Denis Healey: the Labour chancellor who opened the door to neoliberalism

Both Labour and Tory leaders have praised Healey, who died yesterday. Brian Parkin remembers instead Healey’s role in the 1970s Labour government, which began with miners kicking out the Tories, but ended with the election of Thatcher. 

Denis Healey


The February 1974 general election which made Healey Chancellor took place in what now seems like another world. A quarter of a million coal miners on strike. Most electricity was generated from coal, and Edward Heath’s Tory government had limited most workplaces to three days work a week to preserve coal stocks. Television stopped broadcasting at 10.30pm to encourage people to go to bed. Heath called an emergency election – the Tories’ slogan was “who governs Britain?” – and lost.

A minority Labour government was elected, which gained a slim majority at a second election in October and then lasted until May 1979, when Thatcher came to power. Denis Healey, with his common touch and risqué humour, was chosen to be Chancellor of the Exchequer. Up until that time I had known Healey as a bit of a local Leeds political personality, who could metaphorically roll up his sleeves and address the hostile crowd as “comrades” when things got tough at meetings or at the Yorkshire Miners Gala.

How did we get from 1974, when striking workers brought down a Tory government, to the election of Thatcher in 1979? Healey, who could sweet-talk union leaders into holding back militancy, was central to that process.

Inflation was running at over 20 percent, so workers frequently went on strike for wage increases simply to maintain the value of their pay. When Labour was elected in 1974, the miners had got a 35 percent pay rise. In the summer of 1976, amidst threats of a run on the pound, the Labour government did a deal with the union leaders. The “Social Contract” promised to swap “wage restraint” – there was to be a 12-month gap between pay settlements – for assurances of full employment and welfare state spending. In order to get the seal of approval from the money markets, Healey flew to the International Monetary Fund in New York.

The Social Contract was backed by all the union leaders, of the right but also the left. Those leaders included Hugh Scanlon of the engineers union, a former member of the Communist Party. Jack Jones of the Transport and General Workers Union had been seriously wounded fighting fascists as a member of the International Brigades in Spain, and then played a key role unionising the car industry in the West Midlands. Now, facing calls to act “in the national interest”, they both supported the Labour government. In February 1977, Scanlon refused to back 2,000 workers on strike at British Leyland, at the time a state-owned company, even though the government was threatening to sack them.

The result of the Social Contract was effectively no protection for health and welfare, and a rise in unemployment to over 1 million. The Labour manifesto in February 1974 had promised “‘a fundamental and irreversible shift in the balance of power and wealth in favour of working people and their families.” Healey had promised to “tax the rich until the pips squeak.” Now the knock-on effect of the Social Contract was a demoralised and weakened working class all trussed up for Thatcher’s assaults.

Denis Healey was the son of an Irish engineering worker and a seamstress, and was born in Kent in 1917. In 1922 his family moved to Keighley in West Yorkshire, and after a scholarship from Bradford Grammar School he attended Balliol College, Oxford where in 1937 he joined the Communist Party.

Leaving both Oxford and the Communist party in 1940, Healey joined the Royal Engineers as a junior officer and fought in Italy and North Africa. In 1947 he made his first speech at the Labour Party conference in military uniform – by then he had risen to the rank of major. In 1950 he failed to win his first by-election, but in 1952 became MP for the seat of Leeds South East, later Leeds East. From the start, with his big frame and baritone voice, Healey distinguished himself as a powerful speaker.

Although he was part of the right wing of the Labour party, he was forced to tack left in 1963. The death of his friend Hugh Gaitskell prompted a leadership election, and Healey was horrified at the thought of the devious and almost permanently drunk right winger George Brown becoming leader. He supported Harold Wilson, the successful left candidate, and after Wilson and Labour were elected in 1964 he became Defence Secretary. Here his policies took account of the reality, still slowly sinking in, that Britain no longer had a global empire to police. He cut aircraft carriers and aircraft, redirecting the defence budget towards the renewal and expansion of the UK’s nuclear capability.

Healey was probably the strongest personality in the Labour government of 1974-79, and knew that the business of persuading workers to make sacrifices to rescue British big business was very much down to him. I can remember his brazen cheek when he spoke at my union’s annual conference dinner in 1977. He first of all softened up his audience, an assembly of mainly political militants, with a few typically sexist and lewd jokes before winning them over with a sing-song. But it was the song he chose that really demonstrated the brass-necked hypocrisy of the man:

I am the man, the very fat man
That waters the workers’ beer
Yes I am that man, that very fat man
That waters the workers’ beer
But a fit and healthy working class
Is what I very most fear,
Yes I am the man, the very fat man
That waters the workers beer.

Denis Healey, by then Baron Healey of Riddlesden, died on the afternoon of 3 October 2015, 39 years after that trip to the IMF. He opened the door to the era of neoliberalism, to almost four decades of social injustice, of capitalist offensives and crisis. We continue to struggle against the world he played his part in making.


  1. Yes, the IMF only ever made offers that people couldn’t refuse. But Labour historically had been pre-occupied with both internal and external threats as necessarily circumscribing policies. For much of Harlod Wilson’s tenure, he seemed permanently obsessed with ‘the Gnomes of Zurich’- cartels of international bankers- as well as the City of London who might at any time cause a run on the pound; exchange rates and the value of sterling being seen as central to the ‘balance of payments’ in relation to Britain’s ‘trade gap’. Wilson and Healey therefore saw wage controls (low wages) as central to demonstrating that a Labour government uniquely connected with the unions was best placed to deliver a ‘competitive’ UK economy. Just like now, it was a matter of the working class paying the price of capitalism’s crisis, but with Healey’s Social Contract it was with the empty promise that the welfare state and full employment would remain the priorities. It was all a lie.

  2. Britain went broke in 1976. The International Monetary Fund’s bailout compelled neo-liberal policies. It was not Healey’s choice entirely, there was an element of compulsion, wasn’t there?


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