United Kingdom UK Country in northwest Europe off the coast of France

consisting of England, Scotland, Wales, and Northern Ireland. Government The UK is a constitutional monarchy with a parliamentary system of government. There is no written constitution. Cabinet government, which is at the heart of the system, is founded on rigid convention, and the relationship between the monarch as head of state and the prime minister as head of government is similarly based. Parliament is sovereign, in that it is free to make and unmake any laws that it chooses, and the government is subject to the laws that Parliament makes, as interpreted by the courts. Since the UK joined the European Union (EU), the supremacy of Parliament has been challenged and it has become clear that domestic legislation can in certain circumstances be overridden by that of the EU as a whole. Parliament has two legislative and debating chambers, the House of Lords and the House of Commons. The House of Lords has three main kinds of members: those who are there by accident of birth, the hereditary peers; those who are there because of some office they hold; and those who are appointed to serve for life, the life peers. There are nearly 800 hereditary peers. Among those sitting by virtue of their position are 2 archbishops and 24 bishops of the Church of England and 9 senior judges, known as the law lords. The appointed life peers include about 65 women, or peeresses. The House of Commons has 651 members, elected by universal adult suffrage from single -member geographical constituencies, each constituency containing, on average, about 65,000 electors. Although the House of Lords is termed the upper house, its powers, in relation to those of the Commons, have been steadily reduced so that now it has no control over financial legislation and merely a delaying power, of a year, over other bills. Before an act of Parliament becomes law it must pass through a five-stage process in each chamber - first reading, second reading, committee stage, report stage, and third reading - and then receive the formal royal assent. Bills, other than financial ones, can be introduced in either house, but most begin in the Commons. The monarch appoints as prime minister the leader of the party with most support in the House of Commons, and he or she, in turn, chooses and presides over a cabinet. The voting system, which does not include any form of proportional representation, favours two-party politics, and both chambers of Parliament are physically designed to accommodate two parties, the ruling party sitting on one side of the presiding Speaker and the opposition on the other. The party with the second-largest number of seats in the Commons is recognized as the official opposition, and its leader is paid a salary out of public funds and provided with an office within the Palace of Westminster, as the Houses of Parliament are called. History For earlier periods of the history of the British Isles see Britain, ancient, Roman Britain, England: history to 1485, England: history 1485-1714, United Kingdom: history 1714-1815 , United Kingdom: history 1815- 1914, United Kingdom: history 1914 -45, Ireland: history to 1921, Scotland: history from 1513, and Wales: history to 1536. In 1945 the UK was still nominally at the head of an empire that covered a quarter of the world's surface and included a quarter of its population, and, although two world wars had gravely weakened it, many of its citizens and some of its politicians still saw it as a world power. The reality of its position soon became apparent when the newly elected Labour government confronted the problems of rebuilding the war-damaged economy. This renewal was greatly helped, as in other Western European countries, by support from the USA through the Marshall Plan. The 1945 election The ending of World War II in Europe in May 1945 was quickly followed by the dissolution of Winston Churchill's coalition government. The general election in July resulted in the return of a Labour government with a large absolute majority, and Clement Attlee became prime minister. This was the third Labour government in Britain's history, but the first that held both office and effective power. The Labour Party put forward an industrial programme for the nationalization of the coal, gas, and electricity industries, of inland transport services, and of the iron and steel industries. They also advocated public ownership of the Bank of England and the creation of a National Investment Board. The Conservatives, under the leadership of wartime prime minister Winston Churchill, opposed this domestic policy, and the electoral battle was fought mainly on the issue of nationalization. The Conservatives suffered one of the severest defeats in their whole history; for in a House of Commons of 640 members the Labour Party won 393 seats as against 166 in the previous Parliament; the Conservatives dropped from 358 to only 189 seats; while the Liberal Party, who had put forward 307 candidates, had only 12 elected. Post-war austerity The keynote of life in Britain in the years following the end of the war was austerity. The sudden end of the war with Japan (September 1945) hastened the rate of demobilization, and by 30 November 955,315 men and 147,229 women had been discharged from the armed forces, freeing them to take part in Britain's export drive to earn US dollars. Financial stringency had become doubly necessary in Britain following the cessation on 2 September of the US lend-lease programme. Because Britain had sold off its foreign investments to finance the war effort, and had converted a great proportion of its industry to munitions and other war supplies, the country had relied on lend-lease to feed its people. Until Britain could restore its export trade, it needed to secure a large credit in US dollars to survive the period of reconstruction, and after many weeks of negotiation in Washington a loan of £1,100 million was arranged, but with certain stringent conditions attached. Increased production both for domestic needs and export was essential. However, when by 1947 production had still not come up to requirements, there was an economic and financial crisis, since the large US loan was rapidly being exhausted. In the effort to restore the balance of trade, austerity measures were increased and the resultant hardships resulted in a fall in the government's popularity. In the course of 1948 there was a rapid increase in production, coupled with a slowing down of inflation and an improvement in the balance of payments. The economic situation was also improved by the start of US aid under the Marshall Plan. Taxation remained high in 1949 and was even increased in several directions, the chancellor of the Exchequer, Stafford Cripps admitting that it was impossible to reduce it so long as defence commitments and the social services continued on the existing scale. By 1951 rationing of various staple foods still existed in Britain, although not in most other West European countries, and this, coupled with the continuous housing shortage, caused increasing irritation in the country at large. Nationalization and the welfare state Despite the great difficulties of the economic situation, the Labour