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British Economic and Social Policy From 1979 to the Present

If 1976 marked the end of the "Keynesian"era, the election of the Conservatives under Margaret Thatcher in the general election of 1979 saw the beginning of a determined attempt to reverse the trend towards greater state intervention in the economy. The new Prime Minister's avowed goal was to alter fundamentally popular attitudes towards the respective responsabilities of government and of the individual. She spoke warmly of Victorian values, such as self-help and enterprise, and, indeed, she is perhaps unique among prime ministers in having given her name to a comprehensive set of economic and social ideas. Thatcherism may mean different things to different people, but essentially it embodies related values, attitudes and beliefs which favour the free market rather than the state as the preferred means of allocating resources. Thatcherism looks to a sense of responsibility and a spirit of enterprise on the part of individuals, rather than to state-directed collectivism, as the best means of making Britain more competitive in relation to other industrial countries. Thatcherite ideas are not, of course, peculiar to the Prime Minister. Rather they form part of a body of belief, known as the New Right, which came to dominate the Conservative party in 1970s. Britain was to be used as a major experiment in monetarism and in liberal individualist ideas. This meant that the government announced that it would not directly intervene in the economy via incomes policy-type measures aimed at controlling wages and prices. Instead the government was commited to using tight monetary controls and high interest rates to control the economy and to use deflation and unemployment to reduce wage claims and price inflation. Low inflation, rather than the prevention of high unemployment, became the ruling objective of policy. In line with a belief in limiting the role of the state and encouraging self-help, the public sector was reduced by widespread cuts in expenditure and by the growing privatisation of public-sector organisations. Direct taxes were cut and VAT increased to pay for income tax reductions. The government encouraged freer capital markets by lifting restrictions on the export of capital and made British markets more open to foreign competition. It announced that it would not bale out enterprises and organisations which could not withstand increased competitive pressures. These policies, combined with the worst international recession since the 1930s, led to a massive fall in national output and a dramatic rise in unemployment from just over one million when the government came into office to over three million, or 13% of the labour force by 1983. This recession was followed by a slow but long period of recovery up to 1989, during which years tight monetary controls were relaxed, Britain experienced favourable growth and unemployment fell from the mid-1980s onwards though not to the levels of the 1970s. In the late 1980s and early 1990s, Britain again suffered a severe recession as the government (from November 1990 onwards led by John Major) again used tighter monetary controls and high interest rates to tackle the inflationary problems which built up from the mid-1980s onwards. These two recessions were in part compounded by worldwide factors, but, in Britain, they were exacerbated by government monetary policies and they had to be absorbed by an economy which for many years had been growing relatively slowly and whose firms had for long been losing market share both at home and abroad. The Thatcher government's industrial relations policy through the 1980s differed from those of previous governments and reflected radically different theories based on a faith in market forces and liberal individualism. The Thatcher government, from the outset, eschewed incomes policies, at least in the private sector, and turned its back on talks with the TUC and CBI on the management of the economy. In the private sector of the economy, employers and unions were left to free collective bargaining, but within the context of the government's overall restrictive economic stance: if, in their wage bargaining, the parties fixed wages and prices which were too high, then this would mean bankruptcy for firms and telecommunications, gas and electricity, the government resorted to indirect pressures and incentives and later to privatisation to expose wage bargaining to market forces. In the non-market-orientated public sector, such as central and local government, teaching and the health services, the government introduced a tighter system of cash limits on spending and in this way tried to induce managements to stand firm against wage claims. At times this resulted in public-sector workers falling behind their private-sector counterparts and taking strike action in demand of higher wage increases. When this occurred the government was redy to take a firmer stand than its predecessors and put into place other measures to strenghten its hand. The government believed that trade unions had a harmful effect on national competitiveness by imposing restrictive practices in the work-place, by exercising monopoly power in the labour market and by encouraging unrealistic expectations among workers. The solution was in part the adoption of the economic policy already reffered to, but backed by legal changes designed to reduce union bargaining power and remove inefficiencies in the labour market. With the experience of the 1971 Act still in mind, the government made no attempt to repeat the massive changes of the early 1970s. Instead, along with reliance on its tough economic stance, gradual amendments were made in existing labour laws to restrict trade union power and to reduce the scope of employment protection legislation. The theory behind the legal changes was, however, straightforward: it was to introduce a restrictive framework of collective labour law and to deregulate the labour market. There remained little of the liberal collectivism and none of the partial commitment to the corporatist integration of trade unions which had coexisted in the 1971 Act with a more restrictive approach to labour relations.

