The two major parties represented only a tiny fraction of the population and were associated with particular vested interests:

	Whigs - Associated with the emerging capitalist class of the towns and cities.
	Tories - Defended the interests of the country landowners and the monarchy.

Both main parties were resistant to change and violent revolution. Following the Reform Act of 1832, only 2% of the population had the vote. The new working class wanted representation in parliament. As a first step, the skilled working class organized themselves into groups, known as Trades Unions, which acted collectively as a single negotiating body. 

Industrialists and successive governments were opposed to unions, and eventually unions were made illegal and any industrial action taken by union members was classified as 'criminal conspiracy'. 

After many years of struggle, legal recognition was finally granted to the unions and both main parties sought the support of the unions. They didn't want to see the growth of a disaffected and possibly revolutionary working class. 

The 1867 Reform Act saw the partial extension of the franchise giving the vote to ratepayers in towns. 

The Trades Union Congress decided to form a Standing Parliamentary Committee to lobby MP's for legislation  favourable to it's members. However, after further anti-union legislation was passed, the relationship between the unions and the two main parties began to breakdown, and the TUC began to look elsewhere, as it's membership continued to grow.

The 1884 Reform Act removed the property qualification, and opened up the vote to the urban working class.    

Socialist Organisations in the late nineteenth century:     

During the late nineteenth century, the new philosophy of socialism emerged. In Britain, different strands of socialism were developing. The following organisations represented these different strands of socialist thinking;

 

Social Democratic Federation (SDF):

This organisation was the most extreme and believed in the Marxist theory of revolutionary class conflict.

 

Fabian Society:

This organisation included a number of intellectuals such as George Bernard Shaw, and Sidney & Beatrice Webb. They believed that socialism was an evolutionary process which would be achieved democratically. They believed that the state would resolve inequality, and unlike the SDF, did not believe in the theory of class conflict.

 

Independent Labour Party:

This organisation was similar in outlook to the Fabians and was led by Keir Hardie, an ex-miner who had no formal schooling, but managed to teach himself to read and write. In 1892, Hardie won the parliamentary seat of West Ham South, and helped form the ILP in Jan. 1893. A significant proportion of the ILP held strong Christian beliefs and they found a commonality between christian ethics and socialist beliefs. The ILP was more in tune with the working class than the Fabians, and they viewed their struggle against inequality as something of a moral crusade.  

However, there was no overall organisation that combined all of the above views. At the end of century the Amalgamated Society of Railway Servants lobbied for the TUC Standing Parliamentary Committee to investigate ways of increasing Labour representation in parliament. The TUC was now able to provide greater funds to support parliamentary candidates who would represent their interests. This was important as MP's were not paid at this time.

Formation of the Labour Party:     

This coalition of different interests came together to push for change at a Conference on Labour Representation in London’s Memorial Hall in February 1900. The following organisations sent representatives to the conference: TUC, ILP, Fabians and SDF.

The 159 delegates who attended the conference had to decide whether they should be purely a parliamentary lobbying group or a true political party. Keir Hardie argued for the latter and won the day. The new body was called the Labour Representation Committee but it had no members, only organisations affiliated to it. In the election of that 1900, the LRC made little ground. Of the 15 candidates who stood, only 2 were elected, Keir Hardie at Merthyr Tydfil and Richard Bell at Derby. 

Initially, the trade union movement was lukewarm towards the LRC, but it  received a major boost in July 1901, when the House of Lords upheld a compensatory claim for damages by the Taff Vale Railway Company against the Amalgamated Society of Railway Servants. The LRC promised to fight the union's case in parliament and this brought the LRC and trade union movement closer together. As a result of the Taff Vale ruling, LRC membership rose by approx 500,000 in 2 years.

At the 1906 general election, the LRC won 30 seats and decided to change it's name to the Labour party. Labour's MP's lacked parliamentary experience and in 1908 Keir Hardie stepped down as leader due to ill health, to be replaced by Arthur Henderson, an iron-founder and trade unionist. Labour worked closely with the 1906-14 Liberal Governments, to ensure that measures to help Labour were passed, such as the Trade Disputes Act of 1906, and the payment of MPs in 1911. 

