How workers fought inflation in the 1970s

19 June 2022

THE FIRST POSTWAR global recession was triggered in the summer of 1973, quickly compounded by the Yom Kippur war, an OPEC oil embargo and the quadrupling of oil price rises. The USA’s decreasing competitiveness led President Nixon to devalue the dollar in 1971. Despite its decline the US retained its hegemonic role, meaning any shock it received would dramatically impact on the world economy.

Britain: sick man of Europe

For Britain this descent began earlier, its industrial capital already in a parlous state compared to its competitors. Throughout the 1960s Britain was playing second fiddle to West Germany and Japan, falling ever further behind in investment and productivity.

Harold Wilson’s Labour government was elected in 1964, promising to reboot British industry with the ‘white heat of technology’ and develop a modernised and efficient capitalism. But once elected, balance of payments deficits forced him to devalue the pound in 1967 and do an about-face. He introduced an ‘incomes policy’—wage restraint which eventually turned into a wage freeze.

Throughout this period the trade unions had developed into a powerful force, organising 52% of the workforce by 1976. The number of shop stewards grew to between 250,000 and 300,000, giving the movement deep roots on the shopfloor and rank and file power. Shop stewards were relatively independent from the union bureaucracy and were able to win concessions on hours, conditions and wages, often using unofficial walkouts. But Labour and Tories both agreed on curbing union power.

Miners and railworkers suffered from Labour’s attempts to ‘modernise’; jobs and conditions of work were sacrificed. In all these attacks the government was greatly aided and abetted by compliant trade union leaders. Wilson’s gratitude came in the form of seeking to impose Barbara Castle’s White Paper, In Place of Strife, which would have created state imposed settlements on unofficial strikes, strike ballots and other restrictions. In this he failed, undermining his struggle to impose wage restraint. As a result Labour’s usefulness to the ruling class came to an end.

Tory rule returns

With workers’ expectations in tatters Labour lost the 1970 election to Ted Heath’s Tories. Heath continued in the same vein as Labour, aiming to attack shopfloor organisation and restore management control. Already under Wilson British bosses had launched a ‘productivity offensive’ which saw wages pegged to productivity. The intention was to reduce the shop stewards’ power and divide the workforce.
Heath pursued this offensive alongside a new attempt to curb the trade unions. His Industrial Relations Act (1971) was similar to In Place of Strife but worse.

It sought to limit unofficial action. It would create a special enforcement court, the National Industrial Relations Court (NIRC) that would have powers to fine unions and sequester (freeze) their funds. It ruled against the closed shop; collective agreements would be legally binding contracts, limiting workers’ initiative. The NIRC could impose ballots before strikes and a sixty day cooling off period.

Heath also attacked welfare: school meals, dental treatment, prescriptions and spectacles were all subject to higher charges. Education Minister Margaret Thatcher deprived 8–11 year olds of their free milk provision. All this was pushed through in Heath’s first year of office!

A severe recession followed, dramatically increasing unemployment and inflation, with the Tories making it clear the government would not bail out ‘lame duck’ companies. The weapon of unemployment rather than incomes policy was used to hold down wages. By 1974 inflation had risen to 19%, peaking a year later at 24%.

Class struggle erupts

The response to these wide-ranging attacks was heightened class struggle. Although the TUC rejected strike action against the Industrial Relations Bill, it wasn’t long before unofficial action was organised. As with the opposition to Castle’s Bill so again this was largely organised by the Liaison Committee for the Defence of Trade Unions (LCDTU), a cross-union organisation in which the Communist Party played a key role.

Shop stewards enthusiastically promoted a Kill the Bill campaign against Heath’s Bill. Up to 2,000 shop stewards attended LCDTU conferences which agreed days of strike action. In October 1970, 250,000 struck. The following year in March, 100,000 workers struck in London alone, up to 1.5 million nationally. Though the Bill was not killed, a massive rank and file opposition had flexed its muscles.

Hard on the heels of this eruption of anger came the Upper Clyde Shipbuilders (UCS) ‘work-in’. When four yards were earmarked for closure with 6,000 redundancies, the anger was palpable in Glasgow; 100,000 workers struck for half a day as mass demonstrations took place. The UCS workers, led by CP stewards Jimmy Reid, Sammy Barr and Jimmy Airlie, decided against a sit-in and went for a prolonged work-in.