government pressed ahead with a radical restructuring of British society. In the first session of the new Parliament alone, no fewer than 84 acts were passed. The system of national insurance was extended by the National Insurance Act, which also provided for the making of payments towards the cost of a national health service. Complementary to this the National Health Service Act established a free national health service (NHS) for England and Wales. The National Insurance (Industrial Injuries) Act made new provision for compensation for industrial casualties. The government proceeded with its programme of nationalization, completing legislation to bring the coal mines, all inland transport, and the electricity and gas industries under state control. The government deferred their intention to extend nationalization to the iron and steel industry, and instead declared preventive war on the House of Lords in the shape of a bill to amend the Parliament Act 1911. It was proposed to reduce from two years to 12 months the period during which the House of Lords might delay the enactment of a bill that it refuses to pass. The Parliament Bill came up for second reading in the House of Lords (27 January 1949). It was defeated there, and the government then decided to resort to the procedure of the Parliament Act 1911 to carry their new bill into law. The bill was passed by the Commons in September 1949. An Iron and Steel Bill introduced in the 1948-49 session of Parliament proposed to nationalize the principal firms engaged in the basic processes of the iron and steel industry. This bill was particularly strongly opposed by the Conservatives, but eventually became law. The Conservatives, however, undertook to denationalize the iron and steel industry as soon as they returned to power. Altered circumstances induced the government to increase from 12 to 18 months the period of compulsory whole-time military service. In 1950 the general election saw a bitter struggle between the two main parties, Labour and Conservative, and a further decline in the number of Liberals returned. The Labour Party fought the election on the legislative record of the preceding five years, promising, in addition, a future programme involving more nationalization. The Conservatives alleged that the government had seriously increased Britain's economic difficulties. In the election Labour retained power, with a greatly reduced majority (of 8, as against 186 in 1945). For the next 18 months the party battle in the House of Commons was continuous and bitter. There were also splits within the Labour government, and in April 1951 Aneurin (Nye) Bevan and Harold Wilson left the government over the introduction of prescription charges in the NHS. Post-war foreign and imperial policy Ernest Bevin, the Labour foreign secretary, for the most part continued Churchill's foreign policy, in particular sharing Churchill's distrust of the USSR. Although Britain, the USA, France, and the USSR had divided the defeated Germany into four occupation zones, and agreed on the post-war treatment of Germany at the Potsdam Conference (July- August 1945), the wartime alliance did not long survive the end of hostilities. As the Cold War intensified, Britain's close relationship with the USA continued. Britain played an important role in the formation of the post-war Western alliance, and became a founder- member of the North Atlantic Treaty Organization (NATO) in 1949. Britain also began to develop its own nuclear deterrent, leading to the test explosion of its first atomic bomb in 1952. In June 1950 the Cold War heated up with the outbreak of the Korean War. In Britain the Conservative opposition supported Attlee in his policy of full cooperation with the USA and the United Nations on this issue. Before the end of the year British troops were serving in Korea, and they played an important part in holding the Chinese offensive of April 1951. Chinese intervention in Korea raised the problem of Communist China's status in the world, and at the UN Britain had already recognized the Beijing government as the de facto government of China; but the USA had not done so. In many quarters in Britain and Western Europe US policy in east Asia was occasionally viewed with misgiving, as being too ready to be interventionist. Truce talks began in Korea in 1951, although an armistice was not concluded until two years later. Finally, it was the post-war Labour government that saw through the granting of independence to India, Pakistan, Ceylon (Sri Lanka), and Burma (Myanmar), and the restyling of the British Empire as the British Commonwealth. Although this was the fruition of long-term imperial policies, Britain's greatly weakened economic power meant that the shedding of its empire had become as necessary as it was politically desirable. The Conservatives return to power In the autumn of 1951 there was another general election. The result was a Conservative victory, with a majority of 16, and Winston Churchill became the new prime minister. Early in 1952 George VI died suddenly and was succeeded by his elder daughter as Queen Elizabeth II, who was crowned on 2 June 1953. The Conservative government concentrated on the economic plight of the country. They had accepted the bulk of the nationalization carried out by their predecessors, but they did repeal the acts that had nationalized iron and steel and road transport. The internal economic situation showed steady improvement : full employment was maintained, and many controls were abolished. The international situation appeared to have eased since the death of the Soviet leader Stalin (1953). In 1954 the foreign secretaries of the major powers (including Communist China) met at Geneva and agreed a settlement that concluded the Indochina War. In the same year the French Assembly, fearing the re- creation of a German army, finally rejected the proposed European Defence Community, but subsequently the agreements signed in London (1954) solved the problems of West European defence and led to the creation of the Western European Union. Though there were serious internal troubles in two British colonies, Kenya and Cyprus, settlements of two other outstanding problems were reached in 1954. In July Britain and Egypt signed an agreement by which British troops were to leave the Suez Canal zone within 20 months, while in August the dispute with Iran over the latter's nationalization of British oil interests (dating from 1951) was settled, compensation being paid to Britain. Eden takes over from Churchill On 5 April 1955 Churchill resigned from the premiership and was succeeded by Anthony Eden. At the general election in May 1955 Eden's government was returned with an increased majority. In December Attlee resigned from leadership of the parliamentary Labour Party and was granted an earldom. The new Labour leader was Hugh Gaitskell, elected in preference to Herbert Morrison and Nye Bevan. By 1956 the economic situation in Britain was uncertain. Anti- inflationary measures produced a temporary rise in unemployment, and in September the TUC rejected wage restraint. In foreign affairs, relations with the USSR appeared to be easing. In July 1955 a meeting of the heads of government of Britain, France, the