However, while Labour in Parliament was ‘hanging from the coat-tails’ of the Liberals, Labour in the country was growing apace. A deal was struck with the Liberals by Ramsay Macdonald not to stand against each other in by-elections leading up to 1914. The number of constituency parties affiliated rose from 73 in 1906 to 179 by 1914 and before the outbreak of war prevented the expected election, Labour was prepared to field a record number of candidates. 

Macdonald who was to be a significant figure in the history of the Labour party. He believed that socialism was an evolutionary process which should be arrived at democratically. He felt that any change had to be for the good of everyone in the community. He was involved with both the Fabians and the SDF and was elected as MP for Leicester in 1906.

Labour and the first World War:     

Macdonald became leader in 1911, but when World War One broke out in 1914, Macdonald was forced to resign the leadership due to his pacifist views. The majority of the Parliamentary Labour party and TUC supported the war effort. Arthur Henderson resumed the leadership and in 1915 Labour joined the wartime coalition government led by Lloyd-George. Labour played an active role in the war effort, but Henderson was forced to resign from the cabinet when he was prevented from attending an International Socialist conference.

During the war TUC membership rose steadily, which provided more money for the Labour party. Following the end of the war in 1918, the Representation of the Peoples Act in the same year extended the vote to all men over 21 and to all women over 30(Labour had been advocates of women's suffrage for many years).

The Inter-War Years & the first Labour Governments:      

After the war, the Labour Party was well placed to make a challenge for power due to the following:

	More financially secure.
	The larger electorate provided Labour with potentially more voters.
	Returning soldiers faced unemployment and housing shortages.
	Wages fell back to pre-war levels.
	The war had badly split the Liberal party.

In 1918 Labour also created a new party constitution which was more socialist in outlook, and contained the famous Clause IV commitment " ..to secure for the producers by hand or by brain the full fruits of their industry, and the most equitable distribution thereof that may be possible, upon the basis of the common ownership of the means of production...".  

At the 1922 election, Labour significantly came second with 142 seats beating the Liberals into third place. 

Stanley Baldwin’s Conservatives fought the 1923 election on a single issue: protectionism. The Tories lost almost 90 seats, down from 345 to 258. Baldwin had failed to obtain the mandate he sought and declined to form a government.  Ramsay MacDonald, who returned as leader, and had 191 MP's was asked by a reluctant King to form a government. The first Labour government had modest objectives and held office for only a few months, but its achievements should not be underestimated, especially bearing in mind that the cabinet was inexperienced and the press was vehemently anti-Labour. Even without a proper majority in the House of Commons, legislation was still passed on housing, education, unemployment and social insurance. Yet, dependent on Liberal support to remain in power, the government fell as a result of a political row about the actions of Attorney-General Sir Patrick Hastings.

In the subsequent election, the Daily Mail published the infamous Zinoviev letter, a forgery which alleged there were links between Russian communists and the British Labour Party. With an atmosphere of fervent anti-communism, Labour lost 40 seats (although overall vote rose) and the Tories were returned to power.

In opposition, Labour faced a difficult problem when a General Strike was called by the TUC in 1926. Macdonald failed to officially endorse the strike and argued that change could best be achieved through parliamentary elections. This led to tensions between the unions and the Parliamentary Labour party, especially after the strike collapsed.     

Following the election in May 1929, Labour was back in office with 288 seats, albeit still as a minority administration. MacDonald was again Prime Minister, with Arthur Henderson as foreign secretary and Margaret Bondfield as minister of labour, the first-ever woman cabinet minister of any party. The government was dominated by the world economic crisis, precipitated by the October 1929 Wall Street crash. MacDonald’s government put in place a number of measures to try and resolve the problem of rising unemployment. However, these had little effect and in 1931 unemployment caused a crisis within the cabinet. Politically unable to either cut benefits or increase taxes to deal with the financial problem caused by high unemployment, the government was split and fell. Yet MacDonald did not tender his resignation to the King, but instead offered to form a National Government with Liberals and Conservatives. From being one of its founding fathers, Ramsay MacDonald had turned his back on the party and was seen to have betrayed Labour. He was expelled in September 1931; but in the following election, MacDonald’s coalition won a large majority. The Labour Party was reduced to 52 seats. It was the party’s nadir.

