ABSTRACT
The election yielded an outcome that was quite unexpected, a hung Parliament, Britain's first since 1929. Heath claimed that the two parties could agree upon policy, since the Liberals supported the Conservatives but disagreed with Labour both on Europe and on incomes policy. Under the postwar consensus, the maintenance of economic stability full employment together with stable prices depended crucially upon the restraint of organised labour; and this required governments, whether of left or right, to enter into bargaining relationships with the trade unions. Edward Heath, in the second phase of his premiership, had gone further than any other Prime Minister in offering the trade unions partnership in the making of economic decisions. The social solidarity and self-discipline which could alone have sustained such policies was being undermined by the very prosperity and affluence which governments, both Conservative and Labour, had championed and which were themselves a product of the postwar settlement.
