T3 Economic Flashcards
1
Q
The Barber Boom
A
- The ‘Barber boom’ began, with a rise of inflation, along with unusually rising unemployment and a lack of economic growth – leading to a new phrase – stagflation.
- Unemployment rose towards 1,000,000.
2
Q
Heath’s economic U-Turn
A
- Seldon policies included an end to state subsidy of ‘lame duck industries’, but Heath’s government nationalised Rolls Royce in 1971 and govt money poured into Upper Clyde shipbuilders to prevent their bankruptcy.
3
Q
Yom Kippur War and Oil Crisis of 1973
A
- Govt attempts to modernise industry seemed to be working well, as unemployment reduced to 500,000 by 1973 – however success was short-lived.
- OPEC (Organisation of Petroleum Exporting Countries) led by Saudi Arabia aimed to protect the interests of its members and imposed an oil embargo, which meant there was a stop in exports, which led to shortages and a rise in fuel prices in the UK, and long queues outside service station.
- This situation encouraged the miners to strike as the fuel crisis piled pressure on the government regarding energy.
4
Q
Industrial Relations and the 1972 Miners’ Strikes & The 1973 Three-Day-Week
A
- Heath inherited several industrial relations issues; a dockers’ strike, a large pay settlement for dustmen, a postal workers’ strike and a go-slow by power workers which led to power cuts.
- Industrial Relations Act – similar to ‘In Place of Strife – it set up an Industrial Relations Court and provided for strike ballots and a ‘cooling off’ period before official strikes.
- BUT – the TUC (Trade Union Congress) and the CBI (Confederation of British Industry) were opposed to it.
- There were major strikes in 1972 – by miners, ambulance drivers, firefighters, civil servants, power workers, hospital staff and engine drivers – there were 23,909,000 days lost to strikes that year.
- Miners’ Strike – 9 July 1972 – the use of flying pickets by Scargill virtually stopped the movement of coal. By 9 February 1972 the government had declared a State of Emergency, closed schools and 1.2 million workers were laid off.
- A three-day-week was imposed to save electricity and the Wilberforce Committee was established to rule on the Miners’ demands.
- The Wilberforce Report approved generous wage increases that the leader of the NUM Joe Gormley was able to negotiate.
- Heath then returned to the policy of trying to manage wage demands by passing the Industry Act of 1972 which aimed to involved the government, TUC and CBI in agreeing wages, prices and investment and benefits.
- This policy was heavily criticised as being socialist by right-wingers such as Enoch Powell and later by Thatcher.
- The 1973 oil crisis prompted another big wage demand from miners which the govt felt would only increase inflation.
- A national coal strike was launched in Jan 1974, Heath re-imposed the three-day-week and called an election for 28th February 1974 on the issue of ‘Who governs Britain?’
5
Q
How effective was Wilson handling of the economy 1974 – 1976?
A
- The Labour Party inherited a mess in March 1974. Inflation was 15%, balance of payment deficit at £3 billion, the Labour Party was divided over issues such as Europe, and Wilson was older and less energetic than 1964.
- Wilson called another election in Oct 1974, and won an overall majority of 3 seats, with Labour gaining 18 seats and Conservatives losing 21 seats.
6
Q
Wilson’s Industrial relations: 1974 – 1976
A
- Wilson had negotiated the Social Contract with the Trade Unions while in opposition in 1973.
- The Social Contract would involve voluntary pay restraint (ie. The Unions would not demand high pay rises) and in return the Labour government would repeal (remove) Heath’s Industrial Act and Pay Board.
- Two left-wingers – Benn and Foot were put in charge of the departments of Industry and Employment, and the budgets of Chancellor Healey in 1974 aimed to tackle the economic crisis without annoying the Unions.
7
Q
Wilson’s Economic Reforms 1974 – 1976
A
- There was a surge of inflation due to the government needing to settle the wage disputes that had brought down the Heath government.
- Healey warned of the need to control public spending, and his budget of April 1975 introduced big tax increases and public spending cuts.
