Country in northwest Europe off the coast of France, comprising England, Scotland, Wales, and Northern Ireland.
Government The UK is a multiparty liberal democracy, with a constitutional monarchy and parliamentary system of government, with a prime ministerial executive. There is no written constitution. Cabinet government, which is at the heart of the system, is founded on rigid convention, and the relationship between the monarch as head of state and the prime minister as head of government is similarly based. Parliament is sovereign, in that it is free to make and unmake any laws that it chooses, and the government is subject to the laws that Parliament makes, as interpreted by the courts. Since the UK joined the European Union (EU), the supremacy of Parliament has been challenged and it has become clear that domestic legislation can in certain circumstances be overridden by that of the EU as a whole.
Parliament has two legislative and debating chambers, the House of Lords and the House of Commons. The House of Commons has 650 members, elected by universal adult suffrage from single-member geographical constituencies, each constituency containing, on average, around 70,000 electors. The House of Lords has three main kinds of members: those who are there by accident of birth, the hereditary peers; those who are there because of some office they hold; and those who are appointed to serve for life, the life peers. In 1999 the House of Lords Act restricted the membership of hereditary peers from some 800 to 92. Among those sitting by virtue of their position are the spiritual peers (2 archbishops and 24 bishops of the Church of England). The majority of members are life peers. Membership of the House of Lords changes more frequently than the Commons; in July 2010 it stood at 755.
Although the House of Lords is termed the upper house, its powers, in relation to those of the Commons, have been steadily reduced so that now it has no control over financial legislation and merely a delaying power, of a year, over other bills. Before an act of Parliament becomes law it must pass through a five-stage process in each chamber – first reading, second reading, committee stage, report stage, and third reading – and then receive the formal royal assent. Bills, other than financial ones, can be introduced in either house, but most begin in the Commons.
The monarch appoints as prime minister the leader of the party with most support in the House of Commons, and he or she, in turn, chooses and presides over a cabinet. The voting system, which does not include any form of proportional representation, favours two-party politics, and both chambers of Parliament are physically designed to accommodate two parties, the ruling party sitting on one side of the presiding Speaker and the opposition on the other. The party with the second-largest number of seats in the Commons is recognized as the official opposition, and its leader is paid a salary out of public funds and provided with an office within the Palace of Westminster, as the Houses of Parliament are called.
Under the 2005 Constitutional Reform Act, the Lord Chancellor, who had formerly been both presiding officer of the House of Lords and head of the judiciary, lost these roles to the Lord Speaker (elected by the Lords from 2006) and the Lord Chief Justice, and had a role restricted to the efficient functioning of the courts. Also, as part of these changes, in 2009 the House of Lords judicial function ended and its nine senior judges, known as the law lords, now became part of a new Supreme Court, headed by a president, to act as the final court for civil appeals in the UK, criminal appeals in England, Northern Ireland, and Wales, and to hear cases of public and constitutional importance.
Following referenda in Scotland and Wales in 1997 and in both parts of Ireland in 1998, the UK parliament devolved a range of powers to a 129-member Scottish Parliament, a 60-member National Assembly for Wales, and a 108-member Northern Ireland Assembly, each elected by a form of proportional representation. The devolved administrations were given responsibility for a range of issues including education and health.
History For earlier periods of the history of the British Isles see Britain, ancient, Roman Britain, England: history to 1485, England: history 1485–1714, United Kingdom: history 1714–1815, United Kingdom: history 1815–1914, United Kingdom: history 1914–45, Ireland: history to 1154, Ireland: history 1154 to 1485, Ireland: history 1485 to 1603, Ireland: history 1603 to 1782, Ireland: history 1782 to 1921, Scotland: history to 1058, Scotland: history 1058 to 1513, Scotland: history 1513 to 1603, Scotland: history 1603 to 1746, Scotland: history from 1746, Wales: history to 1066, Wales: history 1066 to 1485, Wales: the Act of Union.
In 1945 the UK was still nominally at the head of an empire that covered a quarter of the world's surface and included a quarter of its population, and, although two world wars had gravely weakened it, many of its citizens and some of its politicians still saw it as a world power. The reality of its position soon became apparent when the newly elected Labour government confronted the problems of rebuilding the war-damaged economy. This renewal was greatly helped, as in other Western European countries, by support from the USA through the Marshall Plan.
The 1945 election The ending of World War II in Europe in May 1945 was quickly followed by the dissolution of Winston Churchill's coalition government. The general election in July resulted in the return of a Labour government with a large absolute majority, and Clement Attlee became prime minister. This was the third Labour government in Britain's history, but the first that held both office and effective power.
The Labour Party put forward an industrial programme for the nationalization of the coal, gas, and electricity industries, of inland transport services, and of the iron and steel industries. They also advocated public ownership of the Bank of England and the creation of a National Investment Board. The Conservatives, under the leadership of wartime prime minister Winston Churchill, opposed this domestic policy, and the electoral battle was fought mainly on the issue of nationalization. The Conservatives suffered one of the severest defeats in their whole history; for in a House of Commons of 640 members the Labour Party won 393 seats as against 166 in the previous Parliament; the Conservatives dropped from 358 to only 213 seats; while the Liberal Party, who had put forward 307 candidates, had only 12 elected.
Post-war austerity The keynote of life in Britain in the years following the end of the war was austerity. The sudden end of the war with Japan (September 1945) hastened the rate of demobilization, and by 30 November over 955,000 men and 147,000 women had been discharged from the armed forces, freeing them to take part in Britain's export drive to earn US dollars. Financial stringency had become doubly necessary in Britain following the cessation on 2 September of the US lend-lease programme. Because Britain had sold off its foreign investments to finance the war effort, and had converted a great proportion of its industry to munitions and other war supplies, the country had relied on lend-lease to feed its people.
Until Britain could restore its export trade, it needed to secure a large credit in US dollars to survive the period of reconstruction, and after many weeks of negotiation in Washington a loan of £1,100 million was arranged, but with certain stringent conditions attached.
Increased production both for domestic needs and export was essential. However, when by 1947 production had still not come up to requirements, there was an economic and financial crisis, since the large US loan was rapidly being exhausted. In the effort to restore the balance of trade, austerity measures were increased and the resultant hardships resulted in a fall in the government's popularity.
In the course of 1948 there was a rapid increase in production, coupled with a slowing down of inflation and an improvement in the balance of payments. The economic situation was also improved by the start of US aid under the Marshall Plan. Taxation remained high in 1949 and was even increased in several directions, the chancellor of the Exchequer, Stafford Cripps admitting that it was impossible to reduce it so long as defence commitments and the social services continued on the existing scale. By 1951 rationing of various staple foods still existed in Britain, although not in most other West European countries, and this, coupled with the continuous housing shortage, caused increasing irritation in the country at large.
Nationalization and the welfare state Despite the great difficulties of the economic situation, the Labour government pressed ahead with a radical restructuring of British society. In the first session of the new Parliament alone, no fewer than 84 acts were passed. The system of national insurance was extended by the National Insurance Act, which also provided for the making of payments towards the cost of a national health service. Complementary to this the National Health Service Act established a free national health service (NHS) for England and Wales. The National Insurance (Industrial Injuries) Act made new provision for compensation for industrial casualties.
The government proceeded with its programme of nationalization, completing legislation to bring the coal mines, all inland transport, and the electricity and gas industries under state control. The government deferred their intention to extend nationalization to the iron and steel industry, and instead declared preventive war on the House of Lords in the shape of a bill to amend the Parliament Act 1911. It was proposed to reduce from two years to 12 months the period during which the House of Lords might delay the enactment of a bill that it refuses to pass. The Parliament Bill came up for second reading in the House of Lords (27 January 1949). It was defeated there, and the government then decided to resort to the procedure of the Parliament Act 1911 to carry their new bill into law. The bill was passed by the Commons in September 1949.
An Iron and Steel Bill introduced in the 1948–49 session of Parliament proposed to nationalize the principal firms engaged in the basic processes of the iron and steel industry. This bill was particularly strongly opposed by the Conservatives, but eventually became law. The Conservatives, however, undertook to denationalize the iron and steel industry as soon as they returned to power. Altered circumstances induced the government to increase from 12 to 18 months the period of compulsory whole-time military service.
