Labour and Conservative governments 1964-79 Flashcards

Question

Wilson & Investment

Answer 1

HIGH defence expenditure/more national resources to military than any other NATO country (bar USA) equals reduced investment in other sectors - endeavours to improve Britain’s transport network by building motorways in the north of England. - EncourageD development of manufacturing sites in south Wales, and Scotland - HOWEVER: sustained improvement in industrial productivity was undermined by government deflationary policies which imposed cutbacks to government investment.

Answer 2

SEEN AS FAILURE: - short-term focus on the balance of payment and the value of the sterling = labour no more successful than Tories in tackling underlying weakness of economy. - Rate of inflation have not slowed. - Unemployment was higher in 1970 then in 1964. - Britain’s relative decline also continued 1950: BRITAIN PRODUCED 25% OF WORLD EXPORTS OF MANUFACTURED GOODS - 1960 16% & 1970 11% - by not tackling long-term problems, Labour couldn’t achieve ambitious aims of modernisation!

Answer 3

Wilson’s perescpective: - Wanted to improve industrial relations and win, trade unions support for efforts to modernise. He believed strikes for higher, pay or disrupting production, forcing up labour costs and contributing to inflation. Believed that industrial relations needed to be more strongly regulated if controlling prices and wages were to succeed. - difficult situation because trade unions were there traditional allies, and provided most of their money plus the bloc votes at conferences could often prove decisive in determining party policy + trade unions held considerable economic power in the closed shop policy, and strikes in nationalised industries, which could cause disruption. Trade Unions perspective: - Countries lack of competitiveness should be blamed on employers and government. - Attempts to limit wage increases on family, penalised, low-paid workers. - Right of unions to bargain freely with their employers should not be restricted.

Answer 4

In April 1968, Wilson asked Barbara Castle to lead the newly established Ministry of Employment and Productivity to reform industrial relations, worried by press criticism and Conservative announcement of this plan to reform them. In January 1969, her white paper was published: - Employees, have legal right to join trade union. - Government could order ballot to be held before the strike if serious threat to national interest. - Government could order a return to work for a 20 day cooling off period. - Industrial commission had a legally binding decision about union disputes. Financial penalties if commission was not obeyed. - Unfairly dismissed workers would be entitled to compensation/their job back. LED TO 50 Labour MPs rebelling (wider resistance within party, TUC & Cabinet, led by Home Secretary Jim Callaghan) = contributed to fall of Labour 1970 (convinced others that unions had too much power & Labour resistant to change) HOWEVER traditional industries declined and white collar employment grew = most powerful unions lost members (NUM 1960 - 1970, 586,000 - 279,000) EVEN THOUGH membership of unions representing public centre of government, administration, health and teaching crew, this was not matched by private sector where many employers discouraged union membership)

Answer 5

LABOUR LOST - Wilson’s Complacency - Disillusionment of Labour Supporters - Failure of ‘In Place of Strife’ CONSERVATIVES WON - Conservative Policy Proposals - Heath’s Leadership

Answer 6

- Wilson’s Complacency Early opinion poll suggested Wilson had 51% approval rating compared to Heath 28% = Wilson exuded confidence = probably too relaxed as publication of poor trade figures, just before election Day dented labours claim that the economy was on the mend. - Disillusionment of Labour Supporters Membership of party fell 1964 - 70, 830,000 - 680,000: British foreign policy to supportive of USA (Vietnam - educated youth protesting), too much money on defence & not enough on welfare/education/economic regeneration. Poorer working class because of policies. Abandonment of historic commitment to socialism. - Failure of ‘In Place of Strife’ Initially impressed by Wilson’s promise to modernise Britain, BUT showed trade unions to be selfish to preserve power - sign of govt wider failure

Answer 7

- Conservative Policy Proposals Main ideas as application to EEC, attempts to control prices an income below would end, less state intervention, industrial relations law, reform to reduce number of strike days lost. - Heath’s Leadership Relentlessly attacked economic record of labour = inflation, as measured by retail price index, had risen by 35% and employment by over 200,000. Family dealt with major challenge to his authority when he sacked Enoch Powell (fierce opponent of Commonwealth immigration = ‘Rivers of Blood’ speech = resonated with white working class - 2.5 mill votes won = 5% swing - BUT letters of complaint to Heath) in 1968 from shadow cabinet

Answer 8

1970. Policy proposal suggested they would allow market forces to determine prices and wages. BUT Heath did not regard high levels of unemployment as acceptable/believes that government should use investment to regenerate rundown parts of the country = IN PRACTICE Heath’s aims were not that different from Wilson’s.

