The 1970s and the Decline of British Unions

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Act 1:Wilson

Our story starts in 1969, with the launch of “In Place of Strife”, Prime Minister Harold Wilson and Labour MP Barbara Castle’s white paper on industrial relations. The paper is controversial; while it acknowledged some of union demands such as new rights to trade union recognition, the right of individuals to join a trade union and protection against unfair dismissal it also gave the Secretary of State discretionary powers to order a strike ballot prior to official strikes, and to order a return to work in the case of unconstitutional or unofficial strikes. James Callaghan, then in Wilson’s cabinet shuts this down, due to his close relationship with the unions.

Act 2. Heath

In 1970 Labour loses the elections to the Conservatives and Edward Heath, who introduced the Industrial Relations Act 1971. This required unions to formally register themselves for the first time if they wanted to have legal rights and immunities, among other things. Naturally unions hated it — some even refused to register. In 1971, the government introduces a new system of monetary policy named Competition and Credit Control, which liberalised bank lending regimes. The early years of the Heath Adminstration were also marked by major miner strikes and the passing of the act that would take the UK in the EEC. Also around this time, due to higher-than-desired inflation, the government looked at reviving statutory incomes policy, essentially limiting the maximum pay increase.

In 1973 all hell breaks loose in the economy as the oil crisis hits at the worst possible time. Competition and Credit Control had lead to a massive explosion in consumer demand (people borrowing money to buy stuff), and worse, because Britain was entering Europe soon the government had been spending a lot of money to drive up demand and make the UK economy bigger so that it would be a more important European power. So when the oil shock hit, inflation went through the roof. In the context of this, pay negotiations for coal miners began. The government insists that the miners pay request is far outside the guidelines set out in their incomes policy. The miners disagree, and thus begins the 1973–4 miner’s dispute. This threatens the availability of energy (taking on the coal miners during an oil crisis was not the smartest of ideas) so the government panics and declares a three day week: companies can only work 3 days a week to conserve electricity.

Seeking a mandate to tackle the issue, Prime Minister Heath calls for an early election. Partially he wants a mandate to crush the miners, but at the same time he’s quite corporatist — his sort of frustrated hope is that if he gets a big majority, the miners will just go “oh, alright then” and back down. The election campaign is a comedy of error for the Conservatives. First, Labour manages to drag the campaign away from the issue of the unions (helped by the unions themselves being well behaved) and onto other issues such as consumer prices. Second, Labour argues that the British people should be given a referendum on whether or not they want to be part of the EEC, especially as it means an increase in food prices. Finally, Labour argue that they have a special relationship with the trade unions and so understand their desires and make them act more reasonable. They come to an agreement with the unions, called the social contract ,where — in exchange for abolishing the 1971 industrial relations act and increasing spending on health, education, welfare, etc — , unions would accept pay restrictions. So the campaign chugs on a bit and Labour gains on the Conservatives. Then some magical events happen: The UK government pay board comes back with their analysis of the miner’s case: the miners were right. they were underpaid, this could be solved within the limits of the government’s pay policy. Heath had called an election entirely unnecessarily and looked quite foolish. Then, just two days before polling day, the Director-General of the Confederation of British Industry is overheard complaining about what a disaster the 1971 Industrial Relations Act was, arguing that it had actually made industrial relations worse.

Act 3: Wilson II

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The February 1974 election results in no one party gaining a majority. After failing to negotiate with the Liberals and Ulster Unionists to stay in power, Heath instructs the queen to send for Harold Wilson and Labour comes to power without a majority. After letting things stabilize a bit and ending the three day week, Labour calls another election in October which delivers them a narrow majority. Early on, they give the miners their pay increase, replaced the 1971 industrial relations act, cancel compulsory wage restraint (but tie the unions to a voluntary policy), and increase taxes and spending moderately. In 1975 Britain has a referendum on EEC membership, which resulted in a yes vote. The government also creates the National Enterprise Board, the idea being to invest government money in dynamic private companies. In practice, it props up dying companies that it would be too politically costly to allow to go bankrupt, such as manufacturer British Leyland. The NEB had been envisioned as a socialist maternity ward but it ends up as a capitalist funeral home. Despite Labour’s changes in policy, unemployment continues to climb, having already hit a postwar high under Heath.

