%) of the 260 seats
in the south and Midlands, with 52% of the popular vote. In Scotland,
Wales and much of the industrial north, Thatchers policies were
resoundingly rejected by the electorate. Since 1945, no party had
sustained its majority over three successive general elections.
The Tory share of the popular vote under Thatcher never exceeded 43%.
Yet this produced two landslides, largely because the anti-Tory vote was
so evenly split between Labour and the Alliance. Labour could count on
strong, indeed by 1987 increasing, support in the north of England,
Wales and Scotland, but these were areas of economic decline (a decline
accelerated by the application of Thatcherite, monetarist policies).

54

Economic policy: In 1979-82 the fight against inflation dominated all

else. The rate of inflation almost halved during the course of 1982, so
Thatcher could justifiably claim victory, at least in the short term. By
January 1983, inflation stood at 5.4%, the lowest level since 1970.
Inflation would not exceed 7% again until after the 1987 election. Yet the
cost of her deflationary policy was enormous. Despite the ending of the
recession in 1982, unemployment continued to rise. It reached a peak of
3.2 million in 1985, and the cost of unemployment benefit was one
important reason why the overall tax burden on those in work continued
to increase. The average unemployment rate in the United Kingdom,
even according to deliberately doctored statistics, was 9.1 % in the
years 1979-89, compared with 3.4 % in the period 1973-9 and 1.9 %
during the largely boom period 1960-73. Nevertheless, the boom of the
mid-1980s brought plenty of material benefits. Real earnings in the
1980s grew by an average of 2.8 %. In the 1970s, only a 0.5 % increase
had been achieved. Even during the latter stages of the post-war boom
in the 1980s, real earnings had grown by only 2.1 %. As the boom of the
1980s was accompanied by easy credit, which fuelled massive increases
in consumer expenditure, it is probable that living standards grew faster
under Margaret Thatcher than under any previous Prime Minister.
The real irony is that the Tories did not succeed in cutting the overall tax
burden. Taxation accounted for 38.5 % of GDP in 1979 and 40.75 % in
1990. The real increases were in indirect taxation, particularly VAT, and
in compulsory National Insurance payments (which are additional direct
taxes in all but name). Compulsory insurance payments, even more than
VAT, are regressive: they take a much larger proportion out of the pay
packets of the poor than those of the wealthy. The consequence of
Thatcherite tax policies was to accelerate trend towards greater
inequality between rich and poor, which had begun in 1977 under the
Callaghan government. The least wealthy fifth of Britains population did
not share in any in the benefits of the boom of the 1980s.
Deindustrialisation: The other economic success that Thatcher could
claim was labour productivity. Whereas in the 1970s Britain had a lower
rate of productivity growth (0.6 %) than any of the seven largest
industrialised economies, during the 1980s the country had moved up to
third place, behind only Japan and France. Yet this improvement
depended upon massively increased investment in finance and other
parts of the service sector; it served to confirm Britains virtual
disappearance as a leading manufacturing economy.

55

The numbers of workers in manufacturing industry had been falling since

the mid-1960s. Between 1966 and Thatchers coming to power in 1979,
it declined by 15 %. The rate of decline, however, accelerated after 1979
and the numbers continued to fall during the economic boom of the mid1980s. In the decade after 1979, 42 % more workers disappeared from
manufacturing industry. In 1979, manufacturing industry contributed 26
% to the GNP; by 1990, this had declined to 20 %.
Many new jobs were created to replace those lost in manufacturing
during the recovery of the mid-1980s, of course. The overall labour force
grew from 22.5 million to 26.9 million in the decade after 1979.
However, these were disproportionately in those service industries, such
as hotel work and tourism, in which low rates of pay, part-time working
and limited job security all obtained. Highest rewards tended to be
earned in the finance sector of the economy, where many of the
decades famous yuppies (young upwardly mobile professionals)
worked. Unsurprisingly, their years of easy wealth coincided with the
zenith of Thatcherism. As a consequence of the miserable fate of so
much of Britains manufacturing sector, balance of payments deficits
continued to mount. In 1988, they reached the unprecedented level of
almost 15 billion. By the mid-1980s, Britain was an oil-rich nation and
the government could use revenues from North Sea oil to pay for the
increased social security and unemployment benefits that the decline of
the manufacturing base had necessitated.
Privatisation
If control of inflation was the key economic objective during the
Thatchers first government (19791983), privatisation became the
central goal during the second (19831987). Privatisation began before
1983. British Petroleum, British Aerospace and the British Sugar
Corporation had all been taken into private hands by the end of 1981.
But the pace of privatisation quickened after the 1983 election. The
talisman of wider share ownership was the privatisation of British
Telecom in 1984, on terms deliberately designed to benefit the small
investor. British Gas was privatised in 1986. It has been estimated that
the privatisation of companies raised almost 19 billion in 1979-87.
Privatisation had three main aspects, all designed to reduce the
influence of state regulation and control. There was 1) straightforward
denationalisation of publicly owned assets, 2) subcontracting of
government-financed goods and services (such as refuse collection and

56

hospital meals provision), and 3) reducing or removing state supervision

or monopoly (in areas such as transport regulation, telecommunications
licences, etc.)
Compulsory sale of local authority houses to sitting tenants increased
the proportion of owner-occupied homes during the first Thatcher term.
It was an enormously popular policy. Council house sales undoubtedly
created numerous Conservative voters among groups that had
previously been solidly Labour; 55,000 public-sector houses were sold in
the first year of the Thatcher government, and this rose to a peak of
204,000 in 1982-3. Owner-occupation increased from 55 % to 63 % in
the decade after 1979.
The base of share ownership did broaden considerably. There were 3
million private shareholders when Thatcher came to office and almost 11
million when she left it. Even among those converted to speculation in
equities, the stock market crash of October 1987 provided a harsh
lesson in financial realities; more than a decade later, so did the
devastating effects of the long-term stock market decline from 2001 on
maturing endowment insurance policies and on pension funds, especially
when the latter were related to very low-yielding annuities. Popular
capitalism had a spectacular downside.
Public support for privatisation rapidly dwindled when it was realised
that publicly owned monopolies were replaced not by vigorous
competition from which consumers benefited but by privately owned
monopolies, which, all too often, offered the consumer service no better
than before. Chief executives of these monopolies or near-monopolies nearly all Conservative supporters - paid themselves outrageously high
salaries while also taking up share options and pension rights. Ministers
who had prepared the ground for privatisation of particular companies
found their way onto the boards of those companies as soon as they
retired, which was often very quickly after public ownership had been
surrendered.
The miners' strike (12 March 1984 - 3 March 1985)
Thatcher passed legislation that deprived workers of rights which had
rarely been challenged before the 1970s. The Employment Act of 1982
restricted the definition of a lawful strike to one wholly or mainly
between workers and their own employers. Strikes in sympathy with
other workers became virtually illegal. The Act also contained clauses

