The Postwar Years
In 1945 the party won an overwhelming electoral victory, and Attlee became prime minister in Labour's first majority government. The new government nationalized the Bank of England, the fuel and power industries (coal, electricity, gas, and atomic energy), transportation, and most of the iron and steel industry. It also enacted a comprehensive social security system, which included a national health service. In the areas of colonial and foreign policy, it granted independence to India and Pakistan, Burma (Myanmar), and Ceylon (Sri Lanka), and allied itself with the United States in a strong anti-Communist posture.
Faced with postwar shortages and the problems of reconstruction, Attlee's government encountered severe financial difficulties, despite American assistance. Rationing continued to be a necessity, economic recovery was slow, and the cost of rearmament increased the strains on the economy. The government barely maintained its majority in the general elections of 1950, and the following year it was defeated by the Conservatives.
During the long period of opposition that followed (the Conservatives were returned to power in 1955 and in 1959), the Labour party argued and almost split on questions of disarmament, aid to developing countries, and furtherance of socialism at home. When Attlee and other elder leaders retired and Hugh Gaitskell became party leader, Aneurin Bevan, leading the left wing of the party, unsuccessfully contested Gaitskell's position. Although Bevan was soon reconciled with the party leadership, his supporters continued to urge a policy of diplomatic neutralism and unilateral disarmament, in addition to a strong socialist program. The party's right-wing, on the other hand, argued that prosperity had diminished the appeal of socialism to the average worker and that the party should adopt a broader, more pragmatic program. Gaitskell consolidated his position as leader in the early 1960s, and the party achieved a new solidarity.
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