1979 from the National Archives

Robert Taylor investigates recently released Cabinet papers that document the end of the 1974-79 Labour Government

The newly-opened state archives for 1979 reveal in depressing detail the agonies of the last few months of a Labour Government as it crumbled to trade union militancy in the 'winter of discontent' as well as the harsh, brash 'new' times under Margaret Thatcher with her zealous insistence on a break with the post-war consensus.

Labour Prime Minister Jim Callaghan is revealed as standing almost alone in his increasingly hopeless efforts to deal with the often brutal local action by strike committees and pickets among oil tanker drivers, road haulage workers and local government manual employees as they launched aggressive offensives in pursuit of huge wage increases of up to 20 per cent, four times the government's pay guidelines.

Callaghan noted that he feared the unions 'had lost their way' by their behaviour. He told Moss Evans, the Transport and General Workers' Union leader, that all the gains made through Government-union co-operation since 1974 were being lost and that relations were in 'worse disarray' than at any time since the 1926 General Strike. 'Do you expect us to do nothing?' Callaghan asked Evans, who admitted he agreed with the Prime Minister's observation, but also declared: 'We are all to blame', because they had failed to plan a peaceful transition to free collective bargaining from 'tight' pay policy.

On January 17 1979, the bewildered Prime Minister warned the TGWU leadership he would be forced to do battle with the union if it persisted with its industrial disruptions. 'The Government could not stand by and appear to let control of events pass out if its hands'. However, by then, Callaghan was already in retreat. Two days earlier, he had urged his Cabinet to back a state of emergency but his colleagues had rejected this proposal. Ministers were keen to settle all disputes and public sector pay demands as soon as possible and 'as best we can'. The Cabinet minutes acknowledge this would mean conceding 'excessive settlements' to those with proven industrial muscle.

Bill Rodgers, the Transport Secretary, was the only Cabinet minister to press for a tough stance against the unions. On January 18, he wrote in alarm to Callaghan who had suggested the Government would have to 'nod and wink' to the road haulage employers to give in to the drivers who were blockading the ports at Liverpool and Hull and hitting food supplies, exports and the provision of essential services. 'This is not a matter of pay policy, but of trade union power and influence and law and order. We have to stand and fight somewhere.' Rodgers was almost the exception. Outside the hawkish Downing Street policy unit (Bernard Donaghue and David Lipsey) and senior civil service advisors such as Ken Stowe, Callaghan could find few allies for his policies.

The Prime Minister kept on warning national union leaders that their behaviour would ensure a Conservative victory at the next general election followed by action by the party's leader, Margaret Thatcher, to limit their powers, cut government jobs and spending and attack the public sector. The archives reveal no effective response to his arguments coming from the unions.

The ferocity and disorder of many strikers on the ground in parts of northern Britain even alarmed union leaders such as Evans and David Basnett of the General and Municipal Workers' Union. They realised they and their full-time officials often lacked the authority and courage to restrain the militancy and their efforts to retain control were often ignored.

The gravediggers' strike in Liverpool aroused particular concern in the Government's civil contingency unit. Plans were drawn up to use troops if necessary to bury the dead. But there was a fear of the emotive scenes of using them outside cemeteries or sending cutting gear tractors into cemeteries to dig the plots. More than 150 bodies were sealed in plastic bags and put in a derelict factory to await burial. The National Union of Public Employees '“ the shock troops of the manual workers' offensive '“ backed the gravediggers. At times, the whole bitter conflict often seemed like a struggle of inter-union rivalry for memberships and power.

The archives provide little evidence to revise the opinion of the time that trade union militancy had undermined the moral legitimacy of organised labour. The Callaghan Cabinet was also being overwhelmed by rising unemployment, soaring inflation and grim prospects for state-owned industries including shipbuilding, steel and British Leyland that faced massive closures and redundancies, if not liquidation.

But the files for 1979 do point to one man who kept his head and did his best to bring calm and common sense to rancorous industrial relations. Len Murray, the TUC's general secretary, can be seen everywhere, trying to cajole and retain some control over the mayhem, but with no one in the unions ready to work with him closely.

Murray and Callaghan both realised the wider issues that were at stake, but often in their despair they realised that neither of them knew what to do. Eventually, a concordat was cobbled together between the Government and the TUC in early February to try and put some semblance of life into the once admired partnership. It was too little, too late.

However, Whitehall took a surprisingly sympathetic view of Murray's behind-the-scenes efforts. In May 1979, senior civil service advisors urged the incoming anti-union Thatcher to work closely with him. A briefing note for her speaks of his 'considerable skill' in his handling of the 'winter of discontent'. It said he was 'shrewd and astute' and a 'tough moderate' with a 'suitably down-to-earth, provincial flavour'.

Murray was seen by Whitehall as 'an instinctively cautious man, sensitive to slights, a bit dour and unforthcoming at times'. But they also said he was 'more interested in accommodation than confrontation, a resolver of conflict' and one of the few union leaders to see the link between wage inflation and economic performance. 'It is very much in our interests that he should maintain his influence with his colleagues', Thatcher was advised.

For a time she did her best to follow this line and be polite and restrained with Murray and the TUC. But her gut feelings were somewhat different.

Less than a month after reaching Number 10 Downing Street, she met Henry Ford, the American car manufacturer, and his executive colleagues. She told them: 'Our unions are too powerful and carried too little responsibility for their actions'. Her intent was to move 'gradually' to deal with them without provoking 'any unnecessary confrontations', but she made it clear that her plans were evolving.

The files from Sir Keith Joseph, Thatcher's first Industry Secretary, reveal a terrifying picture of collapse in public corporations such as British Steel and British Shipbuilders and BL, the ailing carmaker. The man famed for his ideological hatred of statism was forced to provide subsidies and other public help to the nationalised industries '“ at least for the moment '“ in order to save them. But a ferocious letter from Norman Tebbit, then a junior trade minister, urged Joseph there must be no surrender to 'industrial blackmail' that would undermine the Government's credibility.

The most sobering document released from 1979 was a grim report from the Central Policy Review unit to Thatcher on her arrival as Prime Minister. It said there had been no improvements in the British economy between 1974 and 1979. It suggested 'the main problems were worse '“ inflation, industrial performance and unemployment [in that order]'. This realistic assessment failed to save the CPRS. Thatcher closed it down almost at once. A new age had begun.