In 1950 the general election saw a bitter struggle between the two main parties, Labour and Conservative, and a further decline in the number of Liberals returned. The Labour Party fought the election on the legislative record of the preceding five years, promising, in addition, a future programme involving more nationalization. The Conservatives alleged that the government had seriously increased Britain's economic difficulties. In the election Labour retained power, with a greatly reduced majority (of 8, as against 186 in 1945). For the next 18 months the party battle in the House of Commons was continuous and bitter. There were also splits within the Labour government, and in April 1951 Aneurin (Nye) Bevan and Harold Wilson left the government over the introduction of prescription charges in the NHS.
Post-war foreign and imperial policy Ernest Bevin, the Labour foreign secretary, for the most part continued Churchill's foreign policy, in particular sharing Churchill's distrust of the USSR. Although Britain, the USA, France, and the USSR had divided the defeated Germany into four occupation zones, and agreed on the post-war treatment of Germany at the Potsdam Conference (July–August 1945), the wartime alliance did not long survive the end of hostilities. As the Cold War intensified, Britain's close relationship with the USA continued. Britain played an important role in the formation of the post-war Western alliance, and became a founder-member of the North Atlantic Treaty Organization (NATO) in 1949. Britain also began to develop its own nuclear deterrent, leading to the test explosion of its first atomic bomb in 1952.
In June 1950 the Cold War heated up with the outbreak of the Korean War. In Britain the Conservative opposition supported Attlee in his policy of full cooperation with the USA and the United Nations on this issue. Before the end of the year British troops were serving in Korea, and they played an important part in holding the Chinese offensive of April 1951. Chinese intervention in Korea raised the problem of Communist China's status in the world, and at the UN Britain had already recognized the Beijing government as the de facto government of China; but the USA had not done so. In many quarters in Britain and Western Europe US policy in east Asia was occasionally viewed with misgiving, as being too ready to be interventionist. Truce talks began in Korea in 1951, although an armistice was not concluded until two years later.
Finally, it was the post-war Labour government that saw through the granting of independence to India, Pakistan, Ceylon (Sri Lanka), and Burma (Myanmar), and the restyling of the British Empire as the British Commonwealth. Although this was the fruition of long-term imperial policies, Britain's greatly weakened economic power meant that the shedding of its empire had become as necessary as it was politically desirable.
The Conservatives return to power In the autumn of 1951 there was another general election. The result was a Conservative victory, with a majority of 16, and Winston Churchill became the new prime minister. Early in 1952 George VI died suddenly and was succeeded by his elder daughter as Queen Elizabeth II, who was crowned on 2 June 1953.
The Conservative government concentrated on the economic plight of the country. They had accepted the bulk of the nationalization carried out by their predecessors, but they did repeal the acts that had nationalized iron and steel and road transport. The internal economic situation showed steady improvement: full employment was maintained, and many controls were abolished.
The international situation appeared to have eased since the death of the Soviet leader Stalin (1953). In 1954 the foreign secretaries of the major powers (including Communist China) met at Geneva and agreed a settlement that concluded the Indochina War. In the same year the French Assembly, fearing the re-creation of a German army, finally rejected the proposed European Defence Community, but subsequently the agreements signed in London (1954) solved the problems of West European defence and led to the creation of the Western European Union.
Though there were serious internal troubles in two British colonies, Kenya and Cyprus, settlements of two other outstanding problems were reached in 1954. In July Britain and Egypt signed an agreement by which British troops were to leave the Suez Canal zone within 20 months, while in August the dispute with Iran over the latter's nationalization of British oil interests (dating from 1951) was settled, compensation being paid to Britain.
Eden takes over from Churchill On 5 April 1955 Churchill resigned from the premiership and was succeeded by Anthony Eden. At the general election in May 1955 Eden's government was returned with an increased majority. In December Attlee resigned from leadership of the parliamentary Labour Party and was granted an earldom. The new Labour leader was Hugh Gaitskell, elected in preference to Herbert Morrison and Nye Bevan.
By 1956 the economic situation in Britain was uncertain. Anti-inflationary measures produced a temporary rise in unemployment, and in September the TUC rejected wage restraint. In foreign affairs, relations with the USSR appeared to be easing. In July 1955 a meeting of the heads of government of Britain, France, the USSR, and the USA took place at Geneva, the first meeting of this kind since the Potsdam Conference ten years earlier, while in April 1956 the Soviet leaders Bulganin and Khrushchev visited Britain. However, later in the year the unrest in Poland and the Hungarian uprising cast a cloud over East–West relations.
The Suez Crisis In Britain the European news was soon overshadowed by the growing crisis in the Middle East, following the announcement on 26 July 1956 by President Nasser that Egypt was nationalizing the Suez Canal. The seizure of the canal was regarded as illegal in Western Europe and the USA, but only in Britain and France was there any serious demand for stern action against Egypt.
Israel reached a secret understanding with Britain and France, and invaded Egypt on 29 October 1956, advancing into Sinai. France and Britain called on both belligerents to cease fighting, and when this did not occur Anglo-French forces began to bomb Egyptian military targets (31 October) and launched an airborne invasion (5 November). The British and French governments claimed their main objective was the protection of the Suez Canal, and the maintenance of free navigation, which they said was threatened by the invading Israeli forces. Egypt responded to these attacks by blocking the Suez Canal and making it impassable, the very thing that Britain and France had tried to avoid.
World opinion, including the USA and USSR, condemned the Anglo-French action. The Arab states united in their support of Egypt, which emerged as the leader of Arab nationalism, and thereafter turned increasingly to the USSR for support, putting paid to Western influence in the Middle East for several years. Britain, France, and Israel were branded as aggressors at the UN and called upon to cease their military activities. A ceasefire was declared from midnight on 6 November, and US pressure brought about a gradual withdrawal of Anglo-French forces, which were replaced by a special UN force.
Britain's action in Egypt aroused the most bitter controversy in the country and was condemned by the Labour Party. The government justified their action on the grounds that it had prevented a war in the Middle East and ensured active UN intervention. There was no doubt, however – whatever the merits of the case – that Britain's prestige had suffered severely, and the blocking of the canal and the consequent disruption of oil supplies increased Britain's economic difficulties. In January 1957 Eden announced his resignation from the premiership and retirement from political life on account of ill-health.
Macmillan succeeds Eden Eden was succeeded as premier and leader of the Conservative Party by Harold Macmillan. After the shambles of Suez, Britain's steady withdrawal from empire continued in a more measured way. Sudan had become independent at the beginning of 1956, and in 1957 both Ghana (March) and Malaya (August) became dominions within the Commonwealth. There was a conference of Commonwealth prime ministers in London in June 1957; and in January 1958 Macmillan made history by embarking on a highly successful Commonwealth tour – the first such tour undertaken by a British premier in office.
In December 1957 Macmillan attended the NATO heads of government conference in Paris. Here agreement was reached in principle on the US offer to supply European members with nuclear weapons; this agreement was much criticized by the Labour Party in Parliament.
At home the government's unpopularity showed no apparent improvement. Inflationary pressure continued, and by autumn there were rumours of an impending devaluation of the pound. On 19 September 1957 the bank rate was raised from 5 to 7% (the highest rate since 1920). Subsequently Britain's international currency position improved. A major (and very controversial) piece of legislation enacted in 1957 was the Rent Act, which freed a large number of privately owned properties from rent control altogether and made rent increases possible in many others.
Macmillan's second administration By 1959 a marked improvement in Britain's economic situation helped to return the Conservatives to power once again at the general election in October, with a larger majority than before.
More and more of Britain's colonies became independent: Cyprus (1959), Nigeria (1960), Jamaica, Trinidad and Tobago, and Uganda (all in 1962), and several more followed within the next two years. Macmillan had made clear his commitment to decolonization and his opposition to apartheid in his 1960 ‘wind of change’ speech to the South African parliament, and in 1961 South Africa, refusing to compromise on its policy of apartheid, left the Commonwealth and became an independent republic outside it.