USSR, and the USA took place at Geneva, the first meeting of this kind since the Potsdam Conference ten years earlier, while in April 1956 the Soviet leaders Bulganin and Khruschev visited Britain. However, later in the year the unrest in Poland and the Hungarian uprising cast a cloud over East-West relations. The Suez Crisis In Britain the European news was soon overshadowed by the growing crisis in the Middle East, following the announcement on 26 July 1956 by President Nasser that Egypt was nationalizing the Suez Canal. The seizure of the canal was regarded as illegal in Western Europe and the USA, but only in Britain and France was there any serious demand for stern action against Egypt. Israel reached a secret understanding with Britain and France, and invaded Egypt on 29 October 1956, advancing into Sinai. France and Britain called on both belligerents to cease fighting, and when this did not occur Anglo-French forces began to bomb Egyptian military targets (31 October) and launched an airborne invasion (5 November). The British and French governments claimed their main objective was the protection of the Suez Canal, and the maintenance of free navigation, which they said was threatened by the invading Israeli forces. Egypt responded to these attacks by blocking the Suez Canal and making it impassable, the very thing that Britain and France had tried to avoid. World opinion, including the USA and USSR, condemned the Anglo- French action. The Arab states united in their support of Egypt, which emerged as the leader of Arab nationalism, and thereafter turned increasingly to the USSR for support, putting paid to Western influence in the Middle East for several years. Britain, France, and Israel were branded as aggressors at the UN and called upon to cease their military activities. A ceasefire was declared from midnight on 6 November, and US pressure brought about a gradual withdrawal of Anglo-French forces, which were replaced by a special UN force. Britain's action in Egypt aroused the most bitter controversy in the country and was condemned by the Labour Party. The government justified their action on the grounds that it had prevented a war in the Middle East and ensured active UN intervention. There was no doubt, however - whatever the merits of the case - that Britain's prestige had suffered severely, and the blocking of the canal and the consequent disruption of oil supplies increased Britain's economic difficulties. In January 1957 Eden announced his resignation from the premiership and retirement from political life on account of ill- health. Macmillan succeeds Eden Eden was succeeded as premier and leader of the Conservative Party by Harold Macmillan. After the shambles of Suez, Britain's steady withdrawal from empire continued in a more measured way. Sudan had become independent at the beginning of 1956, and in 1957 both Ghana (March) and Malaya (August) became dominions within the Commonwealth. There was a conference of Commonwealth prime ministers in London in June 1957; and in January 1958 Macmillan made history by embarking on a highly successful Commonwealth tour - the first such tour undertaken by a British premier in office. In December 1957 Macmillan attended the NATO heads of government conference in Paris. Here agreement was reached in principle on the US offer to supply European members with nuclear weapons; this agreement was much criticized by the Labour Party in Parliament. At home the government's unpopularity showed no apparent improvement. Inflationary pressure continued, and by autumn there were rumours of an impending devaluation of the pound. On 19 September 1958 the bank rate was raised from 5 to 7% (the highest rate since 1920). Subsequently Britain's international currency position improved. A major (and very controversial) piece of legislation enacted in 1957 was the Rent Act, which freed a large number of privately owned properties from rent control altogether and made rent increases possible in many others. Macmillan's second administration By 1959 a marked improvement in Britain's economic situation helped to return the Conservatives to power once again at the general election in October, with a larger majority than before. More and more of Britain's colonies became independent: Cyprus (1959), Nigeria (1960), Jamaica, Trinidad and Tobago, and Uganda (all in 1962), and several more followed within the next two years. Macmillan had made clear his commitment to decolonization and his opposition to apartheid in his 1960 `wind of change ´ speech to the South African parliament, and in 1961 South Africa, refusing to compromise on its policy of apartheid, left the Commonwealth and became an independent republic outside it. Beyond the Commonwealth, Macmillan established working relationships with the US presidents Eisenhower and Kennedy, but was sufficiently realistic to see that the UK's long-term economic and political future lay in Europe. The framework for the European Economic Community (EEC) had been created by the mid-1950s, with the UK an onlooker rather than a participant. In November 1959 the agreement under which European Free Trade Association (EFTA) was set up (of which Britain was a leading member)was initialled in Stockholm. The government's opening of negotiations to join the EEC (August 1961) caused controversy within its own ranks, and also within the Labour Party and among Commonwealth members. Distrusting Britain's closeness to the USA - particularly after the 1962 agreement by which the USA would supply the UK with Polaris nuclear missiles - the French president, Charles de Gaulle, blocked the British application (1963). The period of high East- West tension came to an end with the diffusion of the Cuban missile crisis (November 1962), and a new era of `peaceful coexistence´ was marked by the signing of the Nuclear Test- Ban Treaty (August 1963) At home, Macmillan showed his commitment to `one-nation´ Conservatism by the establishment in 1961 of the National Economic Development Council, which involved government, management, and trade unions in joint consultations over economic issues. In 1960 the economic situation had again begun to cause concern. A wages pause began in July 1961, and there were tax increases in an effort to curb home demand and avert inflation. The government's popularity declined as a result. There were also balance-of- payments problems. The winter of 1962-63 was the worst in Britain since 1947, and unemployment rose sharply, though temporarily. Despite rising living standards, the UK's economic performance was not as successful as that of many of its competitors, such as West Germany and Japan. There was a growing awareness that there was insufficient investment in industry, that young talent was going into the professions or financial institutions rather than manufacturing, and that training was poorly planned and inadequately funded. The defeat of the Conservatives In June 1963 the government barely survived the scandal that centred on the minister of war, John Profumo (who resigned on 7 June), and which led to a judicial enquiry by Lord Denning into the security aspects of the affairs. In October Macmillan suddenly resigned on the grounds of ill health. The Conservatives then chose as their