Problems Of The Labour Government Flashcards
(8 cards)
Was the party divided over EEC membership ?
To an extent, the party held a referendum in June 1975 which saw a 2:1 successful vote in favour of remaining
- cabinet members were encouraged to campaign for their individual side
What else was a problem for Wilson’s government ?
The social contract as listed above which failed to stop strike action in 1978-79
What happened to the ongoing problem of high inflation and the broader economy ?
Miners strike and recession
- settled a 1974 miners strike with a 29% pay increase causing inflationary rates to reach 30% mid 1975
- worldwide recession hit Brit exports, economic growth slumped and unemployment increased from 542k in 1974 to 1.3 million by 1976
What does Denis Healy, COE do to try and counteract the high inflation?
1975 tax increase and cut of government spending hoping money out of the economy would reduce prices
- July 1975 Gov introduced incomes policy and a year later imposed tighter restriction resulting in a gradual fall of average wage increase from 26% in 1975 to 15% in 1976 down to 10% by 1977
- cutting the government spending was very unconventional for a Labour government
What was the impact of the deflationary measures on the pound and why was this harmful to Britian ?
Falling exchange value threatened to push up the price of British imports worsening inflation
- Bank of England bought pounds on the foreign exchange in order to prop up its value but this threatened to use up the nations currency reserves
NATIONAL BANKRUPTCY THREATENED
Who replaces Wilson and when ?
Wilson resigned in March 1976 and was replaced by James Callaghan
How did Callaghan avoid a political crisis in 1976 ?
September 1976 Healy asked the International monitory fund for a loan of $39000 million but to secure this government would have to cut spending by £2 billion
- term accepted in early December - deepened the rift between Labour leadership and Labour left however Callaghan prevented this becoming a political scandal
What was the lib lab pact in 1977-78?
Loss of confidence led to a pact with the 13 Liberal MPs
- November 1976 Gallup opinion polls gave conservatives a 25% lead over Labour
- March 1977 Callaghan made a deal with the Liberal Leader David Steel where the thirteen liberal MPs would support the government