Macmillan established good working relationships with the US presidents Eisenhower and Kennedy, but was sufficiently realistic to see that the UK's long-term economic and political future was in Europe. The framework for the European Economic Community (EEC) had been created by the mid-1950s, with the UK an onlooker rather than a participant. In November 1959 the agreement under which European Free Trade Association (EFTA) was set up (of which Britain was a leading member) was initialled in Stockholm. The government's opening of negotiations to join the EEC (August 1961) caused controversy within its own ranks, and also within the Labour Party and among Commonwealth members. Distrusting Britain's closeness to the USA – particularly after the 1962 agreement by which the USA would supply the UK with Polaris nuclear missiles – the French president, Charles de Gaulle, blocked the British application (1963). The period of high East–West tension came to an end with the diffusion of the Cuban missile crisis (November 1962), and a new era of ‘peaceful coexistence’ was marked by the signing of the Nuclear Test-Ban Treaty (August 1963)
At home, Macmillan showed his commitment to ‘one-nation’ Conservatism by the establishment in 1961 of the National Economic Development Council, which involved government, management, and trade unions in joint consultations over economic issues. In 1960 the economic situation had again begun to cause concern. A wages pause began in July 1961, and there were tax increases in an effort to curb home demand and avert inflation. The government's popularity declined as a result. There were also balance-of-payments problems. The winter of 1962–63 was the worst in Britain since 1947, and unemployment rose sharply, though temporarily.
Despite rising living standards, the UK's economic performance was not as successful as that of many of its competitors, such as West Germany and Japan. There was a growing awareness that there was insufficient investment in industry, that young talent was going into the professions or financial institutions rather than manufacturing, and that training was poorly planned and inadequately funded.
The defeat of the Conservatives In June 1963 the government barely survived the scandal that centred on the minister of war, John Profumo (who resigned on 7 June), and which led to a judicial enquiry by Lord Denning into the security aspects of the affairs. In October Macmillan suddenly resigned on the grounds of ill health. The Conservatives then chose as their new leader, and prime minister, Lord Home, who then disclaimed his peerage to become Sir Alec Douglas-Home.
The internal controversy caused by Douglas-Home's succession further weakened the Conservative Party, which had now held office for 12 years. Though Douglas-Home continued his predecessor's progressive Commonwealth policy, and carried through domestic reforms such as the bill abolishing resale price maintenance (1964), a significant proportion of voters turned to the Liberals and to the Labour Party, which now presented a much more dynamic image under Harold Wilson, its leader since Gaitskell's death early in 1963. As a result, Labour won the general election in October 1964, though only by a majority of four, securing 44% of the vote to the Conservatives' 43%. Wilson became prime minister, and early in 1965 Edward Heath replaced Douglas-Home as Conservative leader, under a new system of selection by election.
Wilson's Labour government, 1964–66 The 1964 election had been fought on the issue of the economy. Wilson created the Department of Economic Affairs (DEA) to challenge the short-term conservatism of the Treasury (although the DEA was disbanded in 1969), and brought in a leading trade unionist to head a new Department of Technology. The new government inherited from its predecessor a serious balance of payments crisis, and its own initial pronouncements and actions exacerbated this by creating a crisis of confidence in sterling abroad. Devaluation was only narrowly avoided, and huge international loans were obtained and import surcharges levied.
By the autumn of 1965 Britain's balance of payments position appeared healthier than for some years past. This position had been reached, however, by imposing measures such as credit restrictions, which hampered Labour's development plans and alienated some of its supporters. Despite government efforts to establish an effective prices and incomes policy, and the National Plan for future economic development, announced by secretary of economic affairs George Brown in September 1965, the basic British post-war problem of combining domestic expansion with international solvency, and of maintaining full employment without creating persistent inflation, remained.
Other separate issues, such as the housing shortage, and the immigration issue, were still pressing in 1966, while overseas the Vietnam War and Rhodesia's unilateral declaration of independence in November 1965 (see Zimbabwe) all affected Britain directly or indirectly.
Labour continues in power, 1966–70 The Labour Party won the March 1966 general election with a greatly increased majority of 96 seats, after winning 48% of the vote. A subsequent budget included the novel proposal of a Selective Employment Tax and a promise that Britain would change to decimal coinage in 1971. Two issues dominated foreign and Commonwealth affairs: the question of whether Rhodesian sovereignty could be handed over to a white minority, and Britain's renewed application to join the EEC. By 1969 the rupture with Rhodesia was almost complete, but the resignation of President de Gaulle in France renewed hopes of Britain's eventual membership of the EEC.
But economic issues rather than foreign affairs dominated political life. Between 1958 and 1965 Britain's gross national product had increased by only a third, while that of the EEC had gone up by more than a half. To improve the economy the government sought to impose a pay freeze, later changed to a pay pause, to increase exports and reduce imports, to modernize technology, and to increase production. Its measures proved insufficient to maintain the pound at 2.8 to the dollar and in November 1967 the pound was devalued to 2.4 to the dollar. Public spending was cut, particularly on defence. This virtually committed Britain to abandoning its military presence east of Suez by 1971.
A monetary squeeze, applied with varying severity by all British governments during the 1960s, became steadily more severe. The bank rate rose again to 7% in 1966, but was cut to 6% in 1967, avoiding a sterling crisis. These monetary policies made it increasingly difficult for industry to raise new capital. It became more difficult to reconcile plans for economic expansion with the policy of seeking a permanent solution to Britain's balance of payments problem. The second consideration was given priority and by 1969 the banks were virtually forbidden to make loans outside terms imposed by the Bank of England. More and more, Britain's economic policy had to be brought into line with international trends. With this aim in mind the government attempted to introduce an ambitious plan for the reform of industrial relations, but this was dropped in the face of trade-union opposition.
The economic situation improved in 1969 and a surplus in the balance of payments was achieved for the first time in years. This surplus was maintained in 1970 and a general election called, in which the franchise was extended to people aged 18–21. However, Wilson's promises of fundamental changes in economic planning, industrial investment, and improved work practices had not been fulfilled, and the Labour Party was defeated, winning 43% of the vote to the Conservatives' 46%.
Social developments in the 1960s A number of liberalizing reforms had been introduced in the 1960s. Both abortion and homosexuality became legalized in 1967, with certain qualifications. Capital punishment was abolished in 1965; there was a simplification of the divorce laws; majority juries were introduced; and road-safety legislation was enacted that resulted in a decrease in accidents.
In 1968 race relations became strained as a result of agitation by Enoch Powell, who came to the fore as a critic of immigration policy, even after a Commonwealth Immigrants Act imposed severe restrictions on entry to Britain. The Race Relations Act introduced legal penalties for manifestations of race prejudice, and was possibly successful in subsequently improving race relations.
Catholic grievances in Northern Ireland over inadequate civil liberties and economic deprivation became so serious that British troops were sent there in 1969 to restore and maintain order. The situation in Northern Ireland was soon to deteriorate into serious intercommunal violence, and was to prove an intractable problem for successive British governments (see Northern Ireland).
Heath's Conservative government, 1970–74 In June 1970 a Conservative government was formed under Edward Heath, with an overall majority of 31. Like Harold Wilson, Heath saw institutional change as one way of achieving industrial reform and created two new central departments (Trade and Industry, Environment) and a think tank to advise the government on long-term strategy, the Central Policy Review Staff. He also attempted to change the climate of industrial relations through a long and complicated Industrial Relations Bill. He saw entry into the European Community (EC, as the EEC had now become) as the ‘cold shower of competition’ that industry needed, and membership was negotiated in 1972.
In the early 1970s British politics were dominated, as before, by serious inflation, now accompanied by rising unemployment (which reached the million mark in 1972), industrial unrest, and a series of commodity crises, notably in oil. The situation in Northern Ireland deteriorated steadily, and violence spread to the UK and the Republic of Ireland. The Rhodesian problem remained insoluble, despite various efforts to reach a settlement and the testing of Rhodesian opinion by the Pearce Commission. The promise of the government to sell arms to South Africa in defiance of a UN resolution threatened the unity of the Commonwealth.