Answer 9

- Conservatives inherited inflation rate of 5% per annum = reached 10% for years later. - Level of employment in 1974 no higher than 1970 BUT the number of working days lost to strikes during Heath’s four years was double that of Wilson’s six. - Heath inherited a balance of payment surplus, but left a substantial deficit. - Coincided with a ‘world economic blizzard’, so how much of what went wrong was Heath’s fault?

Answer 10

Became full member of EEC on 1 January 1973. - 39 Conservative MPs voted against entry in October 1971, and while the Labor Party oppose the terms of entry, 69 voted in favour = not enough to give a comfortable majority. - By 1970, president de Gaulle had left office = Pompidou to opposed = higher chance for heath (passionate advocate). BUT had to enter of ‘French’ terms = angered Conservatives who were mistrustful of Europe = Britain had to Sacrifice remaining preferential trade deals with Commonwealth, and accept EEC policy of heavily subsidising French farmers = little immediate effect on Britain & relations with Europe have remained controversial ever since

Answer 11

Aim to balance right of individual workers with those of the union, while reducing the likelihood of strikes: - Workers have the legal right to join or not join (challenge legality of the closed shop) - The National Industrial Relations Court (NIRC), and the Industrial Relations Commission (IRC) were established which trade unions were required to register with = members of registered unions would enjoy better protection against unfair dismissal, and those that failed to register would be liable for claims for damages. - The act gave the government power to order a pre-strike ballot & impose cooling-off period of up to 60 days. FAILED = Similar to in place of strife = unpopular = TUC set out to make the act unworkable by telling its members to deregister and defy the NIRC = complicated Heath’s efforts to negotiate with TUC over strikes = increased bitterness & trade unions aimed to destroy Act & Heath. CREDIBILITY destroyed by 1972 ruling to release dock workers who refused to appear before NIRC.

Answer 12

Heath was less successful than Wilson = frequency of strikes increased ( 1970 - 74, 11 mill - 14 mill days lost) because of Industrial Relations Act and inflation. INFLATION was severe because: - 1971, Nixon ended system of fixed exchange rates = made British exports more expensive in US. - 1972, pound allowed to float freely, its value determined by the money markets = poor performance. - Worldwide is increase in commodity (raw materials) price.

Answer 13

Miner’s claim for 47% pay increase = well above government wage policy / 8% offered by National Coal Board. January 1972: 280,000 coal miners strike = government forced to declare state of emergency = regular power cuts out the country = by February, government, anxious for settlement and commission of inquiry, awarded the minors a large pay increase. WHY SUCCESSFUL? - Skilfully organised by Arthur Scargill = flying pickets. - Violent incidents, e.g. 15,000 mast pickets successfully prevented large supplies a few leaving Birmingham = did not seriously damaged public sympathy. - Government poorly organised to cope with strike and severe winter weather. IMAPCT: - Encouraged, other workers to strike for pay increase = successful strikes, add to inflationary pressure. - Government looked weak and emphasised failure of the Industrial Relations Act.

Answer 14

Began with intention to reduce state intervention in industry, and refusal to rescue, failing enterprises (called ‘lame ducks’) BUT… - January 1971, aircraft division of Rolls-Royce faced bankruptcy and was nationalised. - Heath was not prepared to allow unemployment to increase = February 1972, government granted, £35 million to ship guilders to safeguard 3000 jobs - Ministry for Industrial Development set up in April to provide aid for industry in deprived areas - statutory policies in November 1972 to regulate prices (DESTROYED BY OIL SHOCK)

Answer 15

Middle eastern oil, producing countries, angry at perceived Western support for Israel in war, cut back supplies and quadrupled prices = Britain dependent on oil for 50% of energy needs. November 1973, Miners began overtime ban in pursuit of pay claim that exceeded government limit = 13th December, declaration of state of emergency and introduction of three day working week to take affect from the 31st December (50mph speed limit on all roads, televisions off at 10.30pm) Further talks to resolve dispute FAILED and in February miners voted 81% in favour of strike action = Reminiscent of austerities of wartime = miners dispute eventually settled and NUM gained 21% wage increase = major defeat (NUM went on strike in early 1974, emboldened by its success, and he’s called immediate election ‘Who governs Britain?’

