How Effectively was the Economy Managed, 1951-70?

Question 1

Churchill (Cons), 1951-55- Continuity

Answer 1

Churchill 77, little part in gov, mainly Chancellor, R.A. Butler
Remained committed to mixed economy, welfare state + using gov. spending to stimulate growth
In ‘Industrial Charter’, broadly accepted mixed economy, took corporatist approach to unions
Butskellism- similar to Labour

Question 2

Churchill (Cons), 1951-55- Change

Answer 2

Labour favoured high taxation, Butler cut income tax twice- 1953 + 55 budget
Labour used tax increases as deflationary measures, Cons used interest rates
De-nationalised Iron and Steel + broke up British Road Services authority by 1953

Question 3

Churchill (Cons), 1951-55- Unemployment

Answer 3

Stayed low, around 300,000- no return to harsh gov cuts + mas unemployment of 1930s

Question 4

Churchill (Cons), 1951-55- Analysis

Answer 4

Followed Keynesian principles
Cooperated with unions
Continued welfare expansion
Consensus continued
Unemployment remained low
Consensus politics avoided extremes + dramatic political shifts- stability

Question 5

MacMillan (Cons), 1957-63- Economic Aims

Answer 5

‘One-nation’ Tory, believed in ‘Middle Way’- between trad Cons and Lab economic policy
Man of consensus, pursued economic policies broadly in line with Lab- mixed economy + loose Keynesianism

Question 6

MacMillan (Cons), 1957-63- Stop-Go Economics (Go)

Answer 6

1950s- ‘never had it so good’
Encouraged spending by relaxing laws in consumer credit + borrowing, and cutting interest rates- ‘cheap money’ policy
1959- ‘giveaway budget’, Chancellor Amory- range of tax cuts. Criticised- ‘budget politics’

Question 7

MacMillan (Cons), 1957-63- Stop-Go Economics (Stop)

Answer 7

Consumer boom led to inflation + influx of imports- balance of payments problem
Gov attempted to ‘slow the economy’ by raising interest rates + taxes, resentment from taxpayers

Question 8

MacMillan (Cons), 1957-63- Stop-Go Economics (Budget Politics)

Answer 8

1964, year of election, cut interest rates + taxes again
Consumer boom, increase in imports + balance of payments at £800m
‘Short-termist’, no consistent growth, no consistent policy

Question 9

MacMillan (Cons), 1957-63- Economic Growth

Answer 9

Standard of living rising, but economy not keeping pace with competitors
1960- Japan had 12% growth, Britain had 2.3%

Question 10

MacMillan (Cons), 1957-63- Main Problems in 1964 (Unemployment)

Answer 10

Unemployment at 380,000 in 1957, grown to 878,000 by 1964- highest post-war level

Question 11

MacMillan (Cons), 1957-63- Main Problems in 1964 (Balance of Payments)

Answer 11

‘Cheap money’ encouraged spending, but increased demand for foreign goods led to balance of payments problem
Determined not to devalue £, so borrowed £714 million from IMF in April 1961, added to debt + didn’t help exports

Question 11

MacMillan (Cons), 1957-63- Analysis

Answer 11

Continuing the consensus
Tax cuts for popularity
Encouraged consumer spending
Then discouraged- ‘stop-go’’
Overall, economic policies short- termist + failed to produce suitable economic growth
Weak compared to other nations

Question 11

MacMillan (Cons), 1957-63- Main Problems in 1964 (Stagflation)

Answer 11

Facing stagflation (rising inflation, slow economic growth)
Seen as the ‘sick man of Europe’
Fallen behind Western Europe economic growth (UK-2.3%, Germany-5.1%, France-4.3%)
Trade continued to struggle

Question 12

Wilson (Labour), 1964-70- Main Economic Problems (Economy Issues)

Answer 12

Britain ‘sick man of Europe’
Deficit of £800 million- defence spending, balance of payments, rising costs of social welfare (5% of GDP)

Question 13

Wilson (Labour), 1964-70- Main Economic Problems (Trade Unions)

Answer 13

Growing union activity- more demanding + militant
Number of strikes at 2,251 in 1964, involving over 1 million workers
Regular pay rises as a result- dramatically increasing inflation

Question 14

Wilson (Labour), 1964-70- Main Economic Aims

Answer 14

Wanted to modernise the British economy- invest in technology + help companies to modernise
‘White heat’ of a technological revolution in speeches
Wanted to curb union activity + make industry efficient + competitive abroad

Question 15

Wilson (Labour), 1964-70- Prices and Incomes Acts (Why)

Answer 15

Inflation rising due to pay rising
Average wages increasing at 8% per year

Question 16

Wilson (Labour), 1964-70- Prices and Incomes Acts (NBPI)

Answer 16

Created National Board on Prices and Incomes to regulate pay settlements given to unions

Question 17

Wilson (Labour), 1964-70- Prices and Incomes Acts (1966 + 67)

Answer 17

Prices and Incomes Act (1966)- wage freeze for 6 months to curb inflation
Prices and Incomes Act (1967)- companies could increase wages only if they could prove productivity + output were increasing

Question 18

Wilson (Labour), 1964-70- Prices and Incomes Acts (Efficacy)

Answer 18

Deeply unpopular, Frank Cousins, Minister of Technology (ex-TGWU leader) resigned
Strike action + industrial unrest in ‘66 + ‘67, his strategy had failed

Question 19

Wilson (Labour), 1964-70- Devaluing Pound

Answer 19

1967- approached IMF for another loan, sign gov. were losing control of finances
Forced to admit devaluation would help- devalued from $2.80 to $2.40, reduced strength by 14%
Would make goods attractive abroad + stimulate trade

Question 20

Wilson (Labour), 1964-70- Devaluing Pound (Reaction)

Answer 20

Deeply unpopular, Chancellor-Callaghan- resigned in protest

Question 21

Wilson (Labour), 1964-70- Analysis

Answer 21

Implemented measures to modernise economy + control inflation- but largely ineffective
Striking + industrial unrest kept inflation high + continued
Decision to devalue pound significant- split cabinet
Breakdown of consensus politics begins