57

that made closed shops of exclusively unionised labour more difficult to

sustain. Individuals who were dismissed for not joining a union were
entitled to high rates of compensation. The Trade Union Act of 1984
required postal ballots at least every five years for all union offices and
provided subsidies for holding them. The Trade Union and Employment
Acts of 1988 gave individuals greater powers vis--vis their unions. They
could no longer be disciplined for working during an official strike.
Crucially, also, the unions legal immunity from prosecution for damages sustained during strikes was available only if a secret ballot of its
members had been held and had provided a majority for strike action.
Coal miners were the traditional elite of the trade union movement.
Thatcher had been a member of the Heath government, which had been
brought down by a miners strike ten years earlier. She would not repeat
his mistake. Far from trying to avoid another strike, however, there is
considerable evidence that she actively courted a showdown with the
miners union President, Arthur Scargill. She appointed Ian MacGregor, a
manager at British Steel, as the new chairman of the National Coal Board
in September 1983. The government also prepared carefully for the
possibility of conflict, stockpiling coal and trying to ensure that supplies
from abroad could be imported at need.
Scargill was quite right to assert what Conservative ministers throughout
denied: that defeat would see the rapid closure of most of Britains pits
and the destruction of the miners distinctive community and culture.
However, he failed to hold a miners ballot beyond calling the strike. This
deprived miners of moral authority for their action, at least in the eyes of
public opinion. It also gave the new Labour leader, Neil Kinnock, the
excuse to distance himself from the miners leader. This deprived the
miners of real Labour Party support during their strike. These factors,
together with the appearance of a much more conciliatory breakaway
union representing the profitable East Midlands mining area and an
unusually mild winter, led to the miners eventual defeat in the spring of
1985.
The trade union movement, beaten down alike by recession, legislation
and industrial defeat, cowered. Another major strike in defence of the
restrictive practices of print workers was defeated in 1986. The mine
workers union lost 72 % of its members in the years 1979-86. The
number of trade unionists as a whole shrank from 13.5 million in 1979 to

58

10.5 million in 1986, and fell below 10 million by the time she left office
in 1990.
June 1984: At Fontainebleau, the EC budget rebate to Britain is settled
and a permanent British contribution to EC funds settled.
October 1984: An Irish Republican Army (IRA) bomb explodes in the
Grand Hotel, Brighton, during the Conservative Party conference.
Thatcher narrowly escapes injury.
November 1984: The sale of British Telecom is the first of the major
privatisations of public utilities and other companies, which continue
into the 1990s.
19 December 1984: Sino-British Joint Declaration: The final agreement
that Hong Kong should become Chinese in 1997 was signed in December
1984. In 1989, the government refused to grant citizenship to 3 million
Hong Kong residents who held British passports, although a Nationality
Act passed the following year did permit up to 50,000 middle-class
professionals and entrepreneurs from Hong Kong to take citizenship and
move to Britain. The territory passed peacefully into Chinese control in
July 1997.
The dismissal of public employees:
Thatcher not only completed the rout of the trade union movement, she
also targeted the civil servants. The Department of Environments
establishment was reduced by almost 30 per cent between 1979 and
1983. The number of civil servants attached to the Ministry of Defence
was reduced by 20,000 by 1986. By 1987, efficiency savings were
calculated to have reached 1 billion. During Thatchers period as Prime
Minister, the number of civil servants was reduced by 22.5 % (from
732,000 to 567,000).
The reduction of the power of local government:
The Local Government Act of 1985 abolished the Greater London Council
and metropolitan councils, whose functions are transferred to smaller
district councils. Drawing upon earlier experiences, notably the
deregulation of public transport under the Transport Act (1985), the
Local Government Act of 1988 required local authorities to put most of
its existing services out to competitive tender and ensured that only
commercial criteria should determine which organisations provided

59

services. The operation of a large number of basic services was

transferred from local authority to private-sector hands. The integrated
package of services previously provided by local government was
dismantled by a government utterly convinced that the free market
approach and unbridled competition were the only ways forward. As
intended, also, the new policy continued local government
fragmentation and enhanced the culture of management rather than
that of administration.
The dismantling of the National Health Service (NHS):
The National Health Service (NHS) presented particular problems for
Thatcher. On the one hand, the administrative structure of the NHS was
both inefficient and wasteful. Also, its costs were extremely high, not
least because universal provision of high-quality service since the NHS
came into being in 1948 had increased life expectancy. More than twice
as many people in the United Kingdom (1.6 million) were over 80 years
of age in 1981 than in 1951, and the number would increase to 2.2
million by the time Thatcher left office. In 1991, 16 % of the population
was over the male pensionable age of sixty-five, compared with 11 %
when the NHS was founded. Inevitably, the very old make heavy
demands on scarce resources. Economically, the NHS was the victim of
its own success.
The NHS White Paper Working for Patients (1989) unveiled the principle
of the internal market, which proposed to separate purchasers from
providers. About 300 hospital trusts would run large hospitals, and
health authorities would purchase their services. Money would follow
resources. GPs, the first port of call for most NHS users, were brought
into the new market system by being given their own budgets.
The management of the new hospital trusts was put in the hands of
business, rather than medical, experts and the Conservative Party
scoured the business and management world for sympathisers to launch
the new system. A predictable, and bitter, battle between the
professional and the business ethic ensued. The first business managers
were alert to every cost-cutting opportunity short of their own grotesque
salaries. Medical practitioners felt that constant financial surveillance
impaired their general efficiency by engendering stress. The most
damaging charges were two. First, NHS reforms switched admittedly
growing funding away from patient care and towards self-important and
overweening administration. Second, the large number of financially

