# A Level British Political, Economic and Social History - 1945-2007

## Conservative decline and the triumph of New Labour, 1990-2007: The end of Conservative dominance, 1990-97

• Many commentators argued that the Conservative Party had been torn apart by ‘civil war’ after the ‘betrayal’ of Thatcher. Further defeats in 2001 and 2005 suggested they might lose forever their traditional place in British politics as the ‘natural party of government’. The resurgence of the Liberal Democrats, like the success of New Labour, seemed to reflect fundamental changes in British society, ‘breaking the mould of British politics’. However, this was not sudden. The revival of the Labour Party was a powerful challenge to a deeply-divided Conservative Party. As a result, Tony Blair came to power in exceptionally favourable circumstances. Labour had a massive majority in parliament. Most of the nation was ready to give the new government a chance.

### The Conservative government under John Major

• The emergence of Major as Thatcher’s successor in 1990 was the culmination of an astonishingly rapid rise. There was especial hostility to Michael Heseltine and a fierce determination among right-wingers (actively encouraged by Thatcher herself) to take revenge against those who had ‘betrayed Maggie’. One key reason for Major’s rise to the leadership was that Thatcherites saw him as ‘one of them’: the leader most likely to be loyal to the Thatcher legacy. In fact, this view of Major was not especially true. His natural instincts were to unify the party. Major showed his desire for party unity by keeping a careful balance in his cabinet.

• The Conservatives jumped ahead in the opinion polls, a swing of around 9 % in favour of the Conservatives, and the tone of the natural press was very positive. Some of this was the ‘honeymoon effect’ experienced by new governments; but it also reflected the intensity of feelings about Thatcher by 1990.

• Major’s first big tasks involved foreign affairs and Europe. Britain was already fighting the First Gulf War, which reached a successful conclusion in March 1991. Major then turned his attention to Europe and made a big speech in Bonn, setting out his aim to see Britain take a place ‘at the very heart of Europe’. This speech was well received, especially by pro-Europeans. Major and his aides hopes that it would be possible to follow a middle way on Europe, avoiding conflict between the poles of opinion in Britain.

• Major faced an uphill task in negotiating the Maastricht Treaty, designed to reform the structures of the European Community. It was difficult to bargain with other European member states at Maastricht and sell the deal to sceptical political and public opinion at home. The Maastricht Treaty was agreed in December 1991 and signed in February 1992. Major’s skilful diplomacy secured opt-outs for Britain from plans for a single currency and from the Social Chapter. These opt-outs won over most doubters in the Conservative Party but opposition to Europe had not gone away. Maastricht was one of the reasons Major delayed calling an election until 1992; he had wanted to call one as soon as possible after coming to power.

• In domestic politics, the first big issue was the poll tax, which had played such a big part in Thatcher’s downfall. Many wanted Major to scrap the proposed tax immediately but this risked splitting the party. Only in November 1991, after very lengthy discussions, was the poll tax finally abandoned in favour of the new council tax. This was a costly move, because it admitted that £1.5 billion had been wasted on the attempts to implement the poll tax, but it allowed Major to get away from an unpopular policy that could be blamed on his predecessor.

### The British economy, 1990-92

• Major’s government inherited a difficult economic situation at the end of 1990, as Major himself well knew, because in 1990 he was Thatcher’s chancellor, trying to deal with the problems of the recession that had followed the ‘Lawson boom’ of the late 1980s. The recession was marked by declining manufacturing output, high interest rates, a steep rise in unemployment and a serious slump in house prices.

• In Britain, unemployment and the collapse of the housing market were the most painful aspects of the recession. From mid-1991 to early 1992, unemployment rose from 1.6 million to 2.6 million. Many homeowners were trapped in ‘negative equity’ (having to repay mortgages that were higher than the current value of their homes). Many had their homes repossessed. In 1990 there were 103,508 repossession orders. Conservative policy advisers were worried that this 1990s recession seemed to affect the Tory middle classes, especially in the south, whereas earlier recessions had hit the industrial north.