new leader, and prime minister, Lord Home, who then disclaimed his peerage to become Sir Alec Douglas-Home. The internal controversy caused by Douglas-Home's succession further weakened the Conservative Party, which had now held office for 12 years. Though Douglas-Home continued his predecessor's progressive Commonwealth policy, and carried through domestic reforms such as the bill abolishing resale price maintenance (1964), a significant proportion of voters turned to the Liberals and to the Labour Party, which now presented a much more dynamic image under Harold Wilson, its leader since Gaitskell's death early in 1963. As a result, Labour won the general election in October 1964, though only by a majority of four, subsequently reduced to three. Wilson became prime minister, and early in 1965 Edward Heath replaced Douglas-Home as Conservative leader, under a new system of selection by election. Wilson's Labour government, 1964-66 The election had been fought on the issue of the economy. Wilson created the Department of Economic Affairs (DEA) to challenge the short-term conservatism of the Treasury (although the DEA was disbanded in 1969), and brought in a leading trade unionist to head a new Department of Technology. The new government inherited from its predecessor a serious balance of payments crisis, and its own initial pronouncements and actions exacerbated this by creating a crisis of confidence in sterling abroad. Devaluation was only narrowly avoided, and huge international loans were obtained and import surcharges levied. By the autumn of 1965 Britain's balance of payments position appeared healthier than for some years past. This position had been reached, however, by imposing measures such as credit restrictions, which hampered Labour's development plans and alienated some of its supporters. Despite government efforts to establish an effective prices and incomes policy, and the National Plan for future economic development, announced by secretary of economic affairs George Brown in September 1965, the basic British post-war problem of combining domestic expansion with international solvency, and of maintaining full employment without creating persistent inflation, remained. Other separate issues, such as the housing shortage, and the immigration issue, were still pressing in 1966, while overseas the Vietnam War and Rhodesia's unilateral declaration of independence in November 1965 (see Zimbabwe) all affected Britain directly or indirectly. Labour continues in power, 1966- 70 In March 1966 the Labour Party won the general election with a greatly increased majority. A subsequent budget included the novel proposal of a Selective Employment Tax and a promise that Britain would change to decimal coinage in 1971. Two issues dominated foreign and Commonwealth affairs: the question of whether Rhodesian sovereignty could be handed over to a white minority, and Britain's renewed application to join the EEC. By 1969 the rupture with Rhodesia was almost complete, but the resignation of President de Gaulle in France renewed hopes of Britain's eventual membership of the EEC. But economic issues rather than foreign affairs dominated political life. Between 1958 and 1965 Britain's gross national product had increased by only a third, while that of the EEC had gone up by more than a half. To improve the economy the government sought to impose a pay freeze, later changed to a pay pause, to increase exports and reduce imports, to modernize technology, and to increase production. Its measures proved insufficient to maintain the pound at 2.8 to the dollar and in November 1967 the pound was devalued to 2.4 to the dollar. Public spending was cut, particularly on defence. This virtually committed Britain to abandoning its military presence east of Suez by 1971. A monetary squeeze, applied with varying severity by all British governments during the 1960s, became steadily more severe. The bank rate seldom dropped below 7% . These monetary policies made it increasingly difficult for industry to raise new capital. It became more difficult to reconcile plans for economic expansion with the policy of seeking a permanent solution to Britain's balance of payments problem. The second consideration was given priority and by 1969 the banks were virtually forbidden to make loans outside terms imposed by the Bank of England. More and more, Britain's economic policy had to be brought into line with international trends. With this aim in mind the government attempted to introduce an ambitious plan for the reform of industrial relations, but this was dropped in the face of trade- union opposition. The economic situation improved in 1969 and a surplus in the balance of payments was achieved for the first time in years. This surplus was maintained in 1970 and a general election called, in which the franchise was extended to people aged 18-21. However, Wilson's promises of fundamental changes in economic planning, industrial investment, and improved work practices had not been fulfilled, and the Labour Party was defeated. A Conservative government was formed under Edward Heath, with an overall majority of 30. Social developments in the 1960s A number of liberalizing reforms had been introduced in the 1960s. Both abortion and homosexuality became legalized in 1967, with certain qualifications. Capital punishment was abolished in 1965; there was a simplification of the divorce laws; majority juries were introduced; and road-safety legislation enacted that resulted in a decrease in accidents. In 1968 race relations became strained as a result of agitation by EnochPowell, who came to the fore as a critic of immigration policy, even after a Commonwealth Immigrants Act imposed severe restrictions on entry to Britain. The Race Relations Act introduced legal penalties for manifestations of race prejudice, and was possibly successful in subsequently improving race relations. Catholic grievances in Northern Ireland over inadequate civil liberties and economic deprivation became so serious that British troops were sent there in 1969 to restore and maintain order. The situation in Northern Ireland was soon to deteriorate into serious intercommunal violence, and was to prove an intractable problem for successive British governments (see Northern Ireland). Heath's Conservative government, 1970-74 Like Harold Wilson, the new Conservative prime minister Edward Heath saw institutional change as one way of achieving industrial reform and created two new central departments (Trade and Industry, Environment) and a think tank to advise the government on long-term strategy, the Central Policy Review Staff. He also attempted to change the climate of industrial relations through a long and complicated Industrial Relations Bill. He saw entry into the European Community (EC, as the EEC had now become) as the `cold shower of competition´ that industry needed, and membership was negotiated in 1972. In the early 1970s British politics were dominated, as before, by serious inflation, now accompanied by rising unemployment (which reached the million mark in 1972), industrial unrest, and a series of commodity crises, notably in oil. The situation in Northern Ireland deteriorated steadily, and violence spread to the UK and the