60

independent trusts - all of which needed to show a profit on trading contributed towards increasingly inequitable treatment opportunities for
patients. By the autumn of 1996, the BMA was reporting that the
treatment of non-emergency patients was now more likely to depend
upon whether fund-holding GPs or health authorities had any money left
at the end of their financial year than upon how ill, or in how much pain,
those patients were.
Education:
Between 1979 and 1986, public spending on schools was reduced by
about 10% in real terms. During the period 1984-7, the government
fought, and largely won, a number of pay battles with the teacher
unions. Education funding was finally increased, by about 4%, in the last
years of the Thatcher administration, largely in order to fund the
implementation of new departures enshrined in the Education Act of
1988.
The Education Act of 1988 offered the characteristically inconsistent
Thatcherite mixture of free market ideology and tighter state control.
The management of state schools became concentrated in the hands of
head teachers and governors as local education authority involvement
rapidly waned. Schools were given financial inducements to opt out of
LEA control altogether. In most authorities, the professional teacher
advisory service was either pared down or withdrawn. Parental choice
was to be paramount; it became theoretically easier to choose schools
outside an individuals local authority. A National Curriculum with
compulsory subjects and defined content was imposed on all state
schools. The confusingly named public schools, which operate in the
private sector and to which almost all Cabinet members sent their own
children, could adopt the new curriculum, in whole, in part or not at all
as their governors determined. Thatcher wanted a centralised structure
of agreed learning and the means - however crude and flawed for
quantifying school performance. The National Curriculum did nothing to
halt the pronounced trend towards the residential zoning of
comprehensive schools and de facto selection by area. Parental choice, a
central plank of Thatcherite education policy, is of very limited value
when many of those which the league tables suggest are the best
schools are hugely oversubscribed.
Crime:

61

Almost the first action of the Thatcher government in May 1979 was to
announce that recommendations for police and army pay rises, due to
have been implemented by the outgoing administration only in
November, were to be met in full, backdated to 1 April and paid
immediately. It was a symbolic announcement of the governments law
and order and defence priorities. In contrast with the severe squeeze on
public funding elsewhere, expenditure on the criminal justice system
increased from 2 billion in 1979-80 to 3.9 billion in 1984-5. In the first
three years of the Thatcher government, almost 10,000 additional police
were recruited, bringing the complement to about 120,000. Neither
tough Tory stances on crime nor community action or substantially
increased expenditure on law and order had much impression on the
crime figures; rather the reverse. The number of recorded crimes rose by
between 5 % and 7 % per year during Thatchers period in government,
the number of notifiable offences in Britain increasing from about 2.5
million per year to about 4.5 million. Motor vehicle theft, vandalism and
burglary increased particularly rapidly during the 1980s. Professional
criminologists were not slow to offer their explanations for the huge
increase in recorded crime during the Thatcher decade. The
overwhelming majority of the profession related crime to deteriorating
social conditions. Criminologists offered substantial evidence in support
of the positive correlation, especially between urban deprivation and
decay, youth unemployment and levels of recorded crime.
Foreign policy:
Thatcher was the most stridently anti-European of British post-war Prime
Ministers. In the first year of government, her main priority was not
bureaucratic but financial. Ever since joining the EEC in 1973, British
contributions to the Community budget had considerably exceeded its
receipts, and Thatcher was determined to get a large rebate. She set her
eyes on an immediate transfer of 1,000 million to the UK Exchequer.
Thatcher could claim reasonable success when, in 1980, she won about
two-thirds of her money back after the EEC conceded a three-year deal
of rebates totalling 1,570 million. Budget grumbles over funding
continued until the Fontainebleau summit in 1984, when agreement was
reached to reduce the British budgetary contribution to a level broadly
related to the countrys GNP and not, as before, considerably in excess
of that.

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The most contentious EC issue during the middle years of Thatchers

period in office - and directly related to budgetary rows - was the
Common Agricultural Policy (CAP). She called the policy at various times
extravagant; it took up almost 70 % of the entire EEC budget when she
came to power. By the mid-1980s, CAP subsidies totalled $22 billion per
year. Her criticisms had point. The CAP had been a foundation stone of
the original Common Market, and its main purpose was protectionist.
The system of guaranteed prices for farmers was designed to ensure
continuity of production and stability in food markets. As there was no
prospect of mass starvation in one of the worlds richest areas, the CAP
defaulted to uncovenanted benefit to often very inefficient small
producers. Farmers as a whole were subsidised to produce, and
produced, far more than the Community needed. Butter mountains and
wine lakes resulted, and surpluses were dumped at rock-bottom
prices, often in communist Eastern Europe. The effect on a vigorous
capitalist free-marketeer like Margaret Thatcher of a protectionist system
that gave communists subsidised food can readily be imagined. A further
illogicality of the system was that CAP subsidies tended to benefit
inefficient more than efficient farmers, and British farmers were
relatively efficient.
She had gained rare approval in Europe in 1986 for signing Britain up to
the Single European Act, which would provide a free internal market,
involving unrestricted movement of goods, labour and capital by 1992.
She wanted to exploit the opportunity to gain further concessions. The
result was an agreement at Brussels in February 1988 on a package of
measures - including automatic price cuts beyond certain production
levels - which reduced agricultural surpluses and confirmed substantial
rebates to Britain.
The President of the EC Commission, Jacques Delors, who held the
position from 1985 to 1995, chaired in 1988a committee that drew up
the strategy for European economic and monetary union, immediately
dubbed the Delors plan. The strategy had three phases: first,
movement towards common membership of a European Monetary
System (EMS); second, a central bank with control over the monetary
policy of member states; and, third, the use of a single currency
throughout the Community. Thatchers response was the Bruges speech
of 20 September 1988, in which she resisted any idea of a European
super-state exercising a new dominance from Brussels and called
instead for willing and active co-operation between independent

