Lord Callaghan of Cardiff

Avuncular Labour prime minister brought down by the 'Winter of Discontent'

At the end of 1975, James Callaghan was in the autumn of his career; an autumn of content. He was now Foreign Secretary and before that he had been Home Secretary and Chancellor of the Exchequer. Nobody before him had headed all of the three greatest departments of state.

Leonard James Callaghan, politician: born Portsmouth 27 March 1912; MP (Labour) for South Cardiff 1945-50, for South-East Cardiff 1950-83, for Cardiff South and Penarth 1983-87; Parliamentary Secretary, Ministry of Transport 1947-50; Chairman, Committee on Road Safety 1948-50; Parliamentary and Financial Secretary, Admiralty 1950-51; Chancellor of the Exchequer 1964-67; PC 1964; Home Secretary 1967-70; Treasurer, Labour Party 1967-76, Chairman 1974, Leader 1976-80; Secretary of State for Foreign and Commonwealth Affairs 1974-76; Minister of Overseas Development 1975-76; Prime Minister and First Lord of the Treasury 1976-79; Leader of the Opposition 1979-80; Father of the House of Commons 1983-87; KG 1987; created 1987 Baron Callaghan of Cardiff; married 1938 Audrey Moulton (died 2005; one son, two daughters); died Ringmer, East Sussex 26 March 2005.

At the end of 1975, James Callaghan was in the autumn of his career; an autumn of content. He was now Foreign Secretary and before that he had been Home Secretary and Chancellor of the Exchequer. Nobody before him had headed all of the three greatest departments of state.

It had been a remarkable achievement for the son of a chief petty officer and coastguard. Jim was nine when his father died and his devout and impoverished mother struggled to keep him at secondary school until he had passed the examination for entry to the Civil Service. Thus, at 16, he attained her greatest ambition for him, a permanent job with security that would lead to a retirement pension. He was drafted to Maidstone to become a clerk in the Inland Revenue at a salary of £1 a week plus a cost-of-living bonus of 15s 9d. The local Baptists found him digs, and the Portsmouth brethren gave him a large bible inscribed, "The steps of a good man are ordered by the Lord."

So they may well have been. As 1975 was dying, a fellow member of the Cabinet, Harold Lever, arrived at the Foreign Office with an incredible message. Harold Wilson had made a firm resolve to resign the premiership in March and Jim Callaghan must prepare to take over.

"But I'm too old," protested the Foreign Secretary. He was almost 64 and was expecting every day that Wilson would tell him to make way for somebody younger. How could he possibly succeed a man not yet 60?

On 11 March George Weidenfeld, the publisher, gave a dinner for Wilson's 60th birthday. As they drove back to the House of Commons, Wilson confided to Callaghan that he would call a special cabinet on 16 March to announce his resignation.

When they reached Westminster, they found Denis Healey, the Chancellor of the Exchequer, rowing with Labour left-wingers who were opposing the Government's plans to restrict expenditure. The destructive dissidence in the Labour Party, the same old conflicts about the same old problems, helped to inspire both Wilson's retirement and his choice of successor.

Harold Wilson had nothing more to give his party and only Jim Callaghan had the will, the authority and the experience to cope with the financial plight of the country and yet keep Labour from splitting apart. In the leadership election, Callaghan was opposed by Michael Foot, Roy Jenkins, Anthony Crosland and Tony Benn. In the final round of the contest, on 5 April 1976, he beat Foot by 176 votes to 137.

Like Harold Wilson, Michael Foot and Neil Kinnock, Leonard James Callaghan was brought up in the sound of vigorous nonconformist hymns and sermons. He went to a vast Baptist Sunday School with 100 teachers and feared that, at the Second Coming, his mother would be taken to glory and he, for his sins, would be left behind. From her the boy who was to become Prime Minister derived his deep sense of duty and financial prudence.

