1964-70: Wilson's ideology and leadership and economic policies and problems

Question 1

Why were people beginning to favour Labour over the Conservatives?

Answer 1

Labour seemed to be more in touch with the social and cultural trends of the 1960s.

Question 2

Why did Wilson appeal more than Heath?

Answer 2

• He was a better tactician and able to portray a more attractive image to voters (first PM from working-class background).
• He cultivated a personal image as a great moderniser and being down to earth.

Question 3

What was the ‘white heat’ of technological change?

Answer 3

A state of intense activity or excitement in technological change.

Question 4

Describe Wilson’s ‘white heat’ speech.

Answer 4

He claimed that if the country were to prosper, a ‘new Britain would need to be forged in the ‘white heat’ of this ‘scientific revolution’.

Question 5

What personal issues did Wilson have?

Answer 5

He was anxious and insecure about his leadership. He relied heavily on a personal team of trusted advisors from outside the government and civil service.

Question 6

What economic problems had Labour inherited by 1964?

Answer 6

Britain’s economy being trapped in the cycle of ‘stop-go’ as well as a deficit of about £800 million.

Question 7

What was one of the main priorities of the Labour government?

Answer 7

Modernisation of Britain’s economy. By 1964 Britain was lagging behind other countries such as West Germany and Japan.

Question 8

What were the two classic economic solutions to the deficit of £800 million?

Answer 8

Deflation or devaluation, however, neither Wilson nor his Chancellor of the Exchequer, James Callaghan, agreed with these solutions.

Question 9

What were the pro’s of deflation?

Answer 9

Supports the value of the pound and prevents inflation.

Question 10

What were the con’s of deflation?

Answer 10

• This was the old ‘stop-go’ approach that Labour was determined to break away from.
• Fears that it would stop the Labour Party from meeting its manifesto commitments of extra spending on welfare and technology

Question 11

What were the pro’s of devaluation?

Answer 11

Makes imports more expensive to help exporters by making British goods cheaper in other countries (helps balance of payments).

Question 12

What were the con’s of devaluation?

Answer 12

• Would make Britain look and be weaker as it would have to scale back its activities across the globe.
• Wilson feared Labour would gain reputation as party of devaluation, (already devalued the pound under Attlee in 1949).

Question 13

What was done instead of deflation and devaluation?

Answer 13

The DEA was set up (department of economic affairs), led by George Brown.

Question 14

What did Brown do?

Answer 14

• Set growth targets and devised a national system of ‘economic planning councils’.
• Tried to establish voluntary agreement about wages and prices with industrialists, trade union leaders and civil servants.

Question 15

Why did these economic proposals come to nothing?

Answer 15

Did not have united government support

• Some blamed Brown, as he could be impulsive and inconsistent.
• Others blamed old-fashioned and anti-labour civil servants.

Question 16

What was the aim of the DEA?

Answer 16

To secure the restraint needed to prevent inflation rising which the government would then need to stop with controls (avoids ‘stop-go’)

Question 17

What did the government do after the DEA?

Answer 17

Brought in a prices and incomes policy to keep down inflation, implemented by a Prices and Incomes Board.

Question 18

What happened in 1966? What was the outcome?

Answer 18

Sterling crisis – caused in part by a long and bitter strike by the National Union Of Seamen. Government defeated the strike butt many on the left were shocked by Wilson’s critical attitude to the strikers.

Question 19

What happened in the aftermath of the sterling crisis?

Answer 19

Frank Cousins resigned from the cabinet over the incomes policy. The relationship between government and the unions was starting to break down.

Question 20

What happened in 1967?

Answer 20

An outbreak of war in the Middle East affected oil supplies and a major national dock strike in August 1967 affected the balance of payments.

Question 21

What did the events in 1967 mean?

Answer 21

Devaluation could not be avoided

• The pound dropped by 14% to 2.40 US dollars
• Labour made defence cuts and introduced hire purchase restrictions and higher interest rates.
• Party’s credibility was damaged.

Question 22

What further made Labour’s economic policies look futile?

Answer 22

Having the second EEC application in rejected in 1967 hard on the heels of the devaluation crisis.

Question 23

When did the economic crisis improve?

Answer 23

When Roy Jenkins became chancellor in 1967.

Question 24

What did Jenkins do?

Answer 24

• Used deflationary methods
• Raised taxes
• Tightened up government spending in all areas of the economy, giving top priority to improving the balance of payments.

Question 25

What was the result of Jenkins’ methods?

Answer 25

Tough measures made the government seem unpopular but by 1969 Jenkins had achieved a balance of payments surplus (although 1969-1970 inflation was still running at 12%).

Question 26

What was the improvement in the economic situation from 1969 was a key factor in?

Answer 26

Making Labour confident of victory in the 1970 general election.