The last time Britain held a ‘Crisis Election’, Ted Heath asked the question ‘Who Governs?’ The perceived wisdom, is that the electorate said ‘Not you!’, but the answer was actually ‘None of you!’. I have written about that campaign in What happened the last time the Tories called a snap election? They lost

But after the shock result on Thursday , Theresa May will look to lead a minority government, just like Labour did in February 1974. Back then, it meandered on for 7 months, before Wilson put it out of its misery, and called another election for October. In doing so, he brought an end to the shortest parliament since 1681.

The issues facing Theresa May, are undeniably similar to those that faced Wilson; a divided party on Europe, heading into a brutal renegotiation, rising inflation, declining living standards and the biggest economic task the country has faced since the war. And If 1974 is anything to go by, the Tories are going to be in for a tortuous 7 months.

I Got It Wrong

During the February 1974 campaign, Heath’s Conservatives had led in every opinion poll. But as the Liberal vote surged, both main parties took an electoral hit. Heath, having called the election to gain a stronger mandate for his negotiations with the unions, had lost. The final result was Labour 301 seats, the Tories 297 and the Liberals 14.

On election night, Heath, with a single tear rolling down his cheek, confided in his aide Lord Aldington ‘I got it wrong’. But he had still won the most votes, and was determined to cling on, citing the national interest. The convention was, and still is, that as incumbent, Heath would have the first attempt to pass a Queens speech through parliament.

For the next four days, Heath sought to do a deal with the Liberal leader Jeremy Thorpe and invited him to Westminster for secret talks. In a show of theatrics, Thorpe pretended to journalists who were surrounding his house, that he was going for a walk. He then crossed the muddy fields to a nearby farm, picked up his briefcase and a car, before slipping on to a train, headed for London. Thorpe had visions of becoming Home Secretary in a formal coalition, but knew his party had little time for Ted Heath’s politics.

For Labour, Harold Wilson waited patiently, remaining in his country residence, only sgoing outside to pose with his dog for the photographers. James Callaghan chaired a meeting of Labour’s NEC and had agreed to wait patiently for the Tories to fail in forming a government, before putting their own case to the country.

As expected, Heath’s coalition talks broke down, after Thorpe’s request for a deal on electoral reform within the first 6 months of coalition was rejected. Heath knew that he would not be able to get the issue past his own backbenches. A disappointed Thorpe told the journalists outside Number 10, ‘He has offered us nothing’

Who Governs?

On the 4th March 1974, Wilson entered Number 10 as PM for the 3rd time. He stood on the steps and told reporters;

‘We’ve got a job to do. We can only do that job as one people. And I am going to do that job right now’.

Commentators have later argued that no post-war Prime Minister has taken office in as difficult circumstances as the ones Wilson faced. The miners were still on strike, the three day week and state of emergency were enforced and inflation had hit 30%.

Wilson himself, shocked by his victory, had promised to conduct himself differently this time. He planned a ‘less frenetic, less personalised style’ and he told his advisers that there would be ‘no presidential nonsense’. Using one of his favoured footballing analogies, he claimed he would become the ‘Sweeper’ rather than a ‘Striker’ thereby allowing ministers to run their own departments without his meddling.

Though Labour proceeded with a Queen’s Speech, outlining a programme for a full Parliament, Wilson had already begun preparation for a second election. He had ruled out a deal with the Liberals and intended to govern as if he had a big majority, hoping to entice the opposition to stifle their progress.

On the 7th of March, Wilson took immediate action and within the first few days the miners’ strike was settled and the state of emergency came to an end. There was an immediate freeze on all rents, whilst Wilson promised the unions’ pension increases, price controls and food subsidies to help the workers. He then dared the other parties to vote down his Queens Speech, warning them that there would be serious repercussions ‘If Parliament denies Labour, a fair chance to get the country back on the road to recovery and strength’

Heath knew that opposition to it would backfire on him. The opinion polls had already moved decisively in Labour’s favour, and after Michael Foot promised to keep Heath’s Stage 3 of the ‘Prices and Incomes’ policy, the Tories had no option but to support the bill. Interestingly, Wilson believed that had been defeated, the Queen would have refused another dissolution, creating a major constitutional crisis.

Nevertheless, Wilson pondered an early summer election, as fears grew about the ensuing economic problems. Unlike Theresa May, Wilson knew that if there had been no obstruction in Parliament, he could not take a credible case to the country for a second election within three months.

Slumpflation

As Labour formed a a minority administration, they faced the gravest economic situation since the great depression. Denis Healey was given the keys to the Treasury, against a backdrop of rising inflation and increased unemployment. The Economist gave the economy the label ‘Slumpflation’ and with inflation running at 30%, most economic experts believed Britain was on the edge of bankruptcy.

As he entered No 11, he addressed an exhausted and depressed Nation with a candid honesty which is often missing from today’s political discourse:

‘You’d be surprised how many people have said to me, since i became chancellor, that i wouldn’t have your job for a million pounds. Why on earth would you want to be chancellor of the exchequer, at a time like this? Well, i see what they mean. This certainly isn’t a time, when any chancellor can win easy applause and still do his duty for the country’

As he prepared to deliver the most important budget in Britain’s recent economic history, Healey had one eye on the planned autumn election, wary that Labour’s position in the commons was on a knife edge. He later admitted that his main aim, was not to settle the financial markets and prevent a run on the pound.

