Wilson had a daunting task. The new Labour government was in a worse situation than in 1964. It had no clear majority, was faced with a much worse trade deficit than the large one of 1964, with higher inflation (19 per cent compared with 3 per cent), declining production, national disputes awaiting settlement, rising nationalism in Wales and Scotland, the issue of the EEC unresolved, and the conflict in Northern Ireland getting worse. Moreover, Labour was itself divided on many issues. Wilson had four advantages. First, he could claim he had once again inherited a Tory mess. Secondly, he knew the electorate would not take kindly to a party which forced his government out of office without giving it a chance. Thirdly, he could claim that the world economy, and not just Britain’s, was suffering from the oil-price explosion. Fourthly, his team was largely an experienced one. No less than 13 out of the 21 members of the new Cabinet, including Wilson, had previous Cabinet experience. There were a record number of women members — two: Barbara Castle, Secretary of State for Social Services, and Shirley Williams, Secretary of State for Prices and Consumer Protection. The aim was to act, giving the public the conviction that the new government meant business. Denis Healey presented a Budget which raised income tax and corporation tax and extended VAT to sweets and petrol. James Callaghan, Foreign Secretary, won praise from the Left by cancelling naval visits to Greece and Chile because of their authoritarian regimes.
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