Chapter 5: Wilson And The Labour Governments Flashcards
Describe Harold Wilson as a leader
-on the Labour left
-seen as “classless”
-relaxed and skillful performer or TV
-in private he was anxious and insecure of his leadership
-relied heavily on a personal team of trusted advisors
Why did the new Labour govt. prioritise modernisation of the economy?
by 1964 it was obvious that Britian was lagging behind other countries such as West Germany
What were the problems with the British economy at the beginning of Wilson’s premiership?
affluence of the post-war boom had not been reflected in productivity or growth rates- Britain’s economy was trapped in a cycle of “stop-go” policies which led to inflation and regular crises over the balance of payments
How much was the deficit inherited from the Conservative govt.?
£800 million
What were the two economic solutions to solving the deficit?
Deflation and devaluation
What was the advantage of deflation?
would support the value of the pound and prevent deflation
Why did Wilson’s govt. not want to resort to deflation?
-part of the old Conservative stop-go approach Labour was determined to break away from
-feared it would stop them from meeting manifesto commitments of extra spending on welfare and technology
What was the advantage of devaluation?
would make imports more expensive and help exporters by making British goods cheaper in other countries which would help the balance of payments
Why did Wilson’s govt. not want to resort to devaluation?
-would make Britain weaker internationally as it would have to reduce its activities across the globe
-didn’t want Labour to gain a reputation for devaluation having previously devalued the plan under Atlee in 1949
How did Wilson attempt to solve Britain’s economic problems?
set up the Department of Economic Affairs in 1964
Who led the DEA?
George Brown
How did Brown propose to fix Britain’s economic problems?
-set growth targets and devised a national system of economic planning councils
-tried to establish voluntary agreement about wages and prices with industrialists, trade union leaders and civil servants
What did Brown aim to achieve with his proposals?
secure the restraint needed to prevent inflation in order to avoid the stop-go cycle
Why did Brown’s economic proposals fail?
did not have united govt. support
Who was Brown and the DEA in competition with?
Callaghan and the orthodox economists in the Treasury
When was the DEA abandoned?
1967
How did the govt. attempt to solve the economic problems after the DEA was abandoned?
brought in a prices and income policy implemented by a prices and income board
What caused the sterling crisis of 1966?
long and bitter strike by the National Union of Seamen
Why were many on the Labour Left shocked by the way the govt. dealt with the strike?
shocked by Wilson’s critical attitude to the strikers
What was the impact of the prices and income policy?
-Frank Cousins resigned from cabinet
-relationship between the govt. and trade unions started to deteriorate
Why did the Labour govt. decide devaluation could not be avoided?
-outbreak of war in the middle east affected oil supplies
-major national dockers strike affected balance of payments
What other economic policies did the govt. implement after devaluation?
made defence cuts and introduced higher purchase restrictions and higher interest rates
