Chapter 10 Flashcards
What economic situation did Harold Wilson face when he came to power in March 1974?
Inflation was at 15 percent and the balance of payment deficit was £3 billion
The economic context was dire, requiring immediate action from the Labour government.
What was the outcome of the October 1974 general election for the Labour Party?
Labour gained 18 seats and had a majority of only 3 seats over the Conservatives
The election was closely contested, reflecting the political tensions of the time.
What was the Social Contract negotiated by Harold Wilson in 1973?
It involved voluntary pay restraint by the trade unions in exchange for the repeal of Heath’s Industrial Act and pay board
The Social Contract aimed to stabilize the economy without alienating the unions.
Who were the two left-wingers appointed by Wilson to key government departments?
Tony Benn and Michael Foot
Benn was in charge of Industry and Foot was in charge of Employment.
What major economic reforms did Chancellor Denis Healey implement between 1974 and 1976?
Imposed steep rises in taxation and cut public spending
These measures were aimed at controlling inflation and addressing the economic crisis.
What was the purpose of the National Enterprise Board (NEB) established in 1974?
To administer the government’s shareholdings in private companies and provide financial aid
The NEB aimed to boost investment in struggling industries.
What problem arose with the Social Contract by 1975?
It was not limiting wage demands
This led to increased tensions within the Labour Party regarding economic policies.
What did Harold Wilson express as the highest aim of leadership in his memoirs?
To secure policies adequate to any situation without major confrontations, splits, and resignations
This reflects the challenges he faced in managing a divided party.
What was the significance of Wilson’s unexpected resignation in March 1976?
It led to various conspiracy theories about the reasons behind his departure
Wilson’s health concerns and promises to his wife also played a role in his decision.
Fill in the blank: The economic crisis that brought down Heath was characterized by a surge in _______.
inflation
Inflation was driven by large wage increases deemed necessary at the time.
True or False: Wilson’s government was a majority government upon coming to power in 1974.
False
Labour was a minority government and needed support from other parties.
What is the International Monetary Fund (IMF)?
Formed at the end of the Second World War, it was designed to promote economic stability and growth across the world.
Who was James (Jim) Callaghan?
Callaghan was the successor to the prime minister, known as a ‘safe pair of hands’ with long experience and good links to the unions.
What economic challenges did Callaghan face during his leadership?
Poor balance of payments, pressure on sterling, and concerns over currency reserves.
What did Callaghan warn the Labour Party about in September 1976?
He warned that the ‘cosy world’ of ensuring full employment was gone and that productivity needed to improve.
What was the purpose of Callaghan’s speech at the Labour Party conference?
To prepare the Labour Party for applying for an emergency loan from the IMF due to economic difficulties.
How much was the loan received from the IMF in December 1976?
€3 billion.
What were the consequences of the IMF loan for the Labour government?
The government had to make big spending cuts.
What was the public perception of Britain’s economy during Callaghan’s premiership?
It reinforced the image of Britain as being in economic decline.
What was the ‘Lib-Lab pact’?
An agreement where 12 Liberal MPs agreed to vote with the government in exchange for advancing devolution for Wales and Scotland.
What is devolution?
The transfer of powers to a lower level of government.
What was required for devolution to pass according to the inserted clause?
At least 40 percent of the electorate had to approve of devolution.
