5 - Incomes policies, 1948–1979

Summary

In the post-Second World War years low levels of unemployment and relatively high levels of economic growth in a rapidly expanding international economy put organised labour in a strong position in the British labour market. By the mid 1950s inflation had replaced unemployment as the prime concern of many Conservative politicians. For three decades voluntary or statutory incomes policies were one of the major responses to wage inflation by British governments. Such statutory policies ran counter to trade unionists' deeply held belief in free collective bargaining.

For many years incomes policies were a highly contentious area between governments and the trade union movement. Before discussing the controversies over the effectiveness or ineffectiveness of such policies, it is best to outline the key features of these policies between 1948 and 1979.

The incomes policies, 1948–1979

Clement Attlee's Labour government (1945–51), struggling to reconstruct the British economy after the Second World War, called for voluntary restraint on wage rises in 1948. Attlee, in a statement in the House of Commons on 4 February 1948, declared that it was ‘essential that there should be the strictest adherence to the terms of collective agreements’, that in the current circumstances there was ‘no justification for any general increase of individual money incomes’ and that any wage or salary claim ‘must be considered on its national merits and not on the basis of maintaining a former relativity between different occupations and industries’.