Answer 16

28 February: ‘Who Governs Britain? The govt or the miners?’ Heath hoped to get decisive support for Govt BUT result was unclear (Conservatives 37.9% & 297 seats, Labour 37.1% & 301 seats). Heath’s efforts to form anti-labour coalition failed & on 4 March 1974, Wilson became PM again.

Answer 17

- Minority government. After indecisive February election, Wilson held another to try to secure a majority. Wasn’t a ringing endorsement = small overall majority of three seats in October, but won fewer votes than in February. (Conservative 35.8% & 277 seats, Labour 39.2% & 319 seats). - Relations with trade unions. - Drift to the left in the labour party. - Labour party divisions over Europe. - Economic difficulties (stagflation, IMF loan) - Failure of Lib-Lab packed. - Winter of discontent.

Answer 18

To demonstrate 1971, industrial relations act had been unnecessary, Labor Party and TUC reached an agreement in 1973, called the Social Contract: - unions agreed to cooperate in trying to control wage increases. - Government promised to try to keep down prices and provide improved welfare benefits. - There would be a return to free, collective-bargaining over wages and no statutory income policy. BUT did not solve economic difficulties = wage increases continued to exceed inflation rate = view that the ‘govt gave and the unions took’. Jack Jones seen as most powerful man in country (leader of transport workers’ union). Suggested some shared objectives between govt and unions BUT only lasted until winter of 1978-79.

Answer 19

Labour Party move to left during four years of opposition, reflected in Cabinet appointments of Michael Foot at Department of Employment and Tony Benn as secretary of state for industry. Wilson promised to renegotiate terms of British membership of EEC and hold a referendum = new terms where British wins contribution to EC budget would be reduced were announced in March 1975, and date for nation’s first referendum was fixed for fifth of June 1975. - Wilson allowed Cabinet ministers freedom to campaign for either side. - Result was a 2:1 vote in favour of continued membership = seen as way to overcome economic difficulties. - SUCCESS = buried issue of Europe and appeared to pressure Labour Party unity BUT NONETHELESS March 1976 Wilson’s announced resignation at 60 years old,

Answer 20

Inflation reached nearly 30% by the middle of 1975, as wages rose faster than growth. World recession hit British exports and unemployment steadily increased from 542,000 in1974, to over 1.3 million two years later. Actions of Denis Healey: - 1975 budget increase taxes and cut government spending. - July 1975, formal incomes policy, setting is £6 per week ceiling on wage increases. This was later reduced to £4, the result was a gradual fall in the average level of wage increases from 26% in 1975 to 15% in 1976, and a 10% in 1977 = unpopular with left, reluctantly agreed to by TUC. UNSUCCESSFUL = 1976 crisis in confidence in pound anyway - Callaghan realised this was a result of Stagflation

Answer 21

September 1976; Healey resorted to asking the International Monetary Fund (IMF) for a loan of $3.9 billion = FORCED TO cut govt spending by $2 billion = cabinet eventually accepted terms in December = deepened rift between Labour leadership & left of party BUT Callaghan had prevented severe economic crisis (similar to 1931 - lost office for 14 years) becoming a political one.

Answer 22

1977-78 Public confidence in government undermined by economic issues = November 1976 opinion poll gave Tories a 25% lead of the labour. By-election losses meant government slim overall majority disappeared = March 1977 Callaghan negotiated deal with new Labour leader, David Steele = 13 liberal MPs agreed to support the government. The pact lasted until 1978.

Answer 23

1978-79 Government strategy for controlling inflation depended on union agreement to pay rises of no more than 5% = unions. Disliked Healey’s policies / believed he had abandoned social contract. - December, Ford workers 15% pay increase after 3 month strike - January 1979, lorry drivers demanded 30% rise in strike = petrol shortages - National Union of Public Employees (NUPE) demanded 40% increase followed = involved dustmen && gravediggers = rubbish piled up = unsympathetic portrayal of Labour in media. Callaghan appeared to be complacent and out of touch = ‘CRISIS? WHAT CRISIS?’ headlines / govt resort to pay increase created perception govt couldn’t manage economy or unions