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Y12 - Britain: 1951 - 1979 > 3.3 Heath and the Economy > Flashcards

3.3 Heath and the Economy Flashcards

1
Q

First economic policies 1970-71: What was growth like between 1970-71?

A

Encouraging growth and inflation

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2
Q

First economic policies 1970-71: In March 1971, what did Barber propose?

A

To replace purchase tax with VAT

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3
Q

First economic policies 1970-71: What did Barber relax from 1970-71?

A

Exchange controls

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4
Q

First economic policies 1970-71: How did Barber liberalise the banking system?

A

Competition and Credit Control

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5
Q

First economic policies 1970-71: What did Barber reduce?

A

Direct taxes

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6
Q

When was decimilisation?

A

1971

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7
Q

What was decimilisation?

A

British currency would have100 new pence instead of 144 old pennies in a pound

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8
Q

Why was it hoped that de Gaulle noticed decimilisation?

A

To highlight how keen Wilson and Heath were on all things European and show Britain wanted to be modern

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9
Q

What did Heath abolish to combat rapid inflation?

A

Prices and Incomes Board

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10
Q

What did Heath have to do to combat rapid inflation?

A

Severe spending cuts
Sweetened by a reduction in standard rate income tax

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11
Q

What subsidies did Barber cut to combat rapid inflation?

A

Council house rents and expenditure of milk to children

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12
Q

What chant comes from the cuts to expenditure of milk to children?

A

Thatcher the milk snatcher

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13
Q

Problems in 1971: What began to jump?

A

Wages and therefore prices

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14
Q

Problems in 1971: What did inflation rise to from 1969 - 1971?

A

5% to 10%

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15
Q

Problems in 1971: What was the problem of British employers at this time?

A

They were not generating entrepreneurial activity

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16
Q

Problems in 1971: What was the growth rate between 1969 and 1971?

A

2.5% to 1.7%

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17
Q

Problems in 1971: What did Britain’s industrial productivity need to be to keep pace with inflation?

A

5%

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18
Q

Problems in 1971: What was the surplus in 1971?

A

£1bn

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19
Q

Problems in 1971: What was the deficit in 1973?

A

£1bn

20
Q

How many people were unemployed in 1972?

A

1 million

21
Q

What is stagflation?

A

This is when inflation and unemployment rise sharply at the same time

Inflation spirals upwards but because of unemployment industrial capacity fails to grow, and often stagnates.

22
Q

When did Rolls Royce face bankruptcy?

A

1971

23
Q

What did the government do with Rolls Royce?

A

They nationalised the company

24
Q

What did the government do when the Upper Clyde Shipbuilders were on the verge of collapse?

A

They nationalised it

25
Q

Why was the nationalisation of Rolls Royce and the Upper Clyde Ship Builders a problem?

A

It was a u-turn on their earlier aims at Selsdon Park

26
Q

The Economy 1972-73: What did Barber do with the 1972 budget?

A

Cut taxes and increased public expenditure

27
Q

The Economy 1972-73: What did Barber’s budget push the growth rate to?

A

7.4% by 1973

28
Q

What did Heath fail to secure?

A

Trade union cooperation on wage restraint

29
Q

What did Heath create to control inflation?

A

Prices Commission and a Pay Board

30
Q

What came into play on the 6th November 1972?

A

A 90 day freeze on pay and prices (including rent)

31
Q

What did the Price and Pay Code do?

A

Limited increases in pay, rent, and prices

32
Q

Why was the Price and Pay Code a u-turn on Selsdon Park?

A

They were introducing their own incomes policy

33
Q

In 1972, what did Barber say about the pound?

A

‘no reason to believe that the pound was overvalued’

34
Q

What does ‘floating the pound’ mean?

A

This means the forces of supply and demand will determine the price of the currency

35
Q

Why did Barber float the pound?

A

As a temporary measure

He said that the trade balance had deteriorated and did not want to have to borrow money

36
Q

What happened to the pound after Barber floated it?

A

Plunged on the market

37
Q

How many people were unemployed by 1973?

A

500,000

38
Q

Why did the 1973 Oil Price Crisis begin?

A

The Yom Kippur War

39
Q

What was the Yom Kippur War?

A

A war between a coalition of Arab states v Israel

40
Q

What did the war prompt OPEC to do?

A

Declare an oil embargo

41
Q

What is OPEC?

A

Organisation of Arab Petroleum Exporting Countries

42
Q

What did the price of oil rocket to in 1973?

A

4x the usual levels

43
Q

By March 1974, how much had oil prices risen by?

A

From $3 a barrel to nearly $12 globally

44
Q

By 1980, how much did oil cost?

A

$35 a barrel

45
Q

What did the value of sterling fall by as a result of the oil crisis?

A

$1.50 to the £1

46
Q

How much did inflation grow to by 1974?

A

16%

Y12 - Britain: 1951 - 1979 (55 decks)

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