Get Red Pepper's email newsletter. Enter your email address to receive our latest articles, updates and news.


The myth of the 1970s

In the 1970s, they say, the dead lay unburied, greedy unions held the country to ransom and a divided country was impossible to govern, John Medhurst asks: was it really so bad?

October 23, 2014
7 min read

MYTH: Britain was in economic crisis and decline in the 1970s

The reasons the British economy was in difficulty in the 1970s had little to do with the welfare state or nationalised industries (which provided a cheap subsidy to underperforming private industry) but reflected the failures of British capitalism. Since 1945, European countries such as France, Italy and Germany, as well as Japan, had outstripped Britain in productivity and economic growth. This was due to the sustained and government-planned and supported investment those countries put into their industries.

In contrast, Britain was badly served by the City and its financial institutions, which prioritised short-term profits, immediate shareholder return and overseas investment. As a result there was a decline of UK industry. Labour’s industrial strategy in the 1970s aimed to provide greater strategic direction and investment through a national enterprise board, planning agreements and targeted regional investment. The City and Conservative Party opposed this.

Analysts such as Alan Bailey, Treasury under-secretary in 1973-79, writing about Labour’s industrial policies of the 1970s, concluded that its attempt at an activist industrial strategy was more positive and successful than is accepted in ‘the prevailing caricature of the period’. As for other economic indicators, such as inflation, there were particular causes, which the 1974-79 Labour government inherited from its Tory predecessor (see below), and which it had some success in dealing with, resulting in inflation halving between 1976 and 1979.

MYTH: In the 1970s Britain was an ungovernable ‘failed state’

Britain was so far from being a ‘failed state’ in the 1970s that a survey by the New Economics Foundation – based on social inequality indices, investment in public services, levels of pay and other benefits to ordinary workers – found that 1976 was the ‘happiest year’ in the period 1945 to date. There were major advances on sexual equality, such as the Equal Pay Act, the Domestic Violence and Matrimonial Proceedings Act, and child benefit. Britain in the 1970s was also characterised by vibrant and original popular music, design and fashion industries.

Although there were significant miners’ strikes in 1972 and 1974 and the so-called ‘winter of discontent’ disputes in 1978/79, these arose from legitimate wage grievances as trade unions tried to ensure their members’ pay kept pace with inflation. The strikes were lawful industrial actions and were accompanied by three general elections (February and October 1974, and March 1979) in which political power changed hands peacefully and constitutionally.

The main threat to British democracy in the 1970s arose from the activities of the political right and the security services. Unaccountable elements in the security services and military intelligence created covert operations such as ‘Clockwork Orange’, which smeared left wing figures in Northern Ireland and Britain, as well as providing Protestant paramilitaries with the names and addresses of Catholic activists. Paramilitary organisations such as GB75, which sought to organise strike‑breaking armies and prepare for a possible military coup, were supported by senior figures in the security services, the military and the Conservative Party. Many on the right, including Margaret Thatcher, supported General Pinochet’s 1973 military coup, which removed Chile’s democratically elected socialist government and murdered thousands of its supporters.

MYTH: Inflation was out of control in the 1970s because of trade union pay demands

Inflation went up considerably between 1972 and 1976, when it began to go back down. It was mainly driven by the Heath government’s relaxation of the Bank of England’s competition and credit control rules, which had ensured that the ratio of bank deposits to lending should broadly balance out. Without these controls, the banks expanded their ‘reserve assets’ to support massive lending, resulting in an inflation and credit boom. Heath refused to raise interest rates to counter this and by the end of his government the rate of inflation was rising remorselessly – it would increase from 10.2 per cent in 1973 to 24.6 per cent in 1975.

Despite being the root cause of the problem the banks and the financial sector demanded more freedom to lend and speculate, and resisted any attempt to re-impose the regulatory rules that had ensured stability since the war. Instead, they and their media allies blamed inflation on the unions’ annual wage claims, which were constructed merely to keep pace with the rise in the cost of living.

MYTH: Trade unions behaved irresponsibly and ‘held the country to ransom’

Most of the unions’ industrial actions of the period were reactive, either seeking to resist wage or job cuts, or political attacks such as the 1972 Industrial Relations Act. In industry (private and nationalised) most British companies, instead of prioritising research, reinvestment and restructuring, preferred to simply lay off workers, prompting industrial militancy in response.