Republic of Ireland. The Rhodesian problem remained insoluble, despite various efforts to reach a settlement and the testing of Rhodesian opinion by the Pearce Commission. The promise of the government to sell arms to South Africa in defiance of a UN resolution threatened the unity of the Commonwealth. In 1972 Conservative policies produced strikes in the mining industry and by railway workers, the beginning of a dispute about fishing limits, the `cod war´, with Iceland (which was concluded in Iceland's favour in 1976), and constant confrontations between workers and the National Industrial Relations Court. The year 1973 began auspiciously with the entry of Britain into the European Community, which was generally acclaimed as a triumph for Edward Heath. Reactions to this event were varied, but in a referendum held in 1974 by the newly elected Labour government Britain voted to stay in the Community. Heath's `counter-revolution´, as he saw it, was frustrated by the trade unions, and the sharp rise in oil prices following the 1973 Arab-Israeli War forced a U-turn in economic policy. Instead of abandoning `lame ducks´ to their fate, he found it necessary to take ailing industrial companies, such as Rolls-Royce, into public ownership. The situation was exacerbated by both miners' and railway workers' strikes, precipitated by the introduction of a statutory incomes policy. A state of emergency was proclaimed in November 1973 with restrictions on the use of power and blackouts throughout the country. A huge trade deficit was announced and at the beginning of 1974 the country was working a three-day week. In February 1974 the Heath government fell at a general election at which the major issue was, inevitably, the confrontation with the trade unions and, after a brief period during which Heath tried to form a coalition with the Liberal Party (Labour did not have an overall majority), Wilson returned to power. Wilson's second premiership, 1974-76 The minority Labour government relied heavily on the Liberals and on the Scottish and Welsh Nationalists, all of whom had greatly increased their vote in the election. However, a second general election in November 1974 gave Labour an overall, if small, majority. Wilson had taken over a damaged economy and a nation puzzled and divided by the events of the previous years. He turned to Labour's natural ally and founder, the trade-union movement, for support and jointly they agreed on a `social contract´: the government pledged itself to redress the imbalance between management and unions created by the Heath industrial-relations legislation, and the unions promised to cooperate in a voluntary industrial and incomes policy. The fight against inflation continued, through voluntary wage restrictions and, in 1975, wage restraint, which limited increases to £ 6 per week for everyone. The economic situation began to look slightly brighter when the first of the North Sea oil came into production and some check was given to rising prices. In Northern Ireland the political solution worked out at Sunningdale in 1973 produced the new Ulster Executive in January 1974, but this fell within the year as a result of a massive Protestant workers' strike against it. Irish politics continued to have their effect in Britain with sporadic bombings and shootings. On a more positive note Labour legislation included the Equal Pay and Sex Discrimination Acts (both major achievements for the women's movement), the reorganization of local government outside Greater London, and the reorganization of the National Health Service. The programme of changing over to a system of comprehensive schools was advanced. Wilson met criticism from a growing left-wing movement within his own party, impatient for radical change, and in March 1976, apparently tired and disillusioned, he took the nation by surprise by retiring in midterm. Callaghan's Labour government, 1976-79 Wilson was succeeded by the political veteran James Callaghan. In the other two parties, Heath had unexpectedly been ousted in 1975 by Margaret Thatcher, and the Liberal Party leader, Jeremy Thorpe, had resigned after a personal scandal and been succeeded by the young Scottish MP David Steel. Callaghan was now leading a divided party and a government with a dwindling parliamentary majority. Later in 1976 an unexpected financial crisis arose from a drop in confidence in the overseas exchange markets, a rapidly falling pound, and a drain on the country's foreign reserves. After considerable debate within the cabinet, both before and afterwards, it was decided to seek help from the International Monetary Fund and submit to its stringent economic policies. Within weeks the crisis was over and within months the economy was showing clear signs of improvement. In 1977, to shore up his slender parliamentary majority, Callaghan entered into an agreement with the new leader of the Liberal Party, David Steel. Under the `Lib-Lab Pact´ Labour pursued moderate, nonconfrontational policies in consultation with the Liberals, who, in turn, voted with the government, and the economy improved dramatically. The Lib-Lab Pact had effectively finished by the autumn of 1978, and soon the social contract with the unions began to disintegrate. Widespread and damaging strikes in the public sector badly affected essential services during what became known as the `winter of discontent´. At the end of March 1979, following the rejection of devolution proposals by referendums in Scotland and Wales, Callaghan lost a vote of confidence in the House of Commons and was forced into a general election. Conservatives come to power under Thatcher The Conservatives returned to power under the UK's first woman prime minister, Margaret Thatcher. Thatcher rejected the `concensus politics´ that had dominated Britain since 1945, and introduced her own more right-wing ideology (` Thatcherism´), combining belief in market forces, monetarism, anti- collectivism, strong government, and nationalism. Thatcher inherited a number of inflationary public-sector pay awards that, together with a budget that doubled the rate of value-added tax (VAT), resulted in a sharp rise in prices and interest rates. The Conservatives were pledged to reduce inflation and did so by mainly monetarist policies, which caused the number of unemployed to rise from 1.3 million to 2 million in the first year. Thatcher had experience in only one government department, and it was nearly two years before she made any major changes to the cabinet she inherited from Heath. In foreign affairs Zimbabwe became independent 1980 after many years, and without the bloodshed many had feared. The creation of the SDP Meanwhile, changes were taking place in the other parties. Callaghan resigned the leadership of the Labour Party in 1980 and was replaced by the left-winger Michael Foot, and early in 1981 three Labour shadow- cabinet members, David Owen, Shirley Williams, and William Rodgers, with the former deputy leader Roy Jenkins (collectively dubbed the `Gang of Four´), broke away to form a new centrist group, the Social Democratic Party (SDP). The new party made an early impression, winning a series of by- elections within months of its creation. From 1983 to 1988 the Liberals and the SDP were