Exam question - 20th March

Question 1

Inflation unsuccessful:

Answer 1

• Heath’s inheritance
  Inherited 5% inflation rate per annum, left a 10% inflation rate per annum.
• Stagflation due to miners strikes in 1974
  Demanded 29% pay increase –> Government met demands.
  Inflation reached 50% by 1975

Question 2

Inflation successful:

Answer 2

Only unsuccessful do to policies of foreign governments

Because 1971 President Nixon ended system of fixed exchange rates. 

    1972 pound could 'float' freely, so value was determined by money markets.

Question 3

Inflation link

Answer 3

Nevertheless, no policies could permanently fix inflation.

• When inflation level dropped due to Healey’s 1975 budget
• Balance of payments deficit
• 1967 - severe confidence in the pound which almost resulted in National bankruptcy.

Question 4

Standard of living successful

Answer 4

• Workers representation increased
• Social contract –> workers were provided with greater welfare benefits.
• Joined EEC on 1st Jan 1971 –> increasing trade within the EEC

Question 5

Standard of living unsuccessful

Answer 5

Stagflation

• Unemployment rose from 542,000 in 1974 to 1.3 million in 1976

‘Winter of Discontent’

• Grave diggers went on strike
  Lorry Drivers wanted a 30% pay increase.

Question 6

Standard of living link

Answer 6

Oil Price Shock 1973

• Ban overtime
• Led 81% miners to vote in favour of strike action –> 81% of miners discontent with life due to high inflation rate

Question 7

Industrial Relations Success

Answer 7

Heath’s U-turn 1972

• Feb Gov granted £35 million to Upper Clyde Shipbuilders to safeguard 3000 jobs.

Industrial Relations Act 1971

• Created NIRC and IRC + gave gov power to order a pre-strike ballot and impose 60 day cooling-off period.

Question 8

Industrial relations unsuccessful

Answer 8

Industrial Relations Act 1971

• TUC encouraged Unions not to register and take days off work for strike action.

Working days lost:
- 1970: 11,000,000
- 1972: 24,000,000

Demands of the unions met in later Winter of Discontent and Oil Price Shocks. –> inflation

Question 9

Industrial relations link

Answer 9

Social Contract

• Unions agreed to co-operate in controlling wage increases.
• Could debate pay.
  Did not combat inflation –> the root cause