Changes in collective labour law

The Employment Act 1980

This Act repealed the procedures for aiding trade-union recognition and for extending collective agreements. It gave employers legal remedies agains secondary picketing and most other types of secondary, sympathetic action. In the first of a series of laws to reduce the efectiveness of the closed shop, it made it more difficult to introduce and maintain such arrangements. All new closed shops had to be approved by four-fifths of the workforce and a wider range of people, not just those with religious objections could claim unfair dismissal if sacked for non-membership. For the first time, public funds were made available to encourage unions to hold postal ballots for the election of officers and for important policy decisions.

The Employment Act 1982

The 1982 Act further tightened the law on closed shops by requiring reviews in secret ballots and by outlawing union-labour-only contracts. Trade unions were made liable for damages if they instigated unlawful industrial actions. Employers were also given legal remedies against political strikes. The general effect of these changes meant employers could sue unions directly for damages arising out of industrial action that was not protected by the statutory immunity applying to acts done in contemplation or furtherance of a trade dispute. These changes excluded from legality wide areas of industrial action which had been seen as lawful since the Taff Vale judgement at the beginning of the century and increased the scope for legal action over a wide range of industrial disputes.

The Trade Union Act 1984

Following on Mrs Thatcher's 1983 election victory, the main thrust of the Trade Union Act 1984 was agains trade unions and the way they ran their internal affairs. Union executives had to submit themselves for re-election by secret ballot every five years and unions had to hold a secret ballot every ten years if they wished to keep a politica fund. Pre-strike ballots were required for unions to retain their immunity from civil actions for damages. However, this latter requirement only related to official strikes and not to unofficial action.

Employment Act 1988

After their third election victory in 1987, the Conservative government introduced the Employment Act 1988. This was again concerned with how trade unions were run internally and aimed to strengthen the rights of individual union members. Workers were allowed to apply for court oreders instructing unions to repudiate industrial action organised without a secret ballot. Unions were banned from disciplining members refusing to support industrial action. All senior union officials had to be elected by secret ballot. A new Commisionner for the Rights of Trade Union members was created with, among other things, the duty in certain circumstances to support and fund union members' court action against their unions.

The Employment Act 1990

The 1990 Act removed all vestiges of legal protection for the closed shops by making refusal of employment on grounds relating to union membership unlawful. It also tied up previous legislation by completing the process started by the 1980 Act by making nearly all forms of secondary action unlawful. It removed the immunity for organising industrial action if the action was not in contemplation or furtherance of a trade dispute or if the action was in support of an employee dismissed while taking unofficial industrial action. Alongside this it gave employers greater freedom to dismiss any employee taking unofficial industrial action and made unlawful industrial action taken to secure the reinstatement of selectively dismissed strikers. It made unions responsible at law if any other official (including shop stewards) called for industrial action and it further tighten up the law on ballots. After the 1992 election victory, the Major government has said that it will introduce what will be the final tranche of labour legislation. It will introduce a seven-day, pre-strike cooling-off period; a tightening of controls on the way postal strike ballots are conducted; and measures to render unions liable to be sued by customers for public-service disruptions even when the employer does not wish to take legal action. In terms of internal union matters, new controls over election procedures and union finances will be introduced; individuals will be allowed to join any unions of their choice, thus undermining the TUC's Bridlington procedures for dealing with poaching and interunion disputes; individual employees will also be required to give periodic written consent for the deduction of union dues through check-off arrangements, thus potentially undermining a major support for union membership and income. In the future, if there is to be any further legislation, a Conservative government might still feel tempted to introduce laws making collective agreements legally binding and outlawing strikes in essential services.

