Labour governments of Wilson and Callaghan 1970s - Industrial and economic reforms Flashcards
Describe the economic situation when Wilson came back into power.
It awful in 1974 when Wilson came back into power – inflation was at 15% and the balance of payments deficit was £3 billion.
Give 4 problems that the Labour Party had to face.
- Trade unions need dealing with
- The Northern Ireland situation was precarious
- The Labour party was less united than ever
- Wilson was older and less energetic.
Describe Wilsons attitude to the 1974 election. What was the outcome?
He felt safe to call new election. Voters still associated Heath and Conservatives with the 3-day week and conflict with the miners. Wilson won his majority but only just.
What did Wilson want to prove with Industrial relations?
He wanted to demonstrate that Labour was the party who worked better with the trade unions.
What did Wilson negotiate in 1973?
The Social Contract with the Trades Union Congress (TUC). The trade unions were sent a clear message that the government was not looking for any confrontations.
What did the National Union of Miners (NUM) allow Wilson to end?
The state of emergency and the 3 day week.
What did Wilson’s new chancellor, Denis Healey, issue?
Two budgets, first in March and then in July, both aiming to deal with the economic crisis without annoying the unions.
What was the first major economic problem?
Surge in inflation due to the rush of large wage increases that were deemed necessary to get out of the Heaths industrial crisis.
What did Dennis Healey do in 1975?
He made a speech in Leeds, giving a stern warning of the dangers: that wage inflation caused unemployment and that it was vital to control public spending.
What happened in April 1975?
Healey’s budget imposed steep rises in taxation, and public spending was cut.
What was set up in 1974?
Nation Enterprise Board (NEB) by Tony Benn.
What did the NEB aim to do?
To administer the government’s share holdings in private companies. It could also give financial aid. Its aim was to increase investment but by 1975 this was being questioned.
What company did the government nationalise and why did this cause controversy?
The failing car manufacturer British Leyland. This caused renewed controversy about the government rescuing ‘Lame Duck’ industries.
What also became apparent about the Social Contract? What happened in 1975?
It was not limiting wage demands.
1975 – more formal pay restraint policy was introduced – shifts in policy intensified party divisions.
What did left-wingers believe during this party division?
They did not want to put so much pressure on the unions and they also believed in more, not less, State intervention in industry.
