During this period, Harold Wilson and James Callaghan were successively appointed as Prime Minister by Queen Elizabeth II.
On 20 September Wilson called another snap election for 10 October, which resulted in a narrow victory for the Labour Party with a slim majority of three seats.
The economy was in recession by the time of the February 1974 election, but economic growth was re-established by 1976—although inflation, which had run into double digits before Labour came to power, was now above 20%.
This was the result of the economic decline, as well as advancing engineering techniques which required fewer personnel, along with other factors including the closure of unprofitable factories and coalmines.
He was replaced by James Callaghan, who had held senior government positions during both of Wilson's ministries, and had served as a Shadow Cabinet member in the early 1960s.
IMF negotiators insisted on deep cuts in public expenditure, greatly affecting economic and social policy.
Within a year of Callaghan taking office, the narrow Labour majority was eliminated due to by-election defeats, prompting a vote of confidence which prevented the government's collapse and a general election from being called.
With most of the opinion polls showing a clear Labour lead, it was widely expected that Callaghan would call a general election that autumn, despite having another year to do so, in order to gain a majority and give his government the chance of surviving in office until 1983.
During Harold Wilson's final premiership, from 1974 to 1976, a number of changes were carried out such as the introduction of new social security benefits and improvements in the rights of tenants.
Council house building continued on a substantial scale, although there was now a greater emphasis on modernising older properties rather than replacing them with new ones.
That year, national insurance benefits were increased by 13%, which brought pensions as a proportion of average earnings "up to a value equivalent to the previous high, which was reached in 1965 as a result of Labour legislation."
In order to maintain the real value of these benefits in the long term, the government introduced legislation which linked future increases in pensions to higher incomes or wages.
[2] An independent Advisory, Conciliation and Arbitration Service (now simply called Acas) (regarded as the brainchild of the trade union leader Jack Jones) was established, which according to Robert Taylor continues to provide "an impartial and impressive function in resolving disputes and encouraging good industrial relations practice."
A Manpower Services Commission was set up to encourage a more active labour market policy to improve job placements and deal with unemployment.
This reform assisted women by linking pensions to the 'twenty best years' of earnings, and those who worked at home caring for children or others were counted as contributors.
[6] In addition, differentials between skilled and unskilled workers were narrowed as a result of egalitarian pay policies involving flat-rate increases.
As a means of combating sex discrimination within the social security system, the Act provided that in future married women would receive the same level of personal sickness or unemployment benefit.
[3] The Damages (Scotland) Act of 1976 “amended the law relating to damages in respect of personal injuries and of death caused by such injuries, and abolished the action of indemnification.” The Education Act of 1976 also repealed part of the Education (Milk) Act 1971 “whereby local authorities were to charge for school milk.”[10] The Bail Act of 1976 “created a presumption in favour of the grant of bail in criminal proceedings, required courts to give reasons when refusing bail, replaced the system of personal recognisances for defendants by a new offence of absconding while on bail, required that a person who is remanded in custody more than once should have the opportunity of obtaining legal aid, and effected certain improvements to the surety system.” The Fair Employment (Northern Ireland) Act of 1976 barred discrimination in employment in Northern Ireland on the grounds of religion and politics, and also established the Fair Employment Agency for Northern Ireland to promote equal job opportunity.
[11] In August 1977 a new rule was made (Statutory Instrument No 1037/1977 dated the 18th of June 1977) “under Section 23 of the Children and Young Persons Act 1969, restricting the circumstances in which a court may remand a person aged under 17 to a Prison Department establishment in England and Wales.”[12] The Industrial Common Ownership Act of 1976 gave the Secretary of State the power to “give up to £30,000 in grants and up to £250,000 in loans to common ownership enterprises, that is those bodies without share-capital and controlled by a majority of their workers.” The Rent (Agriculture) Act of 1976 gave security of tenure to certain agricultural workers, ex-workers and their successors living in housing provided by farmers, and also laid duty on housing authorities to rehouse occupiers of ‘tied cottages’ when dwellings are needed to house incoming workers.
It laid down restrictions on the validity of notices to quit.” The Rent Act 1977, which applied to England and Wales, “laid down the means of fixing rents for controlled or regulated tenancies, and also for tenancies of housing associations or housing trusts.”[16] In October 1974, “Intermediate Treatment” (which included recreational, educational, or cultural activities to which children and young persons are directed in a Supervision Order) became available to juvenile courts in all areas of England and Wales.
That same month, the “10 Christmas bonus “was extended to include widows, the chronically sick, and the disabled, where these people were already receiving social security benefits.”[17] In February 1975 the Supplementary Benefits Commission “introduced certain changes in the payment of rents in line with the recommendations of the Finer Report on One-Parent Families.”[18] Circular 4/74 (1974) renewed pressure for moves towards comprehensive education (progress of which had stalled under the Heath ministry), while the industrial relations legislation passed under Edward Heath was repealed.
[8] In addition, the Social Security Act of 1975 included progressive noise-induced hearing loss "in the list of prescribed diseases covered by the Industrial Injuries Scheme as Occupational Deafness.
[30] The Callaghan Government also introduced a range of measures aimed at moderating pressures for wage rises and to create a favourable climate "for an orderly restoration of collective bargaining".
The impact of consumer price rises was also mitigated by higher income limits for free school meals, an increased milk subsidy, and a substantial reduction in the duty on petrol.
The main provisions of the Race Relations Act 1976 came into force in June 1977, making it unlawful for an employer to discriminate in recruitment or dismissal or in the treatment of existing employees in matters of promotion, transfer, training or other benefits on the grounds of nationality, race, colour, colour, or ethnic or national origins.
From the 29th of August 1977, Attendance Allowance became payable to foster parents of disabled children, and was also extended to kidney patients dialysing at home.
As part of an extension in external consultation on the prevention of industrial accidents and occupationally induced diseases the Health and Safety Commission established three Industry Advisory Committees for construction, railways and oil and regulations were issued in March 1978 dealing with the packaging and labelling of some 800 dangerous chemicals commonly used at work and in the home.
[49] Callaghan continued to lead Labour in opposition for eighteen months; his friendliest biographers take a negative view of the period.
[51]Historian Kenneth O. Morgan states: The fall of James Callaghan in the summer of 1979 meant, according to most commentators across the political spectrum, the end of an ancien régime, a system of corporatism, Keynesian spending programmes, subsidised welfare, and trade union power.
[52]However, Alan Bailey in his 2013 article for the IPPR Progressive Policy Think Tank entitled: "Not all 'the bad old days': Revisiting Labour's 1970s industrial strategy" gives an alternative reading.