Act 4: Callaghan

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In 1976 due to ill health and probable malfeasance of the security services Wilson retires and is replaced by James Callaghan. Shortly after taking office Callaghan is hit by a major crisis — the treasury predicts that the UK doesn’t have enough foreign currency to pay for all of the imports it’s dealing with, which will lead to a fall in the value of the pound. The government panics and goes to the IMF, who true to form, demand massive public spending cuts. Alternative plans are put forward by different factions of the Labour party. The Benn faction prefers a policy of import controls, and it’s backed by many Keynesians (who think it would be crazy to cut spending — and reduce demand — at a time when unemployment is already at record highs, since despite the high inflation there isn’t an excessive demand for workers.). Other Keynesians suggest making cuts on-paper but not in practice by disingenuously changing how they budget things, but Chancellor Dennis Healey argues that the IMF will see through this, and in any case that it would prevent the economic medicine from working (A hint of the government’s conversion to monetarism). Eventually Callaghan secures agreement to the IMF loan because his Chancellor and treasury advisers believe it’s the only sensible option.

Naturally this story has a number of excellent plot twists: The economic model of the treasury was obviously nonsense, as can be seen by the fact most countries now let their currencies float freely. Compounding this, the treasury were acting like the Breton Woods currency system and the obligations it had still existed, even though it had collapsed in 1971. Furthermore, The UK actually had plenty of foreign currency lying around; the treasury people had made a calculation error.

So austerity begins and Labour cut public spending, institutes a public sector wage freeze and curtail the ability of the national enterprise board to invest. It also begins to increase interest rates, having slowly been converted to the monetarist idea that the problem was entirely caused by “too much money chasing too few goods” and that the solution would be to increase the price of borrowing and so de-facto reduce the supply of money. The results of this are threefold: 1. Unemployment continues to grow, because now high interest rates are destroying private sector companies that were previously solvent. 2. Unions are dissatisfied with the government because they’re breaking the social contract. 3. Unions are further dissatisfied with the government because a large number of union workers are in the public sector. Later that year, Callaghan delivers a speech at the Labour conference arguing that Keynes was wrong — you can’t spend your way out of a recession, and trying to do so only leads to higher inflation thereafter. Actually this is nonsense not borne out by the evidence but it was a signal to international money markets, the IMF, etc, that Labour was now monetarist.

In 1977 Labour is defeated in a by-election, removing their narrow majority and forcing them into a pact with the Liberals. By 1978 inflation is high but at a reasonably comfortable level compared to the recent past. Unemployment has stabilized a bit, and everyone is certain about one thing if nothing else: Labour is going to call an election this year. The unions are on their best behaviour in expectation of an election. When the government lowers the maximum level of pay increases, the unions largely accept because they don’t want to hurt Labour’s election chances at the election. Callaghan thinks long and hard about this, going through all of the constituencies with the data he has on hand (polls, last results, reports from their chairs, etc.) and concludes that Labour will win, but probably without a majority.

Intermission: The Winter of Discontent

There had been some change in the make-up of trade unions since 1969. More and more middle class people were unionising. and the union workforce was becoming more diverse. For a good story about how this all played out (and the general changing class dynamics of the time, including the right-wing countermovement) there’s the Grunwick Dispute. Unions had also been devolving more and more power to the shop floor. Old union leaders who commanded respect were retiring and being replaced by new ones, and many of the rank and file members weren’t willing to be quite as deferential to their leaders as they were in 1969. Naturally, that meant it was very hard to make the current incomes policy work. A union leader could easily promise that their members would hold to a certain pay limit — but they had no real means to reprimand workers who demanded more from their boss. One factor of this situation is that the Trades Union Congress is actually quite a pro-government actor in this period. It likes Labour and it wants the Labour government to do well.