When she was widowed, she managed superbly on the stingy pension of a sailor whose war service had caused his death at the age of 44. He was an Irishman who could tell a tale, sing a song and dance a perfect hornpipe. Jim was born in Portsmouth in 1912. The happiest days of his life were between the ages of seven and nine when his father was a coastguard at Torbay with leisure to tell his tales, as together they watched the ships and hunted for gulls' eggs. Jim inherited his father's outgoing temperament and narrative skill.

At Maidstone as a young clerk, Callaghan became a Sunday School teacher and, when the superintendent took him home to tea, he met his daughter Audrey. With her, years later, he was to make as good a marriage as a politician could have. She qualified as a domestic-science teacher, gave him a son and three daughters and was elected a member of the London County Council and Chairman of Great Ormond Street Children's Hospital.

Callaghan became an active member of the Association of Officers of Taxes, a small union well run by Douglas Houghton. He also quietly joined the Labour Party and came to believe that the religion of socialism was more real than Christian fundamentalism. Callaghan was impatient and impetuous and Houghton thought it wise to give him responsibility by getting him elected to the national executive. When he was 24, Houghton steered him into a full-time post in the union as assistant secretary.

Two years later he married Audrey after a happy courtship - the Old Vic and the Proms, calls for arms for Spain, moral confusion about re-armament. Sharing the shame and relief of Munich, they took a German socialist refugee into their home. Callaghan joined the Navy in 1942 as soon as Houghton could spare him and was recommended for promotion to sub-lieutenant, but the doctors suspected tuberculosis and he was assigned to shore duties. Later he joined the East Indies fleet in Ceylon, Harold Lasky encouraged him to look for a parliamentary constituency and in 1945 he won Cardiff South.

With his good looks, his ready tongue and his professional union experience, Callaghan was a potential junior minister. He showed his mettle as chairman of the Defence Committee. After two years Clement Attlee appointed him Parliamentary Secretary to the Ministry of Transport and, aware of his rebellious nature, warned him, "Remember! You are playing with the first XI now, not the second."

Callaghan persuaded the ministry to adopt zebra crossings and catseye studs. After the 1950 general election he was moved to the Admiralty and had the delight of sailing the Mediterranean with the Fleet.

During the 13 years Labour was in opposition, Callaghan's most significant role was as frontbench spokesman on Commonwealth affairs. He travelled widely and spent weeks in the doomed Central African Federation. When Wilson became foreign affairs spokesman in 1960, Hugh Gaitskell appointed Callaghan as Treasury spokesman and Treasury matters were to rule his life for the next seven years.

Anthony Crosland encouraged Callaghan to take part in the leadership contest after Gaitskell's death in 1963. He was at the bottom of the poll but it assured him of his place in the triumvirate that was to dominate the Government in 1964 when Labour was returned with a majority of three. George Brown was made First Secretary in charge of the new "Department of Economic Affairs" which was supposed to perform the miracle of continuous economic expansion. Callaghan was made Chancellor of the Exchequer.

But the trio found themselves facing an immediate crisis. They were left with the biggest adverse balance of payments in history at a time when the markets regarded the balance as the chief indicator of the health of the economy. Should they devalue the pound? The three decided not to. Sterling was the junior partner of the dollar - preferred by many Commonwealth countries - as a world currency. The United States were within days of a presidential election that Labour hoped would return the friendly, populist Lyndon Johnson to power. Further, the Tories would crucify them and there would be no way of winning an early election with a working majority.

In his conventional role, Callaghan was an innovative Chancellor who introduced a new betting tax, an improved capital gains tax, a corporation tax and the Selective Employment Tax. But the problem was always the pound and all varieties of protection were desperately tried. The Prices and Incomes Board was set up and a "National Plan" prepared to achieve an annual growth rate of 3.8 per cent. Brown persuaded the TUC to accept statutory powers for the board and the Bank of England was able to thrash the speculators and win back its lost dollars. This victory certainly helped Labour to win the 1966 election with a large majority.

