Social Contract (Britain)
Encyclopedia
The Social Contract is a term used to describe policy by the Labour government of Harold Wilson
Harold Wilson
James Harold Wilson, Baron Wilson of Rievaulx, KG, OBE, FRS, FSS, PC was a British Labour Member of Parliament, Leader of the Labour Party. He was twice Prime Minister of the United Kingdom during the 1960s and 1970s, winning four general elections, including a minority government after the...

 in 1970s Britain
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

.

In return for the repeal of 1971 Industrial Relations Act, food subsides and a freeze on rent increase, the TUC would be able to persuade its members to cooperate in a programme of voluntary wage restraint.

The Social Contract aimed to avoid the difficulty of former incomes policies, allowing the employers, who in nationalised industries were the state, to treat individual groups separately in wage negotiations. There would be 12-month interval between wage settlements to prevent repeated wage demands and allow the State some level of predictability in future wage expenses, and negotiated increases in wages should be confined either to compensating for inflation since the last settlement or for anticipated future price increases before the next settlement.

It was to be the foundation on which Healey could introduce a stronger budget in order to control the high inflation and growing government spending of the era, which Edward Heath
Edward Heath
Sir Edward Richard George "Ted" Heath, KG, MBE, PC was a British Conservative politician who served as Prime Minister of the United Kingdom and as Leader of the Conservative Party ....

's previous government had failed to do.
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