Later in 1978, the government introduces a new pay policy: a 5% maximum limit on pay increases. Global inflation is starting to rise again, but they operate with a few key assumptions — unions will remain compliant with the government because an election is still imminent, pay restraint will keep inflation at reasonable levels, and if Labour can whip inflation they will be in a good position for the 1979 election at a date of their choosing. It doesn’t quite work out like that. Immediately, trade union leaders argue that 5% is an impossible ask after years of pay restraint. The Chancellor, Dennis Healey, is also privately sceptical that 5% can be delivered. The new expectation becomes that the 5% figure is a bluff — something to talk tough about at election time, which can be negotiated once Labour is re-elected with a new majority. In September, the Lib-Lab pact expires. From now on the government would continue through strange little pacts, starting by offering to increase the number of seats in Northern Ireland in exchange for Ulster Unionist support (a minority government being held hostage by Ulster unionists? plus ca change…). So wage negotiations begin at Ford, and now begins the winter of our discontent. Because it was a large, influential company, companies often looked to what Ford would pay their workers as a yardstick for how they would pay their own workers. Ford had been having a pretty good 1978, so they were perfectly happy to pay their workers whatever they asked — which was rather more than 5%. The government often contracted Ford, so Ford does what the government would’ve wanted and suggest a 5% pay increase. The workers responded by going on an unofficial strike. Ford quickly calculates that the damage from the strike would be worse than any punishment they’d get for breaking the guidelines, so they break the guidelines and offer a 17% pay increase. Duly, the government tries to sanction Ford for breaking guidelines. Left-Wing Labour MPs rebel and vote with the Conservatives and other parties to revoke the sanctions against Ford. The Labour government was basically stuck: the defeat of their ability to sanction Ford essentially meant the total defeat of their ability to punish any private company for going outside the pay guidelines. Now shown to be impotent, other unions begin to make large pay claims. Lorry drivers protest for higher wages, disrupting logistics. Lorry drivers found themselves in a very powerful position in blockading the towns, as they had to make the call as to what constituted essential goods. By 1979, public sector workers such as railway workers and nurses go on strike. Occasionally, the government or business buckle to minor strikes. This had the result of emboldening others, who begin to strike in their area — often without consulting trade union leadership, hospital workers and ambulance drivers in particular, though most notoriously the gravediggers in Liverpool who go on strike for 2 weeks and got a 14% pay increase. (“The bodies were unburied” is the popular cultural meme of the Winter of Discontent) and refuse workers. Having totally lost control of the situation, the government has little choice but to fold its hand and comes to various pay deals far above their preferred 5% limit. The government negotiate with the TUC but due to the weakened central control of union leadership it takes a few weeks for the strikes to totally end. Having entered September with a narrow opinion poll lead for Labour, they now found themselves trailing the Conservatives by a reasonable margin. Things can only get worse.

In early March, 1979, a referendum on a Scottish devolution results in over 50% of voters electing in favour of devolution. Yet the rules of the referendum were that the vote needed to be over 40% of the electorate, in effect making abstainers a proxy for no. Thus Labour refuses to allow devolution. The SNP are furious and table a no confidence motion, swiftly followed by the Liberals and finally the Thatcher-led Conservatives, who set the date for the vote of no confidence for March 28th. Labour has to look for votes wherever it can find them — Enoch Powell marches in and proposes that if the government commits to building a gas pipeline to Northern Ireland, he can deliver the government a large number of Ulster Unionist votes. This is far too pork-barrel-y even for a government as desperate as this, and the offer is turned down. Labour the phone the Liberal MP and freedom of information campaigner Clement Freud and promise him that if he contrives to miss the train back to London (and so, miss the vote) the government will pass a milder version of the freedom of information laws he proposed. He refuses. Labour MP Alfred Broughton is on his deathbed in hospital. He is determined to come in and support the government, though, so plans are made to take him by ambulance to the courtyard of the house of commons and have his vote counted from there. Discussions begin about what would happen were he to die on route, which brings home the morbidness of the situation, at which point the government insists he does not come in. Ordinarily this wouldn’t matter, because there is a standard system of pairing for house of commons votes — if a Labour MP is sick, a Conservative MP will abstain from voting to balance it out. Duly, the Labour whip Walter Harrison went to speak to Bernard Weatherill the Conservative whip, who recognises there was a problem: No Conservative MP would risk their political career to abstain on a vote as crucial and as close as this one. Honour bound, Weatherill eventually offers his own vote, knowing it would mean the end of his political career but feeling unwilling to break with his promise to find a pair. Impressed by such an honourable gesture, Harrison declines the offer. So the debate began. It’s really worth listening to some of the speeches from it. I’ll quote only part of one — from James Callaghan — because it really is rather funny.

So, tonight, the Conservative Party, which wants the [Devolution] Act repealed and opposes even devolution, will march through the Lobby with the SNP, which wants independence for Scotland, and with the Liberals, who want to keep the [Devolution] Act. What a massive display of unsullied principle!

When the votes are counted, the government falls… by one vote. A general election is set for May, 1979. As the maximum term of a government is 5 years, this didn’t have much by the way of substantial political effect — it’s often disingenuously used to imply that it’s solely responsible for Thatcherism or such, but really it’s just ending the government slightly early on a note of high-drama.