But the forecasts for the external deficits were rising alarmingly and Brown was now pressing Callaghan and Wilson to devalue as an aid to entry to the EEC. The Cabinet turned down devaluation in favour of a package of economic measures and a six-month standstill on wages and salaries. Brown fought the Bill through the House and, seeing that his plan was wrecked, resigned and swapped jobs with the Foreign Secretary, Michael Stewart. Callaghan found it easier to get on with this more rational man and over the next 12 months prices and incomes hardly rose but, as sterling grew stronger, Labour critics fought harder than ever to get the Chancellor to allow more public spending, reflate the economy and find jobs for the half-million unemployed.

Callaghan's maritime imagery in his 1967 Budget remained long in people's memory:

We are back on course. The economy is moving ahead. Every seaman knows the command at such a moment: "Steady as she goes."

But, as he himself wryly noted, within the next few months sterling was driven aground by the Six Day War and closure of the Suez Canal. Next, the dockers walked out. Callaghan afterwards admitted that, though these events precipitated the devaluation of 1967, they were not its cause. The world was simply not convinced that Labour could establish a long-term equilibrium in its balance of payments.

What convinced Callaghan that he must devalue was a note from Alec Cairncross, the Government's chief economic adviser and a resolute defender of sterling, saying that he was now a convert to devaluation. The Chancellor thought for hour after hour, then walked through the communication door of No 11 and, over a cup of coffee, he and Wilson agreed that the struggle was over. The figure of devaluation would be 14 per cent. Although the Prime Minister thought Callaghan should remain at the Treasury the Chancellor knew he had lost credibility and must go.

Callaghan wanted to exchange jobs with the Education Minister but Wilson persuaded him to accept the Home Office and appointed Roy Jenkins to succeed him as Chancellor. Both men enhanced their reputations in their new roles.

Almost at once Callaghan began to enjoy the realities of the Home Office after the abstractions of the Treasury. He was soon involved in Bills on gambling, race relations, immigration and criminal law. He made a change in his private life too. For years he and Audrey had shared an ambition to farm and they became part-owners of land and a house in the Sussex Weald. The crops and the animals improved his leisure and gave him a hobby.

The new Home Secretary was embroiled in issues of police corruption, student demonstrations and the influx of Kenyan Asians. But, difficult as these questions were, they were dwarfed by the riots in Ulster.

Captain Terence O'Neill, the Prime Minister of Northern Ireland, was bravely struggling to achieve reforms that would increase civil rights and reduce discrimination against the Roman Catholics. Callaghan announced that British troops would safeguard the power stations. In August 1969, as violence erupted night after night, Callaghan met Wilson, who was on holiday, secretly in Cornwall to discuss sending substantial forces. The Catholics cheered when the Army took responsibility for security and the hated "B" Special police were dissolved.

"There is no doubt," Wilson wrote in his account of the period,

that, in the strengthening of the Labour government's political position in the second half of 1969, Jim Callaghan's handling of the Ulster situation played an important part.

As Shadow Foreign Secretary in the years of opposition, Callaghan travelled the world and so, when Labour was re-elected in 1974, he was well prepared for office. His first task was to renegotiate the terms on which Britain had entered the EEC. But, when the negotiations were well under way, he had to take time out to deal with the crisis in Cyprus, where a military coup had toppled President Makarios. Callaghan was pressed into telephone diplomacy to stave off a Suez-like crisis.

As for Europe, the Labour Party was still deeply divided on the issue. The size of the British contribution to the European budget was the most important grievance. The Foreign Secretary's own views on Europe were those he had held for years: Britain's economic salvation depended on Britain itself and being inside or outside the Community was marginal to the result, but, politically, he believed the Community could bring a strong, collective voice in the world. The Community refused to reduce individual national contributions, but a form of "rebate" was agreed. The Labour government's referendum of June 1975 confirmed Britain's membership.

