The rise in consumer prosperity was a key reason why Macmillan was able to win a thumping victory in the 1959 election. At the same time, the Labour Party’s internal divisions boiled over, making Gaitskell’s job as party leader almost impossible. Only from 1962, when the government was hit by economic set-backs and by damaging scandals, did the political tide begin to turn.
Macmillan claimed in July 1957, ‘most of our people have never had it so good’, but the speech also carried the message, ‘is it good to last?’, warning about inflation and the ‘nightmare of unemployment’.
‘Supermac’: the Conservative government under Harold Macmillan, 1957-63
Macmillan commanded a remarkable aura of confidence and political mastery. The post-war boom was continuing. Macmillan seemed to have the media in the palm of his hand, using the new political opportunities provided by television with flair. Macmillan and most of his cabinet, such as Rab Butler, Iain Macleod, and Education Secretary, Edward Boyle, were capable and efficient political managers, in tune with public opinion. The Labour Party was in disarray, increasingly preoccupied with its own internal battles. In October 1959, after just more than eighteen months in power, Macmillan was able to call a general election at a time of his own choosing, when the economic situation was very favourable. The Conservative parliamentary majority was pushed up to 100 seats.
The Sunday Times journalist, James Margach, though Macmillan was, with Attlee, ‘one of the two most left-wing prime ministers of my forty years reporting politics’. Attlee said in 1951 that Macmillan had very nearly joined the Labour Party in the 1930s.
In the summer of 1957, there was a major financial crisis. Inflation was rising because wages were running far ahead of productivity. There was also a run on the pound, with the danger that the pound would have to be devalued against the US dollar. Macmillan’s chancellor, Peter Thorneycroft, believed in what a later generation would have called ‘monetarism’: he wanted to limit wage increases and to cut the money supply. Other cabinet ministers, led by Iain Macleod, strongly opposed such a policy because it would lead to increased unemployment and cutbacks in housing.
The crisis and the divisions in the cabinet carried on throughout the summer of 1957. It was a row that symbolised the problems of ‘stop-go’ economics: the disagreements over what to do about it were to keep on rumbling in the Conservative Party until (and after) Mrs Thatcher committed herself to monetarist policies in the early 1980s. Macmillan sided with those who wanted to keep up an expansionist economic policy. When Thorneycroft proposed drastic spending cuts in 1958, Macmillan overruled him. Thorneycroft resigned, together with his junior ministers, Enoch Powell and Nigel Birch. The post-war consensus had won again. This ‘little local difficulty’, as Macmillan called the resignations, did not have lasting harm and sterling regained its value against the dollar. The economy expanded so much that the budget of April 1959 provided tax cuts of £370 million - even more than the Butler ‘election give-away’ budget of 1955. The general air of consumer affluence reflected in the budget is generally accepted as the key factor in Macmillan’s comfortable re-election in October 1959, but there were other reasons such as why the Labour Party was unable to offer a stronger challenge.
The Labour Party had only narrowly lost the 1951 election. The total Labour vote, 14 million, was actually larger than in any of Labour’s election victories, including the 1997 landslide. Attlee continued as leader until 1955 but the great wartime generation of Labour leaders was ageing and often in poor health. Attlee’s most important lieutenant, Ernest Bevin, had died in 1951. Party unity had been well maintained while in government but there was a growing split in the party, both in ideology and in personalities.
The key figures in this split were Aneurin (‘Nye’) Bevan and Hugh Gaitskell, who was considered by most people in the party to be the logical choice to succeed Attlee as party leader. Gaitskell was always associated with the right wing of the Labour Party and was regarded with suspicion by the Labour left. Disagreements and personal feuds between the ‘Gaitskellites’ and ‘Bevanites’ became an almost permanent feature of Labour in opposition after 1951. This clash seriously harmed the effectiveness of Labour’s opposition to the Conservative government.
Gaitskell, leader since Attlee retired in 1955, seemed likely to benefit from the disgrace of Eden and boost Labour’s electoral prospects. However, Macmillan quickly re-established party unity and proved himself to be a commanding prime minister.
