The End of Post-War Consensus: Heath's Government (AQA A-Level History): Revision Notes
Political and Economic Policies
The Selsdon Manifesto
In January 1970, the Shadow Cabinet convened at the Selsdon Park Hotel in Surrey to develop the Conservative Party's economic programme ahead of the forthcoming general election. This meeting produced what became known as the Selsdon Manifesto, a document that represented a departure from the interventionist consensus that had dominated British politics since 1945.
The manifesto identified three pressing challenges facing Britain. Economically, inflation threatened price stability and living standards. Politically, the Liberal Party had experienced a revival in by-elections, potentially splitting the anti-Labour vote. Ideologically, the manifesto presented Labour's continued commitment to state socialism—the progressive intervention of elected governments to alter society and the economy through measures such as nationalisation—as fundamentally limiting individual enterprise and personal choice in British politics.
The Selsdon Manifesto marked a significant ideological shift in Conservative thinking, moving away from the post-war consensus that had seen both major parties accept substantial state intervention in the economy. This represented the first major challenge to the Keynesian economic orthodoxy that had dominated British politics since 1945.
The Selsdon programme advocated several interconnected principles. It urged relatively low levels of public expenditure to reduce the tax burden on individuals and businesses. The manifesto championed expansion of the private sector as the engine of economic growth and prosperity. Nationalisation faced explicit opposition on the grounds that it concentrated power in central government, removed large portions of British industry from competitive market disciplines, misallocated resources, and wasted precious capital. The programme also called for ending prices and incomes controls, arguing these distorted market signals and prevented efficient allocation of resources. While accepting the necessity of a Welfare State to support vulnerable citizens, the manifesto protested against the expanding bureaucracy that accompanied state provision.
Labour Prime Minister Harold Wilson condemned this programme in characteristically vivid language. He denounced what he termed "Selsdon Man" as representing a rightward lurch and an atavistic desire to reverse twenty-five years of social progress since the war. This phrase drew deliberate parallels with early human ancestors studied by palaeontologists, suggesting the Conservatives wished to return Britain to a primitive, pre-civilised state.
The 1970 general election
The general election of June 1970 marked a watershed in British electoral politics. For the first time, citizens aged 18 and above could vote, the minimum age having been reduced from 21. Both main parties operated under new leadership: Edward Heath for the Conservatives and Jeremy Thorpe for the Liberals.
The result delivered victory to the Conservatives, who increased both their vote share and parliamentary representation. They gained 77 seats whilst Labour lost 76, providing Heath with a small but workable majority in the House of Commons. The election appeared to vindicate the Selsdon approach, giving the Conservatives a mandate to implement their free-market programme—unregulated or minimally regulated processes of buying and selling goods and services.
The lowering of the voting age from 21 to 18 significantly expanded the electorate and reflected broader social changes in Britain during the late 1960s. This reform gave younger citizens, many of whom had participated in the social movements of the 1960s, direct influence over the country's political direction.
The U-turn
The Selsdon Manifesto had specifically criticised the Wilson government for performing policy reversals, condemning what it characterised as Labour's about-turns on economic management. Within a short period, however, the Conservative government executed an equally dramatic reversal of its own stated principles.
The Irony of the U-turn
The Heath government's abandonment of free-market policies represented a profound contradiction. Having criticised Labour for policy reversals, the Conservatives performed their own dramatic U-turn within just two years of taking office. This policy reversal would have lasting consequences for the Conservative Party and British politics, undermining Heath's authority and contributing to internal divisions that would ultimately lead to his replacement by Margaret Thatcher.
Heath abandoned the free-market policy direction because unemployment rose to politically unacceptable levels. Politicians across the spectrum retained vivid memories of the 1930s economic depression, when mass unemployment had generated severe social distress and political instability. Considerable opposition existed within the Conservative Party itself to any return to such conditions. The fear that unemployment might climb too high and trigger social and political instability weighed heavily on government thinking. The budgets presented between 1972 and 1973 became the instruments through which this policy U-turn was executed.