In 1972 Conservative policies produced strikes in the mining industry and by railway workers, the beginning of a dispute about fishing limits, the ‘cod war’, with Iceland (which was concluded in Iceland's favour in 1976), and constant confrontations between workers and the National Industrial Relations Court. The year 1973 began auspiciously with the entry of Britain into the European Community, which was generally acclaimed as a triumph for Edward Heath. Reactions to this event were varied, but in a referendum held in 1974 by the newly elected Labour government Britain voted to stay in the Community.
Heath's ‘counter-revolution’, as he saw it, was frustrated by the trade unions, and the sharp rise in oil prices following the 1973 Arab–Israeli War forced a U-turn in economic policy. Instead of abandoning ‘lame ducks’ to their fate, he found it necessary to take ailing industrial companies, such as Rolls-Royce, into public ownership. The situation was exacerbated by both miners' and railway workers' strikes, precipitated by the introduction of a statutory incomes policy. A state of emergency was proclaimed in November 1973 with restrictions on the use of power and blackouts throughout the country. A huge trade deficit was announced and at the beginning of 1974 the country was working a three-day week.
In February 1974 the Heath government fell at a general election at which the major issue was, inevitably, the confrontation with the trade unions and the question ‘Who governs Britain?’ The voters gave an unclear verdict, with the Conservatives securing 38% of the vote, Labour 37%, and support for the Liberals increasing to 19%. With no party holding a majority of seats on its own, Heath briefly sought to form a coalition with the Liberal Party, but the Liberal MPs rejected this. This forced Heath to resign and Wilson returned to power, heading a Labour government which was more than 30 seats short of a majority.
Wilson's second premiership, 1974–76 The minority Labour government relied heavily on the Liberals and on the Scottish and Welsh Nationalists, all of whom had greatly increased their vote in the election. However, a second general election, held in October 1974, gave Labour an overall, if small, majority of three seats, after it won 39% of the vote.
Wilson had taken over a damaged economy and a nation divided by the events of the previous years. He turned to Labour's natural ally and founder, the trade-union movement, for support and jointly they agreed on a ‘social contract’: the government pledged itself to redress the imbalance between management and unions created by the Heath industrial-relations legislation, and the unions promised to cooperate in a voluntary industrial and incomes policy. The fight against inflation continued, through voluntary wage restrictions and, in 1975, wage restraint, which limited increases to £6 per week for everyone. GDP fell by 1.6% in 1975 and retail prices increased by 24%. But the economic situation began to look slightly brighter when the first of the North Sea oil came into production and some check was given to rising prices.
In Northern Ireland the political solution worked out at Sunningdale in 1973 produced the new Ulster Executive in January 1974, but this fell within the year as a result of a massive Protestant workers' strike against it. Irish politics continued to have their effect in Britain with sporadic bombings and shootings.
On a more positive note Labour legislation included the Equal Pay and Sex Discrimination Acts (both major achievements for the women's movement), the reorganization of local government outside Greater London, and the reorganization of the National Health Service. The programme of changing over to a system of comprehensive schools was advanced.
Wilson met criticism from a growing left-wing movement within his own party, impatient for radical change, and in March 1976, apparently tired and disillusioned, he took the nation by surprise by retiring in midterm.
Callaghan's Labour government, 1976–79 Wilson was succeeded by the political veteran James Callaghan, a party moderate who had held three key ministerial positions of chancellor, home secretary, and foreign secretary. In the other two parties, Heath had been unexpectedly defeated in the contest for Conservative leadership in 1975 by Margaret Thatcher, a former education secretary, and the Liberal Party leader, Jeremy Thorpe, had resigned after a personal scandal and been succeeded by the young Scottish MP David Steel.
Callaghan was now leading a party divided between right and left wings and a government with a dwindling parliamentary majority. Later in the autumn of 1976 an unexpected financial crisis arose from a drop in confidence in the overseas exchange markets, a rapidly falling pound, and a drain on the country's foreign reserves. After considerable debate within the cabinet, both before and afterwards, it was decided to seek help from the International Monetary Fund (IMF), which agreed to provide a loan of $3.9 billion and submit to its stringent economic policies, including major cuts in public expenditure. Within weeks the crisis was over and within months the economy was showing clear signs of improvement. GDP grew by 0.9% in 1977 and 3.4% in 1978, while inflation fell to 8% in 1978.
In 1977, to shore up his slender parliamentary majority, Callaghan entered into an agreement with the new leader of the Liberal Party, David Steel. Under the ‘Lib–Lab Pact’ Labour pursued moderate, nonconfrontational policies in consultation with the Liberals, who, in turn, voted with the government, and the economy improved dramatically. The Lib–Lab Pact had effectively finished by the autumn of 1978, and soon the social contract with the unions began to disintegrate. Widespread and damaging strikes in the public sector badly affected essential services during what became known as the ‘winter of discontent’.
At the end of March 1979, following the rejection of devolution proposals by referendums in Scotland and Wales, Callaghan lost a vote of confidence in the House of Commons and was forced into a general election, held in May 1979.
Conservatives come to power under Thatcher The Conservatives secured a parliamentary majority of 43 seats, with 44% of the vote, and returned to power under the UK's first woman prime minister, Margaret Thatcher. Thatcher rejected the ‘consensus politics’ that had dominated Britain since 1945, and introduced her own more right-wing ideology (‘Thatcherism’), combining belief in market forces, monetarism, individual responsibility, anti-collectivism, strong government, reduced trade union powers, and nationalism.
Thatcher inherited a number of inflationary public-sector pay awards that, together with a budget that doubled the rate of value-added tax (VAT), resulted in a sharp rise in prices and interest rates. The Conservatives were pledged to reduce inflation and did so by mainly monetarist policies, which caused the number of unemployed to rise from 1.3 million to 2 million in the first year, and provoked inner-city riots in Liverpool (Toxteth), Manchester (Moss Side), and London (Brixton) in July 1981. Thatcher had experience in only one government department, and it was nearly two years before she made any major changes to the cabinet she inherited from Heath. In foreign affairs Zimbabwe became independent 1980 after many years, and without the bloodshed many had feared.
The creation of the SDP Meanwhile, changes took place in the other parties. Callaghan resigned the leadership of the Labour Party in October 1980, hoping he would be replaced by the popular former chancellor and fellow right-winger, Denis Healey. However, the party, whose constituency parties were increasingly dominated by radicals from the ‘New Left’, narrowly voted for the left-winger Michael Foot, who supported unilateral nuclear disarmament and opposed membership of the European Community. This persuaded three Labour right-wing shadow-cabinet members, David Owen, Shirley Williams, and William Rodgers, with the former deputy leader Roy Jenkins (collectively dubbed the ‘Gang of Four’), to break away in early 1981 to form a new centrist group, the Social Democratic Party (SDP).
The new party made an early impression, winning a series of by-elections within months of its creation. From 1983 to 1988 the Liberals and the SDP were linked in an electoral pact, the Alliance. They advocated the introduction of a system of proportional representation, which would ensure a fairer parity between votes gained and seats won.
The Falklands factor Unemployment continued to rise, passing the 3-million mark in January 1982, and the Conservatives and their leader received low ratings in the public-opinion polls.
An unforeseen event rescued them: the invasion of the Falkland Islands by Argentina in April 1982. Thatcher's high-risk decision to send a task force to recover the islands paid off (see Falklands War), and she became popularly known as the ‘Iron Lady’. The June 1983 general election was fought with the euphoria of the Falklands victory still in the air, and the Labour Party, under its new leader, divided and unconvincing. The Conservatives won a landslide victory, winning more Commons seats than any party since 1945 and a majority of 144, although with only 42% of the popular vote. Support for Labour slumped to 28%, only narrowly ahead of the Alliance, which attracted 25% of the vote. The result enabled Prime Minister Thatcher to establish her position firmly, replacing most of her original cabinet, among whom had been many ‘one-nation’ Conservatives, with a group of Thatcherite supporters, including Nigel Lawson, who became chancellor, and Cecil Parkinson, who became trade and industry secretary.
