The Lib-Lab pact

Today is the anniversary of the confirmation of an agreement of 1977 between the Labour government and the Liberal party. Prime minister James Callaghan and Liberal leader David Steel had been talking for some time against a background of international loss of confidence in the UK economy. The pact succeeded in stabilising the economy, just as the Con-Lib Dem coalition was to do in 2010.

The Joint Statement by the Prime Minister and the leader of the Liberal party
We agreed today the basis on which the Liberal Party would work with the government in the pursuit of economic recovery. We will set up a joint consultative committee under the chairmanship of the Leader of the House, which will meet regularly. The committee will examine government policy and other issues prior to their coming before the House, and Liberal policy proposals. The existence of this committee will not commit the government to accepting the views of the Liberal party, or the Liberal party to supporting the government on any issue. We agree to initiate regular meetings between the Chancellor and the Liberal party economic spokesman, such meetings to begin at once. In addition the Prime Minister and the leader of the Liberal party will meet as necessary. We agree that legislation for Direct Elections to the European Assembly for 1978 will be presented to Parliament in this session. The Liberal Party re-affirm their strong conviction that a proportional system should be used as the method of election. The government is publishing next week a White Paper on Direct Elections to the European Assembly which sets out the choices among different electoral systems but which makes no recommendation. There will now be consultation between us on the method to be adopted and the government’s final recommendation will take full account of the Liberal party's commitment. The recommendation will be subject to a free vote of both Houses. We agree that progress must be made on legislation for devolution and to this end consultations will begin on the detailed memorandum submitted by the Liberal party today. In any future debate on proportional representation for the devolved assemblies there will be a free vote. Chapter Five Page | 137 We agree that the government will provide the extra time necessary to secure the passage of the Housing (Homeless Persons) Bill, and that the Local Authorities (Works) Bill will now be confined to provisions to protect the existing activities of direct labour organizations in the light of local government reorganization. We agree that this arrangement between us should last until the end of the present parliamentary session, when both parties would consider whether the experiment has been of sufficient benefit to the country to be continued. We also agree that this understanding should be made public. (NA, PREM16/1399: Joint Statement by the Prime Minister and the leader of the Liberal party ‘The Lib-Lab Agreement’, 23 March 1977)