World War Two and the 1945 landslide:     

With the disastrous election result in 1931, Labour spent almost a decade recovering lost ground. The party’s new generation, including Ernie Bevin, leader of the Transport and General Workers Union, and the academic Hugh Dalton, led the campaign to renew Labour’s fortunes. They both argued for rearmament and an anti-appeasement policy. Clement Attlee, a major in the First World War who had worked in the London slums, became leader in 1935. With the invasion of Poland by Germany in September 1939, and the replacement of Chamberlain by Churchill as Prime Minister in 1940, Labour was invited to join the government in a war-time coalition. Attlee and Arthur Greenwood, the former minister for health, entered Churchill’s cabinet, and were quickly followed by Ernie Bevin, who was made minister for labour. Labour's involvement and co-operation in the wartime coalition government demonstrated that the party could govern responsibly, and created a favourable impression with voters.    

When the war in Europe ended in May 1945, Churchill called a general election for July. Labour’s manifesto, Let Us Face the Future, captured the public mood for change. Although Churchill was popular, voters realised that fundamental changes were required to prevent a return to the hardship of the inter-war years. Labour's manifesto argued that Britain must not return to the poverty and lack of work of the 1930s. Labour pledged to destroy the five ‘evil giants’ of want, squalor, disease, ignorance and unemployment. The Beveridge report published in 1944 had set the tone for change by calling for a drastic shake up of the social security system, welfare state and health service. The 1945 election result was a landslide with Labour winning 393 seats, to the Conservatives 213. For the first time, Labour had an overall majority and had full opportunity to implement its programme of reform.

Attlee, in contrast to previous Labour leaders, was businesslike, a skilled administrator as well as being ruthless when needed. Labour inherited a country and economy ravaged by war. Many industries such as coal and the railways were in a poor state of repair. Public ownership was seen as the only viable rescue plan for these industries as there was precious little money available from the private sector to re-build them. The 1945 Labour government is rightly remembered as one of the most radical and ambitious governments ever: taking into public ownership a number of industries, creating a national contributory insurance scheme and, under the leadership of fiery Welshman Nye Bevan, creating the National Health Service. These reforms were enacted in an extremely hostile economic environment. By the end of the war, Britain was effectively bankrupt. Yet in the hands of Chancellors Hugh Dalton, and then Stafford Cripps, the government, with the help of American loans, did manage to maintain full employment, increase exports and, following the 1949 devaluation of the pound, restore economic stability. In foreign policy both India and Palestine were granted independence, and good relations were maintained with the USA, culminating in the 1949 NATO agreement.

However, tensions still existed between the left and right wings. For example, Herbert Morrison wanted a halt to the nationalisation programme, while Nye Bevan wanted to press ahead with the nationalisation of Iron & Steel.  

Opposition to the Conservatives:     

By 1950 the Labour government had achieved most of its pledges in Let Us Face the Future. Indeed the party appeared to have run out of steam. The election of that year saw Labour’s majority cut to only five, and the new government could not remain in office for long. Attlee dissolved Parliament again in October 1951 and by a quirk of the British electoral system, Labour gained its highest ever share of the vote – 48.8 per cent – but won fewer seats than the Tories.

It was the start of a long period of turmoil, division, reflection and self-examination in opposition. During the years 1951 to 1964, Labour lost three successive general elections. Indeed, at the 1959 election, nearly 50% of the working class vote went to the Tories. An internal debate emerged about the future direction of ‘socialism’ between two distinct strands of thought:

	The left wing, led by Nye Bevan, argued for more radical socialist solutions and a pressing ahead with nationalisation.
	The right wing was keen to abandon Labour's commitment to public ownership, press for rearmament and a strengthening of NATO. This 'modernizing' wing was led by the new party leader, the youthful and energetic Hugh Gaitskell.