• With an election imminent, Major’s government resorted to high public spending. Half of this spending was forced, as a result of rising unemployment, but huge government borrowing was used for subsidies on transport and increased spending on the NHS. Most governments are tempted into lavish spending on the eve of an election, especially as in Major’s situation in 1991-92, when there was a high possibility of being defeated.

The Conservative election victory of 1992

• In 1990, many Conservatives had feared defeat in the next election; that was the overriding reason for displacing Thatcher. The political momentum was with Labour. Neil Kinnock’s leadership had restored party discipline and curbed the hard left. Kinnock’s shadow chancellor, John Smith, gave Labour a reassuring image of moderation and competence. The party reorganisation had been overhauled and was more professional in policy presentation. By 1992, Labour was winning back many of the voters who had deserted them in the 1980s. The opinion polls placed the Conservatives on an average 29 per cent, with Labour ahead on 41 per cent and the Liberals at 15 per cent. However, the Conservatives won 336 seats, Labour 271.

• Labour expectations had been high. Afterwards, Kinnock was accused of over-confidence. John Smith was blamed for making commitments on taxation that allowed the Conservatives to scare off middle class voters.

• The Conservatives ran a good campaign. Chris Patten was an effective party chairman, even though he lost his own seat in Bath. Major won a great deal of respect for his old-fashioned ‘soapbox’ politics, making impromptu speeches on the street in towns like Luton, standing on his soapbox. Although people blamed the Conservatives for the economic recession, they were still seen as the party best able to get the country out of the mess. Many voters just did not feel Labour had reformed enough, memories of the 1980s were still too strong.

• J. Sergeant highlighted in ‘Maggie: Her Fatal Legacy’ how both Major and Kinnock were convinced that Thatcher would not have won the 1992 election. Kinnock claimed that Major was able to defuse the row over the poll tax, which Thatcher would not have been able to do, and was able to present himself as the candidate for change. However, Blair suggested that she would have won because despite Kinnock’s ‘absolutely heroic efforts to change the Labour Party, by 1992 we were not sufficiently, fundamentally changed’.

### ‘Black Wednesday’ and its impact

• In September 1992, Major’s premiership was thrown badly off course by a toxic mixture of financial crisis and internal party divisions over Europe. The turning point was ‘Black Wednesday’, the crisis of 16 September 1992 that forced Major’s government into panic measures to prevent the devaluation of the pound and ended in a humiliating defeat as Britain was forced to withdraw from the right-wing press who had done so much to get him re-elected a few months earlier. Divisions within the party, about personalities and about Europe, widened. Public opinion turned against the Conservatives, just when the Labour Party was reinventing itself as a party of moderation and economic competence.

Britain had joined the ERM in October 1990. The ERM required Britain to maintain a fixed rate of exchange (2.95 German marks to the pound) with a narrow band allowed for fluctuations. By September 1992, the British currency (together with several other ERM currencies) was coming under pressure from foreign exchange speculators. The pound was trading at a low level, close to its minimum allowable rate of 2.77 marks. The crisis in September began with a wave of speculative selling of the pound on financial markets. Major’s government was determined to avoid any devaluation of the pound and to remain within the ERM. The Chancellor, Norman Lamont, increased interests from a high of 10 % to 12 % and later in the day to 15 %, hoping to persuade foreign investors to buy pounds again. The Bank of England spent huge amounts from its reserves in buying up pounds. These increasingly desperate attempts to prop up the pound all failed; the pound continued to sink. This led to the decision to give up the struggle and withdraw from the ERM.

• The immediate sensation and dramatic long-term effects:

• The Conservative reputation for economic competence was destroyed and Major’s government was savagely criticised by opposition leaders, Gordon Brown for Labour and Paddy Ashdown for the Liberals, and in the national press. There was a steep drop in support for the Conservatives in opinion polls. Many observers, including Major, looked back on Black Wednesday as ‘the beginning of the end’.
• In the opinion polls, the Labour lead grew by around 14 per cent in the weeks that followed.

• Within a relatively short time, the economy stabilised and it could be seen that coming out of the ERM had as many beneficial effects as negative ones. The political consequences, however, were disastrous for the Conservative government, both at the time and for years afterwards.