The Barber Boom
By the beginning of 1972, unemployment had reached one million workers—double the level when the Conservatives assumed office. Chancellor of the Exchequer Anthony Barber responded with an expansionary budget that journalists dubbed a "dash for growth". The budget increased pensions and benefits whilst reducing taxation. In presenting his proposals to Parliament, Barber boasted that his measures would add 10% to Britain's economic growth within two years.
To finance this expansion, the budget added £3.4 billion to the public sector borrowing requirement (PSBR)—the amount of money the government needed to borrow to make up the difference between what it could raise through taxation and what it intended to spend on services. This represented classic Keynesian economic management, injecting an additional £2.5 billion into the economy with the explicit intention of reducing unemployment. By early 1974, unemployment had indeed been halved.
The Inflationary Spiral in Action
The Barber Boom demonstrates the classic dilemma of Keynesian demand management:
Step 1: Government increases spending and reduces taxes (expansionary fiscal policy)
- Unemployment falls from 1 million to 500,000
- Economic growth accelerates
Step 2: Increased demand pushes up prices across the economy
- Inflation rises sharply within 15 months
- Workers demand higher wages to maintain living standards
Step 3: Government forced to reverse policy
- Deflationary budget introduced to combat inflation
- Wages freeze imposed, triggering industrial unrest
- The "cure" creates new problems as severe as the original disease
However, the policy produced an unintended and damaging by-product: sharply increased inflation. Within fifteen months of the original expansionary budget, Barber was compelled to move in the opposite direction, adopting a deflationary budget to offset the inflationary consequences of his earlier measures. The government also adopted a wages freeze to suppress inflation. This policy triggered industrial action by miners, who resented the limitation on their freedom to negotiate higher wages and improved working conditions through collective bargaining.
Divisions among the Conservatives
The government's actions increasingly contradicted principles expressed in the Selsdon Manifesto, creating internal party tensions. Rolls Royce, a large manufacturing concern of immense symbolic importance to British prestige, faced bankruptcy. The company's closure would substantially increase unemployment figures and raise uncomfortable questions about the renown and health of British manufacturing as a whole. Despite earlier opposition to nationalisation, the Conservatives took Rolls Royce into public ownership. When the Upper Clyde Shipbuilders similarly approached closure, that enterprise was also nationalised.
The Contradiction of Conservative Nationalisations
The nationalisation of Rolls Royce and Upper Clyde Shipbuilders directly contradicted the Selsdon Manifesto's explicit opposition to state ownership. This demonstrated that political pragmatism—the need to prevent mass unemployment and preserve nationally significant companies—trumped ideological principle. These actions severely damaged Heath's credibility and provided ammunition for both Labour critics and free-market Conservatives who felt betrayed by the U-turn.
This apparent lack of clear policy direction progressively undermined Heath's standing within the party. Iain Macleod, who had served as Chancellor, died in 1970. Reginald Maudling, one of Heath's rivals in the 1965 leadership contest, resigned in 1972 amid scandal. The departure of Enoch Powell from the party in 1974 removed the remaining candidate from that original 1965 contest. The Conservatives lost two general elections in succession during 1974. Although Keith Joseph initially appeared positioned to challenge Heath, outspoken remarks made his leadership candidacy unlikely. In 1975, Margaret Thatcher successfully stood against Heath in a leadership contest.
Industrial relations and the miners' strikes
Industrial Relations Act 1971
Trade union power represented a central concern for the Conservative government. Acting on a manifesto pledge, Employment Secretary Robert Carr introduced the Industrial Relations Act 1971 to specify what unions could and could not do. The legislation established an Industrial Relations Court (IRC) with authority to impose cooling-off periods in disputes and require unions to conduct ballots before taking industrial action.
The Act drew a distinction between official strikes, organised by the elected leadership of a union following proper procedures, and sudden, locally organised or even unorganised walkouts. These latter actions, termed wildcat strikes, could occur without demonstrations and formal strike procedures. The Trade Union Congress opposed the legislation throughout, supported by the Labour Party, despite the latter having attempted something similar in the In Place of Strife proposals.
