Great British Disasters

I originally posted this article on an older blog, but as Britain rarely learns from its crises, it’s pretty much evergreen:

In a way, Britain has had but once crisis since the end of the Second World War, it has emerged in different guises at different times, but it has essentially been the same problem. Britain, as Dean Acheson said, has lost an empire but not yet found a role. In 1945 Britain did not accept that her empire was gone and more significantly, that the centre of world finance had shifted from London to New York. In 1945 Britain sought a post war loan to prop up the value of stirling and as a result the USA demanded full convertibility of the pound, triggering a sterling crisis in 1947 that led to the extension of rationing into the mid 1950s. However, the relative economic weakness of Britain in the post war era, combined with Britain’s inability to accept new realities led to a far greater calamity in 1956.

Suez

When Anthony Eden took over from the ailing Winston Churchill in 1955, he was a popular and inspiring figure with a good war record as Churchill’s capable foreign secretary. He quickly became ensnared in a battle of wills with Colonel Nasser, the new nationalist leader of Egypt in 1956 who had been threatening since 1954 to nationalise the Suez Canal, the world’s most strategic waterway, partly owned by Britain since the bankruptcy of the Khedive in 1875. British soldiers who occupied the canal zone until they were removed in 1954 were generally loathed by the Egyptians and had a bad reputation as very poor guests, consistently inflaming nationalist passions. When Nasser seized control of the canal (albeit offering British share holders very reasonable compensation) not only was a strategic asset threatened, but more importantly Britain’s sense of itself in the world came under attack. Eden, determined not to be outwitted by a figure he compared to both Hitler and Mussolini (though both these comparisons are unrealistic) took up a Franco-Israeli offer of involvement against Egypt. The military operation was successful, paratroops were dropped into the canal zone following an Israeli invasion, on the pretext of being part of an Anglo French peacekeeping mission. It was the USA’s intervention that called time on the operation. President Eisenhower threatened an oil embargo on Great Britain and the mass dumping of Sterling on the world currency markets and Eden suspended operations almost immediately.

• What does Suez tell us about Britain’s position in 1956?

Britain was clearly able to wage war (albeit against a far weaker opponent, in collusion with powerful allies), but Britain’s debts and her dependence on oil imports meant that she was powerless against the USA. America was keen to ensure that she was not dragged into a middle eastern war against the USSR, Nasser’s new backers. In the 19th Century, Britain had been free to deliver punishments to wayward states from Egypt to China to the Transvaal, but those days were gone. They had gone because Britain’s relative economic strength had declined and because Britain had begun the transition to a peacetime, consumerist welfare society.

