...Whitelaw's term in office was, like his predecessors', a difficult one. Intransigent trade unions had called for intermittent strikes following the government's first budget, which slashed domestic spending in an effort to curb inflation and the deficit. Despite the union leaders eventually conceding in 1977, the government had lost quite a bit of political capital and caused alarm among backbenchers elected in marginal constituencies or former Liberal strongholds.
Northern Ireland, having enjoyed a spell of calm in the middle of the decade, fell back into chaotic violence after the Provisional IRA bombed a police station and Orange Order lodge in (London)Derry following the suspicious death of an outspoken Republican in police custody, allegedly by an officer with ties to the Ulster Defence Force.
By the time Whitelaw called for new elections, the political scene had again changed. Labour had elected Michael Foot to replace Callaghan and a combination of the ascendance of the left-wing of the party and Foot's own inability to translate dissatisfaction with the direction Britain was going into gains at the polls led to a half-dozen moderate Labour MPs to join with several former Liberals to create the centrist Democratic Party in 1978. The Democrats, targeting former Liberal safeholds as well as marginal constituencies from both parties, did not do nearly as well as the newspapers had predicted, but combined with the nationalist parties' rebounds in Scotland and Wales as well as Northern Ireland's seats being held by NI-only parties, led to a near-tie between the Conservatives and Labour in the Commons.
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Whitelaw, following his return to office, attempted to solidify his new government by forming a coalition with the Democrats and the Ulster Unionists. But Democratic leader David Steel's insistence on implementing electoral reform in a hypothetical government led to negotiations going nowhere and the Conservatives ruling as a minority for a few months before Whitelaw called for a new election in January 1980.