Labour’s record on unemployment

16 June 2021
What was claimed

Every time the Labour party has been in government, it has left unemployment higher than when it came in.

Our verdict

Only two of Labour’s periods in government are covered by the most recent comparable data, but this is not quite correct looking at the data we have over all times Labour was in government.. Unemployment fell during Ramsay MacDonald’s first term in 1924. Labour was also part of a war time coalition during which unemployment fell.

“Every time the Labour party has been in government, it has left unemployment higher than when it came in.”

In Parliament last week, Conservative MP Richard Holden claimed that every time the Labour party has been in government, it has left unemployment higher than when it came in. 

Only two of Labour’s periods in government are covered by the most recent, comparable figures. 

However, looking at other less reliable data which covers the period since the Labour party was established, this is not quite true. For all but one of the six periods when Labour governed on its own, the unemployment rate was higher at the end of its office than at the beginning. But during Labour leader Ramsay MacDonald’s term in 1924, the limited data available shows that the unemployment rate fell. 

This is also complicated by the fact that Labour MPs were part of the wartime coalition government that left unemployment lower than when they came in.

What counts as unemployment?

Simply put, you’re counted as employed if you do at least an hour of paid work each week. You’re counted as unemployed if you’re available for work, and looking for work, but aren’t employed. 

Together these two groups form the ‘labour force’ or people over the age of 16 who are ‘economically active’. The ‘economically inactive’ group include those people who are in full-time education, retired or unable to work.  

The unemployment rate is the percentage of the labour force who are unemployed.

The statistic is collected by surveying a sample of the population about their employment status. The data is held by the Office for National Statistics from 1971. 

There are a few data sources from before 1971, but they’re less useful.

The Bank of England has estimated the unemployment rate going back to 1761, according to the current definition, but it only tracks the yearly rate, so it won’t show us precise changes between different governments (which often start and end in the middle of the year).

We also have administrative data on unemployment since 1881, which is available monthly, but is also more difficult to compare over time, as the definition of ‘unemployed’ has changed. 

Pre-war

Labour’s first, short period in power was in a minority government under Ramsay MacDonald, from January 1924 to November 1924. The administrative data shows a fall in the unemployment rate of around one percentage point during this time. 

During his second period as Prime Minister, MacDonald led a Labour government from June 1929 to August 1931, during which time the unemployment rate increased from around 10% to over 20% during the Great Depression.

A ‘National Government’ led by MacDonald, but consisting mainly of Conservative politicians, then governed until June 1935, at which point the unemployment rate was around 15%.

Post-war

Labour’s third period leading the government started when it won the July 1945 general election under Clement Attlee, and lasted until the party was defeated by the Conservatives under Winston Churchill in October 1951. During that period the unemployment rate rose slightly. The administrative data shows a rise from 0.9% to 1.4%.

Arguably, Labour was also “in government”, to use Mr Holden’s words, before this, because from May 1940 to May 1945, Britain was run by a wartime coalition government under Churchill, within which Labour played a significant role. A Labour politician, Ernest Bevin, was also the secretary of state for employment.  

If you include this period, then Labour played a part in taking the unemployment rate down from 5.5% in May 1940 to 0.7% in May 1945.

Labour’s fourth period leading the government lasted from October 1964 to June 1970, under Harold Wilson. During this time, the unemployment rate rose by around one percentage point.

For Labour’s most recent two periods in office we have more reliable data on unemployment from the ONS.

Wilson’s Labour party returned to government in March 1974 with unemployment at 3.6%. His Labour successor as prime minister, James Callaghan, left office in May 1979 with unemployment higher at 5.3%.

The most recent period of Labour government saw Tony Blair inherit an unemployment rate of 7.2%, which rose to 7.9% in May 2010, at which point Gordon Brown was replaced by David Cameron.

What about the Conservatives?

There have been three completed periods of Conservative government since the war—at least two of which also saw rises in unemployment.

The period from October 1951 to October 1964 saw unemployment rise from 1.4% to 1.6%.  

Under a Conservative government led by Ted Heath, from June 1970 to February 1974, the data sources show slightly different stories. The administrative data shows a 0.2 percentage point rise while the Bank of England and ONS data shows a small fall from about 3.8% in 1970 to about 3.6% in February 1974.

Under Margaret Thatcher and John Major’s governments, from May 1979 to May 1997, unemployment rose from 5.3% to 7.2%. 

The current period of Conservative-led governments (whether you count from the coalition in 2010 or Conservative-only governments since 2015) has seen the unemployment rate fall so far, but of course this period of government is not complete yet.

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