The Winter of Discontent 1979

From the mid 1960s, one issue came to dominate all other economic, social and political considerations; inflation. The rapid increase in prices over wages had  crept up during the last years of Harold Wilson’s 1966-70 government and it was exacerbated by the oil crisis of 1973 and the poor macro economic decisions of Ted Heath’s government. British workers, desperate to enjoy the prosperity of the 1960s demanded through their unions shop stewards ever increasing pay claims to keep up with the rising prices. Two strikes by Britain’s miners brought the Heath government to its knees, the second of which, in the winter of 1973-74, caused his government to collapse in the spring. The new Labour government that was voted in negotiated a new policy with the unions called the ‘social contract’. The social contract was created as a voluntary code to prevent the need for a formal incomes policy, but it rested on the assumption that union bosses could persuade their members to accept pay restraint. Not only were union bosses becoming less influential compared to union shop stewards, but it was difficult for them to ask their members to stick to single 6 per cent pay rises during a period with 27 per cent inflation. In 1975 the TUC agreed to pay limits of £6 per week to workers earning less than £8,500. They accepted further limits in 1976 and rejected a motion at the 1976 TUC conference to end the social contract and return to free pay bargaining. When Wilson resigned in ill health in April 1976, he was succeeded by Callaghan and in 1978 the prospects for Labour in the next general election seemed good; unions had complied with Callaghan’s call for pay restraint and, had he called an election in mid-1978, he would probably have won. James Callaghan and his Chancellor Denis Healey made tackling inflation a much more important economic priority than former Labour leaders. By 1977, Denis Healey believed that inflation was being brought back under control and that the social contract had run its course. He believed that free bargaining could return but warned against ‘greedy’ unions demanding too much. The following year he was forced to backtrack as inflation soared once again and he enforced a strict five per cent pay increase for low paid workers. This resulted in a winter of strike action in 1978–9, known as ‘The Winter of Discontent’ that the government was powerless to prevent. Ford, the car manufacturing giant, attempted to enforce the government’s pay policy; in response 15,000 auto workers went on strike on 22 September. The strike was unofficial when it began but by 5 October the TGWU had endorsed it, causing other Ford workers to strike, with the total number of workers refusing to work rising to 57,000. Ford offered a rise of 17 per cent which meant they incurred government penalties, but it also showed that the social contract was unenforceable. The left of the Labour Party also sabotaged the social contract, voting through a motion at the Party conference in October that the government stop intervening in pay negotiations between the workers and management. The government now had no way of enforcing pay restraint and the unions seized the opportunity to gain pay increases. In December 1978 lorry drivers began an overtime ban, demanding a 40 per cent pay rise. Callaghan was reluctant to declare a state of emergency as Heath had done, even though it would have enabled the army to drive lorries and oil tankers. The TGWU picketed oil refineries, meaning that petrol could not reach petrol stations and heating oil could not reach schools, hospitals and homes. The situation was exacerbated by the longest, coldest winter since 1947. The next group to go on strike was Britain’s public sector workers. On 22 January 1979 millions of low paid public employees went on strike as public sector unions, such as the National Union of Public Employees (NUPE), tried to ensure that their members got the same pay rises as employees in the private sector. More than a third of public sector employees took home £40 a week and public sector unions demanded it rise to £60. The nurses union, The Royal College of Nursing, demanded a 25 per cent wage rise for nurses. Public sector unions began to lose control over their members, who declared strike action in vital services such as ambulances and 999 emergency telephone lines. The British press reported that cancer patients had to use the London underground to get to hospital appointments. In January Liverpool’s grave diggers went on strike, and whilst the numbers of striking men were small (just eighty), the newspapers printed full page stories of mortuaries filling with unburied bodies and the possibility of having to bury people at sea. Another visual example of the chaos strikes had brought to Britain was the mountains of rubbish in city centres caused by refuse collectors going on strike. The government offered public sector strikers an 11 per cent pay rise. They attempted to negotiate directly with the unions, but gradually realised that the unions themselves had lost control over their members. Union bosses were unable to end strikes directly, instead they gradually decreased as strikers either got the pay increases they wanted or decided to return to work anyway. The main consequence of the Winter of Discontent was a dramatic shift in public attitudes against the trade union movement. Whereas a decade earlier in 1969, 60 per cent of people said they had positive views of the unions, in 1979 only 20 per cent did. There was dissatisfaction about the power of unions coming from within the union movement itself. When Margaret Thatcher was elected in 1979, promising to curtail union power, one in three trade unionists voted for her.

• What does The Winter of Discontent tell us about Britain’s position in 1979?

Britain appeared to be ungovernable due to trade union action and the unions lost much of the support of the general public as a result. However, the real culprit was not the unions as much as it was inflation. Inflation was caused by two principal factors, the rising price of oil as a commodity and Britain’s decline in productivity in the post war years. The thread that connects these two crises is that the economic autonomy that Britain once enjoyed had gone as a result of two world wars and the economic burden they imposed. Just as with Suez, the ability of Britain to function and act in an independent way was negated by external and internal economic pressures, pressures that had not existed a century earlier.

…And now? Here are some questions to consider (your learners might decide that these two issues and the referendum have nothing to do with one another; it’s not about the answer, it’s about the consideration of the question….)

• Are there any recurring themes within the Suez, Winter of Discontent and current referendum crises?
• Why has Britain found it hard to accept changes to her world role in the post war era?
• What role has economics played in Britain’s post war problems?

A full downloadable PDF version of this article and questions is available here: Great British Disasters