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The Miners Strike and the Social Contract

The Miners' Strike

In November 1972, Heath announced a wage and price freeze, which was followed by a mandatory prices and incomes policy. During 1973, the government rolled out the policy stages, careful to avoid confrontation with the unions. The General Council (TUC) of the TUC, however, objected to the provisions of 'stage 3' of the policy, and the 1973 energy crisis strengthened the position of the National Union of Mineworkers (NUM). Industrial action began on 12 November, and the Cabinet immediately announced a national emergency. The Cabinet met the NUM leadership on 28 November, offering pay and other concessions that were refused. In December, Heath announced a three-day week to start in the New Year.

Fall of government

In January 1974, the Trades Union Congress (TUC) General Secretary, Len Murray, promised that if the government enabled an agreement between the NUM and NCB, no other union would make a similar claim under 'stage 3'. The Cabinet decided not to accept this offer. On 4 February, the NUM membership decided on a national strike. Heath called a general election on the issue of 'Who governs Britain?, which led to the fall of the Conservative government.

Labour's Social Contract

In reaction to Heath's Industrial Relations Act, the unions and Labour's National Executive Committee formed a liaison committee, producing the Social Contract. In exchange for union cooperation on the control of wages and incorporating improved social welfare, Labour promised action on prices and a 'social wage'. A National Enterprise Board and compulsory planning agreements with private industry were created. The aim was to expand the frontiers of state control. The Minister of Labour, Michael Foot, settled the miners' strike and went on to represent workers' interests in parliament.

The balance of power between the government and the unions in the Social Contract was controversial. It failed to provide a basis for successfully managing the economy. In July 1975, inflation and wages soared, forcing Labour to introduce a formal incomes policy. Following the Industry Bill of 1975, industries were taken into public ownership. Failure to apply the left wing agenda was partly due to the appointment of Denis Healey as Chancellor of the Exchequer. Following Wilson's resignation in 1976, the new Labour Prime Minister, James Callaghan, instigated deflationary spending cuts and interest rate increases.