The 1970s might have been a great time for popular music, but it was a naff decade for fashion with flared trousers and ridiculously wide lapels. It was in the economy, however, that it was really bad.
1. It was a decade characterized by strikes. Britain's trade unions were literally above the law, in that they could not be sued for the losses they caused to their companies or to the general public. Leaders and shop stewards were often elected by show of hands, leading to intimidation and the election of militants and extremists. Walkouts would be called at the drop of a hat, and working conditions imposed that caused massive inefficiencies and increased costs. The UK had the worst record in the EU for days lost through industrial disputes.
2. The unions used their powers to bully, and to advance the interests of their members at the expense of the public. The public regularly found their services interrupted by walkouts over demarcation disputes. A friend phoning her mother in South Africa found a union official on the line telling her that it didn't sound like an urgent call, and disconnecting her because the union had blocked non-urgent calls to that country. This was not national policy; it was union policy.
The press was among the worst victims, with non-existent workers drawing pay packets to pay into union funds. Union leaders would warn governments what policies were not acceptable to their members, and the unions successfully defeated attempts to bring them under the law by both the Harold Wilson and Edward Heath governments, using industrial action or the threat of it to do so.
3. Inflation spun out of control in the 1970s, peaking at about 25% in the middle of the decade. Firms stopped printing the prices on their goods, or put stickers over the previous prices. Huge pay demands backed by union militancy meant firms had to increase prices to absorb those cost increases. Governments resorted to printing money to pay their way and inflation became endemic. Those on fixed incomes, such as retirees, saw their living standards eroded, though government officials on index-linked pensions were protected against this inflation.
It had a detrimental effect on Britain's ability to sell goods, not only because prices kept increasing, but because they were unpredictable.
4. Many major industries were state owned and loss-making, supported by taxpayer subsidies. These included steel, coal, gas, electricity, telephones, and the manufacture of cars, trucks, buses, aircraft & ships. They included the state airline, shipping company, freight company and bus company. Most of these were uncompetitive, providing inferior products and services, and were not customer-oriented. State housing accounted for 35% or residences, and was let at subsidized rents and was poorly maintained compared to privately-owned properties.
5. Many state-owned industries were monopolies, lacking the stimulus of competition, and were chronically under-invested because government always had more claims on its spending. This made them outdated, lacking the newest technology and practices. The state telephone service would rent, not sell, people a black phone with a rotary dial designed in the 1930s for about £15 a quarter. The waiting list in some areas was over a year. The gas showrooms on every high street where people bought gas appliances had unlisted phone numbers so they were not bothered by calls from customers.
6. Personal taxation was at very high levels, with a top rate of 98%. This consisted of a top income tax rate of 83% plus a 15% surcharge if people drew income by investing in business and industry. These high rates were a disincentive to work and wealth creation, and deterred foreigners from settling in the UK and contributing to its economy. People had to pay up to 35% in Capital Gains Tax, which was not indexed, so they were paying on nominal gains only.
7. Taxes on businesses were very high, with a small profit rate of Corporation Tax at 42% for much of the decade and a standard rate of 52%. This obviously deterred business activity and expansion by making it less worthwhile. By increasing the costs on business, it increased the prices they charged for goods and services.
8. Exchange controls limited the ability to transfer funds. UK travellers could take only £50 out of the country, and UK investors could not invest in overseas assets. This imposed major limits on the way UK businesses could operate, as well as on investors, in addition to the inconvenience to travellers. It turned ordinary citizens into law-breakers.
9. UK state services were generally sub-standard. This resulted from lack of competitive pressure, combined with producer capture and the exercise of union power to seek the convenience of their members rather than the convenience of the public. Under-investment was also a key feature as government responded to electoral pressure by spending on transfer payments instead of on investment and infrastructure.
10. Many UK goods and services in the 1970s were of low quality if not downright shoddy. Part of the reason lay in the industrial disputes that dogged the economy, part lay in under-investment resulting from high tax levels. Many UK goods gained an international reputation for poor quality, a reputation that took time and determination to overcome.