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Thursday, May 06, 2010

Labour's great upset

This piece of mine appears over at the New Statesman.

It’s election time, and the front-runner thinks it has the edge –– just –– over its opponents. But then the unthinkable happens and the underdog comes tops. Could history repeat itself on Thursday?

 It's a World Cup year, and England's chances look good. Chelsea's all-star team have made it to the FA Cup final. And the members of the Labour government, having survived some tough economic times, are hoping that the improved economic situation will help them win another term in office.

No, I'm not referring to Britain in the spring of 2010, but exactly 40 years earlier, in 1970. Back then, in one of the biggest British political upsets of the 20th century, Labour lost an election it should, by all rights, have won. Forty years on, could the reverse be about to happen? Might the party win an unexpected victory in an election it really ought to lose?

The impressive economic record of the 1966-70 Wilson government is one of the great under-reported stories in British postwar history. The country's success had much to do with the intelligent policies pursued by Labour between 1968 and 1970, and in particular the skill of Roy Jenkins, arguably the most successful chancellor since the Second World War.

After the devaluation of the pound in November 1967, Jenkins dampened down domestic demand -- raising taxes by a record £923m in his first Budget -- and channelled resources to the export sector. The revenue raised by the government's innovative Selective Employment Tax, a levy on service-sector employment introduced in 1966, went to subsidise export industries.

The result of Labour's pro-manufacturing polices was that in 1969/70 Britain recorded a record balance of payments surplus of £550m: "one of the strongest in the world", by Jenkins's own estimation.

The public finances were also in rude health -- a borrowing requirement of £1.96bn in 1967/68 had been transformed into a surplus of £600m by the end of 1969. And, fuelled by the export boom, GNP grew by over 6 per cent between the middle of 1967 and the end of 1969.

Shock and gloom

A strong economy, and the publication of a series of opinion polls showing a clear Labour lead, convinced Prime Minister Harold Wilson to call an early election for June 1970.

Victory appeared a formality. Wilson was at the top of his game: his easygoing, pipe-smoking, man-of-the-people persona contrasted sharply with the stiffness of his Conservative opponent, Edward Heath. In early June, the bookies were offering odds of 20-1 on that Labour would win.

Then it all went horribly wrong.

The first result of election night, at Guildford, in Surrey, showed a 5.35 per cent swing to the Tories. Wilson's biographer Philip Ziegler says those who were close to the Labour leader "attested to the deep shock and gloom into which he had been thrown".

The party that couldn't possibly lose did just that. Some blamed Wilson's overconfidence in calling an early poll. Others thought that the unexpectedly poor trade figures in May were significant. Still others -- rather unfairly -- criticised Roy Jenkins's 1970 Budget for being too cautious.
Some even speculated that England's dramatic exit from the 1970 World Cup -- surrendering a 2-0 lead against Germany to lose 3-2 in extra time -- played its part. After all, Wilson had associated himself with the England football team when it had won the World Cup in 1966.
But perhaps Labour lost simply because too many of their supporters thought victory was guaranteed and stayed at home.

Forty years on, the current Labour government is an outsider to win the election. But could the odds be upset again? On the basis of its record over the past 13 years, you could argue that Labour doesn't really deserve to be re-elected. Credit is due for having the wisdom not to introduce swingeing public spending cuts at the height of a global recession, but New Labour's overall record on the economy since 1997 has been disappointing, to say the least.

While Harold Wilson's Labour Party put manufacturing and exports first, New Labour has shamelessly courted the City of London. Almost 1.7 million manufacturing jobs have been lost and the trade deficit has reached £3.8bn.

But then again, in 1970 Labour didn't really deserve to lose. If the party does pull off a surprise victory on Thursday, it will have far less to do with its record in office than a general lack of enthusiasm for the opposition. Elections, as we saw in 1970, don't always go to the party that deserves to win. And knowledge of the completely unexpected events of 40 years ago must give Labour hope that, even at this late hour, all is not yet lost.


Steve Hayes said...

I also don't recall Harold Wilson taking Britain into foreign wars, or wanting to destroy civil liberties at homed.

ZCF said...

It was much easier in Hungary after 1956. Following the necessary execution of a few hundred criminals, we had an excellent government for thirty years.

You British have it all wrong, why bother with elections? Still at least Arthur Scargill thinks Poland's Solidarity movement was an attack on socialism. With my husband, I would vote SLP if the party had a candidate in West Oxford and Abingdon.

Mr. Piccolo said...

I wish I knew more about British politics and history. Wikipedia's article on Edward Health mentions that he represented a break from the older aristocratic Tories like Harold Macmillan, with power moving to "meritocratic" figures like Heath and Thatcher.

Whatever the worth of Wikipedia as a source, it does seem like the Tories have gone through a lot of changes over time. Could One Nation Tories get elected into power nowadays? The media would likely portray them as loony leftist firebrands, but I think plenty of regular people would be attracted to economically left-wing conservatism.

Anonymous said...

The biggest sadness of the night was George Galloway losing in Poplar and Limehouse. The inheritor of the mantle of the great George Lansbury surely deserved better.

Anonymous said...

Other anonymous you have got it totally wrong. Removing Galloway was the decision of the people. Get over it!

James said...

For obvious reasons, Harold Wilson never tried to ban smoking either. In his resignation interview with the BBC (easily accessible on YouTube, last time I checked) he puffs away at his pipe even more than he talks.