Callaghan felt that his career was drawing to a close. He was approaching the philosophic age, his office distanced him from domestic politics and Wilson used him regularly as a wise counsellor, though without ever hinting that he was soon to be his destined successor.

Later, in his 1987 autobiography, Time and Chance, Callaghan reflected on the alteration that took place in their relationship:

When we were in difficulties his sagacity and sang-froid were beyond doubt as was his kindliness to his colleagues. There was a period when he allowed Barbara Castle, Dick Crossman and George Wigg, all of whom suffered from the belief that politics was a conspiracy, to influence him too much, but in later years he had broken free from them and I suddenly realised how much I had got used to him being there to shoulder the final responsibility.

When in 1976 he shouldered that responsibility, the country welcomed their new prime minister. Many people had tired of the stocky Yorkshire scholar, with his abrasive wit and his dauntless optimism. Callaghan was a southerner who had served in the Navy and still had a touch of the jolly jack tar. Physically impressive at the dispatch box - the tallest prime minister in living memory - he spoke in a mellifluous tenor voice that was incapable of stridency and was an ideal vehicle for his persuasive arguments and light irony.

Callaghan's style, too, seemed to be almost innocent. "He dissipates conspiracy," said one of his ministers. He had no kitchen cabinet, no clique of cabinet favourites, and he never tried to fix a decision in advance of the discussion. His sheet anchor was Denis Healey, the Chancellor. Healey could have fulfilled his lifelong ambition by succeeding Callaghan as Foreign Secretary. But he chose to stay at the Treasury and Callaghan gave the post to Crosland rather than to Jenkins, who would have been the constant target of the Labour anti-nuclear brigade. Jenkins left in goodwill to become President of the European Commission.

In his early days at No 10 Callaghan preached a simple idealism and homespun radicalism that touched many Labour hearts. Government spending, he proclaimed, was not a denial of freedom as the Tories pretended, but a way of increasing real freedom. "I was brought up after my father died in a family which lived in two furnished rooms. That was a denial of freedom." The central purpose of a Labour government, Callaghan reminded the nation, was to eliminate social wrongs and promote social well-being. Socialism should concern itself with the weak and the under-privileged, with the poor, the ill-educated, the crippled and the coloured.

He struck a less sympathetic chord, however, when he put the hard side of his policy in the Daily Mirror. We were spending more than we earned and the enemy at the gates was inflation (then, 21 per cent). The Government must restrain pay increases. And public expenditure should be kept down. This was to be the harsh theme song of the Callaghan years of government and it was out of harmony with Labour's long-term aspirations.

The remaining nine months of 1976 were to be a nightmare for Callaghan and Healey as the pound declined and row followed row on public expenditure. It was a miracle that the Government survived into its fifth year and an even bigger miracle that this divided government stayed the course intact.

Callaghan could never be certain even of a majority in the Commons. The tiny surplus won in the second election of 1974 soon ebbed away. He had to depend on the wayward Liberals, and on the nationalist parties, who could be given practical encouragement.

He could not even be sure how all his own followers would vote. There were two sets of dissidents in particular - the "siege economy" advocates, led by Tony Benn, and the Keynesians, led by the dashing Tony Crosland. Callaghan, like Healey, saw clearly that there was no magic Keynesian solution for the ills of 1976 with its massive unemployment, its inflation and external and public sector deficits.

The unions were persuaded to accept a renewed incomes policy. But it was not enough. Would a further billion off expenditure be enough to hold the currency? Still it wasn't enough. As summer went on, and the seamen threatened to strike, sterling came under assault again. Six months before, the pound was worth two dollars. Now it was down to $1.70.