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sovereign states as the best way to build a successful European

community. The close relationship she built with President Reagan
(1981-9) suggested that Thatcherite Britain remained both strategically
and emotionally much more attached to an Atlantic than to a European
axis.
The closeness and interdependence of US and British defence policy was
emphasised by the stationing of US Cruise missiles in British bases from
1983 to 1988. In April 1986, Thatcher permitted the United States to
launch bombing attacks against Libya from bases in Britain. No other EC
leader allowed the United States similar licence. Despite that, the US
invasion of the Caribbean island of Grenada in October 1983 was done
without consulting her, despite the fact that Grenada was a member of
the Commonwealth.
From the mid-1980s, she made a point of visiting Eastern Europe as
often as she could. When relations with the Soviet Union were frosty in
1984, she made a well-publicised visit to Hungary, which had made a
number of small-scale, market-led reforms. She visited Poland in
November 1988, where she spoke freely with the Solidarity leaders and
visited the Gdansk shipyard that had seen the rebirth of the Polish
liberation movement in 1980 and whose workers now cheered her to the
echo. She also spoke plainly to the Communist Party leader General
Jaruzelski about the need for change. In September 1990, only two
months before her fall, she revisited Hungary and also Czechoslovakia,
both of which had by then cast off the Soviet yoke and were coming to
grips with the communist legacy of economic failure, pollution and
despondency. She developed a useful personal relationship with Mikhail
Gorbachev, Soviet leader from 1985 to 1991. She deliberately chose a
visit to the Soviet Union in the spring of 1987 as a launching pad for her
successful re-election campaign.
September 1985: Riots in Brixton and Handsworth.
15 November 1985: The Anglo-Irish Agreement is signed by Thatcher
and the Irish Prime Minister, Garret Fitzgerald. The Irish Republic
government is given a limited say in the affairs of Northern Ireland.
Security liaison between Britain and Ireland improves. The Agreement
failed to bring an immediate end to political violence in Northern Ireland;
neither did it reconcile the two communities.

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January 1986: A crisis over the Westland helicopter company leads to

the resignations of Michael Heseltine and Leon Brittan from the Cabinet.
Heseltine, as Defence Secretary, wanted to bale the Westland Company
out, using funds provided by a European consortium. Leon Brittan, the
Industry Minister, backed by No. 10, favoured a rescue bid from the US
company Sikorski. The disagreement assumed critical proportions for
two reasons. First, Heseltine was becoming increasingly alienated by
Thatchers authoritarian style of government and by her evident
preference for US links over European ones. Second, what should have
remained a battle within the Cabinet became a public scandal because
of leaked confidential material clearly aimed at discrediting Heseltine.
Brittan was forced out of office. Heseltine now began to plot to oust
Thatcher.
February 1986: The Single European Act is signed.
June 1986: The Northern Ireland Assembly is dissolved.
24 January 1986 - 5 February 1987: Wapping dispute:
A print workers strike is defeated by papers owned by Rupert Murdoch.
The Wapping dispute was, along with the miners' strike of 1984-5, a
significant turning point in the history of the trade union movement and
of UK industrial relations. It started on 24 January 1986 when some
6,000 newspaper workers went on strike after protracted negotiation
with their employers, News International (parent of Times Newspapers
and News Group Newspapers, and chaired by Rupert Murdoch). News
International had built and clandestinely equipped a new printing plant
for all its titles in the London district of Wapping, and when the print
unions announced a strike it activated this new plant with the assistance
of the Electrical, Electronic, Telecommunications and Plumbing Union
(EETPU). Although individual members of the National Union of
Journalists went to work in Wapping and NUJ Chapels continued to
operate, the National Union continued to urge their members not to work
inside the wire unless there was an agreement covering the transfer to
Wapping and the responsibilities taken on by journalists. News
International's strategy in Wapping had strong government support, and
enjoyed almost full production and distribution capabilities and a
complement of leading journalists. The company was therefore content
to allow the dispute to run its course. With thousands of workers having
gone for over a year without jobs or pay, the strike eventually collapsed
on 5 February 1987.

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15 April 1986: Thatcher allows US warplanes to fly from Britain to attack

targets in Libya.
June 1987: The Conservatives win the general election with an overall
majority of 102.
June 1987: Unemployment levels fall below 3 million.
1987: The government announces that a new Community Charge (poll
tax) will be introduced in Scotland in 1989 and in England and Wales in
1990.
October 1987: A stock exchange crash (Black Monday) sees 50 million
wiped off share values.
10 May 1988: The Immigration Act tightens controls over immigration.
1988: The top rate of income tax is reduced to 40 % and a further fall in
the standard rate is introduced.
20 September 1988: Thatcher gives a speech in Bruges opposing moves
towards greater European unity
The Employment Act of 1988 gives workers the right to ignore the result
of a union ballot in favour of strike action. This Act builds on the
Employment Acts of 1980 and 1982 by providing an unqualified right to
dissociate (refuse to be a union member). It also gives trade union
members the right to challenge industrial action that has not been
validly balloted, and prevents unions from disciplining members who do
not support industrial action, even if approved by ballot. It provides also
for the appointment of a Commissioner for the Rights of Trade Union
Members to assist members in litigation against unions and makes some
changes to the provisions regarding union elections and political fund
ballots.
December 1988: A US Boeing is blown up by Libyan terrorists over
Lockerbie, Scotland.
In 1989, more than 3 million residents of Hong Kong holding British
passports are refused the right to residency in the United Kingdom.
May 1989: Britain rejects the European Social Charter.

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15 June 1989: The Third European elections see considerable

Conservative losses: the Conservatives win thirty-two seats, Labour
forty-five. Interest rates reach 15 %.
August 1989: Cruise missiles are removed from Greenham Common.
September/October 1989: After disputes between the Chancellor of the
Exchequer, Nigel Lawson, and Thatchers economics adviser, Alan
Walters, both resign. John Major becomes Chancellor of the Exchequer.
December 1989: Anthony Mayer challenges Thatcher for the leadership
of the Conservative Party.
The Employment Act of 1990 made it unlawful to refuse to employ
people not in a trade union. It removes the last remaining legal
protection for the closed shop.
The Poll Tax (announced 1987) and the Poll Tax Riots (31 March
1990)
Much the most controversial policy in respect of local government was
the introduction of the community charge. Widely known as the poll
tax, this was introduced to replace domestic rates. In this policy, perhaps
uniquely during her eleven years in power, her political instincts proved
disastrously faulty. A poll tax could not be presented to the public as
anything other than regressive. It bore more heavily on those with
limited incomes and hardly at all (as a proportion of income at any rate)
upon the wealthy. Eventually it caused the outbreak, on 31 March 1990,
of the Poll Tax Riots, shortly before the tax was due to come into force in
England and Wales. The riot in central London, with the countrywide
opposition to the Community Charge (especially vehement in the North
of England and Scotland) contributed to the downfall of Margaret
Thatcher. She was challenged by Michael Heseltine for the Conservative
leadership. Although she prevailed by a margin of fifty votes, she
narrowly missed the threshold to avoid a second vote, and on 22
November 1990 she resigned. Thatcher resigned as Prime Minister in
November 1990. The next Prime Minister, John Major, announced its
abolition on 21 March 1991.
March 1990: Anti-poll tax riots in London.
The Tories unseated Thatcher as Prime Minister in November 1990 for
two reasons. A large number of Tories felt that the next election was

