Labour Party (UK)

The Labour Party, originally a party of social democracy formed from several groups which first fought a general election in 1895, formally abandoned that ideology under the leadership of Tony Blair in 1994. Essentially a social democratic party, its policies became more market-oriented after the landslide election victory of 1997. Tony Blair won two more elections in 2001 and 2005, and was succeeded by Gordon Brown in 2007. After thirteen years in power, the party lost the general election of May 2010. Since September 2010 the party leader has been Ed Miliband.

Overview
The Labour party has made a stepwise transition from an initial conviction that social justice could be achieved only if the state took control of the economic system, to a belief that it could better be achieved if state control were confined to the effective provision of  those services that could not otherwise be provided; and if the state were used as a means of helping the individual to "overcome limitations unfairly imposed by poverty, poor education, poor health, housing and welfare". The party's initial success in establishing parliamentary representation depended upon the support that it obtained from the trades unions, and its relation with them has since made a stepwise transition from near total dependence to near total independence. The transition of the British electoral system from restricted suffrage to universal suffrage,  was a factor in the early growth of the party's parliamentary representation, and subsequent variations in its numbers have been influenced by non-idealogical factors including  its leaders' personal conduct and performance, the influence of the media, the vagaries of the voting system, and a variety of  unrelated episodes. The party is currently engaged in a review of its policies following its electoral defeat in March 2010.

Political philosophy
The founders of the Labour party were a small group of well-to-do thinkers who were driven by humanitarian concern to question the  system that was responsible for the sufferings of the Victorian middle class. The class barriers of the time might have concealed those sufferings from them but for the fictional writings of Charles Dickens, and  Thomas Hardy, and the meticulous reporting of Frederick Engels. They decided that the system must change, but were convinced that the necessary change could be brought from within the political system, rather than by the  revolutionary methods favoured by Frederick Engels and  Karl Marx. Like them, however, the intellectuals of the Fabian Society  concluded that social justice required  the public control and management of  industry and business -  although their policy proposals, (as reflected in the  original Clause IV of the Labour party's constitution) were less prescriptive than Marx and Engel's  Communist Manifesto policies.

A century later, the architects of New Labour were representing its proposed "top to bottom reorientation" of the party's policies  as the adoption of  a modern way of pursuing the  same objectives as the party's founders,  arising from a need to "separate conceptually, a commitment to our values (timeless) from their application (time-bound)". During the intervening years there had been swings of opinion towards and away from central management of industry. No move in either direction was made by minority Labour governments of the 1930s, but the economic breakdown of the depression of the 1930s  had convinced even the Conservative Harold Macmillan of the need for national economic planning - a widely-held belief that was reinforced by wartime planning achievements. After the extensive programme of nationalisation by the Attlee administration, opinion  began to swing in the opposite direction. The party's final attempt to intervene in industrial management was a brief, and totally unsuccessful attempt in 1964 to obtain voluntary private sector participation in a "National Plan".

Economic policies
Before the second war the Labour party subscribed to a cross-party consensus in favour of maintaining a balanced budget, and in the early post-war years it subscribed to a cross-party consensus in favour of using fiscal policy to regulate the economy. A divergence of policies arose in the 1980s when the Conservative party briefly adopted monetarism, but that was followed by a general acceptance of an international consensus in favour of fiscal stability, and the use of monetary policy to regulate the output gap

Origins
The founders of the Labour party included the a London-based group of socialist intellectuals calling themselves the Fabian Society, the more widely-dispersed Social Democratic Federation led by the Scottish miner, Keir Hardie,  and a few trade union officials seeking parliamentary representation for their members. They formed the Labour Representation Committee and in 1900, Keir Hardie and another of their members were elected to Parliament. At that time they enjoyed hardly any support from the public or  from the majority of trade union members, and their prospects of gaining a significant foothold in parliament appeared slight. That situation changed after the House of Lords Taff Vale Railway judgement that prohibited picketing and enabled employers to sue strikers for damages. That decision result in a surge of support from other trade union members that enabled the Committee to support further candidates and resulted in an increase in their parliamentary strength to 29 in 1906, 42 in 1910 and  57 in 1918. Rapid progress thereafter resulted in the election in 1924, of enough Members of Parliament to form a minority government.

The Ramsay Macdonald era
The first Labour Government lasted less than a year. After passing laws on housing, education, unemployment and social insurance, it was defeated on a vote concerning the conduct of its Attorney General. After being out of office for five years, it was re-elected in 1929, retaining its former Prime Minister,  Ramsay MacDonald. The country was immediately struck by the effect of the Great Depression and the effect of the previous government's return of the pound to the Gold Standard at an overvalued rate. The result (which is described more fully in the article on the Great Depression in Britain) was an increase in unemployment to over 16 per cent and a speculative attack on the pound. The Government's reaction was an attempt to reduce the depression-induced budget deficit, the cabinet split over a proposal to cut unemployment benefit, and the Government resigned. To the surprise of his colleagues, the following day Ramsay Macdonald announced he would lead a National Government as a Coalition with the Conservative party .

