How Successful Were The Economic Policies Of The 1964-1970 Labour Government Flashcards
How big was the balance of trade deficit when Labour came into government in 1964?
£800 million
What was Labour’s plan in the 1960’s to stop Britain’s kcal of competitiveness?
Producing goods that were better and/or cheaper than foreign products, requiring British firms to improve their efficiency by investing in new technology and machinery, grant wage increase only if workers were more productive
What was the Labour governments plan to help the economy?
Use its revenue from taxation to develop and improve Britain’s transport network
Maintain investment in the nationalised industries
Ensure that Britain has a well-trained workforce
Why did many economist argue Britain’s trade unions contributed to the country’s economic difficulties?
In times of inflation, union members would use the threat of strike action to demand wage increases for members
Unions strongly resisted attempts by the government to use its power to try to restrict pay increases or to make wage increase dependent on improved productivity
Any wage increase which was not linked to an improvement in productivity made industry labour costs higher and increased inflation
High labour costs also reduced the amount of profit that employers could invest
Why did the Labor government of the 1960s have to take into account the demands of trade unions?
Because the Labour Party was allied to trade unions and half off the British workforce belonged to trade unions
What was the choices the Labour government of the 1960s had to take as an immediate step to tackle the balance of payments deficit?
Deflation, which would take money out of consumers pockets and reduce the spending power of industries and businesses
Devaluation, reeding the exchange of the pound which had been fixed since 1949 at £1:$2.80
Why did Wilson rule out devolution in 1964?
It would reduce the savings of thrifty, working-class families
Devaluation destined one Labour government in 1931 and severely damaged Attlee’s in 1949
Did not want to associate Labour with what he called the ‘easy way out’
He knew that with his majority in the Commons of 4 another election was not long
He did not want to upset the Americans
What deflationary measures did chancellor of the exchequer, Jim Callaghan, introduce in 1964?
A foreign loan to prevent a run on the pound, higher taxes on alcohol and tobacco, a temporary import surcharge
What new ministry did Wilson create to modernise and improve Britain’s economy?
The Department of Economic Affairs
What ambitious goals did Wilson set in the published National Plan in September 1965?
An annual growth of 3.8% over 6 years
An increase in exports of 5.25%each year to wipe out the balance of payments deficits
Created a new National Board for Prices and Incomes (NBPI) to ensure that wage increase would only be granted by increase in productivity
Provide investment funds for the modernisation of British industry, the improvement of workers skills and a program of regional development
What 3 reasons did the National Plan not work?
The Treasury jealously guarded its role as the governments economic minister and did not co-operate with the DEA
The recommendations of the National Plan for government spending were undermined by the Treasury’s deflationary measure to solve the immediate economic difficulties
The NBPI had no power to enforce its decisions
When did the Labour government of the 1960s accept the humiliation of devaluing the pound?
November 1967, with the pound being worth $2.40 instead of the previous $2.80
Why strike damaged the economy in May 1966?
The seaman strike
How high did unemployment reach in 1967 compared to the 1.4 million in 1964?
2.5 million
What was the impact of the slow economic recovery of devaluation in 1967?
In January 1968 all British forces east of Suez, expect in Hong Kong and Persian Gulf, were to be withdrawn by the end of 1971
Prescription charges, abolished in 1964, were reintroduced
The raising of school-leaving age from 15 to 16 was deferred from 1971 to 1973, undermining the educational reform the Labour government had belied was essential in modernising Britain