Thatcher's second term: 1983–87 During her second term, Thatcher embarked on a more distinctive, and divisive, free-market programme of economic reform, which led in the short-term to rising unemployment (to a rate of 13%) and dissent from trade unions and a growing ‘underclass’. In January 1984, trade unions were controversially banned from operating at the government's main intelligence-gathering station, GCHQ in Cheltenham, and between March 1984 and March 1985 there was a bitter and protracted miners' strike over plans to close 20 pits. The strike became characterized by large confrontations between striking miners and police, who were protecting those miners who wished to work, and at Orgreave in May 1984 it reached riot proportions. The strike was the longest in the coal industry since 1926, but ended with defeat for the miners and the broader trade union movement, and left lasting scars in the mining communities.
There was increasing violence in Northern Ireland, which spread to the mainland with a bombing designed as an attempted assassination of Thatcher and leading members of the Conservative Party on 12 October 1984 at their hotel during their annual conference in Brighton. In September and October 1985, the social divisions of Thatcherite economic policies erupted in riots in inner-city areas of Brixton and Tottenham in London and Wandsworth in Birmingham. The government was further embarrassed by its own prosecutions under the Official Secrets Act and the resignations of two prominent cabinet ministers. With the short-term profits from North Sea oil and an ambitious privatization programme (involving the sale of British Telecom, British Airways, and British Gas), the inflation rate continued to fall and by the winter of 1986–87 the economy was buoyant enough to allow the chancellor of the Exchequer to arrange a pre-election spending and credit boom.
Leadership changes in the opposition parties After Labour's crushing defeat in June 1983, Michael Foot resigned as Labour's leader and in October 1983 the party elected his 41-year-old Welsh protégé Neil Kinnock, a former left-winger who was now positioned in the ‘soft left’ centre of the party and proceeded to modernize its internal structures and image. Roy Jenkins also stood down as leader of the SDP and was replaced in June 1983 by David Owen, a former foreign secretary.
Thatcher's third term With high unemployment and Thatcher's increasingly authoritarian style of government, Labour stood in the public opinion polls at 39% of the vote, 7% ahead of the Conservatives, in the summer of 1986. But an improving economy, with GDP growth of over 3% in 1986–87 and the inflation rate at 5% enabled the Conservatives to be re-elected in June 1987 with a majority of 102 seats, after winning 42% of the vote to 31% for Labour.
In her third term, Prime Minister Thatcher pressed on with further free-market reforms, including more privatization (of electricity and water) and reforms of trade unions. However, her governing style became increasingly autocratic, creating dangerous enemies within her party. In July 1989, she replaced Geoffrey Howe, the former chancellor 1979–83 and the foreign secretary since 1983, with John Major. And in October 1989 the chancellor of the Exchequer, Nigel Lawson, resigned because of disagreements with the prime minister over monetary police. Major replaced him as chancellor and Douglas Hurd took over as foreign secretary.
Earlier, in June 1989, the Conservatives polled poorly in the elections to the European Parliament, winning only 33% of the vote and finishing well behind Labour, while the environmentalist Green Party won an unprecedented 15% of the vote. A factor behind this was an overheating economy, with a growing trade deficit, and growing tiredness with Thatcher's hectoring style of government and its unpopular replacement, in April 1990, of local property taxes (rates) with a single flat per-capita tax (‘community charge’), which became known as a poll tax. The public opposition to the measure culminated in a demonstration in central London on 31 March 1990 which led to rioting and looting.
SDP and Liberals merge Following the 1987 general election, the Liberals' leader, David Steel, called for a ‘democratic fusion’ of the Liberals and the SDP. The merger was opposed by the SDP's leader David Owen, but a majority of the party's members voted in favour, in August 1987. Owen consequently resigned as SDP leader, to be replaced by Robert Maclennan. A new, merged Social and Liberal Democratic Party (SLDP) was formed in March 1988, with the Liberal, Paddy Ashdown, elected its leader in July 1988, while Owen headed a tiny ‘Mark 2 SDP’, with three MPs. The SLDP subsequently became known as the Liberal Democrats.
Major replaces Thatcher as Conservative leader and prime minister In October 1990 the government announced that it was joining the European Exchange Rate Mechanism (ERM) in what was a victory for the chancellor and Treasury over the prime minister, who was not keen on joining. This was indicative of Thatcher's diminishing authority, which was underlined in November 1990 when the deputy prime minister, Geoffrey Howe, dramatically resigned and in his parting speech was strongly critical of Thatcher's governing style.
This persuaded Thatcher's long-time rival, Michael Heseltine, to challenge her for the leadership of the Conservative Party. Thatcher failed to gain a clear victory in the first ballot of the leadership election and, with defeat looming if she fought on, her Cabinet colleagues persuaded her to withdraw from the contest. In the subsequent second ballot, in late November 1990, Michael Heseltine (131 votes) and Douglas Hurd (56) conceded that John Major (185) had won, enabling him to become party leader and prime minister at the age of 47.
Major's consensual style of leadership proved popular and he oversaw the UK's military involvement in the Gulf War in early 1991. Recognizing the unpopularity of the poll tax, he abolished it and replaced it with a new council tax based on property values and which took account of ability to pay. In February 1992, he supported the Maastricht Treaty on closer European economic and political union, which proved controversial within his party.
Despite almost two years of economic recession, the party won a fourth consecutive victory in the April 1992 general election, with a reduced majority of 21 seats, after again securing 42% of the vote. Neil Kinnock, who had expected to win, announced his resignation as leader of the Labour Party and Roy Hattersley resigned as deputy. John Smith, a party moderate, was elected as the new Labour leader in July 1992.
The Major government of 1992–97 The new Major government faced early economic challenges. With a deepening recession and international pressure on the pound, on 16 September 1992, known as ‘Black Wednesday’, the UK was forced to withdraw from the ERM and allow the pound to devalue by 15%. This was damaging to the chancellor Norman Lamont, who was sacked in May 1993 and replaced by the former home secretary, Kenneth Clarke. In October 1992, the trade and industry secretary Michael Heseltine announced a drastic pit-closure programme, involving the closure of 32 collieries and the loss of 30,000 miners' jobs.
Prime minister Major faced growing divisions within his party between the Eurosceptic majority and a Europhile minority, led by Clarke. In July 1993 parliament ratified the Maastricht Treaty, helped by support received from Liberal Democrat MPs. The Conservatives were also damaged, from 1994, by a series of personal and financial ‘sleaze’ scandals, which undermined the government's Back to Basics campaign for a return to traditional family values. Responding to public concerns over MPs being paid by commercial clients to ask helpful parliamentary questions (‘cash for questions’), Major set up a committee, under Lord Justice Nolan, to oversee standards in public life. It produced an initial report in November 1995 which led MPs to vote to require members to declare all outside earnings resulting from their positions in parliament and to ban all paid lobbying.
Faced with a right-wing rebellion over his policies on Europe, Major dramatically resigned as party leader in June 1995, challenging his opponents to ‘put up or shut up’. He was re-elected a month later, defeating his sole challenger, John Redwood, a prominent Eurosceptic and former Welsh secretary. To buttress his position, in July 1995 Major promoted the president of the Board of Trade, Michael Heseltine, to the post of deputy prime minister. But the Conservatives' approval ratings failed to improve.
New Labour leader In May 1994, Labour's popular leader John Smith died suddenly of a heart attack. Tony Blair, young and articulate, with a clear view of the centrist direction he wished the party to follow, was elected the new leader in July 1994 and had a rapid impact, with the party's popularity rating immediately soaring.
The Anglo-Irish peace process In December 1993, Prime Minister John Major and Irish premier Albert Reynolds issued a joint peace proposal on Northern Ireland: the Downing Street Declaration, which offered all-party constitutional talks in return for a cessation of violence.
This was followed, in August 1994, by the Irish Republican Army (IRA) agreeing to a ceasefire in Northern Ireland, as an initial step towards a negotiated peace process. Differences subsequently arose between the UK and Irish governments over the interpretation and implementation of a report on decommissioning of weapons in Northern Ireland, which was published in January 1996, and the peace process was disrupted when the IRA renewed its bombing campaign in London in February 1996. The Major government responded by sending more troops to Northern Ireland.