After the 1959 defeat, splits in the Labour movement widened due to two key factors:
Growing opposition to the party leadership from the trade unions and the simmering divisions over Britain’s nuclear weapons. Britain’s first tests of the atomic bomb happened in 1952. As the technology advanced, the more powerful hydrogen bomb was tested in 1957, the time when controversy over Britain’s foreign policy was at a height over Suez. CND (the Campaign for Nuclear Disarmament) was formed in 1958. CND rapidly became the most powerful pressure group in Britain, backed by many intellectuals and mobilising middle class protesters to demand that Britain should go ahead with unilateral disarmament. 8,000 people took part in a demonstration at the weapons research base at Aldermaston in Berkshire in 1958; a second march on Aldermaston in 1959 was even bigger. CND’s ‘unilateralism’ became a powerful magnet for anti-government protest, almost a substitute for opposition in parliament. Many Labour left-wingers joined in. The links between CND and the Labour left may well have turned some voters away from Labour in the 1959 election.
At the same time, the trade unions were starting to challenge the Labour leadership. Until the late 1950s, the unions had been happy with full employment and their leaders were essentially moderates. In 1956, however, a left-winger, Frank Cousins, became leader of one of the most powerful trade unions, The TGWU (Transport and General Workers). Cousins then led fierce union opposition to Gaitskell over Britain’s nuclear weapons.
At the Scarborough conference in 1960, Gaitskell delivered his emotional speech in which he promised to ‘fight and fight again to save the party we love’, after he was defeated over nuclear disarmament.
At the 1959 conference, held just before the general election, Gaitskell proposed the idea of abolishing clause four of the party constitution, the clause that committed the party to nationalisation. Gaitskell was impressed with the way the moderate socialists in West Germany, the SPD, had dumped their commitments to Marxist ideals in their party conference at Bad Godesberg earlier in 1959. It soon became clear, however, that opposition from the left wing and from some union leaders would be fierce; Gaitskell backed down without putting it to the vote. It may be true that Gaitskell was right to back down because the issue would have split the party. It was only in 1994 that Tony Blair finally convinced the Labour movement to abandon clause four and to fully commit itself to social democracy.
Labour’s political position slowly improved after 1960. There was a cultural shift in the country that made public opinion less satisfied with affluence and more critical of government, symbolised in print by the rise of the satirical journal Private Eye and on television by the popularity of That Was The Week That Was.
The Age of Affluence did not come to an end in the early 1960s but the government faced difficulty and frustration in its economic policies. Hopes of a radical modernisation of the economy were never really fulfilled. The intended transformation of Britain’s infrastructure made stuttering progress. By the late 1950s, it was becoming clear that economic growth in Europe, especially West Germany, was leaving Britain behind and that trade with the Empire and Commonwealth was not sufficient to keep up. Macmillan reversed his party’s previous policy and decided that it was essential for Britain’s economy to be joined with Europe’s.
In 1959, Britain took the lead in forming the European Free Trade Area (EFTA) but the new organisation was not able to match the economic growth of the EEC. In 1961, the Macmillan government submitted Britain’s application to join the EEC. Three key economic factors were behind the application:
The 1961 application was a symbol of the sense of failure in bringing about economic modernisation. The British economy was still growing and living standards were still going up - but the cycle of ‘stop-go’ economics had not been broken. Economic growth too often led to the over-heating of the economy through excessive, expensive imports and rising wage demands. Britain continued to slip behind foreign competitors such as West Germany, the United States and Japan. The problems that had caused Peter Thorneycroft and Enoch Powell to resign in 1958 were still there.
In 1961, worries about the economy over-heating forced the government to introduce a ‘pay pause’ to hold down wage inflation, and to ask for a loan from the IMF (International Monetary Fund). The economic difficulties facing the Conservatives by 1962 were familiar ones: the balance of payments problem and the economics of ‘stop-go’. In February 1962, Macmillan set up the NEDC (National Economic Development Council) in an attempt to get economic cooperation between government, employers and unions.
In the Night of the Long Knives reshuffle of 1962, Macmillan replaced his chancellor, Selwyn Lloyd, with Reginald Maudling, thought to be a rising star in the party. Maudling attempted to avoid the threat of rising unemployment through tax concessions and a policy of ‘expansion without inflation’; the result was that the balance of payments continued to deteriorate, with imports running well ahead of exports and rising inflation. This left a difficult inheritance for Wilson’s Labour government in 1964.
