What if...Britain had said no to the IMF

The date is 2 December 1976. One image dominates the papers: a bewildered, middle-aged Thames Television presenter, surrounded by sneering youngsters. "Four-letter punk rock group in TV storm", thunders the Daily Mail, while the Mirror leads with
the unforgettable headline “The filth and the fury".

Although that day in December seemed most likely to be remembered for the confrontation between Bill Grundy, host of the early-evening show Today, and the members of the Sex Pistols, an even greater drama was playing out in the staid surroundings of the Cabinet Room, 10 Downing Street. After more than 20 meetings in two months, Jim Callaghan's ministers had come to the moment of decision.

With the pound under attack on the markets and the Bank of England's reserves exhausted, they had been forced to beg for a loan from the International Monetary Fund. For weeks, they had argued about the IMF's demands for heavy spending cuts. Now it was time to vote.

Reporters first realised what was happening when they heard shouting from inside No 10 and a man ran out with blood pouring from his nose. "It's Tony Benn!" somebody said in the confusion. Then the black door opened and the familiar, florid features of Denis Healey came into view. "I've had enough," he announced grimly, rubbing his knuckles. "I'm off." And with that, he was gone.

Only years later, when Benn's diaries were published, was it possible to reconstruct what had happened. Inspired by watching the Pistols the previous evening, Benn had opened the meeting with a passionate speech about Labour's socialist commitments. His Anglo-Saxon language had impressed his colleagues.

Against all expectations, the vote had gone against the chancellor and the cabinet had decided to reject the IMF terms. Instead, they backed Benn's Alternative Economic Strategy, with its plan for a siege economy protected by import controls. Healey resigned, the IMF negotiators went home and Britain prepared for life as the new North Korea.

The obvious loser from the IMF debacle was Benn. Within a few weeks, the pound collapsed on the foreign markets, Britain was kicked out of the European Economic Community and the government cancelled the Queen's Silver Jubilee. Public opinion turned against the new chancellor. By the time the government lost a vote of no confidence in June 1977, Benn was the most hated man in the country. After he lost his seat
a few weeks later, little was ever heard of him again.

And the very biggest losers were the Sex Pistols. In the furore over Healey's walkout, their story was overshadowed. Their musical career petered
out a few months later. Nobody remembers them now.

Dominic Sandbrook is a historian and author. His books include Never Had It So Good: A History of Britain from Suez to the Beatles and White Heat: A History of Britain in the Swinging Sixties. He writes the What If... column for the New Statesman.

This article first appeared in the 16 August 2010 issue of the New Statesman, The war against science