At the annual party conference, Callaghan made an historic speech that was profoundly disturbing to the rank and file. "The cosy world," he said,

we were told would go on for ever, where full employment would be guaranteed by a stroke of the Chancellor's pen, cutting taxes, deficit spending - that cosy world is gone. Yesterday, delegates pointed to the first sorry fruits; a high rate of unemployment. We must ask ourselves unflinchingly, what is the cause of high unemployment? Quite simply and unequivocally, it is caused by paying ourselves more than the value of what we produce.

The Prime Minister had been heard thus far in sullen silence. Now he presented a greater shock:

We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists and that, in so far as it ever did exist, it has only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment.

In November, after protracted exchanges, a loan was negotiated from the IMF; the world was convinced that Callaghan and his Chancellor had turned the economy round. The year 1977 was one of recovery. The external deficit was turned into a surplus, the pound rose substantially, inflation fell to 12 per cent and was still falling.

But earlier in the year rising prices and the fear that the Government's policies were causing unemployment brought further unpopularity and Callaghan feared that the Leader of the Conservative Party, Margaret Thatcher, could win a confidence vote. He persuaded David Steel to make a pact by which the Liberals would give general support to the Government and in return would be consulted before any important initiative.

The situation was so promising in midsummer that people became convinced Callaghan would call an election in October. Could Labour win? It had been 19 points down in the opinion polls and now it had more or less caught up. The Prime Minister studied private polls as well as the public ones and calculated that Labour would get about as many seats as the Conservatives. But what was the good of that? Why run the risk, when in 1979 the electorate might give them a working majority? He decided to put the election off.

For the rest of his life, Callaghan was blamed for getting the election date wrong and also for deceiving the TUC. At the 1978 conference, thinking of Margaret Thatcher as the waiting bride, he sang an old music-hall song: "There was I . . . waiting at the church . . ." The song ends with the prospective bridegroom saying he could not marry that day: "My wife won't let me." He assumed the delegates would gather the election was not on. To his amazement, they thought it a signal that the election was imminent.

A lot of the criticism was made with hindsight after Labour lost the election. But Thatcher's victory was preceded by the unforeseeable extravagances of the Winter of Discontent. This not only brought the unions into disrepute; it also made nonsense of the claim that only Labour could get on with them.

Both the TUC and the party conference had resisted Callaghan's plea for a continuance of pay policy, at a level of 5 per cent. It was a fatal figure, "unattainable and provocative" as Healey later wrote. When Ford, after a long strike, awarded 15 per cent to their employees, Callaghan proposed to use his statutory powers and impose sanctions on the company, but five members of the Tribune Group abstained. From that moment industry knew that pay restraint was unenforceable. Callaghan watched with anguish a rush of high wage demands and walk-outs and threatening picket lines.

In December, local-authority manual workers asked for 40 per cent and many went on strike. Then the road haulage and the tanker drivers struck for 25 to 30 per cent, and factories had to close and there were some shortages of food and medical supplies. In January rubbish was piling up in the streets as dustmen struck and in Liverpool families were unable to bury their dead until the gravediggers returned to work.

For the first time Callaghan got badly across public opinion as he returned from a summit in the West Indies with an enviable tan and a seeming insouciance. A careless remark on landing was translated into the tabloid headline "Crisis? What crisis?" This was at a time when sewage and water supplies were threatened and the railwaymen were asking for a 10 per cent bonus on a 20 per cent rise.

Callaghan's luck was really out. The worst blizzard in years hit the stricken country. He fell into despair about his party's future, and his lifelong belief in the high social role of trade unions came under strain. Yet he could not bring himself to denounce the unions publicly. By late February, the Tories were 20 per cent ahead in the opinion polls and it seemed clear that Callaghan would soon give way to Thatcher.

Just when the Government's fortunes were at their lowest, the Bills devolving power to Scotland and Wales were put to referendums and failed to win the approval they needed to make them law. In March, a vote of no confidence was moved by the Scottish Nationalists, which the Government lost by one vote.

