The Economic Polcies Of The 1964-1970 Labour Government

Question 1

What were the difficulties facing the Labour government in 1964?

Answer 1

• Balance of payment deficient of £800 million
• Labour blamed it as a symptom of lack of competitiveness which could only be fixed by making better goods so more competitive

1. Improve efficiency by investing in new tech and machinery
2. Grant wage increase only if workers were more productive

Question 2

Why in 1964 did the Wilson government rule out devaluation ?

Answer 2

• Ruled out devaluation believing it would reduce the savings of working class families who they should defend and devaluation had in 1949 severely damaged the Attlee government
• Wilson’s didn’t want to be seen to take the ‘easy way out’

Question 3

When and what action did the Wilson government first take on the economy ?

Answer 3

• Autumn 1964 Jim Callaghan COE negotiated a series of foreign loans over the next 9 months and introduced an increased tax on tobacco and alcohol
• However it meant that Brit bases in the far east maintained, Brit had to fight in Borneo defending Malaysia from Indonesia and US demanded support in Asia

Question 4

Did Deflation work ?

Answer 4

It prevented a run on the pound and reduced the balance of payments deficit however this was undermined by a failure to impose proper wage restraint and government departments perusing contradictory measures

Question 5

After deflation, what measure did the Labour government caved into ?

Answer 5

18 November 1967 Devaluation as the government was left with no other option pound devalued from $2.80-$2.40
- the May 1966 Seamen strike demanding pay increase undermined pay guides
- it threatened trade export and poor figures threatened a run on the pound

Question 6

What was the result of devaluing the pound ?

Answer 6

• lead to government announcing in 1968 all British forces east of the Suez bar the Persian gulf and Hong Kong would see a withdrawal of British forces by 1971
• undermined manifesto policies
  1. Prescription charges abolished in 1964 were reintroduced
  2. Raising of schools leaving age from 15-16 deferred from 1971-73
  Undermined social initiative

Question 7

When and what was Labour biggest economic initiative ?

Answer 7

September 1965 National plan
- two ambiguous targets of a 5.25% increase in export each year to wipe out BOPD and a 3.8% annual growth rate over the next 6 years

Question 8

What did the government create as part of the national plan ?

Answer 8

• the National Board of Price and Incomes (NBPI) to ensure wage increase only granted if there was an increase in productivity
• the new department of economic affairs (DEA)

Question 9

Did the national plan have much success ?

Answer 9

No
- The treasury safeguarded its role as governments economic ministry and were uncooperative with the DEA
- The DEA and the treasury perused contradictory measures to solve the economic problems
- The NBPI lacked any real power to enforce its wage restraints and only showed Labour was willing to undermine their special relationship to the unions

Question 10

What are some signs of the lack of progress made ?

Answer 10

• unemployment rose to 2.5 million in 1967 a post war high
• devaluation of the pound
• Britains percentage share of world export do manufactured goods decreased from 16% in 1960 to 11% in 1970