The rejection of Britain’s application to join the EEC in January 1963 was a serious setback for Macmillan’s economic policies. Macmillan himself wrote in his diary, ‘All our policies, at home and abroad are in ruins’. Later that year, the publication of the Beeching Report, recommending massive cuts in Britain’s rail network, showed continuing concerns over economic modernisation; it also provoked a great deal of public outrage.
Corelli Barnett, author of The Lost Victory, argued that the crises of the 1970s were the inevitable culmination of long-term economic decline. British governments had failed to control public spending, or to face down wage demands from the unions. British industry had failed to restructure and invest in modern equipment. Britain’s share of world trade had declined steadily from a quarter in 1951 to a tenth by 1975. Technical education had been neglected. Productivity was low compared with foreign competitors. Nationalisation had been a big mistake. Governments, Conservative as well as Labour, had intervened too often to prop up failing industries. Too much emphasis on full employment had led to constant problems with inflation. He believes that the painful economic reforms introduced by Mrs Thatcher after 1979 were both necessary and overdue.
The post-war era can be regarded as a ‘Golden Age’. Living standards rose steadily; the rate of economic growth was consistently higher than it had been between 1900 and 1939; unemployment, the curse of the 1930s, averaged 2 per cent during the ‘Golden Age’.
Even the unfavourable comparison with foreign competitors can seem misleading. The two countries far ahead of Britain in growth and modernisation were Germany and Japan. Both countries had been so devastated by the Second World War that they had no alternative but complete restructuring of their economies; and neither had been permitted to rebuild their military strength. If Britain’s defence spending (an annual average of 7 per cent of GDP) is taken into account, the overall economic performance compared with West Germany and Japan does not look so bad.
Political problems and the fall of Macmillan, 1962-1963
Macmillan’s purge of his cabinet, a brutal reshuffle known as the ‘Night of the Long Knives’, was intended to rejuvenate the government but it actually weakened it.
The first personal disaster to strike Macmillan in 1963 was the Profumo affair. This was a lurid scandal, combining sex, spying and high politics. Profumo lied to parliament and the Prime Minister about his actions. While the political impact was actually short-lived, the image of Macmillan as old and out-of-touch was reinforced.
Macmillan’s position was finally undermined by a serious illness; a major abdominal operation that kept him in hospital for weeks in the autumn of 1963.
Macmillan had not prepared the way for anyone to succeed him. Using the recently-passed Peerage Act, Lord Home renounced his peerage to become Sir Alec Douglas-Home, and thus able to take his place in the House of Commons. The whole business of deciding upon the compromise candidate between Rab Butler and Lord Hailsham made the Conservative Party seem trapped in a bygone age, sharply contrasting with the new Labour leader and his promises to take Britain forward into the ‘white heat of the technological revolution’.
The 1964 election was a close-run contest. Despite the problems affecting the Conservatives and the low public approval for Sir Alec Douglas-Home, Labour squeezed to victory by only three seats.
Many factors were running against the Conservatives:
There had been a run of scandals and ‘events’ in 1962-63.
There was the sense of a power vacuum following the resignation of Macmillan and the doubts over choosing his successor.
There was a sense of growing impatience with the old ‘Establishment’ and desire for generational change that showed through Private Eye and That Was The Week That Was.
There was increased support for Labour. Harold Wilson was a strong political campaigner, confident in dealing with the media and more focused and succinct than Gaitskell, who had sometimes been an impressive and passionate speaker but was too often long-winded, trying to make many points at once.
The split between Bevanites and Gaitskellites was over, with both the key personalities now dead.
Labour could exploit the powerful public mood that it was ‘time for a change’ - the Labour election slogan, ‘Thirteen years of Tory misrule’ proved very effective.
The Liberal revival: the liberals bumbled through the post-war era, attracting merely 2.5 per cent of the vote and never winning more than six seats. After 1960, however, the Liberals began to show some signs of life under a capable leader, Jo Grimond. In 1962, there was a stunning surprise when the Liberals won a by-election in the safe Conservative seat of Orpington in Kent. In election, the Liberals still won only nine seats, but the Liberal share of the total vote almost doubled. This was a pre-echo of the future Liberal revival after 1964. It is also possible that votes taken by Liberals from Conservative candidates may have just tipped the balance in such a close election race.