67

unwinnable under Thatchers continued leadership. The year of 1990

was a very difficult year for them. Partly because of Lawsons earlier
policies to prepare Britain for European Exchange Rate Mechanism (ERM)
membership, interest rates had soared to 15%, making the homeowners
mortgages ruinously expensive while the value of their houses was also
tumbling. Inflation - the key evil of Keynesianism in Thatchers eyes had recently risen above 10 % again. And the poll tax was proving a
public relations disaster. The Cabinet was be falling apart. Those few
experienced ministers who were left openly squabbled on the EMS.
Opinion poll findings were dismal, confirming that 1989 losses in the
European elections were no flash in the pan. The second precipitating
factor in Thatchers departure was the resignation of Sir Geoffrey Howe
on 1 November 1990, or more accurately the resignation speech which
he made in the Commons twelve days later.
November 1990: Geoffrey Howe resigns from government and makes a
damaging resignation speech in the Commons. Heseltine announces a
challenge to Thatchers leadership. Thatcher fails to get an overall
majority in the first leadership ballot and withdraws from the second
after Cabinet ministers tell her that she is unlikely to win. At all events,
enough rallied around Thatchers own chosen successor, John Major, to
ensure that he comfortably defeated Heseltine in the second ballot from
which she was now an enforced absentee.
Thatchers prime
ministership ended on 28 November 1990.
In 1992 Thatcher left the Commons at the dissolution of parliament
before the general election, having represented Finchley for the
Conservatives continuously since 1959, and took her seat in the House
of Lords as Baroness Thatcher of Kesteven.
28 November 1990 2 May 1997: John Major as Prime Minister:
In 1991, John Major announced the abolition of the hated poll tax and its
replacement, from 1993, by a council tax which took account of the
value of property in its assessments. 1991 also witnessed the brief,
successful Gulf War against Iraq as a subordinate allied partner with the
United States. Lowered inflation and bank rates provided further reasons
for Conservative optimism. Consumer price rises declined from 9.5 % in
the last year of the Thatcher administration to 3.7 %in 1991-2. The next
general election, which most Tories had considered unwinnable under
Thatcher, came in the untroubled spring of 1992 and proved an
unexpected triumph for Major.

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October 1990: Britain joins the European Monetary System (EMS) at an

exchange rate of 2.95 deutschmarks, which many commentators
consider far too high.
In two areas - taxation policy and privatisation - Major appeared loyal
enough to the legacy. He kept rates of direct taxation low, at 25 % for
the standard rate and 40 % for the higher, although taxes as a whole
were raised in the 1993 budget. Privatisation continued. In particular,
Major embarked on one specially high-profile initiative - the disastrous
break-up of British Rail in 1995. At any event, privatisation engendered
in Railtrack perhaps the most spectacularly mismanaged and inept
company in twentieth-century business history, run as it was by people
who knew little or nothing about railways and who pensioned off most of
those who did - the skilled engineers - to save costs and increase
dividends for shareholders. The political fall-out was substantial.
Overall, Major was no keeper of the Thatcherite flame. Public
expenditure, expressed as a percentage of GDP, edged inexorably
upwards - from 39 % in the last year of the Thatcher government to 44
% in 1997. Rates of growth in GDP and, especially, consumer
expenditure, were lower in the 1990s than in the 1980s.
1 May 1997: UK general election:
Under the leadership of Tony Blair the Labour Party ended its 18 years in
opposition, and won the general election with a landslide victory,
winning 418 seats, the most seats the party has ever held. Thatcher
used her immense residual influence in the party, and in particular in the
constituencies, to undermine Major. But Major did not lose the general
election of 1997 purely because of Thatchers influence. The impression
his own indecisive leadership gave of a rudderless, as well as a feuding,
party would probably have led to defeat anyway. However, 1997 was a
Conservative disaster. It represented the biggest defeat the party had
suffered since the election of 1832, immediately after the passage of the
First Reform Act. The 336 Conservative MPs returned in 1992 dwindled to
only 165, against 419 supporting the incoming Labour government. Of
that paltry number, none was elected from either Scotland or Wales. It
had been widely noted that Thatchers economic policies did devastating
damage to the old industrial areas of Scotland, Wales and northern
England. The result of the 1997 election was perhaps the delayed, but
logical, outcome of those policies - a final unwelcome present from

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Thatcher to Major. The Conservatives also polled nearly 5 million fewer

votes than Labour.
2 May 1997 27 June 2007: Tony Blair as Prime Minister:
The Labour Partys turn to the right had already begun under Neil
Kinnock, its leader from 2 October 1983 to 18 July 1992. Blairs success
in persuading Labour to drop the famous socialist Clause 4 from its
Constitution in 1995 deepened that process. Blairs determination to
promote New Labour as a non-socialist enterprise explicitly recognised
the importance of the Thatcher legacy.
The 1997 election provided ample evidence that Tony Blair could win
big. Although the 2001 election result was less impressive, especially in
terms of Labours popular vote, which fell by almost 3 million, an overall
majority of 167 confirmed that Blair was even more capable than
Thatcher had been at winning huge majorities.
Tony Blair came from a quintessentially Conservative background. His
father was a successful businessman and a Tory councillor who educated
his son at a leading Scottish public school. Blair never imbibed the beerand- sandwiches culture of Labour activism and took far less interest
than most party leaders in cultivating deep roots in the party.
In foreign affairs, also, Blairs leadership shows elements of Thatcherite
priorities. The events of 2002-3, culminating in the allied US-UK attack
on Iraq, indicated that British foreign policy falls meekly in behind an
agenda set by the United States.
Thatchers Legacy:
Thatchers economic legacy is mixed. One central objective of
Thatcherism was to reduce the burden of taxation. This failed. At the end
of 1996, taxation accounted for 37.2 %of a taxpayers annual income; in
1979 it had been only 31.1 %. Characteristically, though, the burden of
direct taxation in the same period went down from 19.9 % to 17.7 %.
Thatcherite Toryism brought overall prosperity. After deducting costs of
housing, the average real income of British families rose by between
1979 and 1992 by 37 %. However, the real incomes of the poorest 10
per cent declined by 18 per cent, while those of the richest 10 %
increased by 61 %. In 1979, the richest 10 % of the population held 20.6
per cent of the nations wealth and the poorest 10 % held 4.3 %. In

