Britain is broken because it has forgotten the lessons of the 1970s

There are now remarkable parallels between today and the time of the Queen’s Silver Jubilee back in 1977

Prices are rising rapidly, inflation is close to double figures, a war has caused disruption to energy supplies, crowds are flocking to see Abba and the country is getting ready to celebrate the Queen’s jubilee with street parties and community events. This is 1977 and the parallels with today as Her Majesty marks 70 years on the throne are startling.

The Silver Jubilee took place against an economic backdrop pretty similar to the problems we face now, which is remarkable, given the lessons we were supposed to have learned in the meantime, but didn’t.

Boris Johnson is clearly concerned that history is repeating itself. “How many of you actually remember the Seventies?” he reportedly asked his youthful Cabinet at a meeting recently. Very few, as it turned out. But it should not be necessary to have lived through the 1970s to understand how and why they have had such an impact on politics ever since.

That decade’s hold on today’s popular imagination is extraordinary, given the passage of time. It is like someone in 1977 looking back to the 1920s for guidance, though it was a failure to heed the warning signals from the calamitous inflation 50 years previously that brought the economy close to breakdown by the time of the Queen’s first jubilee.

The “easy money” approach of governments and central banks, designed to generate full employment, stimulated a boom that caused prices to rocket. In the early 1970s it was engineered not by Labour, but by the Conservatives, who under Edward Heath abandoned a commitment to radical free-market policies in favour of Keynesian fiscal expansionism.

Economists like Milton Friedman had warned that pumping more money into the economy would be disastrous, triggering a recession as interest rates were pushed ever higher, and so it proved. By the time the Queen took the salute at the Trooping the Colour that year, inflation stood at 15 per cent.

Just a few months earlier, as the country entered a double dip recession, chancellor Denis Healey had to go cap in hand to the IMF for a loan as the pound collapsed. Lord Balogh, the Labour government’s economic adviser, warned that the country faced a “possible wholesale domestic liquidation starting with a notable bankruptcy... The magnitude of this threat is quite incalculable.” He added: “Should inflation accelerate further, a deep constitutional crisis can no longer be treated as fanciful speculation.”

The same approach of printing money to ameliorate the impact of the pandemic lockdowns has had a similar result and we have yet to see the full consequences. If we follow the 1970s trajectory, the cost of borrowing will have to go up, pushing homeowners into negative equity, forcing businesses on the edge of profitability to the wall and increasing unemployment as consumers rein in their spending. In a society much more heavily dependent on consumption than in the 1970s, this is a big problem.

Back then, we were known on the Continent as “the sick man of Europe”, and who were we to disagree when we were doing our homework by candlelight because the power had been cut off after Arthur Scargill’s flying pickets blockaded the coal depots? Unlike today, in 1977 we still had a heavy industrial sector – but much of it was in state hands, inefficiently run and an intolerable drain on the taxpayer. The fatal combination of state control and union militancy had turned the mines, the steelworks and the shipyards into the least productive in Europe.

But they employed hundreds of thousands of people, were heavily unionised and the Labour government was simply unwilling to carry out any reforms that might have ensured their long-term survival. Indeed, the unions held the nation by the throat and were gradually throttling it to death. Every news broadcast seemed to contain a report from a factory car park somewhere in the country where hundreds of men raised their hands to approve yet another strike.

If there is a comparison with today, it is a sense that things were broken and we were being run by a government with no real idea how to fix them. Although times were hard for many, there was no suggestion of the Treasury chucking cash at everyone or “putting an arm around the nation”. As unions pressed for huge pay rises to keep up with inflation, controls were imposed on prices and incomes, which eventually led to the Winter of Discontent and the fall of the Labour government. No wonder Boris wants to remind his colleagues how it played out.

Looking back, the Britain of 1977 feels like another country. There were

Inflation eventually led to the Winter of Discontent and the fall of the government. No wonder Boris wants to remind his colleagues how it played out

far fewer people. The population of the UK in 1977 was around 56 million. Now it is 68 million. It has grown more in the past 20 years than it did in the previous 60, fuelled largely by immigration, especially since the late 1990s.

Just one in 10 school leavers went to university in 1977 – and that was double the proportion in the 1950s. But there were no fees, everything was paid for and, in contrast to young graduates today, we never doubted we would get a job at the end of it all. For students in 1977, well-paid holiday work was easy to come by and if we couldn’t find any we just signed on the dole.

As to leisure, this was the era when foreign travel began to take off, even if flying was expensive – as were restaurants before the boom in foreign food. Watching a top football team, on the other hand, did not set you back the best part of £100, even if you risked getting beaten up. The centres of our big cities, now transformed out of all recognition in many cases, were squalid and dirty. Public buildings were black with the grime of a century of pollution, while the brutalist concrete architecture of the 1960s was already falling apart, turning innercity estates into crime-ridden hellholes.

To top it all, our country was in the throes of a terrorist war, with troops on the streets of Northern Ireland and bombs a frequent occurrence on the mainland. It all seemed bleak, though to be young was very heaven, and the Jubilee, as it will be this weekend, was a brief moment to forget the nation’s woes. As if to capture the mood, the soundtrack was provided by punk, with the Sex Pistols’ snarling version of God Save the Queen almost topping the charts. Some things about the 1970s are, perhaps, best forgotten.