- The National Enterprise Board (NEB) was set up in 1974 and led by Benn, with the job of handling govt share holdings in private companies. The NEB could also give financial aid.
- The NEB’s decision to bail out car manufacturer British Leyland caused controversy due to the fact it was a bail out of a lame-duck industry.
- The Social Contract was also failing to limit wage demands.
- In 1975 a more formal pay restraint policy was introduced – and these shifts in policy sharpened divisions – with left wingers such as Benn and Foot arguing for less pressure on TU’s and more govt intervention in the economy.
8
Q
Callaghan’s premiership: 1976-1979
A
- Callaghan gave a speech in Sept 1976 which seemed to hint at the decline of the post-war consensus.
- He was critical of the Cons and Lab govt of past 20 years for failing to tackle the ‘twin evils’ of inflation and unemployment.
- Callaghan warned that the ‘cosy world’ of the govt ensuring full employment was gone.
- The speech was in preparation for the fact that the govt was preparing to apply for an emergency loan from the IMF of £3 billion.
- The IMF insisted that the govt make big spending cuts in return for receiving the money.
- Although Callaghan arguably handled the IMF crisis well and the economic picture was not as dire as believed, this was still damaging for the government.
- The Conservatives could claim it was a humiliation, and the left wing of Labour saw it as caving into the pressures of international financiers.
- The IMF bailout reinforced the global picture of Britain being in decline – the sick man of Europe.
- The fact 9 North Sea oilfields were in production by 1978 helped the economy – inflation rates fell to 10%, unemployment was still 1.6 million but falling, and the number of days lost to strikes was at a 10 year low.
9
Q
‘The British Disease’
A
- It was around this time that foreign journalists coined the phrase of the ‘British Disease’ to describe the combination of Britain’s bad employer-worker relations and the constant industrial stoppages caused by trade union strikes.
10
Q
Callaghan & Industrial Unrest (1976 - 1979)
A
- The industrial unrest that followed in the wake of the 1976 IMF Crisis of that year set a pattern that was to continue throughout Callaghan’s three years as Prime Minister.
- There was scarcely a month in which a strike did not occur somewhere; even the moderate trade unions became involved in strike action.
- From December 1977 the trade unions became more sweeping in their demands and more aggressive in their tactics following the government announcement of a maximum 5% ceiling on wage rises.
11
Q
Private Sector Workers Strikes (1976 - 1979)
A
- A year-long strike beginning in 1977 at the Grumwick photographic works in North London involving the mass picketing and violent clashes with the Police.
- The workers of all 23 plants of Ford Motors went on strike in September 1979; the dispute was settled only by Ford management giving in and granting a 17% pay rise.
- A lorry drivers’ strike, called in January 1979, threatened the nation’s food supplies; it was called off after the drivers had gained a 20% wage rise.
12
Q
Public Sector Workers Strikes
A
- A particularly significant development was increased militancy amongst public sector workers.
- Not wishing to miss out on the very large pay settlements, following trade union strikes in the private sector, public sector trade unions began to make demands.
- They felt they had a strong case since they were the ones who felt most victimised by the government’s cuts in public expenditure.
- It was their sense of grievance that intensified the industrial troubles and led to what became known as the 1978 – 1979 Winter of Discontent.
- Taking their cue from the success in the haulage lorry drivers, an alliance of public service trade unions, including the influential National Union of Public Employees (NUPE) and Confederation of Health Service Employees (COSHE), called for a day of action.
- On 22nd January 1978, around 1.5 million workers responded by coming out on strike.
13
Q
Attracting Maximum Media Publicity
A
- Following this impressive success, selective strikes were organised in areas calculated to attract the greatest media attention.
- The school meals service was disrupted, mounds of refuse were left to pile up uncollected and, perhaps most dramatic of all, industrial action by grave diggers left dead bodies unburied.
- The media had a field day with all this, but their depiction of a collapsing Britain was not all exaggeration.
- The Wilson and Callaghan governments had failed to meet their own expectations and the hope of the trade unions.
- They had alienated large sections of their natural supporters and given encouragement to the Conservative opposition.