The Attlee era
The first post-war Labour government was faced with an unprecedented economic situation. In the words of the official historians of the war: "In a war allegedly governed by the concept of the pooling of resources among allies, the British had taken upon themselves a sacrifice so disproportionate as to jeopardise their economic survival as a nation". The country had lost a quarter of its national wealth and most of its export markets, and had accumulated a record public debt amounting to more than twice its national income. With the sudden cancellation of American Lend-Lease economic support, it was becoming difficult to pay for food imports, and John Maynard Keynes was sent to Washington to negotiate a fresh loan. A condition of that loan, was that  the pound was to be made convertible with the dollar. The need to maintain a fixed rate of exchange between the pound and the dollar imposed  a  balance of payments constraint upon the management of economy which could only be escaped by devaluation. Attempts were made to maintain full employment within that constraint, but a currency crisis forced the government to  devalue the pound in 1949. In order to avoid a further crisis, imports were restrained by continuing the rationing of food and clothing. The Government suffered a marked loss of popular support and was narrowly defeated in the election of 1951.

During the intervening six years the Attlee government brought about major and lasting domestic changes  by introducing a comprehensive social security system, creating the National Health Service, and raising the school leaving age to 15. It also made  more transitory changes to the country's industrial structure  by nationalising the coal mines, the railways, gas and electricity, and iron and steel. In addition, it introduced lasting changes to  the country's foreign relations by becoming part of NATO; giving independence to India, Pakistan, Ceylon and Burma; and withdrawing from Palestine.

The Gaitskell influence
After the party's decisive defeat in the general election of May 1955, Clement Attlee resigned and his former Chancellor of the Exchequer, 44-year-old Hugh Gaitskell was elected as party leader in his place. According to Roy Hattersley, who was one of its members at the time, "the Labour Party of 1955 was a loose coalition of men and women who ranged in opinion from orthodox Marxists to footloose liberals". They and their successors spent 13 years in public contention about the party's policies. The principal topics of contention were whether abandon or retain Britain's nuclear weapons, and whether to implement or abandon the party's commitment to wholesale nationalisation. Although the outcome moved in the direction of the second option in both cases, a substantial body of its - mainly left-wing - members continued to campaign for the first.

The new party leader, Hugh Gaitskell, supported by former economics academic, Anthony Crosland campaigned for the abandonment of the proposal in the 1955 election maifesto to "start new public enterprises" where necesary. In an influential book "The Future of Socialism", Anthony Crosland argued that further nationalisation was unnecessary since the socialist goals of greater equality and improved living standards could be achieved through growth under a mixed economy. Hugh Gaitskell failed in an attempt to remove the Clause IV commitment to nationalisation from the party's constitution but a 1959 collection of essays on the future of the Labour party, only one contributor argued for further nationalisation, and two argued the case against. The 1959 election maifesto promised to re-nationalise the steel industry (that had been privatised by the previous Conservative goverment but announced that the party had no other plans for nationalisation, and the 1964 election manifesto proposed only to expand existing nationalised industries.

Thanks mainly to Hugh Gaitskell's opposition to the powerful unilateral disarmament movement within the Labour party, the 1964 election maifesto proposed instead to negotiate a joint NATO deterrent.

Before that election, Hugh Gaitskell died suddenly of a little-known disease and Harold Wilson was elected as his successor.

The Wilson/Callaghan era

 * (the sequence of events during this era is set out in the 1964-1997 timeline)

Management of the economy
By the time that Labour resumed power in 1964, an international consensus had been established concerning the method of managing an economy. According to that consensus, fiscal policy should be used to regulate output, monetary policy  to manage the exchange rate, and incomes policy  to regulate pay and prices. The objective was to maintain full employment within the balance of payments constraint imposed by the ruling system of fixed exchange rates. That consensus was accepted by the both Labour and Conservative parties. There were disagreements about judgments of magnitudes and timing, but none about the principles involved.

New Labour
Tony Blair was elected as the Leader of the Labour Party in July 1994 after the sudden death of his predecessor, John Smith. In 1995, he persuaded the party to amend its constitution; the annual Conference voted to replace the controversial Clause IV (see box), which had been drafted by Sidney Webb and had been party policy since 1918. The redrafting marked a radical break with traditional policies, and marked the emergence of what Blair called "New Labour". The commitment to nationalisation, even though it was widely regarded as rhetoric without practical intent, was widely seen as a major factor in the electoral unpopularity of the Labour Party. The Conservative Party had won four successive general elections (in 1979, 1983 and 1987 under Margaret Thatcher and in 1992 under John Major), and Labour was seen by some as unelectable as long as it retained close links with the Trade Union movement and espoused the rhetoric of pre-war socialism.