The end of World War II left Britain with massive economic
problems. In elections held immediately after the
war, the Labour Party overwhelmingly defeated Churchill’s
Conservative Party. It had promised far-reaching
reforms, particularly in the area of social welfare—an appealing
platform in a country with a tremendous shortage
of consumer goods and housing. Clement Atlee (1883–
1967), the new prime minister, was a pragmatic reformer
rather than the leftist revolutionary that Churchill had
warned against during the election campaign. His Labour
government proceeded to enact reforms that created a
modern welfare state.
The establishment of the British welfare state began
with the nationalization of the Bank of England, the coal
and steel industries, public transportation, and public
utilities such as electricity and gas. In the area of social
welfare, the new government enacted the National Insurance
Act and the National Health Service Act, both
in 1946. The insurance act established a comprehensive
social security program and nationalized medical insurance,
thereby enabling the state to subsidize the unemployed,
the sick, and the aged. The health act created a
system of socialized medicine that forced doctors and
dentists to work with state hospitals, although private
practices could be maintained. This measure was especially
costly for the state, but within a few years, 90 percent
of the medical profession was participating. The
British welfare state became the model for most European
countries after the war.
The cost of building a welfare state at home forced the
British to reduce expenses abroad. This meant disman-
tling the British Empire and reducing military aid to such
countries as Greece and Turkey, a decision that inspired
the enunciation in Washington of the Truman Doctrine
(see Chapter 7). It was not only a belief in the morality
of self-determination but also economic necessity that
brought an end to the British Empire.
Continuing economic problems brought the Conservatives
back into power from 1951 to 1964. Although they
favored private enterprise, the Conservatives accepted
the welfare state and even extended it, undertaking an
ambitious construction program to improve British housing.
Although the British economy had recovered from
the war, it had done so at a slower rate than other European
countries. This slow recovery masked a long-term
economic decline caused by a variety of factors, including
trade union demands for wages that rose faster than productivity
and the unwillingness of factory owners to invest
in modern industrial machinery and to adopt new
methods. Underlying the immediate problems, however,
was a deeper issue. As a result of World War II, Britain
had lost much of its prewar revenue from abroad but was
left with a burden of debt from its many international
commitments. At the same time, with the rise of the
United States and the Soviet Union, Britain’s ability to
play the role of a world power declined substantially.
Between 1964 and 1979, Conservatives and Labour
alternated in power. Both parties faced seemingly intractable
problems. Although separatist movements in
Scotland and Wales were overcome, a dispute between
Catholics and Protestants in Northern Ireland was
marked by violence as the rebel Irish Republican Army
(IRA) staged a series of dramatic terrorist acts in response
to the suspension of Northern Ireland’s parliament in
1972 and the establishment of direct rule by London. The
problem of Northern Ireland remained unresolved. Nor
was either party able to deal with Britain’s ailing economy.
Failure to modernize made British industry less and
less competitive. Britain was also hampered by frequent
labor strikes, many of them caused by conflicts between
rival labor unions.
In 1979, after five years of Labour government and
worsening economic problems, the Conservatives returned
to power under Margaret Thatcher (b. 1925), the
first woman prime minister in British history. Thatcher
pledged to lower taxes, reduce government bureaucracy,
limit social welfare, restrict union power, and end inflation.
The “Iron Lady,” as she was called, did break
the power of the labor unions. Although she did not
eliminate the basic components of the social welfare system,
she did use austerity measures to control inflation.
“Thatcherism,” as her economic policy was termed, im
improved
the British economic situation, but at a price. The
south of England, for example, prospered, but the old industrial
areas of the Midlands and north declined and
were beset by high unemployment, poverty, and sporadic
violence. Cutbacks in funding for education seriously undermined
the quality of British schools, long regarded as
among the world’s finest.
In foreign policy, Thatcher took a hard-line approach
against communism. She oversaw a large military buildup
aimed at replacing older technology and reestablishing
Britain as a world policeman. In 1982, when Argentina
attempted to take control of the Falkland Islands (one of
Britain’s few remaining colonial outposts, known to Argentines
as the Malvinas) 300 miles off its coast, the British
successfully rebuffed the Argentines, although at considerable
economic cost and the loss of 255 lives. The
Falklands War, however, did generate popular support for
Thatcher, as many in Britain reveled in memories of the
nation’s glorious imperial past.
World History