Changes in protective and individual employment law

Substantial changes were made in the area of individual labour law in the 1980s. Here the government's stated aim has been to reduce what it saw as rigidities in the labour market and introduce new flexibilities into the employment relationship. Thereby it was believed that firms would be made more efficient and new jobs would be created. Opponents, on the other hand, have said that it has watered down legal rights for employees and made British workers some of the least protected in the European Community. The Employment Act 1980 repealed procedures for extending collective agreements and ensuring that recognised pay levels were observed. It also limited employees' unfair dismissal and maternity rights by increasing the qualifying period of employment from six months to two years. The Wages Act 1989 reduced the functions of wages councils in fixing rates of pay in industries where collective bargain is weak by restricting them to fixing a single rate of pay and by removing youn workers from their coverage. At the same time the government intimated that the funding of the wages council inspectorate was not a priority and that in future it planned to abolish wages councils altogether. Lack of employer enthusiasm for abolition and fears of the introduction of possibly more extensive measures from the EC are said to have stayed the government's hand. The Employment Act 1989 continued the theme of deregulation. It repealed laws regulating youn people's hours of work, exempted small firms from requirements to provide written statements of disciplinary procedures, and again increased the qualifying period for bringing complaints of unfair dismissal. (The law also took a sideswipe at collective matters by limiting the right to time off work for trade unions duties.) In line with this attitude to employment protection legislation, the government has also steadfastly opposed many of the proposal of the EC Social Charter on matters such as rights for part-time workers, maternity leave, and the restriction of overtime working. At the Maastricht summit in autumn 1991 the government chose to opt out of the so-called Social Chapter of the Treaty, which committed all the other EC countries to an extension of social legislation. The industrial relations policy initiated by the Thatcher government was therefore to use the law gradually to reduce the threat of trade union industrial action and to weaken membership unity in such action. The objectives were not cluttered by any of the liberal collectivism of previous Conservative administrations such as the traditional obeisance to collective bargaining. It has sought to regulate collective relations at work and to introduce the threat of common law interventions into industrial relations. However, in the area of individual and protective labour law, it has deregulated industrial relations and has changed Britain from being about average in Europe in terms of social and protective law to being towards the bottom of the EC league. The legislation has had a major effect on industrial relations. It has changed Britain from being one of the least regulated western countries in terms of collective labour law to being one of the most regulated. It has made picketing much more difficult and has virtually stopped the use of secondary action in industrial disputes, with unions extremely wary to protect their funds. It has made the use of balloting in important union elections and before strikes the common practice in Britain industrial relations. It has gradually reduced the number and power of closed shops in British industry and ensured that no new ones are introduced. However, it ahs not stopped closed shops altogether which often continue to exist de facto, though without legal supports and much more vulnerable to those who decline to join or to employers who might seek to discourage membership. The law was introduced piecemeal. There are limits to governments' ability to raise the rate of economic growth. The historical record suggests that however great the growth in national income, there will not be enough to meet all the claims for better social services. Public expenditure on social services creates powerful vested interests, both among the producers and the consumers of such services, for more public expenditure in the future; hence the need for rules of public finance which restrain spending departments. The monetarist episode of the 1980s was only one more example of how economic ideas have been adopted in the hope of imposing discipline in the political market place. In conclusion, it will be many years before the success or otherwise of policies since 1979 can be judged in historical perspective since these policies have been intended to have their full effect only in long term. Economic and social policy have been motivated by hopes of strengthening enterprise, self-help and free markets as much as by consideration of measurable results in the short term. Inevitably, however, the reapperance of inflationary pressures in the economy and a balance of payments deficit on current account from 1987 placed a question mark against claims that Britain has experienced an economic renaissance.

Bibliography: Howard F. Gospel and Gill Palmer-British Industrial Relations; Peden G. C.-British Economic and Social Policy