The failure of the Industrial Relations Act revealed a fundamental problem with legislative attempts to control trade union behaviour: laws are only effective if people comply with them. By refusing to register with the IRC, unions rendered the entire framework largely powerless. This demonstrated that industrial relations could not be resolved through legal mechanisms alone when unions and workers were determined to resist.
The plan assumed unions would register with the IRC, but they refused to do so. The court achieved little. At one point it caused the arrest and imprisonment of five dockers' shop stewards for not appearing when summoned. This proved an embarrassment to the government, and the Official Solicitor obtained their release.
Miners' strikes 1972 and 1974
The Conservatives came to power claiming that inflation posed a serious menace and that reducing it was a priority. During their period in office, however, inflation rose. An inflationary spiral developed: whenever prices increased, unionised labour demanded higher wages; these awards inevitably prompted employers to increase the prices of their goods or services to pay for the higher wage bill, which in turn prompted further wage demands.
The government itself ranked as a major employer. The National Coal Board had been gradually reducing the size of the labour force as the coal industry contracted. It had achieved this reduction without making redundancies by offering generous retirement terms, thereby avoiding direct confrontation over declining pay levels. Following years of improving pay relative to the national average, miners had fallen back during the 1960s.
The 1972 Miners' Strike
In 1971, National Union of Mineworkers president Joe Gormley succeeded in negotiating a 14% pay rise. The following year, when a further pay demand was refused, the first national coal strike since 1926 commenced.
Key tactics employed:
- Deployment of flying pickets—striking workers who travelled from place to place to demonstrate at workplace entrances and dissuade other workers from crossing picket lines
- Solidarity from other unions, whose members refused to cross picket lines
- Strategic targeting of power stations and coal depots
Outcome: The NUM rapidly created a fuel crisis, exacerbated by winter weather conditions. The government declared a state of emergency. After seven weeks of striking, the miners accepted an improved offer from the NCB, achieving a significant victory.
The high rate of inflation quickly undermined the real value of this pay rise. The government was attempting to limit public-sector pay rises and recommend similar limits to the private sector, determined to avoid paying the miners more. Meanwhile, the 1973 oil crisis had pushed up coal prices. NUM leaders were convinced their members deserved a pay rise and that the NCB, backed by the state, could afford to grant one.
The 1974 Miners' Strike and Three-Day Week
The 1974 strike reduced the availability of electrical power to such an extent that the government was forced to introduce a three-day working week to avoid completely running out of fuel.
Context:
- The 1973 oil crisis had made coal more valuable
- Previous pay rise eroded by high inflation
- Government determined to hold the line on public sector pay
- NUM convinced its members deserved significant increases
Consequences:
- Dramatic reduction in economic activity
- Widespread disruption to businesses and daily life
- Government authority severely undermined
- Contributed directly to Heath's decision to call an election, asking voters "Who governs Britain?"
- Conservative defeat in the February 1974 election
Key Points to Remember:
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The Selsdon Manifesto (1970) promised free-market policies including low public expenditure, private sector expansion, and opposition to nationalisation and price controls
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Heath performed a dramatic U-turn from 1972, abandoning free-market principles due to rising unemployment, which doubled to one million by early 1972
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The Barber Boom injected £3.4 billion into the economy through increased PSBR, halving unemployment by early 1974 but causing severe inflation
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Despite opposing nationalisation, the government took both Rolls Royce and Upper Clyde Shipbuilders into public ownership to prevent job losses, directly contradicting manifesto commitments
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The Industrial Relations Act 1971 attempted to control trade unions through an Industrial Relations Court but proved largely ineffective as unions refused to register
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Miners' strikes in 1972 and 1974, using flying pickets to create fuel crises, defeated the government's attempts to control wage demands and contributed to Heath's political downfall
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The inflationary spiral—where wage increases led to price increases, which led to further wage demands—proved impossible for the government to break without provoking major industrial confrontation