Landslide victory for Labour in May 1997 In February 1997, after a series of by-election defeats, the Conservatives lost their Commons majority. This provided the springboard for a Labour landslide victory in the May 1997 general election. Led by the charismatic 44-year-old Tony Blair, who had rebranded the party as ‘New Labour’, following a ‘Third Way’ between capitalism and liberal socialism, Labour secured a majority of 179 seats by winning 43% of the vote to 31% for the Conservatives. The Conservative Party had its lowest share of the vote since 1832 and the smallest number of seats since the 1906 general election. A number of cabinet ministers lost their seats and Major immediately conceded and announced his resignation as Conservative Party leader. He was succeeded by William Hague, aged only 36.
Blair's first term: 1997–2001 The new Blair government included Gordon Brown as chancellor of the Exchequer, John Prescott, the party's deputy leader, as deputy prime minister, Jack Straw as home secretary, and Robin Cook as foreign secretary. It made departures in foreign policy, with a more cooperative attitude towards Europe – agreeing to sign up to the EU Social Chapter, but continuing to remain outside the euro area – and an emphasis on human rights and humanitarian aid. Inheriting a strong and growing economy, ‘New Labour’ agreed to adhere to the previous government's medium-term spending plans and its broad pro-market approach. In addition, it gave the independent Bank of England control over the setting of interest rates, with an emphasis on maintaining inflation at a low target rate of 2.5%.
The main policy initiatives of Blair's first term lay in four areas: devolution; reform to the House of Lords; improving education and the National Health Service (NHS); and promoting peace in Northern Ireland.
Devolution In September 1997, referenda were held in Scotland and Wales on government proposals to set up a Scottish Parliament with tax-raising powers and a Welsh Assembly with more limited powers. Scottish voters backed the idea of a Scottish Parliament by 75% of votes, and of its tax-varying powers by 63% (the total turnout was 61.4%). In Wales, devolution was narrowly approved by 50.3% in favour. Elections to the these new assemblies were held in May 1999 and they opened in July 1999. Labour was the largest party in both chambers but did not achieve an overall majority.
Reform of the House of Lords and domestic initiatives The Blair government carried out the first stage of reform to the House of Lords in November 1999. This involved over 600 hereditary peers losing their rights to sit in the Lords, but 92 being allowed to remain (under the so-called Weatherhill compromise) until a later stage of House of Lords reform.
Other constitutional reforms included the creation of an elected mayor of London, a post created after approval in a May 1998 referendum in London, and the 1998 Human Rights Act, which brought into UK law (from October 2000) the rights contained in the European Convention on Human Rights. The first Mayor of London, elected in May 2000, was Ken Livingstone, a Labour left-winger, who had stood as an independent.
Domestically, New Labour had stressed the importance of being ‘tough on crime and the causes of crime’, and supported increases in police numbers and powers. Also it gave emphasis to improving school performance through more testing of pupils and league tables of schools' performance. This became part of a centralized, target driven approach which was seen also in the NHS with respect to reducing waiting times for hospital treatment.
The Northern Ireland peace initiative The Blair government, supported by the Clinton administration in the USA, made significant progress in moving all parties in Northern Ireland towards peace and the sharing of devolved power. In August 1997, the signed an international agreement on arms decommissioning as preparation for Anglo-Irish political talks from September. These included Sinn Fein, the political wing of the IRA, from late 1997, after an IRA ceasefire held. It represented the first time a British government had invited the republican movement to take part in round-table talks.
Despite some incidents of violence, the multiparty negotiations, known as the Stormont talks, continued, leading on 10 April 1998 to a historic ‘Good Friday’ agreement to devolve powers to a Northern Ireland Assembly; set up a North–South Ministerial Council and a British-Irish Council; and deal with the issues of human rights, policing service, decommissioning of illegal weapons, and the release of political prisoners. Voters in Northern Ireland and the Republic of Ireland gave overwhelming backing to the agreement in a referendum on 22 May 1998.
In the June 1998 elections to the new Northern Ireland assembly the Ulster Union Party (UUP) and the Catholic-oriented moderate Social Democratic and Labour Party (SDLP) polled strongly, with the UUP leader, David Trimble, nominated as first minister. However, the peace agreement came under challenge in August 1998, when a dissident IRA faction, the ‘Real IRA’, exploded a large bomb in the shopping centre of Omagh, Northern Ireland, killing 28 civilians. However, the ‘Real IRA’ announced a permanent ceasefire in September 1998. In October 1998 David Trimble and the SDLP leader, John Hume, were jointly awarded the Nobel Prize for Peace.
Unionist demands that the IRA first disarm before Sinn Fein could join the proposed Northern Ireland executive, and disputes over the release from jail of IRA terrorists, held back further progress. Not until December 1999, after the IRA agreed to begin arms decommissioning, did the UK government devolve powers to a power-sharing executive in the province, with Trimble finally becoming first minister. Direct rule from London was imposed from February to May 2000 because of concerns over slow progress on arms decommissioning, but power-sharing was restored after the IRA agreed to open its arms dumps to independent inspection.
In July 2000, a further 80 prisoners were released from Northern Ireland's Maze prison, taking the total number released to 420, with only 20 remaining inside. But, after violence between the two loyalist paramilitary groups – the Ulster Volunteer Force (UVF) and the Ulster Defence Association (UDA) – Johnny Adair of the UDA was returned to prison for violating the terms of his early release. British troops also returned to the streets of Belfast after two years absence.
Challenges in 2000–01 In 2000, the UK dispatched its biggest task force since the Falklands War to Sierra Leone to oversee the evacuation of foreigners from Freetown, as rebels moved towards the capital and a UN peacekeeping mission came under attack. The British government insisted that their troops would not become embroiled in the civil war, with British troops remaining in the region until the UN could assemble a bigger task force.
At home the government faced a wave of disruptive protests over high fuel prices and complaints about high taxes upon petrol and other oil products. These spread across Europe in August and September 2000. The UK protests included blockades of oil refineries and forced some concessions on fuel duties.
The government also faced criticism from its political opponents when Home Office figures, released in January 2001, showed that applications for political asylum in the UK rose in 2000 to a record 76,040, representing a quarter of all applications made in the EU. The government was accused of having too lax a policy which was encouraging asylum seekers to target the UK.
Between February and May 2001, the country faced a major outbreak of infectious foot-and-mouth disease, affecting pigs, cows, and sheep, and which led to a mass cull of 3 million healthy and infected animals in affected areas to try to contain its spread.
Blair's second term Four years of economic growth, provided the basis for Labour's re-election at the May 2001 general election, with a majority of 167 seats, after winning 41% of the vote. After the Conservatives' crushing defeat, William Hague resigned as leader and he was replaced by Iain Duncan Smith, a right-wing Eurosceptic, who won a decisive victory over the former chancellor of the Exchequer Kenneth Clarke in September 2001, winning 61% of the party vote. However, Duncan Smith's leadership proved ineffective and he was replaced as party leader in November 2003 by the experienced former home secretary, Michael Howard.
Blair reshuffled his cabinet in May 2001, appointing Jack Straw as foreign secretary, David Blunkett as home secretary, and women to 7 out of the 23 cabinet seats. His second term saw continuing emphasis on tackling law and order, including the issue of anti-social behaviour orders (ASBOs), improving school results, and substantially increased spending on the NHS, including on doctors' salaries, as well as the introduction of self-governing hospitals. There was liberal social legislation, with the Civil Partnership Act (2004) giving same-sex couples the same rights and responsibilities of marriage.
However, for Prime Minister Blair the chief focus of his second term was on events overseas, in particular the international war on terror and the US-led intervention in Iraq.
The war on terror The second Labour term was dominated by two major issues – Islamist terrorism and Iraq. In the wake of the September 11th terrorist attacks on the USA, Blair pledged military and diplomatic support for US president George W Bush and for an international coalition against terrorism. With British backing, US forces targeted Afghanistan, where Osama bin Laden's al-Qaeda terrorist network enjoyed the protection of the hard-line Islamist Taliban regime, and military action began on 7 October 2001. The Taliban were overthrown by the end of the year (although Osama bin Laden evaded capture) and a new government was installed under Hamid Karzai, a Pashtun tribal leader. However, Taliban insurgents and rival warlords continued to challenge the government's authority, and Karzai's rule over much of the country was to remain tenuous despite the ongoing deployment of multinational security forces (under NATO control since 2006).