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1991, the proportions were 26.1 % and 2.9 % respectively. If an unofficial

poverty line is drawn at one-half of the average national income, the
numbers in poverty increased from 5 million in 1979 to 14.1 million in
1992.
Perry Anderson, Neoliberalismo: un balance provisorio
El neoliberalismo naci despus de la Segunda Guerra Mundial, en una
regin de Europa y de Amrica del Norte donde imperaba el capitalismo.
Fue una reaccin terica y poltica vehemente contra el Estado
intervencionista y de Bienestar. Su texto de origen es Camino de
Servidumbre, de Friedrich Hayek, escrito en 1944. Se trata de un ataque
apasionado contra cualquier limitacin de los mecanismos del mercado
por parte del Estado, denunciada como una amenaza letal a la libertad,
no solamente econmica sino tambin poltica. El blanco inmediato de
Hayek, en aquel momento, era el Partido Laborista ingls, en las
vsperas de la eleccin general de 1945 en Inglaterra, que este partido
finalmente ganara. El mensaje de Hayek era drstico: A pesar de sus
buenas intenciones, la socialdemocracia moderada inglesa conduce al
mismo desastre que el nazismo alemn: a una servidumbre moderna.
Tres aos despus, en 1947, cuando las bases del Estado de Bienestar
en la Europa de posguerra efectivamente se constituan, no slo en
Inglaterra sino tambin en otros pases, Hayek convoc a quienes
compartan su orientacin ideolgica a una reunin en la pequea
estacin de Mont Plerin, en Suiza. Entre los clebres participantes
estaban no solamente adversarios firmes del Estado de Bienestar
europeo, sino tambin enemigos frreos del New Deal norteamericano.
En la selecta asistencia se encontraban, entre otros, Milton Friedman,
Karl Popper, Lionel Robbins, Ludwig Von Mises, Walter Eukpen, Walter
Lippman, Michael Polanyi y Salvador de Madariaga. All se fund la
Sociedad de Mont Plerin, una suerte de franco masonera neoliberal,
altamente dedicada y organizada, con reuniones internacionales cada
dos aos. Su propsito era combatir el keynesianismo y el solidarismo
reinantes, y preparar las bases de otro tipo de capitalismo, duro y libre
de reglas, para el futuro. Las condiciones para este trabajo no eran del
todo favorables, una vez que el capitalismo avanzado estaba entrando
en una larga fase de auge sin precedentes su edad de oro, presentando
el crecimiento ms rpido de su historia durante las dcadas de los 50 y
60. Por esta razn, no parecan muy verosmiles las advertencias
neoliberales de los peligros que representaba cualquier regulacin del

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mercado por parte del Estado. La polmica contra la regulacin social,

entre tanto, tuvo una repercusin mayor. Hayek y sus compaeros
argumentaban que el nuevo igualitarismo de este perodo
(ciertamente relativo), promovido por el Estado de Bienestar, destrua la
libertad de los ciudadanos y la vitalidad de la competencia, de la cual
dependa la prosperidad de todos. Desafiando el consenso oficial de la
poca ellos argumentaban que la desigualdad era un valor positivo en
realidad imprescindible en s mismo , que mucho precisaban las
sociedades occidentales. Este mensaje permaneci en teora por ms o
menos veinte aos.
Con la llegada de la gran crisis del modelo econmico de posguerra, en
1973 cuando todo el mundo capitalista avanzado cay en una larga y
profunda recesin, combinando, por primera vez, bajas tasas de
crecimiento con altas tasas de inflacin todo cambi. A partir de ah las
ideas neoliberales pasaron a ganar terreno. Las races de la crisis,
afirmaban Hayek y sus compaeros, estaban localizadas en el poder
excesivo y nefasto de los sindicatos y, de manera ms general, del
movimiento obrero, que haba socavado las bases de la acumulacin
privada con sus presiones reivindicativas sobre los salarios y con su
presin parasitaria para que el Estado aumentase cada vez ms los
gastos sociales.
Esos dos procesos destruyeron los niveles necesarios de beneficio de las
empresas y desencadenaron procesos inflacionarios que no podan dejar
de terminar en una crisis generalizada de las economas de mercado. El
remedio, entonces, era claro: mantener un Estado fuerte en su
capacidad de quebrar el poder de los sindicatos y en el control del
dinero, pero limitado en lo referido a los gastos sociales y a las
intervenciones econmicas. La estabilidad monetaria debera ser la
meta suprema de cualquier gobierno. Para eso era necesaria una
disciplina presupuestaria, con la contencin de gasto social y la
restauracin de una tasa natural de desempleo, o sea, la creacin de
un ejrcito industrial de reserva para quebrar a los sindicatos. Adems,
eran imprescindibles reformas fiscales para incentivar a los agentes
econmicos. En otras palabras, esto significaba reducciones de
impuestos sobre las ganancias ms altas y sobre las rentas. De esta
forma, una nueva y saludable desigualdad volvera a dinamizar las
economas avanzadas, entonces afectadas por la estagflacin, resultado
directo de los legados combinados de Keynes y Beveridge, o sea, la
intervencin anticclica y la redistribucin social, las cuales haban

