Labour in Government

Barbara Humphries continues her series on the history of the Labour Party with a look at the experience of the first two Labour governments. This article was originally published in Socialist Appeal, issue 49 March 1997.

In 1918 Labour had become the second largest party in Parliament, replacing the Liberals as the main opposition. Within six years it was to be in government. After just over twenty years of existence it had changed the face of British politics, which was no longer a 'gentlemanly' affair between the Liberals and Tories.

In 1911 Labour received 400,000 votes. By 1923 this had jumped to four and a half million. This was because of the class roots of the Labour Party. There have been many other attempts by parties of all political colours to break the two-party system in Britain this century, but they have failed because in the end they had no firm basis in a particular class in society. Look at the words of one of the most radical and foresighted representatives of the ruling class in the 1920s -Lloyd George who had led the wartime coalition government:

"The new danger was known as socialism in Germany, Bolshevism in Russia. In Britain it is the Labour Party which strives for the collective ownership of the means of production. For the Liberals this is unacceptable in principle, as the Liberals are for private property. Civilisation is in jeopardy, the Liberals and the Tories must unite." He added " France the population is agricultural and you have a solid body of opinion which does not move rapidly and which is not easily excited by revolutionary movements. That is not the case here. This country is more top heavy than any other country in the world and if it begins to rock, the crash here for that reason will be greater than in any other land."

The Labour Party had adopted in 1918 its programme 'Labour and the Nation' which expressed the aspirations of the rank and file of the party. It called for a minimum wage, a 48 hour week, a million new houses within two years, with capital supplied free of interest from the government, a public owned and integrated transport system' public ownership of key industries and land, a wealth tax, and a vast increase in public services. It called above all for full employment which could be achieved by public works carried out by local authorities. Labour stated that its aims were fundamentally different to the two capitalist parties.


However the assumption behind its programme was that these were social reforms which were in the interests of the community and could be supported by any foresighted person. But not by the British ruling class. Once the capitalists and financiers had consolidated their power in the aftermath of war, all wartime controls were abandoned, prices went up and employers demanded longer hours and lower wages. It was back to all-out class war as usual. The leadership of the labour movement having lost its advantageous position in 1918 was put on to the defensive and all the main sections of the working class suffered defeats and cuts by 1921. The Triple Alliance forged to support the miners, dockers and transport workers collapsed on Black Friday in 1921 when it failed to support the miners who were faced with pay cuts.

At the end of 1923 an election was called which did not give Labour an overall majority. The vote was 5,500,000 votes for the Tories, 4,350,000 for Labour and 4,300,000 for the Liberals. The Tory leader, Baldwin tried to form a government at the instigation of the King was brought down by the combined Labour and Liberal vote.

The King then sent for Ramsay MacDonald to form the first minority Labour government. In this situation the Monarchy was of key political importance, not just a source of revenue from tourism or entertaining divorce sex scandals. The Privy Council advised the King that Labour should be given a chance. Individuals like Ram say MacDonald and Philip Snowdon were seen as trustworthy statesmen. Their failure to implement their programme would suit- ably demoralise the labour movement and teach the workers a lesson. Such was the confident arrogance of the British ruling class at the time. They knew that the leaders of the Labour Party would not use their spell in office to appeal for support for their programme. The programme would be abandoned on the basis that there was no overall majority for Labour. Members of opposition parties were invited to take part in the Cabinet of Ram say MacDonald. He had more faith in representatives of the Liberals than he did in his own Party. The only left-winger to be appointed to the Labour Cabinet was John Wheatley, a Clydeside MP and member of the Independent Labour Party. In fact as Minister for Health he was responsible for the only success story of the first Labour Government, a programme of public housing.

This first minority Labour Government faced the trickery and deceit of the ruling class. MacDonald's attempts to recognise Soviet Russia and open trade negotiations {a rational step in the interests of the capitalists themselves) provoked cartoons depicting him selling the country to the Bolsheviks! The Labour Government was actually brought down by the Campbell prosecution. The Labour attorney general decided to prosecute the Communist J.R. Campbell for a class appeal which he had made to the troops. not to fire on strikers. The charge of sedition was dropped for the reason that there was no evidence- and so was the Labour Government. The campaign was sealed with the infamous Zinoviev letter forgery which the ruling class used to 'prove' Labour was in the pay of the Communists! Incredibly this piece of fiction was used by the Tory press to conduct a campaign against the Labour Party on the grounds that it was controlled by Bolsheviks. Parliamentary politics was not as some of the Labour leaders imagined. a game of cricket where each side played by the rules. MacDonald might have imagined himself to be a 'gentleman' but his opponents were not.

It is almost 18 years since we had a Labour Government in office and it is hard to remember just how vitriolic the Tory Press is capable of being. Blair is even less prepared for this than Ram say MacDonald was in 1924.

The Labour Party today is more vulnerable not only having learned nothing from history but also being more dependent on the mass media than ever before. Labour can only combat the power of the Tory media by being able to appeal over its head to the working class movement. Blair believes that the movement counts for nothing and the press everything. This will leave a Labour Government vulnerable to every whim of the Tory editors of the press.