Intervention in Iraq From 2002 international attention turned to Iraq, where Saddam Hussein's dictatorial regime, despite having been subject to sanctions since 1990, remained in suspected possession of weapons of mass destruction. By early 2003 serious divisions had emerged within the UN Security Council and EU over proposed military action against Saddam which would pre-empt ongoing UN weapons investigations. Nevertheless, the USA and UK launched an offensive in March 2003. By early April 2003, US forces had taken control of the capital, Baghdad, British troops had secured the southern city of Basra, and Saddam's regime had collapsed. However, despite the initial military success and the subsequent efforts to establish representative government in Iraq through democratic elections, the continuing occupation by US, UK, and other allied forces has since failed to reconcile the country's sectarian divisions or subdue the violent insurgency that has resulted in thousands of largely civilian casualties. A partial withdrawal of British troops from southern Iraq was announced by the Blair government in February 2007.
In the UK, Blair's policy on Iraq was unpopular. Although he won overall parliamentary approval for military action (despite the opposition of many Labour MPs), there was dissension within the cabinet, particularly former foreign secretary and leader of the House of Commons Robin Cook who resigned in March 2003. There were also hostile street demonstrations. Then, in June 2003, the government had to refute allegations that it had distorted intelligence information to justify military action against Iraq. This controversy, arising from investigations by the BBC, led to a judicial inquiry, headed by Lord Hutton, which in January 2004 exonerated the government from charges of exaggerating intelligence about Iraq's weapons of mass destruction, but was critical of the BBC, prompting the resignation of the corporation's chair of governors. Subsequently, the security situation deteriorated in Iraq, with an insurgency and sectarian violence, leading to further British troop casualties.
Terrorism legislation With the terrorist threat still prominent, the Labour government in early 2005 sought to introduce more restrictive anti-terrorism measures against British or foreign suspects, including control orders and effective house arrest. Having provoked strong cross-party opposition, the controversial legislation was passed in March 2005 after protracted debate, which had included the longest-ever sitting of the House of Lords. The government ran into more problems in November 2005 as Blair suffered his first House of Commons defeat as prime minister when MPs voted against increasing the length of time terror suspects could be held without charge to 90 days, but allowed a doubling of the time to 28 days.
Blair's third term In the May 2005 general election, Labour retained power for an unprecedented third consecutive term. However, its parliamentary majority fell to 66 seats and its share of the national vote to 35%, with the Conservatives winning 32% and the Liberal Democrats 22%. The Iraq war effect led to some Labour voters switching to the Liberal Democrats, who had opposed the war.
After the party's defeat, the Conservative leader Michael Howard stood down and was replaced in December 2005 by David Cameron, who pledged to modernize the party and make it more ‘caring’.
Fears of reprisals for UK military involvement in Iraq were realized when British Islamist terrorists struck London's transport network on 7 July 2005 in a series of suicide bomb attacks, killing 52 people and injuring around 700. Other would-be bombers attempted a similar but unsuccessful assault two weeks later.
There was further progress with the peace process in Northern Ireland. In late July 2005, the IRA announced a formal end to its armed campaign against British rule in Northern Ireland and, in January 2007, Sinn Fein voted to end its longstanding opposition to British-backed policing in the province. These steps removed obstacles to the restoration of a power-sharing devolved government. Following fresh elections to the Northern Ireland Assembly in March 2007, the Democratic Unionist Party (DUP) and Sinn Fein (as the two largest parties) reached an historic agreement to share power in a devolved administration to replace direct rule by the British government from 8 May 2007. The DUP's formerly hardline leader, Ian Paisley became first minister, while Sinn Fein's Martin McGuinness became deputy first minister.
Brown replaces Blair as prime minister During 2005 and 2006, Prime Minister Blair came under increasing pressure from supporters of the chancellor, Gordon Brown, to step down to honour what they believed had been an agreement made between the two men in 1994, when Brown had agreed not to challenge Blair for the party's leadership. In September 2006 Blair told the Labour Party conference that he would step down after 10 years as prime minister and he did this in June 2007.
The 56-year-old Brown took over as party leader, without a challenge, and as prime minister, inheriting a party which had lost much popular support. The party polled poorly in the May 2007 elections to English local councils, as well as in the Scottish Parliament – where the Scottish National Party (SNP) became the largest party and formed a minority Scottish Executive administration with the SNP's Alex Salmond as first minister – and the National Assembly for Wales.
Brown appointed Jacqui Smith as the first female home secretary, Alistair Darling as chancellor of the Exchequer, David Miliband as foreign secretary, and Jack Straw as justice secretary. Brown faced a resurgent Conservative Party, which, under the leadership of David Cameron, had moved towards the centre-right, expressing concern for environmental issues and a more ‘caring conservatism’. Nevertheless, during his first two months in office, Brown dealt decisively with the challenges of an outbreak of foot and mouth disease, which was quickly contained, and terrorist plots, and Labour enjoyed a ‘bounce’ in opinion polls.
Financial and economic crisis: 2007–09 From September 2007 the British economy was plunged into a gathering financial and economic crisis, part of a global financial crisis and recession. The first sign of this was a financial crisis at Northern Rock, the UK's fifth largest mortgage lender. It had expanded rapidly over recent years by funding its mortgages through borrowing from the international credit market, but because of a collapse in the US housing market, which led to financial problems among US lenders, the interest rates at which this credit was available increased to unsustainable levels for Northern Rock. In September 2007 it had to request emergency short-term support from the Bank of England, which led to many investors seeking to withdraw their funds, in what was the first run on a British bank for 140 years. In February 2008, the Brown government was forced to nationalize Northern Rock as no private buyer could be found.
Falling support for Labour as crisis deepens During 2008, the Labour government fell consistently behind Cameron's Conservative Party in national opinion polls, and in May 2008 it registered its worst local election results in 40 years. This led to mounting criticism within the Labour Party of Brown's leadership. Before Brown became prime minister, supporters of Blair had expressed concerns that Brown lacked the essential skills of communication and empathy with voters which were needed by a modern prime minister. But Brown's supporters argued that he had the experience and competence needed, pointing to what had been seen as a successful period as chancellor when the economy had expanded for more than ten years. But the financial crisis in 2008–09 led to a re-assessment of Brown's chancellorship and to criticism that public expenditure had been allowed to increase too sharply, without value for money being achieved, and that he had put in place a ‘light touch’ financial regulation which had enabled banks to expand unchecked into risky areas which were to lead to their failure when the financial climate changed.
This became evident in October 2008, when, following recent failures of major US financial institutions and a sudden collapse in UK house prices, the shares of three leading UK banks collapsed and, faced with the risk of a run on these banks, the Brown government stepped in and part-nationalized them. This was part of a series of broader financial rescue packages which injected billions of pounds of funding into the banking sector. The aim was to encourage banks to start lending again (to each other and to businesses and house buyers). But despite the massive sums involved, which seemed to threaten UK public finances for decades to come, the impact seemed minimal. Meanwhile, the Chancellor, Alastair Darling, announced a reduction in the rate of VAT (sales tax), in an effort to encourage increased consumer spending in the run-up to Christmas 2008, and the Bank of England slashed its base interest rates. By March 2009, this rate had reached a low of 0.5%, the lowest level in the Bank's 315-year history. The Bank then embarked on an unprecedented strategy of quantitative easing, to increase the amount of money in circulation. The aim was to revive the UK economy which, from summer 2008, moved into a sharp recession, with unemployment rising (particularly in the construction industry) from 5% in early 2008 to over 7% in 2009, a number of major retailers collapsing, and the rate of inflation falling.