Act 5: Thatcher

We all know how the election of 1979 goes. It was obvious — except that it wasn’t, not quite. There are a number of oddities of the campaign. Callaghan is actually much more personally popular than Thatcher. Some trade unionists actually hold a sneaking suspicion that Thatcher would enact policies more in their interests — because if you saw her as an old free marketeer, she’d have the government step back and let the unions and private companies fight amongst themselves, unlike the interventionist policies of Callaghan, Wilson and Heath. Nevertheless, Thatcher wins the 1979 election on the largest swing since the end of the second world war. Duly the government begins implementing the standard monetarist policies — cut public spending and increase interest rates. Unemployment skyrockets from somewhere in the range of 1–1.5 million to 3 million. Countless private companies go bankrupt due to the interest rate hikes, combined with the perversely detrimental impacts of the increased revenue from north sea oil. Considered a potential source of salvation in the tough times of the 1970s, in the end all it really does is push up the value of the pound — making British exports more expensive abroad, and so helping to put more British companies out of business. In 1981 there are rumblings of a conflict between the miners and the government. The government wants to close 23 pits and the unions object. Contrary to the “Iron Lady” image, Thatcher actually backs down pretty quickly. The government doesn’t believe it can win such a strike at this time. In 1982 the increasingly militant National Union of Mineworkers leadership calls for a strike, but the membership votes to accept the government’s 9% pay increase offer.

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A few years later she has the political power to move against the miners. The shuttering of coal mining in the UK is done in a completely unnecessary, cruel, and spiteful way. vengeance for the 1973 strike that destroyed the Heath government, and in which Thatcher was a cabinet minister. The miners are defeated in 1985. Coal mines in the UK were rapidly shut down after that. The result — the rapid devastation of mining communities, the spike in unemployment, etc, was completely and totally unnecessary. When the accounts for the UK Coal Board were explored, it was discovered that although it was indeed an unprofitable industry, the actual mining of coal was breaking even — it was enough to pay wages, to cover repairs to the mining equipment, etc. The industry was unprofitable due to pensions and land damage compensation payments, which the government had to continue paying regardless. The rapid shuttering of the mines was primarily a political decision, at best motivated out of a desire to crush the trade unions and at worst motivated by nothing more than sheer spite and bitterness.

In 1986, the Wapping dispute begins as newspaper workers go on strike. Like the miner’s strike, it is a turning point in the crushing of organised labour in Britain — it’s also an important moment in the development of the Rupert Murdoch owned press as he moves The Times printing to a barbed wire fortress in Wapping. The metonym for the press “Fleet Street” becomes an anachronism as most newspapers stop printing there following the crushing of their own print workers.

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From the 1980s into the 90s, all unions are severely weakened. They were subject to increasing legal regulation and many actions are banned. The right to take sympathy action (you work for a bus company and I work for a bus repair company, I could refuse to repair your companies bus until it comes to an agreement with you) is removed. The requirements for a strike to be considered legal are made stronger, including tighter restrictions on balloting members. The “closed shop” (requiring all workers in a workplace to be unionised) is abolished. The government opts out of joining the social chapter, which was the EEC’s agreed system of trade union rights and responsibilities. The strike praxis of the 1970s, where those on strike would often make it physically impossible to enter their place of work by crowding around the entrance, is being legislated out of possibility. On top of this, changing economic circumstances also hurt the unions. With 3 million unemployed and stronger rights for employers, the bargaining position of worker becomes much weaker than it was during full employment times. Many working class communities see their major private sector employers decimated by the government’s high-interest-rate, high-value-pound policies. As government services are privatised, they shed workers. The abolition of income restraint policies leads to a reduction in middle class union membership, weakening the unions in those professions.

The Encore

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Eventually in 1997 New “Labour” came to power. They did little to restore the rights of trade unions. In 2000 there were a wave of protests about the price of petrol by the lorry drivers. They objected to the high taxes on petrol and began blockading petrol stations or refusing to deliver petrol as a result. The government eventually won the day (While making some concessions to lower taxes on motorists), but the reaction and expectation of most of those within it was often fear that they were facing a situation much like that in 1979 — that this was just the precipice of a crisis that would destroy them. In 2005 there was a major strike at Gate Gourmet, who did the catering for British Airways, which had many echoes of the Grunwick dispute. Also in 2005, there was another election — in a point of irony, having not been particularly helpful to the trade unions and seeking to weaken their influence, Blair’s Labour party found itself more reliant on them than ever for financing after this election. Alas, this didn’t lead to much if any policy change.

The 2010 Labour Leadership election is also fun: David Miliband persistently won most votes from party members and from elected representatives. His brother, Ed Miliband, won by a larger margin amongst “Affiliated Members”, which is to say Trade Union members. In the end, the unions tipped the result. This caused some outrage by the centre-right of the party, who already regarded this voting system as an anachronism. So dutifully, they were given reform and Labour moved to a new voting system — one that would even allow members of the public to vote for £3. The idea here was that members of the public would naturally vote for nice, electable, centrist candidates — unlike unions who would elect centre-lefties sympathetic to their positions. Naturally it transpired that actually the only people willing to pay to vote for the next Labour leader were the sort of people who’d vote for Jeremy Corbyn, who was rather to the left of the preferences of even the trade unions.

-Saltpeter Seashore.

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