The Labour Party partly based its 1951 election campaign on fears that the Conservatives would dismantle the welfare state and launch an attack on trade unions. This proved not to be the case. The Conservative Government of 1951 did not reverse many nationalisations, and only the road haulage and iron and steel industry were denationalised. Tight control was retained through the Iron and Steel Board because of difficulties with the sale of assets, but road haulage denationalisation was only partial.
Even though the Conservatives were committed to maintaining the welfare state, the Chancellor, Richard ‘Rab’ Butler, like his Labour predecessor Hugh Gaitskell, introduced health service charges in his first budget. In December 1951, the Cabinet's Economic Committee decided against hospital charges and, in 1953, the Cabinet accepted the findings of the Guillebaud Committee - that the National Health Service provided value for money.
Churchill was determined to uphold the constitution. Although he had been perceived as an aggressive enemy of organised labour during the strike of 1926, this was no longer the case. As Minister of Labour, Sir Walter Monckton followed a policy of pacifying the trade unions in order to maintain the corporate structure of industrial relations constructed during the Second World War.
During the early 1950s, the Conservative government adopted a conciliatory approach to union demands, and industrial conflict was readily resolved. This situation changed with Harold Macmillan's 1955 emergency budget. In order to limit inflationary demand the budget increased purchase tax, cut government expenditure and restricted hire purchase. Consequently, the Trades Union Congress (TUC) became less content with government policy. The Prime Minister, Anthony Eden, met the General Council (TUC) of the TUC in 1956 and warned them that a looming 'balance of payments crisis' might force a devaluation, which would adversely affect wages and living standards.
In March 1956, the government published the White Paper 'The Economic Implications of Full Employment', which argued the dangers of wage increase driven inflation. The paper called for restraint in wage demands and profits to prevent rising prices, loss of exports and eventual unemployment. The Trades Union Congress (TUC) was also becoming more radical in its outlook - the post-war leader was the militant General Secretary of the Transport and General Workers Union (TGWU), Frank Cousins.
Iain MacLeod succeeded Sir Walter Monckton as Minister of Labour in December 1955. Monckton was shocked by the uncompromising behaviour of the British Motor Corporation, which made 6,000 workers redundant without notice in July 1956. Although he was anxious to establish frameworks for negotiation between management and unions, he believed this should be voluntary.