In February 2009, Chancellor Darling announced a £500 billion asset protection scheme in which the government would ring-fence participating banks' riskiest assets, with the government covering up to 90% of future losses. In April 2009, the Chancellor's budget forecast a 3.5% fall in GDP in 2009, the sharpest since 1945, and that the budget deficit would increase to over 12% of GDP. In the final quarter of 2009, the economy began to slowly grow again, but the contraction in GDP since mid-2008 had been over 7%, making it an unusually long and severe recession.
Developments in foreign affairs In December 2008, Prime Minister Brown announced that Britain would end combat operations in Iraq by the end of May 2009 and its forces leave Iraq by the end of July 2009. However, he maintained British military commitments in Afghanistan, which cost the UK £2.6 billion in 2008–09, and was leading to growing numbers of UK army casualties.
Brown sought to develop close relations with the new US president, Barack Obama, and was the first European leader to visit President Obama in the USA, in March 2009. Brown also sought to encourage international cooperation in dealing with the world financial crisis, by convening and hosting a Group of 20 (G20) summit in London in April 2009.
Labour undermined by scandals The image of the Labour government and party was damaged during 2008–09 by a series of allegations relating to party funding and parliamentary allowances. In January 2008, Peter Hain resigned from the Brown cabinet after controversy over alleged covert and undeclared financial donations to the party. In February 2009, home secretary Jacqui Smith faced media criticism for receiving a parliamentary allowance of £22,000 a year by claiming that her main home was a room in her sister's house in London, where she lived during the week. In May 2009, the Daily Telegraph published damaging details of allowance and expense claims by Labour ministers and MPs.
The ‘Con-Dem’ coalition The general election of May 2010 produced a ‘hung parliament’, in which the Conservative party won the most seats (306), with 36% of the vote, but fell short of the 326 required for an overall majority. The Liberals, with 57 seats from 23% of the vote, held the balance of power, while Labour won only 258 seats, with 29% of the vote, following Brown's lacklustre performances in the first-ever televised debates between party leaders in a UK general election.
David Cameron, the Conservative 43-year-old leader, reached agreement with the Liberal Democrats for a full coalition for the five-year term of parliament, with the Liberal Democrat leader Nick Clegg becoming deputy prime minister. The other key member of the government was George Osborne, who in June 2010 introduced an emergency budget to begin to tackle the new government's key challenge, the massive budget deficit, which amounted to 11% of GDP. He announced an increase in VAT from 17.5% to 20% from January 2011, a two-year freeze on most public-sector salaries, and plans for major spending cuts, requiring most departments (an exception being the NHS) to cut their budgets by a quarter over four years, along with major reforms to welfare spending. Earlier, in May 2010, the government set up an independent Office for Budget Responsibility to provide an independent assessment of the public finances and economy for each annual budget and pre-budget report.
Soon after the election, Gordon Brown resigned as Labour leader. His deputy, Harriet Harman, took over as interim leader until September 2010, when the party elected Ed Miliband, the 40-year-old former energy and climate change secretary, as its new leader, narrowly defeating his brother David. Ed Miliband, a ‘soft left’ heir to Brown, criticized the coalition government for cutting public spending too quickly and so threatening to plunge the country into a new recession just as it was recovering from the sharp 2008–09 downturn.
Overseas interventions Between March and September 2011, the UK played an important part in the international intervention which resulted in the overthrow of the autocratic Khaddhafi regime in Libya.
In August 2013, it appeared that the UK would also become involved, with the USA, in military action against Syria to punish it for apparently using chemical weapons against its citizens. However, the House of Commons voted to block UK military involvement. This had wider repercussions, leading the USA to follow a new non-military approach to Syria.
Austerity, riots, and the Olympics UK politics were dominated from 2010 by the coalition government's austerity programme, which changed the political debate fundamentally. In 2011–12 the economy flat-lined, remaining below its pre-recession level, and for many workers wages fell in real (inflation adjusted) terms. UK government debt was high as a share of GDP in 2012, at 88% (double the level in 2007), and in February 2013 the UK lost its AAA credit rating for the first time since 1978. The numbers unemployed did fall from 2012, as jobs were created in the private sector, but unemployment among young people aged 18–24 nearly doubled, to 22%, between 2009 and 2012.
Against this backcloth, August 2011 saw rioting and looting in parts of London and other English cities, sparked by a police fatal shooting of a 29-year-old man. However a year later London successfully hosted the 2012 Summer Olympics and Paralympics.
In 2013, the economy began to grow and move beyond its pre-recession level. Helped by increased consumer borrowing and a recovering housing market, GDP grew by 2.7% in 2013 and by over 3% in 2014. This brought unemployment down to below 2 million in August 2014, for the first time since 2008. However public debt remained high, the government austerity continued, and the Bank of England maintained its interest rate at a record low of 0.5%. Living standards remained squeezed for many and the Labour opposition sought to make the ‘cost of living’ crisis a key political issue.
Coalition rifts and the UKIP challenge The ‘Con-Dem’ coalition government held together during 2010–13 despite several serious rifts. In May 2011, the Liberal Democrats suffered a setback when voters rejected, in a referendum, a proposal to replace the first-past-the-post system for elections to the House of Commons with an alternative vote system. They had a further setback in August 2012 when the government abandoned their proposals to reform the House of Lords. The Liberal Democrats retaliated by blocking a proposed review of constituency boundaries, which was likely to have benefited the Conservatives.
The Conservatives faced a growing electoral challenge from the populist UK Independence Party (UKIP). Led by Nigel Farage, UKIP advocated the UK's exit from the EU in order to ‘recover sovereignty’ and restore control over immigration. The context was a net migration into Britain of 200,000 people in 2013, which was twice the government's target, with much of it coming from the EU. Facing pressure from his party's Eurosceptic wing, in January 2013 Prime Minister Cameron pledged that if returned to power after the 2015 general election, the Conservatives would negotiate reforms of the EU ahead of an ‘in or out’ referendum on EU membership by the end of 2017.
The challenge from UKIP intensified during 2014. In the European Parliament elections of May 2014 UKIP finished first, winning 27% of the vote. Turnout, at 34%, was low, but this was the first time ever that one of the UK's two major parties had not been first in a national election. This was followed, in August–September 2014, by two Conservative MPs defecting to UKIP. They went on to fight by-elections and in October 2014, the first defector, Douglas Carswell, trounced the Conservatives in his Clacton constituency.
Scotland votes to stay in the Union Prime minister Cameron faced a challenge also from north of the border. The SNP formed a majority government after the May 2011 Scottish Parliament elections and in October 2012 reached agreement with Cameron that Scotland would hold a referendum in autumn 2014 on whether Scotland should be an independent country. It was also agreed that the voting age be reduced to 16 years for this vote.
The main Westminster parties were united in opposing independence and joined together in a ‘better together’ coalition headed by Labour's former chancellor Alistair Darling. Their campaign focused on the economic risks of independence and uncertainties about what currency an independent Scotland would use and whether it could remain an EU member. The pro-independence ‘Yes Scotland’ campaign was supported by the SNP, Scottish Green Party, and Scottish Socialist Party and emphasized the positive opportunities of independence.
The two-year long campaign engaged Scottish voters, but opinion polls consistently showed a majority not in favour of independence until the closing weeks, when the gap narrowed. One opinion poll, on 6 September 2014, indicated a narrow majority in favour of independence. This caused panic in Westminster and the Conservative, Labour, and Liberal Democrat leaders rushed to Scotland to join the campaign. In August 2014, they pledged to give Scotland increased powers over domestic taxes and parts of the social security system in the event of a ‘no to independence’ vote. On 8 September 2014, they went further, endorsing a timetable set out by Labour's former prime minister Gordon Brown for additional powers to be agreed and legislated for by the time of the May 2015 UK general election.
The turnout for the referendum, on 18 September 2014, was very high, at 85%, but the result was clear: a 55% to 45% vote against independence. The SNP leader Salmond accepted the result and announced he would step down as first minister. But considerable challenges lay ahead for the Westminster parties to deliver quickly their promises on enhanced devolution to Scotland. And on 19 September 2014, Cameron announced that new powers to Scotland should be delivered in tandem with similar changes in England. This raised issues on whether Scottish MPs should be allowed to vote in the UK parliament on policies which did not affect Scotland, the so-called ‘West Lothian question’.
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