Wilson And Callaghan Flashcards
What Economic Problems did Wilson face taking office in 74?
- Inflation was at 15%.
- The value of sterling had fell after the ‘Nixon Shock’ in 1972 and the removal of fixed exchange rates.
- This made imports comparatively expensive, and there was thence a balance of payment deficit of £3 billion.
- Since Britain joined the EEC in 1973, they had to remove preferential Commonwealth trading practices and join the Common Agricultural Market.
What was Labours electoral situation?
They won in Feb 1974 with a hung parliament and no majority.
- A second election held in October gave Labour a majority of 3.
What was the Social Contract?
- The unions agreed to negotiate and enforce a voluntary pay restraint, with the TUC exercising its authority or keep pay demands down and, in return, the government would repeal Heaths Industrial Relations Act and offer welfare benefits to employees.
What was Healey’s inflation controlling budget?
- April 1975, steep rises in taxation and public spending cuts.
What was the National Enterprise Board?
- Set up under the Industry Act 1975, under the administration of Tony Benn.
- It’s role was to administer gov. share holdings in private companies and make compulsory planning agreements with private industry.
- Essentially intended to empower the state to help run the economy.
How successful was the National Enterprise Board?
- Criticised for its investment in nationalising British Leyland, a ‘lame duck’ industry.
- It’s successes, however, came in nationalising British Shipbuilders and helping create British Aerospace in the aircraft industry.
How successful was the Social Contract?
- Didn’t succeed, labelled vacuous.
- It was a toothless agreement rather than legislative therefore didn’t limit wage demands.
- By 1975 a formal pay restraint was imposed, splintering the party between Foot and Benn and the left who didn’t want to pressurise the unions.
What was Callaghan initially deemed as?
- A ‘safe pair of hands’, someone with experience in all main cabinet posts and with good links to the unions.
- Almost an ideal leader to maintain party unity.
Why did Callaghan apply for an IMF loan?
- The pound was under pressure, investors thought it was was overvalued and began selling.
What were the conditions for the IMF loan?
- Big spending cuts and tax raises in attempt to balance the budget in return for a £3.9 billion loan.
What were the positive effects of the IMF loan?
- Callaghan handled the crisis well and the economy recovered. Interest rates came down, and the pound started to regain its lost buying power.
What were the negative effects of the IMF loan?
Despite economic recovery, it reinforced an image of Britain in economic decline.
- The Conservatives denounced the loan as national humiliation, there was a growing of leftist militancy in the Labour Party who felt betrayed.
What was the economic situation by 1978?
- North Sea Oil had started to become on stream, affecting the balance of payments as Britains began to import less oil, by 1978 there were 9 oilfields in production.
- Inflation rates fell to 10%, unemployment started to fall but still high at 1.6 million.
- The number of days lost to industrial disputes was at a 10 year low.
What was the affect of the Lib-Lab pact?
- Labour lost majority in a 1977 by-election and faced a motion of no-confidence by the Conservatives. Callaghan formed a pact with David Steel and the Liberals to defeat the vote, in return for Labour promising devolution referendums in Wales and Scotland.
What were the 1978 devolution acts?
- Opened up referendums for devolved Assembly’s in Scotland and Wales.
- The terms of the referendums were set in order to make the passing unlikely.
- A clause that 40% of the electorate had to approve for devolution to pass made it hard.
