Wilson's Economic Policies (1964-1970)

Question 1

Devaluation (1964)

Answer 1

• Devalued the £ in hope of trying to fix the balance of payments deficit
• Reduced exchange rate from $2.80 to $2.40, by 14%
• Made a broadcast on live TV addressing the nation, usually only done in times of war
• Assured viewers that devaluation did not mean that the pound in their pocket was worth anything less
• Seen as a pathetic attempt to save face, later mocked for
• 1949: Atlee also devalued - Wilson trying to avoid Labourer being known as the party of devaluation
• Angered trade unions by Wilson’s attempt to lay most of the blame on the strikers
• Unnecessarily turned into a television drama spectacle

Question 2

Department of Economic Affairs (DEA)

Answer 2

• Created to plan long-term economic growth
• Treasury would plan short-term economic growth
• DEA responsible for the National Plan for economic development, introduced by George Brown
• He introduced vague ways in which Britain should increase its GDP
• Policy caused rivalry between Brown (DEA) and Callaghan (Treasury)
• Brown was moved in 1966 to the Foreign Office
• DEA abandoned in 1967

Question 3

Incomes & Prices Policy

Answer 3

• Set limits on prices, wage freezes between unions and employers
• Solution to solve the wage-price spiral
• Implemented by Incomes and Policy Board to control inflation
• Caused trade unions to strike over wages
• ‘Wildcat strikes’ started, e.g. Seamen’s strike in 1966-1967
• Frank Cousins, trade unionist, resigned as Minister of Technology over the policy

Question 4

Roy Jenkins Post-Devaluation Boom
(1967-1970)

Answer 4

• Jenkins replaced Callaghan, supported devaluation since 1964
• Jenkins used deflationary ‘Stop’ policies, raising taxes/cutting spending, to improve the balance of payments deficit
• Policies made government unpopular, especially amongst trade unions
• 1969: balance of payments surplus had been achieved
• 1969-1970: inflation still running at 12%
• Improvement in the economic situation made Labour confident in winning the 1970 election

Question 5

Devaluation Historiography

Answer 5

• Wilson overestimated the seriousness of the BoP deficit
• Private sector of the economy, not a BoP deficit, in fact a positive BoP surplus
• 1967: -14.3%
• 1976: -14.8%
• 1992: -17.2%
• EU Referendum: -18.4%
• 2008: -26.7%
• 1949: -30.6%