linked in an electoral pact, the Alliance. They advocated the introduction of a system of proportional representation , which would ensure a fairer parity between votes gained and seats won. The Falklands factor Unemployment continued to rise, passing the 3-million mark in January 1982, and the Conservatives and their leader received low ratings in the public-opinion polls. An unforeseen event rescued them: the invasion of the Falkland Islands by Argentina in April 1982. Thatcher's decision to send a task force to recover the islands paid off (see Falklands War). The general election in 1983 was fought with the euphoria of the Falklands victory still in the air, and the Labour Party, under its new leader, divided and unconvincing. The Conservatives won a landslide victory, winning more Commons seats than any party since 1945, although with less than half the popular vote. Thatcher was able to establish her position firmly, replacing most of her original cabinet, among whom had been many `one-nation´ Conservatives. Domestic problems The next three years were marked by rising unemployment and growing dissent: a dispute at the government's main intelligence-gathering station, GCHQ; a bitter and protracted miners' strike; increasing violence in Northern Ireland; an attempted assassination of leading members of the Conservative Party during their annual conference; and riots in inner- city areas of London, Bristol, and Liverpool. The government was further embarrassed by its own prosecutions under the Official Secrets Act and the resignations of two prominent cabinet ministers. With the short-term profits from North Sea oil and an ambitious privatization programme, the inflation rate continued to fall and by the winter of 1986-87 the economy was buoyant enough to allow the chancellor of the Exchequer to arrange a pre-election spending and credit boom. Party leadership changes Leadership changes took place by 1987 in two of the other parties. Michael Foot was replaced by his Welsh protégé Neil Kinnock; Roy Jenkins was replaced by David Owen as SDP leader, to be succeeded in turn by Robert MacLennan in September 1987, when the SDP and Liberal parties voted to initiate talks towards a merger. The merger of the Liberal and Social Democratic parties was an acrimonious affair, with the SDP, led by David Owen, refusing to join the merged party and operating as a rival group. Paddy Ashdown emerged as the leader of the new party. Thatcher's last years Despite high unemployment and Thatcher's increasingly authoritarian style of government, the Conservatives were reelected comfortably in June 1987, with a slightly reduced majority. In a cabinet reshuffle in July 1989, Geoffrey Howe was replaced as foreign secretary by John Major. In October 1989 the chancellor of the Exchequer, Nigel Lawson, resigned because of disagreements with the prime minister, and Major replaced him. Douglas Hurd took over the foreign office. The government was widely criticized for its decisions forcibly to repatriate Vietnamese `boat people´ and to give right of abode in the UK to the families of 50,000 `key´ Hong Kong citizens after the transfer of the colony to China in 1997. David Owen announced that the SDP would no longer be able to fight in all national constituencies and would only operate as a `guerrilla force´. The Green Party polled 2 million votes in the European elections. Thatcher challenged In September 1990 the House of Commons was recalled for an emergency debate that endorsed the government's military activities in the Persian Gulf, and UK forces played an important role in the Gulf War launched the following January. In October 1990 the government announced that it was joining the European Exchange Rate Mechanism (ERM). In November the deputy prime minister, Geoffrey Howe, gave a dramatic resignation speech, strongly critical of Thatcher. Michael Heseltine then announced his candidacy for the leadership of the Conservative Party. Having failed to gain a clear victory in the first ballot of the leadership election, Thatcher was persuaded by her colleagues to withdraw from the contest. In the subsequent second ballot Michael Heseltine (131 votes) and Douglas Hurd (56) conceded that John Major (185) had won. He consequently became party leader and prime minister. Major's leadership Major was initially popular for his consensual style of leadership, but dissatisfaction with the poll tax continued and was seen as the main cause of a 25% swing away from the Conservatives in a March 1991 by- election. A hastily constructed replacement of the poll tax did little to repair the damage done to the Conservative Party, which sustained heavy losses in the May 1991 local elections. The deterioration of the National Health Service was also an issue. Despite the apparent waning popularity of the Conservative government and almost two years of economic recession, the party won its fourth consecutive victory in the April 1992 general election, with a reduced majority. Neil Kinnock announced his resignation as leader of the Labour Party and Roy Hattersley resigned as deputy. John Smith was elected as the new Labour leader in July 1992. The recession deepens With a deepening recession and international pressure on the pound, the government was forced to devalue in September 1992 and leave the ERM. Further criticism in October forced it to review its economic strategy and, in the same month, Trade and Industry Secretary Michael Heseltine announced a drastic pit-closure programme, involving the closure of 32 collieries and the loss of 30,000 miners' jobs. The announcement initially met with massive public opposition, but the closure programme eventually went ahead. The Conservatives lose ground In November 1992, the government won a narrow majority (3) in a ` paving debate´ on ratification of the Maastricht Treaty on closer European economic and political union. The vote went in favour of the government motion because of the support of the Liberal Democrats. In May 1993 the Conservatives lost a key seat to the Liberal Democrats in a by-election. Norman Lamont, who was largely blamed for the 1992 ERM fiasco, was subsequently replaced as chancellor of the Exchequer by home secretary Kenneth Clarke, but this failed to prevent a second Conservative by- election defeat in July. In the same month the Maastricht Treaty was finally ratified by parliament. In December 1993 Prime Minister John Major and Irish premier Albert Reynolds issued a joint peace proposal on Northern Ireland, the Downing Street Declaration, which offered all-party constitutional talks in return for a cessation of violence. The sleaze factor During 1994 the Conservative Party was plagued by a series of personal scandals, further eroding public confidence and undermining the party's Back to Basics campaign for a return to traditional family values. Revelations of British arms sales to Iraq prior to the 1991 Gulf War and the alleged complicity of senior Conservative figures, including John Major, further embarrassed the government, as did reports that certain Conservative MPs, including junior ministers, had been paid by clients to ask helpful parliamentary questions. Responding to public concern, Major announced the setting up of a committee, under Lord