This debate split the party and led in 1959 to an unsuccessful attempt ,to abandon Clause IV of the party's constitution. This was followed in 1960 by the passing of a party conference motion in support of unilateral nuclear disarmament, against the advice of the leadership. From the conference platform, Gaitskell famously promised to ‘fight and fight and fight again to save the party that we love’ and within a year the vote was reversed. Yet despite the division and set-backs, Gaitskell made significant steps to restore Labour’s popularity. With the Conservatives themselves divided and undermined by economic problems, Labour looked set for power. The victory came in 1964, albeit with a tiny majority of four, and only after the tragic and sudden death of Gaitskell in January 1963, who was replaced by the grammar school educated Yorkshireman, former Bevanite, Harold Wilson.

The Harold Wilson Era:     

Labour was returned to office on a platform of modernisation and reform. The party’s manifesto, The New Britain, focused on the need for economic and social transformation. In many ways, this is what Wilson’s administration achieved. The period was one of openness and social liberalism, with the legalisation of many taboo practices such as divorce, homosexuality and abortion, and the ending of capital punishment.

However, the failure of the government to devalue the pound until 1967 is believed to have restricted the level of economic growth, and the new Department for Economic Affairs never succeeded in implementing its National Plan. The party’s majority was increased to 97 in 1966,when Wilson went to the country asking for a mandate to finish the job. With this endorsement, he was able to implement reforms on a range of issues including steel nationalisation and the development of comprehensive education. Wilson’s 1964-70 governments achieved much of what they set out to do.

The relationship between the government and the trade union movement gradually deteriorated. To combat union militancy the government believed that union reform was necessary. Barbara Castle, published a white paper entitled "In Place of Strife", in which it was proposed that the government should have powers to impose a month-long conciliation period before a strike could take effect, and where appropriate to insist on a secret ballot of the union membership. Trade union leaders bitterly opposed the proposals and the cabinet became divided. Eventually a compromise was reached whereby both parties agreed to "self-policing".    

Improving economic circumstances in 1969 led to strong showings for Labour in the polls but, to the surprise of most pundits, the Conservatives won a narrow victory in 1970. Wilson remained Labour leader and once again, in opposition, the party began a lengthy internal debate – this time on the future of Europe. The Heath government was seriously weakened by a miners' strike, power cuts, oil  crisis which resulted in "three-day" working week. In the March 1974 election Labour polled 37 per cent of the vote, one per cent less than the Tories, but won more seats. With such a narrow majority, another election was inevitable and the October poll strengthened Labour’s control only slightly – a five-seat majority. Despite the difficult political circumstances, the Labour government lasted for five years and managed to pass significant pieces of legislation: on health and safety, trade union legislation, and rents. The issue of Europe was resolved with a national referendum in 1975, which supported Common Market membership (now the European Union) by two to one. Cabinet ministers were allowed to campaign for either the pro or anti Europe campaign groups. Wilson resigned in 1976 and was replaced by James Callaghan but mounting international economic difficulties left the new prime minister with little room to move. Against a background of rising unemployment and inflation, the government cut back public expenditure and restricted public sector wage increases. The international value of sterling fell and Denis Healey, the Chancellor, was obliged to seek a loan from the International Monetary Fund. By 1977 the government was in a minority and was reliant on a Lib-Lab pact to keep it in office. The TUC now sought a return to "free collective bargaining", but the government sought to maintain some degree of wage restraint by establishing a 5% norm for pay settlements. The result of this tension was industrial action by public sector workers in January 1979 branded by the press as the "Winter of Discontent".

The Wilderness Years:      

Labour was heavily defeated at the 1979 election, with the Conservatives, led by Margaret Thatcher, gaining a large percentage of the working class vote. The party began a new period of soul-searching. Internal debates about increased power for trades unions, creation of an electoral college to elect the party leader and  re-selection of MP's dominated, and led eventually to the forming of a breakaway group,the Social Democratic Party, in 1981. Michael Foot, the veteran left-winger, was elected leader but he was hampered by divisions within the party and proved unable to reverse Labour’s decline in support. The divisions in the party were well-illustrated by the decision of Tony Benn to challenge Dennis Healey for the deputy-leadership, with Healey scrapping home by less than 1%. With Labour moving further to the left, the 1983 election resulted in a crushing defeat. Labour gained 27.6 per cent, its lowest showing since 1918 and not much above the Liberal/SDP Alliance. Labour's manifesto for the election has been famously referred to by Gerald Kaufman as the "longest suicide note in history".