72

deformado tan desastrosamente el curso normal de la acumulacin y el

libre mercado. El crecimiento retornara cuando la estabilidad monetaria
y los incentivos esenciales hubiesen sido restituidos.
La hegemona de este programa no se realiz de la noche a la maana.
Llev ms o menos una dcada, los aos 70, cuando la mayora de los
gobiernos de la OECD (Organizacin para el Desarrollo y la Cooperacin
Econmica) trataba de aplicar remedios keynesianos a las crisis
econmicas. Pero al final de la dcada, en 1979, surgi la oportunidad.
En 1979 fue elegido en Inglaterra el gobierno de Margaret Thatcher, el
primer rgimen de un pas capitalista avanzado pblicamente empeado
en poner en prctica un programa neoliberal. Un ao despus, en 1980,
Reagan lleg a la presidencia de los Estados Unidos. En 1982, Kohl
derrot al rgimen social liberal de Helmut Schmidt en Alemania. En
1983, en Dinamarca, estado modelo del bienestar escandinavo, cay
bajo el control de una coalicin clara de derecha el gobierno de Schluter.
Enseguida, casi todos los pases del norte de Europa Occidental, con
excepcin de Suecia y de Austria, tambin viraron hacia la derecha.
Durante sus gobiernos sucesivos, Margaret Thatcher contrajo la emisin
monetaria, elev las tasas de inters, baj drsticamente los impuestos
sobre los ingresos altos, aboli los controles sobre los flujos financieros,
cre niveles de desempleo masivos, aplast huelgas, impuso una nueva
legislacin anti sindical y cort los gastos sociales. Finalmente y sta fue
una medida sorprendentemente tarda, se lanz a un amplio programa
de privatizaciones, comenzando con la vivienda pblica y pasando
enseguida a industrias bsicas como el acero, la electricidad, el petrleo,
el gas y el agua. Este paquete de medidas fue el ms sistemtico y
ambicioso de todas las experiencias neoliberales en los pases del
capitalismo avanzado.
La variante norteamericana fue bastante diferente. En los Estados
Unidos, donde casi no exista un Estado de Bienestar del tipo europeo, la
prioridad neoliberal se concentr ms en la competencia militar con la
Unin Sovitica, concebida como una estrategia para quebrar la
economa sovitica y por esa va derrumbar el rgimen comunista en
Rusia. En 1978, la segunda Guerra Fra se agrav con la intervencin
sovitica en Afganistn y la decisin norteamericana de incrementar una
nueva generacin de cohetes nucleares en Europa Occidental. En
poltica interna, Reagan tambin redujo los impuestos en favor de los
ricos, elev las tasas de inters y aplast la nica huelga seria de su

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gestin. Pero no respet la disciplina presupuestaria; por el contrario, se

lanz a una carrera armamentista sin precedentes, comprometiendo
gastos militares enormes que crearon un dficit pblico mucho mayor
que cualquier otro presidente de la historia norteamericana. Sin
embargo, ese recurso a un keynesianismo militar disfrazado, decisivo
para una recuperacin de las economas capitalistas de Europa
Occidental y de Amrica del Norte, no fue imitado. Slo los Estados
Unidos, a causa de su peso en la economa mundial, podan darse el lujo
de un dficit masivo en la balanza de pagos resultante de tal poltica.
Mientras la mayora de los pases del Norte de Europa elega gobiernos
de derecha empeados en distintas versiones del neoliberalismo, en el
Sur del continente (territorio de De Gaulle, Franco, Salazar, Fanfani,
Papadopoulos, etc.), antiguamente una regin mucho ms conservadora
en trminos polticos, llegaban al poder, por primera vez, gobiernos de
izquierda, llamados eurosocialistas: Mitterrand en Francia, Gonzlez en
Espaa, Soares en Portugal, Craxi en Italia, Papandreu en Grecia. Todos
se presentaban como una alternativa progresista, basada en
movimientos obreros o populares, contrastando con la lnea reaccionaria
de los gobiernos de Reagan, Thatcher, Kohl y otros del Norte de Europa.
Mitterrand y Papandreu, en Francia y en Grecia, comenzaron aplicando
una poltica de redistribucin, pleno empleo y proteccin social. La
tentativa de crear un equivalente en el Sur de Europa de lo que haba
sido la socialdemocracia de posguerra en el Norte del continente en sus
aos de oro fracas debido a la crisis.
En marzo de 1983 el gobierno de Mitterrand en Francia cambi su curso
dramticamente y comenz a aplicar una poltica econmica mucho ms
prxima a la ortodoxia neoliberal, priorizando la estabilidad monetaria, el
equilibrio presupuestaria, las concesiones fiscales a los capitalistas y el
abandono definitivo del pleno empleo. Al final de la dcada, el nivel de
desempleo en Francia era ms alto que en la Inglaterra conservadora. En
Espaa, el gobierno de Gonzlez jams trat de realizar una poltica
keynesiana o redistributiva. Al contrario, desde el inicio, el rgimen del
partido en el poder se mostr firmemente monetarista en su poltica
econmica, gran amigo del capital financiero, favorable al principio de la
privatizacin y sereno cuando el desempleo alcanz rpidamente el
record europeo de 20% de la poblacin econmicamente activa.
En Australia y Nueva Zelandia, un modelo de caractersticas similares
asumi proporciones verdaderamente dramticas. Los gobiernos

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laboristas superaron a los conservadores en su radicalidad neoliberal.

Probablemente Nueva Zelandia sea el ejemplo ms extremo de todo el
mundo capitalista avanzado. All, el proceso de desintegracin del
Estado de Bienestar fue mucho ms completo y feroz que en la
Inglaterra de Margaret Thatcher. Con excepcin de Suecia y Austria,
hacia fines de los aos 80 la propia socialdemocracia europea fue
incorporando a su programa las ideas e iniciativas que defendan e
impulsaban los gobiernos neoliberales. Paradjicamente, eran ahora los
socialdemcratas quienes se mostraban decididos a llevar a la prctica
las propuestas ms audaces formuladas por el neoliberalismo. Fuera del
continente europeo slo Japn se mostr reacio a aceptar este recetario.
Ms all de esto, en casi todos los pases de la OECD, las ideas de la
Sociedad de Mont Plerin haban triunfado plenamente.
La prioridad ms inmediata del neoliberalismo fue detener la inflacin de
los aos 70. En este aspecto, su xito ha sido innegable. En el conjunto
de los pases de la OECD, la tasa de inflacin cay de 8,8% a 5,2% entre
los aos 70 y 80 y la tendencia a la baja continu en los aos 90. La
deflacin, a su vez, deba ser la condicin para la recuperacin de las
ganancias. Tambin en este sentido el neoliberalismo obtuvo xitos
reales. Si en los aos 70 la tasa de ganancia en la industria de los
pases de la OECD cay cerca de 4,2%, en los aos 80 aument 4,7%.
Esa recuperacin fue an ms impresionante considerando a Europa
Occidental como un todo: de 5,4 puntos negativos pas a 5,3 puntos
positivos. La razn principal de esta transformacin fue la derrota del
movimiento sindical, expresada en la cada dramtica del nmero de
huelgas durante los aos 80 y en la notable contencin de los salarios.
Esta nueva postura sindical, mucho ms moderada, tuvo su origen, en
gran medida, en un tercer xito del neoliberalismo: el crecimiento de
las tasas de desempleo. La tasa media de desempleo en los pases de la
OECD, que haba sido de alrededor de 4% en los aos 70, lleg a
duplicarse en la dcada del 80. Finalmente, otro objetivo sumamente
importante para el neoliberalismo - el grado de desigualdad social aument significativamente en el conjunto de los pases de la OECD: la
tributacin de los salarios ms altos cay un 20% a mediados de los
aos 80 y los valores de la bolsa aumentaron cuatro veces ms
rpidamente que los salarios.
En todos estos aspectos (deflacin, ganancias, desempleo y salarios)
podemos decir que el programa neoliberal se mostr realista y obtuvo
xito. Pero, a final de cuentas, todas estas medidas haban sido

