Callaghan's Defeat and the Country's Wrong Turning

It was after the weak and befuddled Callaghan government was defeated in 1979 that the country took a wrong turning. The first Thatcher administration started retrogressive policy trends that have continued until the present – through 18 Tory and 11 Labour years.

The key policy drivers throughout this, almost 30 year, period have been:

(i) the transfer of powers from local authorities, as part of a general intention to undermine democracy;

(ii) attacks on, and measures to weaken, the trade unions, as part of a general attack on workers’ rights;

(iii) the, in effect, giving away of the main benefits of North Sea Oil to commercial interests, and the privatisation of a whole range of other national assets.

Democracy was undermined by the transfer of powers from local authorities, controlled by elected councillors, to unelected quangos and other nominated bodies, such as school and college governors. Policies, and their implementation, were dictated from Westminster and Whitehall, with insignificant consultation.

Because local councillors no longer had the powers to address issues, for example in education, raised by members of their communities, citizens became increasingly divorced from the political process. The feeling that they do not matter, and they cannot make a difference, is why so many do not vote.

The most serious consequence of the Tory governments’ anti trade union measures is the removal of worker protection. The ‘free’ employment market enables employers to drive down wages and dismiss employees much more easily, often unfairly.

The enormous potential of North Sea Oil to raise the living standards of the poor was squandered. Effective control was given to multi-national oil companies and the £ billions the government received in tax were used to fund rising unemployment. The number out-of-work rose to over 3 million, as manufacturing industries were allowed to disappear.

The Thatcher and Major governments regarded a thriving City of London, not a buoyant manufacturing sector, as the measure of success. The Tory conviction was that if controls were removed the free market would solve all economic and social problems. The 2008 disasters in the housing market originated with these free market policies.

Building societies, in effect owned by their customers, were allowed to become banks. Many then embarked on irresponsible lending binges and paid large bonuses to employees who sold the most loans. It ended in tears, as the collapse of Northern Rock, and the difficulties of other banks, have demonstrated.

The Tory position, in accord with its tradition, has been that public expenditure is an evil and should be reduced to lower the ‘burden’ of personal taxation. In addition to giving the better off a good deal on tax, the Thatcher and Major governments gave them, what were, in effect, one-way bets: they were able to buy shares below market value when the public utilities (gas, electricity, water telecommunications etc) were privatised.

It took a long time for the majority of people to recognise the damage inflicted by these policies on the public services. However, by the end of the 20^th century, Labour, along with citizens who had experienced the damaging effects of the Thatcher cuts, recognised that public expenditure, especially on the health service and education, needed to be increased.

It was because, in so many respects, it was recognised that the Major government’s policies were heading in the wrong direction that a Labour government was elected in 1997. Many of us in the Labour Party believed that a Labour government would:

(i) improve public services by increasing expenditure;

(ii) transfer powers from unelected quangos;

(iii) take steps to create greater fairness and equality.

The next blog will show how naïve we were.