So the first Labour Government was cast off by the British ruling class in the fine traditions of democracy! But the labour movement had not been destroyed. In fact the Labour vote increased by a million votes at the general election. But the Tories under Baldwin used the period of Labour Government to rebuild their position and to forge ahead with the vicious anti-working class policies which were to lead to the General Strike of 1926.

In the aftermath of the defeat of the defeat of the General Strike the Tories made attacks on the rights of trade unionists and the funds of the Labour Party itself. Affiliated trade unionists now had to opt in to pay the political levy to the Labour Party rather than opting out. Secondary industrial action was made illegal. Defeat on the industrial field led the working class to look to the election again of a Labour Government. The defeat of the General Strike had led to the complete severance of any links between the Labour Party and the Communist Party, as the Left- Wing Movement, a movement of constituency parties sympathetic to the CP was effectively proscribed and constituency parties disaffiliated. However opposition within the Labour Party to the leadership of Ramsay MacDonald came from the Independent Labour Party which still had an independent existence and how became a focal point for the left of the party. The Cook-Maxton manifesto -'Socialism in our time' embraced the strategy of the 'the living wage' as a way of overcoming unemployment. This was an alternative to the Government's policy of cutting wages and increasing hours as a solution to the crisis of British capitalism.


Many points from the Maxton-Cook Manifesto were taken on board by the official Labour policy document, published in 1927 entitled Labour and the Nation. It asserted that "The Labour Party unlike other parties is not concerned with patching the rents in the a bad system but with transforming capitalism into socialism." It was a 50-page document covering public ownership, unemployment pay, working hours, the break up of the poor laws and surtax on incomes of over £500 per year. Labour's philosophy was that socialism was inevitable because it was more just, more rational and more progressive than capital- ism. Its members were fully committed to transforming society. For many, socialism was like a religion. Their whole lives evolved around the Labour Party. They not only attended political discussions and open air meetings on a weekly basis, but they may have been involved in socialist choirs, drama groups, rambling and cycling clubs. Their children attended socialist Sunday Schools and in some areas there were even 'socialist naming ceremonies' to replace christening ceremonies for children! This was how the movement prepared for the 'new Jerusalem,' which would inevitably arrive because capitalism was doomed.

However the experience of the Labour leadership in government was to face up to a crisis of capitalism which it was to be called upon to deaf with in an orthodox way. It was not pre- pared to use the crisis to implement socialism, using its minority position as an excuse. Labour had a political programme but when in government resorted to economic orthodoxy. The socialist aspirations of the rank and file of the movement were completely discarded.

On May 30th 1929 the second minority government was elected to office. Labour won over 8 million votes and 288 seats, and was the largest party in the House. However the Tory and Liberal votes combined were over 13 million, 319 seats. Again Labour was dependent upon the goodwill of the Liberals. This minority government was questioned by left- wingers who said that Labour should not have taken office in those conditions. John Wheatley predicted the humiliation of the Labour Party if it carried out cuts in wages and the incomes of the unemployed. But the government was dominated by Ram say MacDonald and his Chancellor of the Exchequer, the orthodox Philip Snowdon. 

Churchill had this to say of the Labour Government: "I am glad to see old Parliamentarians whom I have known for a quarter of a century, and who have played so distinguished a part in our proceedings, having at least their share in the responsibilities of government and testing what are called by those who have not long experienced them 'the sweets of office. ' I look forward to having the Financial Secretary to the Treasury deliver us a clear exposition of the gold standard and the solid advantages which it will counter upon the country, and generally 'to defend orthodox financial matters. No doubt the Financial Secretary will be able to do this when his education by Treasury Officials, the Bank of England and the high financial authorities of the City of London have been completed."


Macdonald was determined that the government was to be controlled by the big five - Macdonald, Snowdon, Henderson, Thomas and Clynes. There would be no early general election as the country could not face further disruption. Wheatley was left out of the Cabinet this time. He was given a job in the Ministry of Works where, according to Snowdon "he could do a good many small things without the opportunity for squandering money."

The Labour Government of 1929-31 carried out a few reforms -a contributory pension scheme was started, slum clearance started, agricultural marketing boards set up, and public regulation introduced for road transport. Not very much of Labour and the Nation in any of this! The repeal of the Trades Union Act of 1927, and the raising of the school leaving age to 15 were measures destroyed by the House of Lords. Employers continued with their offensive to cut wages. The rest of the life of the government was to be dominated by the Wall Street Crash of 1929.

The Wall Street Crash of 1929 was the prelude to the greatest slump in history. By 1931 a quarter of the American work- force was unemployed. Seven million were unemployed in Germany. Unemployment in Britain doubled under the 1929-1931 Labour Government. The government endorsed the employers' efforts to reduce living standards and even introduced an Anomalies Bill which meant that 300,000 of the unemployed would have their benefits cut. But this was not enough for the bankers and in the summer of 1931 a commit- tee was set up to deal with 'the unemployment problem.' Called the May Committee (it was headed by Sir George May, former head of the Prudential Insurance Company it com- prised five industrialists and two trade unionists. It reported in July 1931, recommending cuts in government expenditure including a 15% cut in teachers pay, 25% in service pay and a 20% reduction in unemployment benefit. The trade unionists dissented but were largely ignored. The May Committee pointed out that there would be a budget deficit of £140 million and recommended that £67 mil- lion of cuts be made. The bulk of these cuts were to fall on the unemployed. MacDonald and Snowdon as supporters of financial orthodoxy called for the budget to be balanced. 