After Labour was elected in 1974 the unions showed great patience in abiding by the ‘social contract’ with Labour, reigning in pay demands in return for an increase in the ‘social wage’ (rent freezes, pension increases etc). As a result inflation began to come down. But although the unions had contributed to containing inflation, the banks continued to send money abroad, causing a balance of payments crisis and threatening a further rise in inflation. While Phases 1 and 2 of wage restraint were broadly accepted by the trade unions, Phases 3 and 4 were not. Phase 3 allowed a maximum wage increase of 10 per cent, although inflation was higher. By 1978 inflation had fallen to 10 per cent but the government unwisely chose to go to Phase 4, which limited pay increases to 5 per cent. This set off the strikes of the ‘winter of discontent’, which were in response to pay increases lower than the rise in the cost of living and large cuts in public services demanded by the International Monetary Fund (IMF) in return for its loan in 1976.

The media greatly exaggerated the size and impact of the strikes to discredit Labour and assist Thatcher. In reality the strikes inconvenienced relatively few and, compared to genuine catastrophes like the collapse of UK manufacturing in the 1980s or the banking crisis of 2008, had no permanent economic impact. Despite this the legend of the winter of discontent is now set in stone, impervious even to the admission of Derek Jameson, editor of the Daily Express in 1979, that: ‘We pulled every dirty trick in the book. We made it look like it was general, universal and eternal, whereas it was in reality scattered, here and there, and no great problem.’

MYTH: The dead remained unburied because of strikes

In early 1979, as part of industrial action across public services, grave diggers at two cemeteries (one in Liverpool and one in London) took unofficial strike action. These actions lasted for a few weeks, during which bodies that would have been buried in those cemeteries were kept on ice. In all other cemeteries across the UK the dead were buried as usual.

MYTH: Margaret Thatcher saved the country from the decline of the 1970s

By 1979 inflation was going down and North Sea oil was coming on stream. The 1974–79 Labour government was unlucky in that its time in office coincided with the capital investment phase of North Sea oil exploration rather than the results of that investment. Its Tory successor reaped the benefits and then squandered them, using North Sea oil revenues to fund tax cuts for the middle class and pay benefits to the more than three million it allowed to become unemployed, instead of using it as the basis for national economic recovery.

Thatcher applied an extreme economic dogma that had the immediate effect of plunging the country into the deepest recession since the war, which it did not begin to emerge from until 1988. For most of the 1980s UK growth was the same as the 1970s and on a par with average growth rates in other western European countries of the time. Inflation was higher when Thatcher left office than we she entered it, and the effect of mass unemployment on British society was devastating. The focus of the British economy shifted from manufacturing industry, which sustained vibrant communities and ensured decent living standards, to a deregulated finance sector based in London, supported by a de-unionised service economy of long working hours and minimal employment protections.

John Medhurst is a trade union policy officer. His book on the challenge posed by Tony Benn and the Labour left in the 1970s, That Option No Longer Exists: Britain 1974-76, is published by Zero Books

Red Pepper is an independent, non-profit magazine that puts left politics and culture at the heart of its stories. We think publications should embrace the values of a movement that is unafraid to take a stand, radical yet not dogmatic, and focus on amplifying the voices of the people and activists that make up our movement. If you think so too, please support Red Pepper in continuing our work by becoming a subscriber today.
Why not try our new pay as you feel subscription? You decide how much to pay.
Share this article  
  share on facebook     share on twitter  

#MeToo is necessary – but I’m sick of having to prove my humanity
Women are expected to reveal personal trauma to be taken seriously, writes Eleanor Penny

Universal credit isn’t about saving money – it’s about disciplining unemployed people
The scheme has cost a fortune and done nothing but cause suffering. So why does it exist at all? Tom Walker digs into universal credit’s origins in Tory ideology

Meet the digital feminists
We're building new online tools to create a new feminist community and tackle sexism wherever we find it, writes Franziska Grobke

The Marikana women’s fight for justice, five years on
Marienna Pope-Weidemann meets Sikhala Sonke, a grassroots social justice group led by the women of Marikana

Forget ‘Columbus Day’ – this is the Day of Indigenous Resistance
By Leyli Horna, Marcela Terán and Sebastián Ordonez for Wretched of the Earth