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concebidas como medios para alcanzar un fin histrico: la reanimacin

del capitalismo avanzado mundial, restaurando altas tasas de
crecimiento estables, como existan antes de la crisis de los aos 70. En
este aspecto, sin embargo, el cuadro se mostr sumamente
decepcionante. Entre los aos 70 y 80 no hubo ningn cambio
significativo en la tasa media de crecimiento, muy baja en los pases de
la OECD.
De las tasas de crecimiento de la larga onda expansiva, en los aos 50 y
60, slo quedaba un recuerdo lejano. A pesar de todas las nuevas
condiciones institucionales creadas en favor del capital la tasa de
acumulacin, o sea, la efectiva inversin en el parque de equipamientos
productivos, apenas creci en los aos 80, y cay en relacin a sus
niveles ya medios de los aos 70. En el conjunto de los pases del
capitalismo avanzado, las cifras son de un incremento anual de la
acumulacin de 5,5% en los aos 60, 3,6% en los 70, y slo 2,9% en los
80. Una curva absolutamente descendente.
Cabe preguntarse an por qu la recuperacin de las ganancias no
condujo a una recuperacin de la inversin. Esencialmente, porque la
desregulacin financiera, que fue un elemento de suma importancia en
el programa neoliberal, cre condiciones mucho ms propicias para la
inversin especulativa que la productiva. Los aos 80 asistieron a una
verdadera explosin de los mercados cambiarios internacionales, cuyas
transacciones puramente monetarias terminaron por reducir de forma
sustancial el comercio mundial de mercancas reales. El peso de las
operaciones de carcter parasitario tuvo un incremento vertiginoso en
estos aos.
Por otro lado, y ste fue el fracaso del neoliberalismo, el peso del Estado
de Bienestar no disminuy mucho, a pesar de todas las medidas
tomadas para contener los gastos sociales. Aunque el crecimiento de la
proporcin del PNB consumido por el Estado ha sido notablemente
desacelerado, la proporcin absoluta no cay, sino que aument,
durante los aos 80, de ms o menos 46% a 48% del PNB medio de los
pases de la OECD. Dos razones bsicas explican esta paradoja: el
aumento de los gastos sociales con el desempleo, lo cual signific
enormes erogaciones para los estados, y el aumento demogrfico de los
jubilados, lo cual condujo a gastar otros tantos millones en pensiones.
El segundo aliento de los gobiernos neoliberales

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El capitalismo avanzado entr de nuevo en una profunda recesin en

1991. La deuda pblica de casi todos los pases occidentales comenz a
reasumir dimensiones alarmantes, inclusive en Inglaterra y en los
Estados Unidos, en tanto que el endeudamiento privado de las familias y
de las empresas llegaba a niveles sin precedentes desde la Segunda
Guerra Mundial. Pero el thatcherismo no solo sobrevivi a la propia
Thatcher, con la victoria de Major en las elecciones de 1992 en
Inglaterra; en Suecia, la socialdemocracia, que haba resistido el embate
neoliberal en los aos 80, fue derrotada por un frente unido de la
derecha en 1991. En Italia, Berlusconi, una suerte de Reagan italiano,
lleg al poder en 1994 conduciendo una coalicin en la cual uno de sus
integrantes era antes un partido oficialmente fascista. En Espaa la
derecha lleg al poder con Aznar en 1996.
Una de sus razones fundamentales de este segundo impulso de los
regmenes neoliberales en el mundo capitalista avanzado fue la victoria
del neoliberalismo en otra regin del mundo. En efecto, la cada del
comunismo en Europa Oriental y en la Unin Sovitica, del 89 al 91, se
produjo en el exacto momento en que los lmites del neoliberalismo
occidental se tornaban cada vez ms evidentes. La victoria de Occidente
en la Guerra Fra, con el colapso de su adversario comunista, no fue el
triunfo de cualquier capitalismo, sino el tipo especfico liderado y
simbolizado por Reagan y Thatcher en los aos 80. Los nuevos
arquitectos de las economas poscomunistas en el Este, gente como
Leszek Balcerowicz en Polonia, Yegor Gaidar en Rusia, Vclav Klaus en la
Repblica Checa, eran y son ardientes seguidores de Hayek y Friedman,
con un menosprecio total por el keynesianismo y por el Estado de
Bienestar, por la economa mixta y, en general, por todo el modelo
dominante del capitalismo occidental correspondiente al perodo de
posguerra. Esos lderes polticos preconizan y realizan privatizaciones
mucho ms amplias y rpidas de las que se haban hecho en Occidente;
para sanear sus economas, promueven cadas de la produccin
infinitamente ms drsticas de las que jams se ensayaron en el
capitalismo avanzado; y, al mismo tiempo, promueven grados de
desigualdad y empobrecimiento mucho ms brutales de los que se han
visto en los pases occidentales. No hay neoliberales ms intransigentes
en el mundo que los reformadores del Este.
La dictadura de Pinochet fue el primer rgimen en aplicar polticas
neoliberales: desregulacin, desempleo masivo, represin sindical,
redistribucin de la renta en favor de los ricos, privatizacin de los

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bienes pblicos. Todo esto comenz casi una dcada antes que el
experimento thatcheriano. En Chile, naturalmente, la inspiracin terica
de la experiencia pinochetista era ms norteamericana que austraca:
Friedman, y no Hayek, Pero es de notar tanto que la experiencia chilena
de los aos 70 interes muchsimo a ciertos consejeros britnicos
importantes para Thatcher. Existieron excelentes relaciones entre los
dos regmenes hacia los aos 80.
Robert Pearce, Atlee's Labour Governments, 1945-51, Routledge, 1994.
Eric J. Evans, Thatcher and Thatcherism, Routledge, 2004.