This was a huge mistake. It would have been better to have occupied the yards and refused to build the ships on time than working themselves out of a job. Better still if the unions had organised a campaign of action to nationalise the shipbuilding industry without compensation and under the control of the workers.

Nonetheless the immense sympathy for the UCS workers and pressure on Heath to stem the rising tide of unemployment forced the government to keep the yards open, though with the loss of 2,000 jobs. The UCS struggle also generated a huge wave of around 250 occupations, mostly sit-ins, during the Heath government.

When the miners entered the fray in 1972 the Tories were forced into a humiliating climbdown. The miners had come out for a wage increase. They were offered 6% but won 20%.

The victory was clinched at the Battle of Saltley Gate. Miners had regularly picketed Saltley coking works but police were forced to shut the gates when 15,000 striking Birmingham engineering workers joined Arthur Scargill’s flying pickets. In the aftermath 25,000 Manchester engineering workers launched strikes and occupations demanding a pay rise too.

The summer of 1972 saw the dockers fighting for their jobs against the effects of ‘containerisation’, a form of mechanisation. They had set up a National Ports Shop Stewards Committee to organise unofficial strikes and picket container depots. The NIRC ruled that the pickets violated the Industrial Relations Act.

In June three London dockers were threatened with prison. Around 35,000 dockers went on unofficial strike in support of them and the charges were suddenly dropped. In July the NIRC ordered the removal of pickets from an east London depot. When the dockers ignored the order five pickets were arrested and sent to Pentonville prison.

The entire dock workforce came out, unofficially picketing out Fleet Street printers. Within four days 250,000 workers were on unofficial strike and the left TGWU leader Jack Jones successfully proposed that the TUC call a one-day general strike. That same day the the dockers were released.

The Industrial Relations Act had been defeated but not removed from the statute books. Of course it was well within the reach of the TUC to have organised an indefinite general strike to smash the Act, but not one of the leaders, left or right, had the bottle to go down this road.

A national dockers’ strike began the next day, but this time under the control of the union leaders. After three weeks Jones struck a shoddy deal against the wishes of rank and file dockers. It was a deal that was unable to stop the whittling down of dockers’ jobs as containerisation continued.

The final nail in the coffin of Heath’s government was hammered in by the miners. At the end of 1973 they called a national strike in pursuit of a pay claim. TUC leaders supported the miners’ action.

Miners’ leaders moved quickly to control picketing this time. They feared that picket line violence would damage Labour’s electoral prospects. The government introduced a three-day week for industry, believing this would turn people against the miners. It did the opposite. As the lights went out, Heath bowed out.

Labour betrays again

Heath called an election on ‘who rules Britain, the government or the miners?’ But this ruse did not force the miners back as they held out throughout the election campaign. The result led to a hung parliament, with Harold Wilson forming a minority government. Labour increased miners’ pay by 35% and a second election was held in October 1974 which Labour won by three seats.

In 1973 Labour, against the backdrop of working class action, had developed its most left wing manifesto since 1945. It pledged to ‘bring about a fundamental and irreversible shift in the balance of power and wealth in favour of working people and their families’. It promised to expand the mining industry, nationalise North Sea oil and bring it ‘under full Government control with majority public participation’.
It pledged to introduce strict price controls, repeal the Tories’ Housing Finance Act which had forced up council rents and launch a public sector house building programme, and ‘redistribute income and wealth’ with an annual wealth tax on the rich. It would repeal the Industrial Relations Act.

The Labour left, including Tony Benn, played a significant role in drawing up the manifesto with the approval of Jones and fellow leftwinger Hugh Scanlon. Even right wing Shadow Chancellor Denis Healey boasted that he would ‘squeeze property speculators until the pips squeak’. Ominously though for workers the manifesto also enshrined a Social Contract which again raised the need for an incomes policy, i.e. wage restraint.

Left union leaders like Jones and Scanlon were obviously more sensitive to the dangers of losing an ‘out of control’ rank and file. Jones had a long record of defending shop stewards and was part of the Broad Left, a current that drew in the Labour lefts as well as the CP. But at the end of the day these lefts no less than the rights would subordinate the interests of their union members to the priority of supporting Labour.

