A Short History of Trade Unions - Part 8: 1970 – 1979
April 2020
This Part covers the period 1970-1979 and includes the Incomes Policies of the Tory and Labour governments in the 1970s and their impacts on trade unionists. Several myths from the 1970s are also de-bunked. The excerpts are taken from John Medhurst’s article “The myth of the 1970s” at www.redpepper.org.uk/the-myth-of-the-1970s/
The previous Parts of this short history of trade unions as well as the Leading Labour Lives series can be seen at https://www.madsmeds.org/home
Union membership increased throughout this period as can be seen on the table below.
Trade unions and TU membership 1939-1979.
Year No. of trade unions registered No. of TU members Union density:
members as a % of employees
1939 1019 6,206,000 31.9
1949 742 9,077,000 44.7
1959 668 9,257,000 43.3
1969 561 9,999,000 44.2
1979 454 12,639,000 53.4
This table shows the figures leading up to the period covered in this article so that trends can be identified specifically:-
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the numbers of trade unions went down as unions merged with each other.
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the numbers of members steadily increased throughout this period as did union density.
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trade union membership peaked in 1979.
MYTH 1: 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, and which it had some success in dealing with, resulting in inflation halving between 1976 and 1979.
1970 In June a Tory government was elected with Ted Heath as prime minister.
There was a graduated reduction in public sector pay settlements.
T&G had 1,500,000 members.
1971 Industrial Relations Act The Conservative government had a manifesto commitment to bring in a conciliation pause and compulsory strike ballots, and to make collective agreements enforceable by law. In 1971, it adopted an Industrial Relations Act incorporating these principles and establishing a National Industrial Relations Court (NIRC). This was empowered to grant injunctions against strikes and to settle labour disputes. The court was led by a Tory judge, John Donaldson. The court was boycotted by trade unionists until the Act was repealed and the NIRC abolished in 1974 by the new Labour government.
1972 The “Pentonville Five” were five docker shop stewards. They were jailed in July 1972 by the National Industrial Relations Court for refusing to obey a court order to stop picketing a container depot in East London. Their arrest and imprisonment led to the TUC calling a general strike on 31 July, demanding the release of the five shop stewards. The Five were released on Wednesday 26 July as a result of a re-interpretation of the law by the courts. The strike action in the docks then became official.
1972-74 Inflation levels led to proposals for voluntary wage restraint. This was rejected by the unions in protest against the Tories’ Industrial Relations Act. A statutory pay freeze was imposed followed by ceilings on settlements which were policed by a Pay Board.
MYTH 2 : 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.
1974 In the February election, Labour won 301 seats (17 short of a majority). Two miners' strikes, in 1972 and at the start of 1974, damaged the Tory government; the latter caused the implementation of the Three Day Week to conserve energy. Conservative prime minister Ted Heath called an election to obtain a mandate to face down the miners' wage demands with the slogan “Who Governs Britain?”. As Tony Benn remarked, the British public answered “Not you, mate” because the election resulted in a hung parliament. Heath resigned and a minority government with Harold Wilson as prime minister was formed. Denis Healey became Chancellor of the Exchequer - he faced a debt of over £4 billion, inflation was in double figures and wages were linked to prices. It was recognised that this minority government had no long-term stability, and that another general election was likely within a few months.
1974 In October, a Labour government (with a majority of 3 seats) was elected with Harold Wilson as prime minister.
1975 The Social Contract and Employment Protection Act. The Labour government was elected with a commitment to a social contract agreed with the trade unions. It was chiefly designed by Jack Jones, general secretary of the T&G. Its key was a deal in which the trade unions backed a ceiling on wage rises in favour of a strong redistributive element towards low paid workers and trade union rights. In return the trade unions gained a strengthening of employment and trade union rights mostly through the Employment Protection Act. These included:
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Establishment of ACAS (Advisory, Conciliation and Arbitration Services) and other bodies to keep industrial issues out of the courts
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Rights to time off for trade union activities
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Protection against unfair dismissal
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Rights to arbitration for low paid workers
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Rights to ACAS support in recognition disputes
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Rights to consultation on redundancies and Health and Safety
The government also brought in the following legislation to provide protections in and out of work.
1975 The Social Security Act established a maternity allowance fund. In August, the Social Security Pensions Act established equal treatment in pensions schemes and abolished contributions tests which limited state pensions for women.
In November, The Employment Protection Act outlawed dismissal for pregnancy and provided for paid maternity leave. The Sex Discrimination Act outlawed direct and indirect discrimination on gender grounds and established the equal Opportunities Commission.
The Equal Pay Act came into operation in December.
1976 Harold Wilson caused a political sensation when he resigned in March. He was just over two years into his fourth stint as Prime Minister, and five days after his 60th birthday. He had been Labour leader for 13 years and Prime Minister for nearly eight years. James Callaghan succeeded him as leader and PM
The Race Relations Act 1976 was passed to prevent discrimination on the grounds of race. Items that were covered included discrimination on the grounds of race, colour, nationality, ethnic and national origin in the fields of employment, the provision of goods and services, education and public functions.
IMF (International Monetary Fund) bailout. The Labour government applied to the IMF for a £2.3 billion bailout stating that unemployment and inflation were at exceptional levels. In return the IMF insisted on deep spending cuts to tackle the budget deficit. The government implemented spending cuts which, in effect, ended the “social contract” with the unions.
1977 T&G membership exceeded 2,000,000.
1978 The Government announced a unilateral 5% limit on pay increases, backed by sanctions on employers who award more. This led to the “Winter of Discontent”.
MYTH 3: 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.’
1978/79 Widespread disputes (known as “The Winter of Discontent”) occurred in the public and private sectors as the government incomes policy broke down.
26 September 1978 – 23 Ford car plants are closed across Britain due to strikes.
21–22 December 1978 – The BBC was hit by a series of strikes.
22 January 1979 - public sector workers in the United Kingdom went on strike in the largest strike to take place in the country since 1926. The workers from the four largest public sector unions ( The National Union of Public Employees, Confederation of Health Service Employees, General and Municipal Workers Union, and Transport and General Worker’s Union) called on their one and a half million members to stop working in protest of the British government’s attempt to create a pay increase ceiling at 5 %.
1979 In May, a Conservative government (with a majority of 43 seats) was elected with Margaret Thatcher as prime minister leading to eleven pieces of anti-union legislation being passed and a massive rise in unemployment (over 3 million people in 1983) as the manufacturing industry contracted.
Part 9 will deal with the policies of the Thatcher government and how this impacted on trade unions.
Solidarity
Brian Madican
April 2020