Justice Nolan, `to oversee standards in public life´. The European dimension In March 1994 the government's failure to retain the full extent of the UK's blocking vote in negotiations held on wider European union enraged Conservative `Euro-sceptics ´, leading to calls for Major to resign or call a general election. New Labour leader The Liberal Democrats made substantial gains in the May 1994 local elections. In the same month Labour leader John Smith died suddenly. Tony Blair, young and articulate, with a clear view of the direction he wished the party to follow, emerged as the new leader after the first fully democratic elections for the post in July. The impact of Blair's election was instantaneous, and his party's popularity rating immediately soared. Meanwhile, the Conservatives were recovering from further losses in the June European elections. The Anglo-Irish peace process In August 1994 Major, in a dual initiative with Irish premier Albert Reynolds, secured a ceasefire by the Irish Republican Army (IRA) in Northern Ireland, as an initial step towards a negotiated peace process. Differences subsequently arose between the UK and Irish governments over the interpretation and implementation of a report on decommissioning of weapons in Northern Ireland, which was published in January 1996, and the peace process was disrupted when the IRA renewed its bombing campaign in London in February 1996. The Major government responded by sending more troops to Northern Ireland. Major's reelection bid In Scottish local elections in April 1995 the Conservatives failed to win a single seat, and in June 1995, faced with a right-wing rebellion over his policies on Europe, Major dramatically resigned the Conservative Party leadership. He was reelected the following month, his sole challenger, John Redwood, a prominent `Euro-sceptic´, having resigned as Welsh secretary in order to challenge him. Major carried out an immediate cabinet reshuffle and, in an unexpected move, promoted president of the Board of Trade Michael Heseltine to the post of deputy prime minister. Following publication of the Nolan Committee's initial report on standards in public life in November 1995, MPs voted to require members to declare all outside earnings resulting from their positions in parliament and to ban all paid lobbying. The government's diminishing majority In March 1996 the government announced that Creutzfeld-Jakob disease in humans could be passed from BSE-infected beef to humans, precipitating a collapse in beef sales and a Europe-wide ban on the import of UK beef. In April 1996 the Conservative Party's House of Commons majority was reduced to one seat after Labour won the Staffordshire South East by- election. In January 1997 the death of a Conservative MP reduced the government's House of Commons majority to one, and in February 1997 the Wirral South seat was won by Labour from the Conservatives in a by-election, driving the Conservatives again into a Commons minority and bolstering Labour's hopes of an outright majority in the general election in May. At the elections for representation at the Northern Ireland all-party talks held in May 1996, the Official Ulster Unionist Party (OUP) won 30 seats, the Democratic Unionist Party (DUP) 24 seats, the Social Democratic Labour Party (SDLP) 21 seats, and Sinn Fein 17. In February 1997 there were reports of a rift between SLDP leader, John Hume, and Sinn Fein leader, Gerry Adams. Labour's landslide victory After an unusually long election campaign, the country went to the polls on 1 May 1997. The opinion polls, which had predicted a clear win for Labour, proved to be accurate, and the election resulted in a landslide victory for Tony Blair and his party, with a House of Commons majority of 179. The Conservative Party had its lowest share of the vote since 1832 and the smallest number of seats since the 1906 general election. A number of cabinet ministers lost their seats and Major immediately conceded and announced his resignation as Conservative Party leader. He was succeeded by William Hague, aged only 36. The new government took office determined to `hit the ground running´ , and announced a number of policy initiatives, derived from its election manifesto, and a significant change in its attitude towards Europe. As expected, the key appointments were John Prescott as deputy prime minister, Gordon Brown as chancellor of the Exchequer, and Robin Cook as foreign secretary. Resignation and reshuffling In July 1998 Prime Minister Blair made a major reshuffle of his cabinet. In the following months, however, three senior cabinet members would resign their posts. In October the Secretary of State for Wales, Ron Davies, resigned from the cabinet following an incident in London. Alun Michael, who had previously been Minister of State at the Home Office, replaced him, but was resigned in February 2000 just before a vote of no confidence, and later stepped down as Labour leader in Wales. Davies also withdrew his candidacy for the post of First Minister in the Welsh assembly, which was due to be elected in May 1999. Prime Minister Blair was forced to endorse Rhodri Morgan as First Secretary of the Welsh Assembly in February 2000; Blair had previously blocked his appointment to this position in favour of Michael. In December 1998 the Secretary of State for Trade and Industry, Peter Mandelson, and the Paymaster General, Geoffrey Robinson, both resigned following revelations that Robinson, a millionaire, had in October 1996 made a loan to Mandelson of £373,000 to assist him in buying a house. Mandelson's post was filled by the Chief Secretary to the Treasury, Stephen Byers, who was succeeded by Alan Milburn, and Robinson's post was filled by Dawn Primarolo. In June 1999 former cabinet minister, Jonathan Aitken, was given an 18-month prison sentence for perjury. Devolution In September 1997 Scottish voters backed the idea of a Scottish Parliament by 75% of votes, and of its tax-varying powers by 63% (the total turnout was 61.4%). This marked the beginning of the way towards devolution. The results of a referendum held in Wales, also in September 1997, gave approval to devolution proposals by a much narrower vote (50.3%). Elections for the new Scottish Parliament and Welsh Assembly were held in May 1999. The Scottish Parliament opened on 1 July. Labour was the largest party in both chambers but did not achieve an overall majority. Moves towards peace in Northern Ireland The UK and Ireland took the significant step in late August 1997 of signing an international agreement on arms decommissioning in preparation for Anglo-Irish political talks in September. The British government then confirmed that six weeks of IRA ceasefire had qualified Sinn Fein for a place at the talks table. The development was historic in that it represented the first time a British government had invited the republican movement to take part in round-table talks. Northern Ireland multiparty talks (known as Stormont talks) resumed in January 1998. All parties involved - including Sinn Fein - agreed on a document jointly proposed by the British and Irish governments as a basis for negotiation. Despite political difficulties and incidents of violence, the negotiations continued, culminating