On Monday 21st March 1977 discussions began between the Liberal Party and the ruling Labour government of James Callaghan about a possible parliamentary arrangement. A vote of confidence had been tabled for later in the week against a government which had gone into minority at the beginning of the month. The pound stood at $1.716 and the Bank of England minimum lending rate (MLR) was 11%
I made some undated notes, which turned up during a house clearance, for a time-table of events which followed. They are not contemporaneous, but must have been intended for a later general election campaign in which the subject of coalition was likely to come up.
The talks continued on 22nd and a "working arrangement" was agreed between David Steel and Jim Callaghan on 23rd. Interestingly, the Liberal policy of a devolved Welsh Assembly with some law-making powers was pressed. This was of course strongly rejected by Labour.
March 29: Healey budget reduced standard rate from 35% to 33%. "Growing international confidence in British economy"
.March 31: MLR reduced to 9.5%
April 4: Conservatives win Stechford by-election. Liberals lost deposit.
April 15: MLR 9%
April 22: MLR 8.75%
August 3: MLR 7.5%
September 1: MLR 6%
October 7: MLR 5.5%
October 14: MLR 5%
November 1: MLR raised to 7%
January 16: Current account surplus announced - £59 million
January 20 [Annual] Inflation 12.1%
January 21: Special [Liberal] Assembly votes to continue pact until following July
February 17: Inflation falls to single figures
March 11: 25% tax band in Healey budget
May 23: Unemployment down for 8th successive month
June 1: MLR -> 10%
June 28: Liberals force government to reduce NI surcharge from 2.5% to 1.5%
July 31: Pact ends
"The pact can now be seen to have given the country possibly the best fifteen months of government it had enjoyed in the whole decade. Inflation came down from 20 per cent to under 9 per cent, mortgage rates fell from 12.25% to 8.5%. Tax measures were introduced to encourage employees to set up employee shareholding schemes/"