Labour PM Callaghan loses to Thatcher

In the autumn of 1978, I remember the Labour Prime Minister James Callaghan – “Sunny Jim” as he was dubbed in the newspapers – made a public TV broadcast. The Labour Party had been in power since 1974, when it had taken two general elections in the same year to give Harold Wilson a majority. Wilson then stepped down as PM after two years and Callaghan was elected by Labour MPs to carry on ruling. During this period, the opposition Conservatives under Margaret Thatcher surged in the polls. By the end of 1978, most pundits thought Callaghan would seek a fresh electoral mandate as the government had lost its overall majority back in 1976 and had been required to rule with the support of other parties.

But Callaghan dodged the bullet. He refused to go to the country. With his customary bluff delivery, the PM barked that Labour would carry on in power now that things were getting better. In fairness, there was no doubt that the worst of the mid-1970s economic crisis was behind him. And Labour was still ahead of the Tories in the polls. Plus the public generally preferred Callaghan to Thatcher. An election in October 1978 would have very likely resulted in Labour losing seats but forming another minority government. What Callaghan may have reckoned was that as the recovery set in, Labour might win outright if the election was delayed until 1979.

So that’s what he decided to do. In papers released decades later, it was revealed that Callaghan had resolved to postpone the election over the summer of 1978. He confessed to a malicious delight in confounding Thatcher and keeping her waiting. But what he failed to see was that that autumn of that year was a brief pause in the ongoing malaise facing Britain and not the end of the troubles. The storm clouds had parted briefly. But the sun would soon go in again.

Looking back, the danger signs were all too obvious. The Liberal Party (now the Liberal Democrats) had walked out of a pact with Labour – which was damaging them electorally. Labour had to govern with the self-interested support of the Ulster Unionists – the Protestants in Northern Ireland. The trades unions weren’t prepared to stick to a 5% limit on pay rises, especially in the nationalised industries. This was stoking the fires of industrial action. Yet Callaghan was sure he could convince union leaders to curb pay over some beer and sandwiches. His hopes were blasted out of the water when Ford, the car maker, agreed a pay rise of 17% for its workers.

FIND OUT MORE: The 1983 general election

The road to the Thatcher decade opens up

The next year was spent trying to run the country as usual with one eye cocked firmly on the Tory leader. Her weaponising of immigration was viewed by Callaghan – quite rightly – as distasteful. This was at a time when the extreme-Right National Front had enjoyed some electoral success in local elections and Thatcher sought to puncture the NF’s popularity by adopting an anti-immigrant stance. In one TV interview she infamously made reference to ‘alien cultures’. The tabloids chimed in with terrifying stats on what Britain’s demographics would look like by the end of the century. Callaghan thought these statistics were as worthless as ‘astrology’ and referred to the government’s own statistical service, which was producing provocative figures on the projected Asian/British population by 2000, as the ‘Astrologer General’.

Callaghan got rather petty at times ensuring for example that Thatcher was excluded from Princess Margaret’s royal box at the London Palladium during a show. Meanwhile the police trade union, the Police Federation, was demanding higher pay. In response, Callaghan and his Home Secretary Merlyn Rees decided not to attend their annual conference thereby avoiding the predictable barracking, which Home Secretaries still get from the rowdy coppers. The Police Federation chief Jim Jardine asked why Callaghan wasn’t going to come and with typical bluntness, the Prime Minister responded: “Why should I, until you learn to behave yourselves?”

The problem with the Police Federation was indicative of the tough slog the Labour government was experiencing to enforce its 5% incomes policy. All this came to a head in the winter of 1978 to 1979 when over 2,000 strikes by trades unions brought the country to a halt. The so-called “Winter of Discontent” – a Shakespearian reference coined by the editor of The Sun, Larry Lamb. The narrative that developed rapidly then and ever since is that over-powerful unions overstepped the mark bringing down a Labour government and ushering ten years of Thatcher that saw the unions systematically attacked and destroyed. In effect, they committed suicide that winter by being bloody-minded and unreasonable.

It’s an easy narrative and the one that’s stuck – despite attempts to provide a more nuanced analysis. As inflation creeps back up nowadays, there’s a growing understanding of what workers were fighting for in a period where inflation was much higher than it is today. Thatcher, however, couldn’t believe her luck. Here were the unions kicking their own government. Callaghan manifestly unable to rein them in. She promised to “clip the wings” of the labour movement and suppress the strikes.This struck a cord with voters in many parts of the country.

Crisis. What Crisis?

At the height of the Winter of Discontent, James Callaghan went to a global summit in the Caribbean. He came back looking healthy and tanned – which landed like a lead balloon back home. Questioned by journalists at the airport about the ongoing ‘crisis’, the Prime Minster adopted his usual abrasive stance. After all, he reasoned, the worst of the mid-70s blues were over. The economic signs were improving. The unions would soon see sense. And he’d be re-elected later that year.

The Sun newspaper – a far more powerful influence on public opinion than it is now – ran the headline: Crisis. What Crisis? This is a line from the 1973 movie Day of the Jackal and popularised as an album title by the rock group Supertramp in 1975. Callaghan never actually said those words but the sentiment stuck. Here then was a Prime Minister who had lost touch with reality. So the narrative went…

The end of Labour in power

Opinions divide on whether Labour was fated to lose power in 1979. The dominant view has been that the post-war Keynesian consensus with government, companies and unions running mixed state and private sector economies in a tripartite arrangement was coming to a close. A neo-liberal era of deregulated markets and privatisation, as well as an ethos of rugged individualism, was dawning. The traditional working class was declining and its organisations, the trades unions, experiencing a last futile gasp.

But this analysis has been challenged. Other parts of Europe swung to the left – France for instance – rejecting the Thatcher/Reagan doctrine. More interestingly, greater credence has been given to some accounts that Callaghan was right when saying that Britain had pulled through the worst and with the benefit of North Sea oil and a strengthening economy need not have embarked on Thatcher’s policy of monetarism and widespread de-industrialisation that led to very high levels of unemployment in the 1980s.

For my part – I canvassed in the 1979 election aged 15. In all honesty, I never doubted that Thatcher – who I despised – was going to win. Older people I canvassed alongside didn’t think she necessarily would. The British people just wanted the existing system to work better and were not hankering for its destruction – they thought. But as Callaghan himself said of that year, the tide had changed. And there are times when you simply cannot resist the movement of history.