Heath's government 1970-74 Flashcards
Heath’s initial aim as PM
Following progressive policies.
He declared that he was adopting a new style of government and that he intended to reduce the rise in prices, increase productivity and reduce unemployment.
He intended to break with the consensus.
Selsdon man- the Conservatives agreed to promote hands off approach in matters of government direction and encourage people to use their new freedom to promote their own interests.
Abandoned an incomes policy, government wouldn’t seek to impose wage and salary freezes or interfere with pay settlements.
Industrial relations act
1971.
An extension of ‘in place of strife’
It restricted the workers right to vote.
A national relations court as set up with the authority to judge the validity of strike action.
Unions were required to put themselves on a government register.
Barber
His early measures included:
Income tax cuts
Reductions in government spending
Scrapping of the prices and incomes board.
Cuts in the subsides paid to local authorities.
Heath’s U turn
Inflation had risen to 15% by the end of 1971.
Declining industrial output destroyed the governments confidence.
In 1972, they announced that they would return to try and control inflation by controlling prices and incomes.
Nationalised Rolls Royce in 1971, and paid £34 million to keep Upper Clyde Shipbuilders going.
Problems with the unions
Heath appealed to the unions to sit down with the government.
The TUC formally resisted the Industrial relations act. This meant that the unions responded by refusing to register. This made Heath and his cabinet seem incompetent and unrealistic.
NUM- in 1972, in a joint bid to gain a wage increase and to highlight the increasing number of pit closures, they called a strike, in which they used flying pickets to prevent the movement of coal.
This disrupted fuel and electricity supplies and reduced industrial production.
3 day week
Heath hoped to defeat the miners by imposing severe limits on the use of fuel, thereby enabling to government to resist the NUM’s attempted blackmail.
In December 1973, he introduced the 3 day week.
When the miner’s strike was eventually settled, the NUM gained a 21% increase, almost 3 x the amount that the employers had originally offered.
Emboldened by their success, the NUM went on strike again in 1974, in pursuit of a further wage demand.
1974 general election
Deemed a failure.
Government had achieved none of their economic goals:
Rapid inflation made the holding down of prices impossible
Wage demands and many strikes led to a decline in productivity
Unemployment hadn’t been reduced
Resort to 3 day week showed failures
Reform of local government
Local government act (passed in 2 stages 1972/73.)
It reshaped the structure of local governments.
Whole areas were subsumed into newly created regions and many familiar places disappeared. There were many protests.
Entry into EEC
Following De Guales retirement in 1969, the EEC had invited Britain to reapply.
Heath told his party that the economic situation made it essential that Britain joined.
Heath signed the Treaty of Accession in 1972, which led to Britain becoming a full member.
Weaknesses of Britain’s bargaining position
The 6 knew that Britain had sought membership because they couldn’t survive economically on their own.
Britain couldn’t negotiate from strength.
Existing members wouldn’t allow Britain to change the workings of the system they created.
Britain accepted the demand that Commonwealth food and goods would no longer enter Britain on preferential terms.
Sacrificed economic ties with the Commonwealth.
The international oil prices rise
Heath hoped that joining the EEC would benefit British recovery.
From the early 1960s, OPEC members had begun to establish greater control over their own oil industries.
In retaliation for the West’s support of Israel in the Arab- Israeli war, the Arab members of OPEC drastically reduced their oil supply to those Western countries who they believed had sided with Israel.
Between 1973-1980, the cost of oil rose from $2 to $35 barrel.
The result was rapid inflation.
Economic effects of oil price rise
Balance of payments deficit rose to £1 billion.
Annual inflation rate rose to 16%.
Value of the sterling dropped to $1.57
Interest rate was raised to 15%.
Between 1974-76, unemployment figures more than doubled.