Even during the long election campaign that followed Callaghan was personally ahead of Thatcher in popularity. The public still liked his upright, avuncular manner. There had been little to criticise in his behaviour. He had, it is true, allowed David Owen, whom he had appointed Foreign Secretary, to appoint in turn his son-in-law Peter Jay as ambassador to Washington. But the accusations of nepotism cut little ice with the public.

Callaghan, in later years, passed a verdict on himself:

I cannot be accused of failing to recognise that an incomes policy is a wasting asset, but I can be faulted for not finding a viable alternative before its credibility expired.

The verdict was not free from vanity. There was nothing he or anyone else could have done to prolong serious pay restraint that winter.

He was nearer reality when Bernard Donoughue suggested that the election opinion polls hinted he might still have a chance of victory and he answered:

Perhaps once every 30 years there is a sea-change in politics. It does not matter what you say, or what you do. There is a shift in what the public wants and what it approves of. I suspect there is such a sea-change and it is for Mrs Thatcher.

The sea-change produced a net gain of 55 seats for Margaret Thatcher and an overall majority of 43 seats. Her programme headed by reform of trade-union law seemed to be relevant and attractive; Callaghan had headed the last Labour government Britain was to see for nearly two decades.

When Parliament reassembled Callaghan was again elected leader with Foot as deputy. But the party executive demanded changes in the electoral college, for which David Owen attacked Callaghan; a new breakaway party was conceived - the SDP. Callaghan resigned before constitutional change could come into effect but his candidate, Healey, was well beaten by Foot under the old rules.

Jim Callaghan stayed on in the Commons to become Father of the House. He went to the Lords in 1987 and, sitting opposite Lord Home of the Hirsel, the former prime minister Sir Alec Douglas-Home, played, like him, the role of elder statesman. Frequently Lord Wilson of Rievaulx sat by his side, still physically sturdy, but sadly unable to join the argument.

Lord Ardwick

No politician in old age and great old age displayed greater dignity and gravitas than James Callaghan, writes Tam Dalyell.

As Father of the House from 1983 to 1987 he would sit in his place at the near end of the fourth row below the gangway, and intervene, selectively and succinctly. His last intervention after 42 years in the House of Commons, on 9 March 1987, was during a debate on intermediate nuclear weapons. That his intransigent views on the subject were a source of discomfort and electoral embarrassment did not matter unduly to him since, after he had been Prime Minister, somehow he transcended party politics.

In the House of Lords, only two ex-prime ministers have been effective peers in the past century - Callaghan's friend Alec Home and Callaghan himself. His particular concern in the upper house was with education. He said that, while he did not believe that 1990s schoolchildren could recite all the capes and headlands from St Abb's to St Bees Head, he thought they were far better educated than he was.

But in April 1988, during the second reading of the Education Reform Bill, he spoke up for adult education:

I speak with some feeling about this matter. I did not have the advantage of going to a university . . . Adult education is important not only for training, retraining and such purposes, but also . . . because it gives everybody, young or old, the opportunity to fulfil themselves in the way that the best of those who go to Eton can do.

In 55 years since, as Len Callaghan, one of Attlee's junior ministers, he came to speak at the Eton Political Society, I only incurred the rough edge of his tongue twice - "Sunny Jim" was an inappropriate sobriquet.

Once was when I took the Labour Party to court, as he saw it, over devolution broadcasting. But the first occasion was when in 1967, as Chairman of the PLP Education Group, I opined at a party meeting that the school leaving age should not be raised to 16, but to the end of the year in which pupils were 15, to avert class disruption. "You had the best, Tam, I didn't. I know how valuable education is!"

There was something deeply touching about his last decade. As an ex-prime minister, and part of Britain's history, he was invited to all sorts of magnificent occasions. The reply was almost always along the same lines. "Sorry, for 60 years, Audrey supported me: now, in her illness, it is my turn to be with her." He was to outlive her by just 11 days.

* Lord Ardwick died 18 August 1994