The deficit itself had been caused by rising unemployment as a result of the Wall Street crash. Balancing the budget meant that the workers, and particularly the unemployed were to be made to pay for the crisis of capitalism. Alternatives to this policy were discussed by radical economists, Keynesianists at the time but were disregarded by Snowdon who wholly upheld the position of the Bank of England.


The report of the May Committee coincided with a run on the pound. Gold was being lost at the rate of £2.5 million a day. Again the Labour Government did not challenge the wisdom of Britain remaining on the gold standard, which committed the government to a fixed exchange rate, rather like the ERM. The crisis came to a head in August 1931 with demands from the Bank of England that the government take action to satisfy international financiers. The right wing dominated Labour Cabinet met and agreed substantial cuts. However when it became clear that these would be opposed by the TUC, some MPs such as Henderson and Clynes began to have doubts. Nevertheless cuts of £56 million were agreed unanimously by the Cabinet including £36 million off the dole. When the TUC expressed its opposition, they were described as 'pigs' by Beatrice Webb. But these cuts were not enough for the bankers and the Tories and Liberals who demanded a further £25 million cuts. A loan from the New York Reserve Bank would only be forthcoming if there was confidence that the government was carrying out cuts. Further cuts were agreed by the Cabinet, but only by 11 to 9. There was significant opposition from some Ministers and from the TUC.

Seeing that government support for these cuts would not be forthcoming, Macdonald then asked for the resignation of his ministers and went to the King. It was there and at a secret meeting with opposition leaders that he was 'advised' not to resign but to form a National Government. He returned to an astonished Labour Cabinet to tell them that they were sacked and that he would be leading a government in which the leader of the Tory Party , Baldwin would be the deputy. Only three Labour ministers, including Snowdon agreed to follow him. This act of trickery ended the second Labour government. It was a coup, British style, again illustrating the complete arrogance of the British ruling class in its attitude towards democracy. A Labour Government had its programme dictated to by the bankers and the leaders of the capitalist par- ties. When it seemed to be incapable of carrying out the programme the Monarchy was called upon to remove it from office. MacDonald has gone down in the history of the labour movement, as a traitor, who allowed a Labour Government to be brought down by a bankers' conspiracy.

In reflection however we might ask why the tactic of a National Government was used when the Labour Cabinet had been prepared to carry out most of the cuts. The National Government was only to make a further £20 million cuts when it drew up its budget and the gold standard was subsequently abandoned. Financial orthodoxy was gradually to become a thing of the past for all governments in the 1930s as the idea that 'you could spend your way out of a recession' became acceptable, and made theoretically respectable by Keynes. This was championed in the USA by the politics of the New Deal and by an incoming Social Democratic government in Sweden. But the British ruling class was exceptionally reactionary.

It can be argued that at least part of the motive for the split- ting of the Labour Party and the setting up of a National Government was political. It was a devise to demoralise the labour movement and to set it back for a decade. As Ramsay MacDonald boasted that 'every duchess in London will be wanting to kiss me,' the Labour Party expressed defiance and credibility was returned to right-wingers such as Henderson who stayed with the Party. The National Government immediately called an election in which it won an overall victory, 554 seats (14,532,519 votes) to Labour's 52 seats (6,649,639 votes). It was an hysterical election campaign with Macdonald claiming that Labour was a sectional, not a national party, and former Cabinet colleagues such as Henderson were 'Bolsheviks run mad. ' Middle class voters were told that Labour would use their post office savings to give more money to those on the dole.


Although the election was a defeat for Labour, the National Government taking 70% of the vote, and Labour was decimated in Parliament, its vote from the high point of 1929 only fell from 8.3 million to 6.6 million. The Tories and Liberals combined for electoral purposes to defeat Labour. Working class voters stayed with the Labour Party. The small proportion of Labour MPs meant that the position of the trade unions within the Party was strengthened, with unions like the Miners' Federation sponsoring a high percentage of MPs. Labour had now been defeated on the industrial and political front. But it fought back in a 'Call to Action' campaign calling 2,000 local demonstrations and issuing 3 million leaflets against the 'Bankers conspiracy. , Labour was not to be elected to government for over ten years in the 'lost decade' of the 1930s, characterised by mass unemployment, hunger marches and the threat of fascism both at home and abroad. The labour movement must learn the lessons of the 1929-1931 Labour Government. They show who really holds power, the bankers and industrialists who control the economy, backed up by institutions such as the Monarchy. In the 1930s the Tories believed that they alone had the right to govern. Why this was the case will be looked at in the next article on Labour in the1930s.