Hope for a revival in Labour's fortunes came from Welsh MP Neil Kinnock, who replaced Michael Foot as leader in 1983. The Miners' strike of 1984 posed a difficult dilemma for Kinnock, and he chose not to give the miners his full support. The Miners' strike eventually collapsed and this seriously undermined the strength of trade unionism.

Kinnock sought to sideline the extreme left within the party, such as the Militant tendency, and then to restore Labour’s image with the general public. His speech to the 1985 Party Conference, where he attacked the Militant tendency from the platform, was seen as a sign of the new Labour leader’s courage and commitment to change. This was followed by changes to Labour’s image, headed by a new Campaigns and Communications directorate under Peter Mandelson. A visible sign of the changes afoot was the replacement of the party’s emblem - the red flag - by a red rose at the 1986 conference. Even with such changes, Kinnock was unable to recover much ground and Labour still lost the 1987 election heavily. More thorough-going reform was necessary and therefore the party began a process of policy review. The outcome, Meet the Challenge, Make the Change, ended Labour’s commitment to unilateral nuclear disarmament, high taxation and old-style nationalisation.

With Tory leader Margaret Thatcher increasingly under fire, the prospects of the party were much improved. In 1989 Labour gained the most number of seats in the European elections, the first national election the party had won for over a decade. However the end of the Thatcher era in 1990,when she was replaced by John Major, marked a reversal in Labour’s fortunes. After a campaign fought on the defensive over tax, Labour achieved only a two per cent swing in the 1992 general election and the Conservatives were returned with a 21-seat majority.

New Labour:     

Labour’s fourth successive election defeat was a major shock to the party. Kinnock’s successor, Scottish lawyer John Smith, promised to continue the process of reform, including tackling the trade union block vote. At the 1993 Party Conference Smith won the vote on One Member One Vote (OMOV) – removing direct union representation in parliamentary selections – by the smallest of margins, and largely due to the last-minute speech by John Prescott. If he was careful in his dealings with the party, in the Commons Smith was less restrained. Immediately after the election the Tories were wrong-footed by the crisis in sterling and exit from the Exchange Rate Mechanism. ‘Black Wednesday’, as 16 September 1992 became known, was a gift to Smith, who used his considerable parliamentary skills to attack the Conservatives. With record-breaking (for the time) local election results in 1994, John Smith was rightly optimistic about the future of the party. ‘A chance to serve , that is all we ask’, Smith told a gathering of Labour supporters on 11 May 1994. The event was to be his last. Early the next morning he suffered a massive heart attack. Just as with Gaitskell in 1963, Labour had lost a leader on the verge of power.

The ensuing leadership contest saw the election of Tony Blair, the youngest-ever leader of the Labour Party. Blair was widely known to be a moderniser and his leadership election statement was clear that Labour must be reformed radically if it was to win office again. Yet for any still in doubt, Blair showed his true intentions in his first speech to party conference as leader, when he called for the updating of Clause IV of the party’s constitution. While opposed by some traditionalists, the proposed change won overwhelming support(65%) at the special conference in April 1995. This was followed in 1996 by the publication of New Labour, New Life for Britain, the draft manifesto that was discussed and voted upon by party members across the country. Labour’s agenda was fully costed, to avoid the arguments over tax that had dogged them in 1992, and centred on five pledges: education; crime; health; jobs and economic stability. Party members gave the proposals clear endorsement - with 95 per cent backing the plans. The 1997 election campaign saw the Tories in decline - over sleaze, tax rises and divisions over Europe. Labour’s campaign, by contrast, was smooth and efficiently run. The party targeted 90 marginal ‘key seats’ - the constituencies it had to win if it was to gain a majority. In the event new Labour was shown to have underestimated its popular appeal, winning a landslide total of 418 Labour MPs, including a record 101 Labour women, and a majority of 179.

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