When Wilson unexpectedly resigned in March 1976 James Callaghan was elected leader. He lost no time in pressing ahead with a new round of pay restraint but this proved the last straw. Callaghan openly defied the TUC and Labour Party conference policy to throw out his 5% wage limit. The TUC was under a lot of pressure from the rank and file to reject this limit and the ‘winter of discontent’ of 1978–79 ensued, a massive strike wave of millions of workers which smashed the 5% limit.

Thatcher era begins

Labour’s usefulness to Britain’s capitalist rulers was significant. Workers’ living standards had been effectively lowered through successive wage restraint deals. Productivity deals and participation schemes had undermined union power. Labour even used troops to break strikes. They pioneered methods of police control as when the Special Patrol Group attacked the picket lines of Asian women at Grunwick’s.
But British capitalism’s competitiveness had not been seriously overhauled or improved; much more drastic surgery had to be performed. The rise of Thatcher saw a new Tory brand come to power, intent on solving British capitalism’s problems at the expense of the working class.

The strategy advocated had been used before and essentially revolved around the ruthless promotion of slump conditions dispensed with an iron fist. Initially inflation spiralled up again to 17% in Thtcher’s first year before falling back.

‘Monetarism’ restricted the money supply and raised interest rates. The least efficient companies were bankrupted, leading to a dramatic rise in unemployment. This would of course undermine militancy and union strength. Thatcher’s attacks on the welfare state freed up resources to subsidise private industry via tax cuts. Cuts to nationalised industries were combined with privatisation schemes. Indirect, regressive taxation increased.

To cap it all came her legal attacks on trade unions, including outlawing the closed shop, solidarity strikes and flying pickets. They also required ballots for strike action as a ‘cooling off period’ to give bosses time to divide workers and prepare to defeat strikes.

The Tories’ strategy was to take on the working class section by section in order to weaken the trade union movement as a whole. Workers in steel, the civil service, cars, health and rail were picked off first and kept isolated by union leaders. This culminated in taking on the vanguard of the labour movement, the NUM, in a year-long strike against pit closures.

Thatcher had diligently prepared for this; coal reserves were stockpiled and the powers of the state fine-tuned to smash the miners. Anti-union laws and the massive use of a militarised police force threw down the gauntlet to union leaders. The strike was not going to be won by sectional militancy; it required solidarity from the whole movement. A general strike was needed but the TUC proved to be Thatcher’s guardian angel.

The miners’ eventual defeat saw over 20,000 jobs lost and many more to come, but it was also a decisive victory over the labour movement. Although key battles followed among the printers and nurses, the rightward shift in the trade unions and the Labour Party took hold. The working class had suffered an historic defeat.

Lessons for today

Now that more and more workers are moving into disputes over pay, it is worth drawing the lessons of this period, in order to win pay increases that insulate us from another period of rising prices, as well as rebuilding the movement.

A surge in working class militancy, largely unofficial in origin, rested on a confident shop stewards’ movement. It had been steeled in plant bargaining and was prepared to take action in defiance of union leaders. Its main weakness was a failure to build a solid rank and file organisation politically independent of both left and right union leaders.

The Labour government and trade union bureaucracy succeeded in weakening shopfloor organisation through union policed wage restraint, productivity and workers’ participation schemes. The decline in the role of the shop stewards and a corresponding rise in the power of union bureaucrats had already shifted the balance of power when Thatcher was elected.

Thatcher continued this process but took victimisation to a new level. She took on isolated groups of workers, knowing full well the timidity of most union leaders. Traditional trade union militancy had no answer to the Tories’ political offensive. Its sectional nature meant groups of workers going down to defeat in isolation.

The prosecution of a successful fightback needed revolutionary answers. A rank and file movement was needed to organise solidarity action when union leaders dithered. Such a movement needed a clear political alternative to the sellouts and to the limits of sectional militancy. It meant taking on the anti-working class policies of Labour governments and Neil Kinnock, who refused to support the miners.

The fight for an action programme that could mobilise the working class to defend its interests in the here and now, but linked to a fight for the socialist transformation of society was desperately required. When Thatcher mobilised the state and its forces to smash the miners was the time to call for a general strike, for democratic workers’ councils and for organised workers’ defence against the capitalist state.

That meant a new leadership distinct from Labour and reformist trade unionism, a revolutionary party to lead the working class to victory.

This is the strategy Workers Power is fighting for in the growing cost of living movement. If your organisation agrees, in whole or in large measure with it, let’s coordinate our efforts at local or national level. If you as an individual agree with it—then join us.

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