I lived through the 70s and 80s , Mojo (born mid-50s)
As jas said, it was the tripling of oil prices by OPEC after the Yom Kippur War that mainly caused Labour's downfall:
oil prices fed into the economy, goods prices rose because of higher transport costs, inflation rose to 20-25%, workers went on strike to protect their living standards, some businesses could no longer make a profit
The previous Tory govt - until 1974 - had left the economy in a dreadful state, with a 3-day week, soiralling inflation,
so Labour inherited a chronically weak economy
Mrs Thatcher squandered North Sea / Scottish Oil
She sold off many nationalised industries and institutions - iirc it was a former Tory PM Harold McMillan who called it "selling off the family silver"
She stopped supporting industy through this tough period, deliberately de-industrialising in particular the North of England, in order to try to force a services economy instead of more secure, better paid manufacturing jobs
She set out to smash the trade unions, with new laws to remove the main defence that ordinary workers have against employers, their main weapon to gain higher wages
She rewarded Tory voters with giveaways, especially selling off shares well below market value, so speculators could sell for instant windfalls
She starved the NHS of funds - I had to pay for my late mum to have foot, knee and eye ops, or she would have waited over 2 years
And of course MrsT sold off council housing, which caused the misery of spiralling prices and rent
She started the demonising of people on benefits
She changed the country from one that supported the welfare state to an "I'm all right, Jack" country
and the pendulum has stuck there ever since
That's why Blair had to move to the centre - what would have previously been right of centre - to win GEs