Uber and the corporate capture of e-petitions
Steve Andrews looks at a profit-making petition platform's questionable relationship with the cab company

You might be a centrist if…
What does 'centrist' mean? Tom Walker identifies the key markers to help you spot centrism in the wild

Black Journalism Fund Open Editorial Meeting in Leeds
Friday 13th October, 5pm to 7pm, meeting inside the Laidlaw Library, Leeds University

This leadership contest can transform Scottish Labour
Martyn Cook argues that with a new left-wing leader the Scottish Labour Party can make a comeback

Review: No Is Not Enough
Samir Dathi reviews No Is Not Enough: Defeating the New Shock Politics, by Naomi Klein

Building Corbyn’s Labour from the ground up: How ‘the left’ won in Hackney South
Heather Mendick has gone from phone-banker at Corbyn for Leader to Hackney Momentum organiser to secretary of her local party. Here, she shares her top tips on transforming Labour from the bottom up

Five things to know about the independence movement in Catalonia
James O'Nions looks at the underlying dynamics of the Catalan independence movement

‘This building will be a library!’ From referendum to general strike in Catalonia
Ignasi Bernat and David Whyte report from the Catalan general strike, as the movements prepare to build a new republic

Chlorine chickens are just the start: Liam Fox’s Brexit trade free-for-all
A hard-right free marketer is now in charge of our trade policy. We urgently need to develop an alternative vision, writes Nick Dearden

There is no ‘cult of Corbyn’ – this is a movement preparing for power
The pundits still don’t understand that Labour’s new energy is about ‘we’ not ‘me’, writes Hilary Wainwright

Debt relief for the hurricane-hit islands is the least we should do
As the devastation from recent hurricanes in the Caribbean becomes clearer, the calls for debt relief for affected countries grow stronger, writes Tim Jones

‘Your credit score is not sufficient to enter this location’: the risks of the ‘smart city’
Jathan Sadowski explains techno-political trends of exclusion and enforcement in our cities, and how to overcome this new type of digital oppression

Why I’m standing with pregnant women and resisting NHS passport checks
Dr Joanna Dobbin says the government is making migrant women afraid to seek healthcare, increasing their chances of complications or even death

‘Committees in Defence of the Referendum’: update from Catalonia
Ignasi Bernat and David Whyte on developments as the Catalan people resist the Spanish state's crackdown on their independence referendum

The rights and safety of LGBTQ+ people are not guaranteed – we must continue to fight for them
Kennedy Walker looks at the growth in hate attacks at a time when the Tory government is being propped up by homophobes

Naomi Klein: the Corbyn movement is part of a global phenomenon
What radical writer Naomi Klein said in her guest speech to Labour Party conference

Waiting for the future to begin: refugees’ everyday lives in Greece
Solidarity volunteer Karolina Partyga on what she has learned from refugees in Thessaloniki

Don’t let Uber take you for a ride
Uber is no friend of passengers or workers, writes Lewis Norton – the firm has put riders at risk and exploited its drivers

Acid Corbynism’s next steps: building a socialist dance culture
Matt Phull and Will Stronge share more thoughts about the postcapitalist potential of the Acid Corbynist project

Flooding the cradle of civilisation: A 12,000 year old town in Kurdistan battles for survival
It’s one of the oldest continually inhabited places on earth, but a new dam has put Hasankeyf under threat, write Eliza Egret and Tom Anderson

New model activism: Putting Labour in office and the people in power
Hilary Wainwright examines how the ‘new politics’ needs to be about both winning electoral power and building transformative power

What is ‘free movement plus’?
A new report proposes an approach that can push back against the tide of anti-immigrant sentiment. Luke Cooper explains

The World Transformed: Red Pepper’s pick of the festival
Red Pepper is proud to be part of organising The World Transformed, in Brighton from 23-26 September. Here are our highlights from the programme

Working class theatre: Save Our Steel takes the stage
A new play inspired by Port Talbot’s ‘Save Our Steel’ campaign asks questions about the working class leaders of today. Adam Johannes talks to co-director Rhiannon White about the project, the people and the politics behind it

The dawn of commons politics
As supporters of the new 'commons politics' win office in a variety of European cities, Stacco Troncoso and Ann Marie Utratel chart where this movement came from – and where it may be going