Edward Heath, leader of the Conservative Party and Prime Minister had called and unexpectedly lost the February 1974 general election. Although the Labour Party were able only to form a minority government, the following October 1974 general election saw them obtain a three-seat majority, and it was widely expected that Heath (who had led the party for the previous decade but lost three of the four general elections he contested) would not be leader of the party for much longer.

At the time the rules for electing a party leader only applied when the post was vacant and there was no way to challenge an incumbent. Heath faced many critics calling for either his resignation or a change in the rules for leadership elections to allow for a challenge. Heath eventually agreed with the 1922 Committee that there would be a review of the rules for leadership elections and subsequently he would put himself up for re-election.

A review was conducted under the auspices of Heath's predecessor Sir Alec Douglas-Home. Two recommendations were made, though neither was to make a difference in 1975 (although they would prove crucial in future years). The leader would henceforth be elected annually, whether the party was in opposition or government, in the period following a Queen's Speech, though in most years this would prove a formality. Also on the first round the requirement for a victorious candidate to have a lead of 15% over their nearest rival was modified so that this would now be 15% of the total number of MPs, not just those voting for candidates.

The Conservative Party, officially the Conservative and Unionist Party, is a centre-rightpolitical party in the United Kingdom. It is the majority party in the House of Commons, having won 330 of the 650 seats at the 2015 general election. Between 2010-15, it was the largest single party with 303 Members of Parliament and governed in coalition with the Liberal Democrats. It is the largest party in local government with 8,296 councillors.

The Conservative Party was founded in 1834 from the Tory Party—giving rise to the Conservatives' colloquial name of Tories—and was one of two dominant parties in the 19th century, along with the Liberal Party. In the 1920s, the Liberal vote greatly diminished and the Labour Party became the Conservatives' main rivals. Conservative Prime Ministers led governments for 57 years of the 20th century, including Winston Churchill (1940–45, 1951–55) and Margaret Thatcher (1979–90). Thatcher's tenure led to wide-ranging economic liberalisation and saw the Conservatives become the most eurosceptic of the three major parties.