Heath’s Economy

Question 1

What were the initial Conservative economic principles set out in 1970?

Answer 1

• Set out as The Selsdon Manifesto, the then shadow cabinet drafted a free-market programme, cuts to public spending, expansion of the private sector and opposition of nationalisation to lame duck industries.
• It did accept the need for a welfare state and trade union reform wasn’t an all-out repudiation of the post-war consensus.

Question 2

What was the Heath economic U-turn?

Answer 2

• As the unemployment rate was reaching a million, Heath felt compelled to take action, nationalising Rolls Royce in 1971 and the Upper Clyde Shipbuilders.

Question 3

What was the ‘Barber Boom’?

Answer 3

• Tax cuts and public spending cuts introduced by Barber was a self-professed way of adding 10% growth to the UK within 2 years. Initially, between 1971-72 both inflation and unemployment increased leading to stagflation.
• Barbers 1972 budget still pushed forward and, whilst unemployment went down to 500,000 by 1973, inflation was spiralling out of control.
• Within 15 months Barber was forced to move to a deflationary budget and adopt a wages freeze… angering the miners.

Question 4

What was the effect of the Yom Kippur war?

Answer 4

• OPEC, led by the oil rich Saudi-Arabians, imposed an oil embargo on the Israel-supporting western countries.
• The price of oil rocketed to 4x usual levels

Question 5

What was the Industrial Relations Act 1971?

Answer 5

• Set up an Industrial Relations Court which could impose cooling off periods and demand ballots.
• A distinction was made between organised strikes and ‘wild cat’ strikes.

Question 6

What was the reaction to the 1971 Industrial Relations Act?

Answer 6

• Both the TUC and the Confederation of British Industry (CBI) staunchly opposed it. They organised a 140,000 strong March In London chanting ‘Kill the Bill’ in early 1971.
• Major strikes in 1972 - highest number of working days lost in a year because of strikes since 1926. 23,909,000.
• Miners strikes and the use of flying pickets virtually stopped the movement of coal around the country by Feb. 1972.

Question 7

What were Heaths attempts to nullify the industry problems?

Answer 7

• He passed the Industry Act of 1972 in an attempt to involve the government, TUC and the CBI in agreeing wages, prices, investment and benefit.
• Despite this, there was still further disputes…
• Heath also moved Willie Whitelaw to minister of employment as he was considered a skilled negotiator, this also failed.

Question 8

What was the final straw in industrial disputes?

Answer 8

• With the miners refusal of the government pay offer and the governments refusal to treat the miners as a special case, the NUM called a national strike.
• Heath was forced to impose a 3 day week and call for a general election.

Question 9

What was the impact of the Industrial Relations Act on Heath?

Answer 9

• He was vilified by the working class. The good relationship he so desperately needed with the unions was shattered and he was seen as an elitist and uncaring.