Greasy Pole: The Dark Side of Sunny Jim

It is not entirely clear why the late Lord Callaghan should have been known as Sunny Jim because there was a lot more to him than a supposedly genial, unflappable favourite uncle. While there are people who are grateful for his care for them when they were in trouble there is also a significant number who remember him as a thug and a bully. These are the people who came to know that beneath the surface Sunny Jim concealed an iron determination and excessive venom against anyone who crossed him.

Hugh Dalton, who was the first Chancellor of the Exchequer in the 1945 Labour Government, at first assessed Callaghan as “first class though with no manners and ruthless ambition”, an opinion which he modified later to “obviously a trimmer and doesn’t seem to have any deep convictions”. Roy Jenkins, another Labour Chancellor, described him as “an aggressive pike eating up the minnows, with a brooding air of menace”; Barbara Castle, who was grievously mauled by him over the proposals for trade union “reform” in In Place of Strife, saw him as a menace on dry land: “a snake in the grass”. What all these opinions, sometimes contradictory, add up to is that Callaghan was clearly well suited to a career in politics at the highest level. And so it turned out, because he held all the major governmental jobs – Chancellor of the Exchequer, Home Secretary, Foreign Secretary and finally Prime Minister. This was pretty well unique, although that cannot be said about the fact that, by the standards which judge capitalist politicians, he failed in all four jobs.

Import duties

Callaghan was not unique in his politician’s readiness to reel off sound bites which he came to regret. One of these was his assurance that, after one of the more minor crises, the outlook for the British economy was set fair: “steady as she goes” was how he put it. This was intended to remind everyone that he had once been in the Navy and to comfort them with the image of a great liner being nudged into safe harbour, with captain Sunny Jim placidly in control on the bridge. What actually happened was that when, only a couple of days after the election, it became clear that British capitalism was in one of its recurring crises Callaghan’s response was typical, desperate panic. One of the wheezes he hurriedly implemented in October 1964 was a temporary 15 per cent increase on some import duties which, far from solving the trading problems of British capitalism, provoked outrage and threats of retaliation abroad. In response the British government had to promise that the surcharge was only temporary and then, a few months later, to reduce the rate to 10 per cent. How calm  and collected was Callaghan through all this? In November 1964, at a conference of ministers at Chequers, George Wigg recalled “Jim Callaghan’s lips quivered, his hands shook, he had no idea what hit him.” Prime Minister Wilson commented “I’m having to hold his hand. His nerve isn’t very good these days”.

Another wheeze, thought up by the unpredictably fertile brain of Callaghan’s advisor on tax Nicky Kaldor, was the Selective Employment Tax (SET), reputedly a measure to re-distribute labour in a structural reform which would eliminate all those nasty problems which had bedevilled the British economy for so long. The SET was a tax on employers for every employee; manufacturing industry then received a rebate plus a premium for every employee. Agriculture received a rebate of the tax while the service industries did not get anything. This complexity was imposed in a hurry such as to belie its stated purpose of permanently reshaping British industry. One minister described its introduction to the Cabinet: “…bewilderment and  consternation. Nobody could quite follow what he (Callaghan) was saying.” In any case SET was virtually abandoned as part of the measures taken in conjunction with devaluation in 1967.


Devaluation was supposed to be yet another radical step to improve the international trading position of British capitalism; after the event Harold Wilson declared: “It will be a relief to our people…they will feel that at last we have broken free…” But the Cabinet had been arguing about it almost since the day Labour got into power. Callaghan’s attitude was uncertain but he warned: “we must not underestimate the catastrophe of devaluation. It would be a political catastrophe as well as an economic one.”

Ten days later he announced that the catastrophe had arrived; the pound was to be devalued and soon afterwards he resigned. This has been misconceived as the act of an honest politician accepting responsibility for a mistake. In fact Callaghan had wanted to give up being Chancellor for some time and in any case he was careful, and tenacious, enough not to resign from the Cabinet. What he did was to swap jobs with another member of the Cabinet, moving to the Home Office while Roy Jenkins took over as Chancellor. Directly Callaghan became Home Secretary in November 1967 he was up against the problem of a prospective large intake of immigrants from Kenya who had the right to come here because they held British passports. Immigration controls on people from the British Commonwealth were already in operation, having been introduced by the Conservative government in 1962. At that time the Labour Party strongly resisted the Act, as proclaimed by Hugh Gaitskell as far back as 1958: “The Labour Party is opposed to the restriction of immigration as every Commonwealth citizen has the right as a  British subject to enter this country at will.”


This appealed to some Labour supporters as a principled stand but it quickly crumbled when it was confronted with the threat of losing votes on the issue, so that during the 1964 election Labour made it clear that they would keep the 1962 Tory Act in operation. The issue came to something of a climax in that election when Labour lost Smethwick, and with it their prospective Foreign Secretary Gordon Walker, to a Tory who ran an openly racist campaign. By the time Callaghan got to the Home Office plans were already under way to rush through legislation to overturn the historic right of British passport holders to enter this country freely. Labour’s Commonwealth Immigration Bill went even further than the 1962 Act; it was clearly an attempt to appease any racism among the voters, as it protected the right of entry of most white Commonwealth citizens while denying those rights to Kenyan Asians. This cynical piece of racist legislation was effortlessly seen through Parliament by Sunny Jim, who did not see any reason to resign over this latest example of a policy reversal.

In spite of all that had gone before, in his early days as his Prime Minister Callaghan seemed to be almost invulnerable. With amazing sleight of hand he kept his government going although it was in a minority in the House of Commons. In line with the policy of depressing working class living standards by holding wages down he saw off a strike by the firemen and persuaded the miners to accept a pay deal without a fight. There seemed no end to what he could accomplish by way of disciplining the workers in the interests of their employers – and all this, according to one aide, without trying to “break into the Guinness Book of Records for the amount of work done in twenty-four hours”. But of course this could not, did not, last. The so-called pay policy went a step too far with an attempt to impose a limit of 5 per cent on rises, which was particularly hard on the lower paid workers. Denis Healey, who was Chancellor of the Exchequer at the time, later admitted that “we in the Cabinet should have realised that our five per cent norm would be provocative as well as unattainable” – and that was how it turned out.

Road haulage and oil tanker drivers went on strike for 25 to 30 per cent increases; local authority manual workers claimed 40 per cent and the Ford Motor Company agreed a rise of 17 per cent. This was followed by the series of strikes written into history as the Winter of Discontent. Callaghan called the election of 1979 “a sea change” when in fact it was an expression of disillusionment with the Labour Party, bringing the Thatcher government to press on with policies which Callaghan and his ministers had begun.

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