in the release of the Northern Ireland Political Talks Document on 10 April. The `Good Friday´ agreement, heralded as a historic breakthrough, granted a range of executive and legislative powers to a Northern Ireland Assembly; proposed the establishment of a North-South Ministerial Council and a British-Irish Council; and was concerned with human rights, policing service, decommissioning of illegal weapons, and the release of political prisoners. Voters in Northern Ireland and the Republic of Ireland gave their overwhelming support to the agreement in a referendum held on 22 May. In the June 1998 elections to the new Northern Ireland assembly the Ulster Unionists and the SDLP polled strongly and the UUP leader, David Trimble, became first minister. In August 1998 a dissident IRA group, calling themselves the `Real IRA´, exploded a large bomb in the shopping centre of Omagh, Northern Ireland, killing 28 civilians. New security measures were passed by Parliament, which was specially recalled. However, the `Real IRA´ announced a permanent ceasefire in September 1998. In October 1998 David Trimble and the SDLP leader, John Hume, were jointly awarded the Nobel peace prize. In June 1999 Prime Minister Blair, in an effort to make progress in implementing the Good Friday Peace Agreement, publicly stated that he did not consider it necessary for the IRA to begin disarming before Sinn Fein could join the proposed Northern Ireland executive so long as the intention to do so was made clear. The same month Patrick Magee who was given eight life sentences in 1986 for terrorist offences - including the planting of a bomb at the Grand Hotel, Brighton, in 1984 - was released from the Maze Prison in Northern Ireland under the terms of the Good Friday Agreement. His release angered Unionist politicians and threatened the peace process. Devolution of power in Northern Ireland The Northern Ireland peace negotiations resumed in July 1999. Although talks foundered on the issues of decommissioning of arms and prisoner release, the IRA agreed to begin decommissioning discussions, and consequently a coalition government was able to be established, and powers were devolved to the province by the British government in December. Elections to the European Parliament Widespread voter apathy in the elections to the European Parliament in June 1999 resulted in the lowest ever turnout in any national poll in the UK - just 23% of the electorate in England and Wales voted. The Conservatives made sweeping gains in the elections. The Tories won 36 seats in the European Parliament, Labour 29, the UK Independence Party 3, and the Scottish National Party, Plaid Cymru, and the Greens 2 each. The UK restored full diplomatic relations with Libya, broken off after a British policewoman was shot outside the Libyan embassy in London in 1984. The move came after Libya accepted `general responsibility´ for the murder of Yvonne Fletcher and offered to pay compensation to her family. Beef crisis The three-year-old worldwide ban on the export of British beef was formally lifted in July 1999, allowing meat exporters to start the difficult task of rebuilding their foreign markets form 1 August. The resumption of worldwide sales applied only to de-boned meat and meat products from animals born after 1 August 1996 - the date the ban on feeding meat and bonemeal to animals in the UK became fully effective. The crisis had cost British exporters more than £1 billion and taxpayers an estimated further £3 billion. Relations between Britain and France soured in October 1999 as the French government refused to lift a ban on imports of British beef. British supermarkets responded with bans on French food after an EU report revealed that sewage had been used to make animal feed in France. However, Prime Minister Blair refused to ban French meat, saying scientific advice did not justify on health grounds. Angry French farmers respond to Britain's consumer boycotting by blockading the Channel Tunnel. An EU panel of scientists decided that France had produced no new evidence to justify keeping its ban on imports of British beef. The ban stayed nonetheless. France's government said early November it would face legal action through the European Commission rather than lift its ban on imports of British beef. Britain offered a compromise, possibly involving more tests of its beef and a voluntary labelling scheme for British beef which could lead to France lifting its ban and allay consumer fears in Germany. Britain and France engaged in a last-ditch round of talks over beef mid- November, with the European Commission warning that legal action against Paris would start later in the month if the ban on UK exports remained in place. Cabinet reshuffle In a wide-ranging Cabinet reshuffle in October 1999 Tony Blair appointed Peter Mandelson secretary of state for Northern Ireland. Mo Mowlam, who left the Northern Ireland Office, took over as minister for the cabinet office and chancellor of the Duchy of Lancaster. Alan Milburn moved up from the Treasury to the post of secretary of state for health, and Geoffrey Hoon was appointed secretary of state for Defence. The defence secretary, George Robertson, left the cabinet to become NATO secretary-general, and Frank Dobson resigned his post as health secretary to become the government's favoured candidate for the Labour Party nomination for the first elections for the post of mayor of London. This post was filled in 2000 by Ken Livingstone, who stood as an independent candidate. The hereditary peers who would retain their ancient rights to sit and vote in the House of Lords into the next millennium were announced in November 1999. In a historic ballot, 75 peers were elected by their fellow hereditaries under the so-called Weatherhill compromise that allowed them to stay until stage two of House of Lords reform. More than 600 other hereditaries lost their rights as members of the House of Lords when the House of Lords Bill became law in November. Crises in Africa 2000 The biggest British task force since the Falklands War was dispatched to Sierra Leone to oversee the evacuation of foreigners from Freetown, as rebels moved towards the capital and a UN peacekeeping mission came under attack. The British government insisted that their troops would not become embroiled in the civil war, although it was expected that British troops would remain in the region until the UN could assemble a bigger task force. In Zimbabwe, Britain was criticized by South African political leaders including those of South Africa, Mozambique, and Namibia, who claimed that Britain and other Western countries had sparked the crisis over land which was leading to widespread and government-backed violence, by failing to honour promises made in 1998 to fund a land redistribution programme. When Zimbabwean ministers arrived in London, England, in April, Britain offered to fund land reform over the next two years, under the proviso that the money go to the poorest sector of society and not personal allies of government ministers, and that fair law be reinstated in the country; the Zimbabwean ministers refused to agree to the conditions, saying that they went back on the 1998 agreement and that they represented British colonialism.