### Satire

• John Major was an easy target for cartoonists and satirists. Major remained personally more popular than his party; but the image of Major as a well-meaning but bumbling and inadequate leader stuck to him.

### Sabotage

• The negative perceptions of Major made it harder for him to face down the increasingly blatant actions by anti-Europe elements in his own party. In July 1993, rebel MPs blocked Major’s attempts to get parliament to ratify the Maastricht Treaty. Major won the vote in the end but his authority was damaged. There was no leadership challenge against Major in 1993 but the speculation about a challenge further undermined him. Major reshuffled his cabinet in 1994 but this had little impact. By 1995, only 12 per cent of the public identified the Conservatives as a unified party.

• By the summer of 1995, Major felt so insecure that he called for a leadership election so that he could be re-elected to his own job. It was a case of ‘back me or sack me’. Some observers saw the move as a bold gamble; others saw it as a sign of weakness and desperation. At Prime Minster’s Questions, Major was mocked by Blair: ‘I lead my party. You follow yours.’ The ballot was decisive with 218 for Major, 89 for John Redwood. There was no need for a second ballot. Major had won in spite of the national press: even the Daily Telegraph wrote that Major had ‘inflicted a spell of humility on the scribblers’. Yet 89 Conservative MPs had voted against him, when his government only had a small majority. The attitude of the press was as hostile as ever. The Times wrote: ‘Yesterday Conservative MPs threw away their last best opportunity to win the next election.’ Opposition to Major within the party, especially on Europe, continued almost as intensely as before his re-election.

• One deadly cause of Major’s weakness was the ‘back seat driving’ of Margaret Thatcher. She encouraged the Maastricht rebels by demanding a referendum to approve the treaty. She gave her support to Redwood in his challenge to Major in 1995. She did little to discourage her admirers from reminding everyone what a dynamic leader she had been compared to Major. In the run up to the 1997 election, her comments seemed to show more approval of Blair than of her chosen successor as prime minister.

### Sleaze

• There were sandals of ‘Tory sleaze, such as those about sex that led to the resignation of two cabinet ministers, David Mellor and Tim Yeo, and some backbenchers. Other scandals centred on corruption. In 1994, the Scott enquiry, set up by Major to investigate illegal arms dealing, proved that government ministers had broken the rules and been ‘economical with the truth’. Two leading Conservatives, Archer and Aitken, were convicted of perjury. The ‘Cash for Questions’ affair when Conservative MPs were accused of accepting money in return for lobbying on behalf of the owner of Harrods, Mohammed Fayed, was very damaging to the Major government because it lasted such a long time and kept ‘Tory sleaze’ in the news right through the 1997 campaign.

• Although many of the scandals were minor, the sensational press coverage inflicted severe damage on a government that was already weakened and was being targeted by newspapers that had deserted the Conservatives. To make matters worse, every setback was exploited with ruthless efficiency by the opposition. Blair’s Labour Party was more united, better organised and more kindly treated by the media than at any time since 1945.

### The revival of the Labour Party, 1990-97

• The revival of the Labour Party in the 1990s seemed to be dominated by the ideas and personality of Blair, who became leader of the party in 1994 and had three years in which to prepare for power. Blair set out with great skill to remodel the Labour ‘brand’. The promotion of ‘New Labour’ was intended to live down his party’s extremism in the 1980s, when Labour had seemed unelectable. Blair wanted to convince Middle England that the Labour Party had fundamentally changed, both ideologically and in party unity. The ‘Blair Project’ achieved dramatic success between 1994 and 1997 but transformation of Labour’s fortunes was also due to Blair’s predecessors, Neil Kinnock and John Smith, who also made major contributions.

### The rise of New Labour, 1992-97

• Kinnock played a big part in dragging Labour back into the political mainstream. He took on the extreme left, represent by the Militant Tendency and the ‘Bennites’. After heavy defeats in 1987, Kinnock further reorganised the party and moved its policies towards the centre ground. Some party activists blamed him for losing the 1992 election after Labour had been a head in the polls; but the Labour Party Kinnock left behind was infinitely stronger than it had been in 1983.

