Economy under Wilson 1964-70 Flashcards
Possible exam question: “Labour were successful at dealing with economic problems 1964-70” Give 3 lines of argument
Yes to an extent
No - Failed aims - national plan - deflation
No - Trade Unions
Define devaluation and deflation
Devaluation - lowers the value of the pound to make exports easier to sell as they are cheaper than imports.
Deflation - supports the value of pound through cuts and saving money.
What successes did Labour have in terms of the economy? (3 examples)
They changed the £800 million BOP deficit they were given in 1964 into a £700 million surplus by 1970.
Devaluation - worked in the end - increasing exports by making them cheaper and therefore improving productivity
First budget fulfilled some promises - prescription charges abolished and benefits increased
What did the National Plan seek to do?
Cover the country’s development for the next 5 years - increase national output 25% by 1970 by increasing productivity annually.
How did Callaghan’s 3 budgets create failures? + 2 examples
Damaged public trust - abolished prescription charges in first budget 1964 but then reintroduced them later on - increased benefits but was forced to cut public spending by £500 million in 1966.
How did issues with trade unions cause economic failures?
Strikes - When they were forced to cut public spending to deflationary measures this angered trade unions as they expected the labour government to give them benefits not punishments. Led to seamen strike in 1966 and dockers strike. - 6 million days lost to strike action in 1964, then down to 2.7m in 1967 then back to 6.8 m in 1989.
Failure of In Place of Strife - was popular with the public and would’ve stopped wildcat strikes (unofficial strikes that aren’t authorised were 95% of strikes) and given a cool-off period to government before they went ahead. But as labour had such strong ties to unions they had to back down and it was humiliating and caused further economic issues.
How did the National Plan fail?
The creation of the DEA by Wilson created a rivalry between Brown (head of DEA) and Callaghan (chancellor) and they were on opposing sides of the devaluation debate. Brown resigns when they vote against devaluation in 1966 then Callaghan resigned when they finally did devalue in 1967. This was not uniting but a distraction from the economic issues they were facing.
