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International Socialism, April 1977


Notes of the Month

The Lib-Lab Deal


From International Socialism (1st series), No.97, April 1977, p.3.
Transcribed & marked up by Einde O’Callaghan for ETOL.


THE PACT concluded by James Callaghan and David Steel was the price of the Labour government’s survival. Was the price too high? Not from the government’s point of view. The only concessions to the Liberals of any substance are those concerning proportional representation – hardly a make or break issue.

The commitment made by Callaghan to regular consultation with the Liberals has its uses. From now on the threat that the Liberals will not support the government in the House of Commons can be used to bludgeon the Labour lefts back into line. Steel’s statement that ‘socialism is the one thing this country is not going to get as long as this agreement lasts’ will only shock those who believed that socialism was ever on the cards under the present government.

The Labour left’s response was feeble even by the standards they have set themselves. A large proportion of Tribune MPs represent marginal constituencies and so the last thing they wanted was a general election in the near future.

As the Sunday Times put it,

‘No one called for a special party meeting before the vote. Most of them (the Labour lefts – Ed.) were just happy to survive – and wait until afterwards to thicken the air with complaints about non-consultation’ (March 27).

More interesting is the response of the ruling class. Their view, as expressed through their various Fleet Street organs, seems to have been that a Thatcher government would be premature at the present time. The day of the vote in Parliament the Financial Times said that if a Lib-Lab pact were made,

‘many people who have no reason to sympathise with Labour policies ... might still wish, on short-term and tactical grounds, to see it remain in office for some months longer.’

And it went on to explain:

‘However sceptical one may be about the success of Phase Three, it is at least arguable that Labour has a better chance of preventing a wage explosion that the Conservatives’ (March 23).

This attitude can be explained partly by big business’s lack of confidence in the present Tory leadership. Conservative policy on wage controls is ambiguous, reflecting the preference shared by Thatcher and her chief policy adviser, Keith Joseph, for tight control of the money supply (i.e. more spending cuts, sackings and bankruptcies) as the chief weapon to be used against the working class. Their ideological monetarism, combined with their generally , crass and blundering approach to politics, hardly make the Thatcher team ideally equipped to negotiate a sensitive Phase Three deal with the TUC

The Economist (March 26) spelled out the thinking underlying continued support by big business for the Labour government. In line with our predictions. In last month’s issue and in this month’s briefing, it argues that a tight Phase Three deal cannot be enforced in the private sector. It will therefore be up to the government to hold the line against public sector workers by using cash limits on spending to create unemployment and hold down wages.

‘The key social issue next autumn will be confrontation with some public sector trade unions ... This is the main reason for tentatively welcoming the fact that the Lib-Lab deal this week saved the country from an immediate general election which would probably have, brought an unready Thatcher government to office.’

So whatever our relief at being spared the immediate prospect of a Thatcher government we should be under no illusions about the attacks we can expect during the coming months. Let us now turn to the forces around which a fightback can develop.

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