• Blair wanted a dramatic shift in policy to show how Labour was breaking with its past. John Smith had already prepared the way by moving to abolish the trade unions block vote by introducing ‘One Member One Vote’ (OMOV) in 1993. Many Labour traditionalists regarded OMOV as surrendering to the anti-union ideology of Mrs Thatcher, but Blair wanted to get the party as far away as possible from trade union power and from the memories of the winter of discontent in 1979.

• The second big reform was the abolition of clause four. This wiped out one of the most iconic socialist principles enshrined in Labour’s constitution: the commitment to state ownership of key industries. Blair’s aim was to move Labour forwards, dropping outdated socialist ideas and embracing the modern capitalist economy. This gave Blair the modernising image he wanted.

• Party unity and discipline was given a high priority. After Smith’s death in 1994, the danger of a divisive leadership contest had been avoided by a deal between Blair and his main rival, Gordon Brown. In later years, this deal was to cause friction, but the Blair-Brown partnership was hugely effective. Behind them, the party’s organisation was slick and controlled. Philip Gould closely monitored public opinion through focus groups. Peter Mandelson ran the efficient machinery coordinating public statements and keeping all elements of the party ‘on message’.

• In the past, the Conservatives had always outmatched Labour in campaign funds and in support from the national press; negative press coverage of Neil Kinnock in the 1992 election campaign was just one example of this. Overcoming this problem was perhaps the most important factor in the success of New Labour by 1997. Blair’s press secretary, Alastair Campbell, used his experience as a former journalist to change Labour’s relationship with the press and media. Journalists and newspaper owners, many of them unenthusiastic about Major anyway, were won over.

### The general election of 1997: reasons for Labour’s victory

• The Conservative Party seemed to be undergoing a fundamental crisis of identity. Major claimed that ‘winning for a fifth time was an absolute impossibility’. Labour won by a landslide, winning ‘safe’ Conservative seats like Harrogate and Hove. Half of all Conservative MPs lost their seats. The Conservatives won 31 per cent of the vote. They now had only 165 seats in the Commons, with not a single seat in Scotland.

• There were many reasons for Conservative pessimism before the campaign:

• The traditional Conservative image of party unity had been shattered by the Eurosceptic rebellions.

• The accusations of ‘Tory sleaze’ were damaging. Martin Bell’s campaign against Neil Hamilton dominated evening news bulletins and had adverse effects on the wider Conservative campaign.

• The Referendum Party, lavishly financed by Sir James Goldsmith, won no seats but attracted enough voters to cause Conservative defeats in some marginal seats, as in the defeat of David Mellor in Putney.

• The economic situation had improved by 1997, but there was no ‘feel good factor’ or approval for Conservative economic policies. The blame for Black Wednesday still loomed over Major’s government.

• Major national newspapers that had always strongly supported the Conservatives were now lukewarm or had even gone over to support for Labour.

• The Labour Party was no longer an easy target for attack but was a formidable fighting force. The usual Tory tactics of frightening voters away from Labour’s ‘socialist extremism’ simply did not work anymore.

• Tony Blair was a skilful communicator, particularly effective in presenting an air of moderation and winning over ‘Middle England’. Blair did especially well with women and young voters.

• Labour was no longer the party of ‘tax-and-spend’ economic policies. Gordon Brown had done a great deal to convince people that Labour was the party of prudence and economic competence.

• The Labour campaign was run by a disciplined ‘spin machine’ that was very effective in dealing with the media and the press, both in refuting Conservative attacks and in selling Labour policies. Labour spokesmen were always ‘on message’ with access to up-to-date information.

• There was widespread tactical voting, with Labour supporters voting Liberal (and vice-versa) according to how the anti-Conservative vote could be maximised. This resulted in the election of several new Liberal Mps. It also secured the defeat of many Conservative candidates by their Labour opponents.

• The Labour landslide of 1997 ended eighteen years in opposition. The fact that so many new Labour MPs were youthful or female was in tune with the ideas of a new beginning.