The economic situation became more alarming, as the balance of payments deficit reached £1.75bn – an all time high. Healey quickly put together his first budget as and issued a sombre warning about inflation. He orchestrated a rise in income tax and corporation tax – the latter increased to 52%. He finished by stating ‘it is a budget designed to make Britain a fairer place to live in’.

Most Labour MPs welcomed the budget, except for Dennis Skinner, who walked out of the Commons upon hearing that the introduction of a wealth tax had been ditched. In a sign of the times, two Tory MPs wore Chairman Mao outfits to attack Healey, who,they argued, was the first British chancellor to have been a member of the Communist party. Opposition to the bill was led by Margaret Thatcher, whose impressive performance aided her in the subsequent Tory leadership contest.

No Deal Is Better Than A Bad Deal

Europe would provide another stern test of Wilson’s party management. Although Heath had taken the country into the EEC in 1973, Labour had rejected the terms of entry, and subsequently developed its own conditions for membership.

Wilson had committed the party to ‘a fundamental renegotiation of the terms of entry’ and to that outcome ‘being submitted to the British people for final decisions’. This pledge, had led to Enoch Powell publicly supporting the policy – and Labour piled on votes in the Midlands as a result of his endorsement.

The only issue was, the Europeans were in no mood to renegotiate the terms of the ‘Treaty of Rome’ as Wilson had promised the electorate. The Foreign Secretary James Callaghan then angered the Europeans by delivering an aggressive speech, to the commons on April 1st, signalling the opening of the re-negotiations.

It had been his intention to signal that ‘Britain means business’. But Callaghan threatened that if no substantial deal was forthcoming, then the government would have no option but to recommend Britain’s exit from the EEC, before putting it to the people in a referendum.

He outlined Labour’s position on the current deal, taking issue with the ‘Common Agricultural Policy’ and the ‘Community Budget’. He demanded that Britain be given dispensation to continue special trading relationships with Commonwealth countries. In Europe however, there was little prospect of meaningful discussion, particularity with the ongoing prospect of a change of government within months.

This stagnation, heightened the tensions within the cabinet as Labour’s position softened on EEC membership. Wilson had managed to fill his cabinet with a mix of pro and anti common-marketeers. People such as Benn, Foot, Castle and Shore were anti, while Jenkins, Williams and Callaghan were increasingly pro. But the gap was beginning to widen, as civil servants outlined to Callaghan the costs to the British economy of a withdrawal.

On the other side key ‘Brexiters’ such as Benn took the opposite view – arguing for a siege economy. They believed that any re-negotiation would not be passed by the unions and party members at conference. To settle the issue the NEC agreed to call a two day conference, whereby the merits of a referendum and Labour’s official stance would be decided.

Opposition

The Conservatives were not willing to risk confrontation with the government until the summer period. On June 20th, when allocated a Supply Day, where the opposition can choose a subject for debate, they tackled ‘Labour’s Plans for Industry’. This was seen as an outright rejection of the Bennite policies on planning agreements and the National Enterprise Board – a key manifesto commitment.

When the government was defeated by 11 votes, Heath called on Wilson to ditch the strategy completely. In response Wilson told the House

‘The RT Hon Gentleman can be fully assured that we shall consider all the implications following what he has succeeded in doing today, and that in due course we shall make our decision known’

No one could be in any doubt, that Wilson was preparing for an autumn election. From the 19 June to 30 July, Wilson suffered seventeen defeats. This included the Finance Bill (defeated five times on the rate of income tax) and the Trade Union and Labour Relations Bill (defeated seven times). The government also suffered fifteen defeats in the House of Lords.

During this time, the Tories and Liberals looked to make informal contacts for a coalition. Fearing a huge defeat, Nigel Lawson produced a paper on the virtue of an agreement whereby they stepped down in some seats to support a ‘national coalition’. Indeed, in July there was much discussion about the creation of a ‘National Government’ to guide Britain through the ensuing economic uncertainties. It was felt that Heath’s unpopularity was an obstacle to this.

The End

There had been an assumption throughout the parliament, that the government would not last until the end of the year. Many pundits had expected Wilson to strike earlier, as opinion polls consistently pointed to a 10% lead over the Tories. On August the 4th, the Sunday Times editorial said ‘We hope this Parliament has gone and will not come back’.

The Labour NEC met on July 25th to put together a manifesto for an autumn election, with Healey warning the party not to commit to further public expenditure. This enhanced Labour’s election strategy, which was to focus on the experience of the cabinet to manage the crisis.

Wilson decided on the shortest possible campaign, aware that the public were fed up of the constant electioneering and he announced the dissolution just 22 days before the poll. Wilson hoped that the end of the three day week would give him a mandate to push on with his style of governing. In his TV address to the Nation on the first day of campaigning, he apologised to the them for plunging the country into another election but he asked them to put the uncertainty of the last few months behind them and support the plans.

When asked ‘Who Governs’, the public again said ‘None of you!’ Labour were returned with a majority of 3, on a swing of just 2% against the Conservatives. It was the first time since 1922 that a government had won an overall majority with less than 40% of the vote.

Rather than achieving a strong and stable outcome, Labour would be forced to rely on the Liberals for support by 1977.