The Sixties - Economy

Question 1

What economic problems did Labour inherit?

Answer 1

deficit of £800 million
trapped in ‘stop-go’ cycle

Question 2

Why were labour reluctant do introduce deflation or devaluation

Answer 2

Deflation = old Conservative ‘stop-go’ approach
Devaluation = make Britain look weaker + would scale back its activities across the globe

Question 3

Solution to deficit

Answer 3

Department of Economic Affairs –> led by Gordon Brown

Question 4

DEA

Answer 4

National system of ‘economic planning councils’ established
Tried to establish agreement w/ trade unions + industries about wages + prices to prevent inflation rising and allow the gov. to implment controls to stop it

Question 5

DEA successful or unsucessful?

Answer 5

Unsucessful
- in competition w/ Chancellor Callaghan + orthodox Treasury
- Wilson tried to keep big personalities happy instead of picking the best people for the job

ABANDONED in 1967

Question 6

What was the new policy for dealing with inflation?

Answer 6

Prices and incomes policy which set limits of price rises + wage limits

Question 7

Sterling crisis 1966

Answer 7

Due to long strike from National Union of Seamen
Defeated by government but Left shocked by wilson’s critical attitudes –> relationship between gov. and trade unions breaking down

Question 8

Why did the gov. have to resort to devaluation?

Answer 8

1967 outbreak of war in Middle East affected oil supplies
National dock strike affected balance of payments

Question 9

Devaluation policy

Answer 9

value of £ dropped by 14%
gov. made defence cuts
increased interest rates

Question 10

Effects of Devaluation

Answer 10

damaged Labour’s credibility
2nd application to join EEC rejected

Question 11

Economic improvements made by…

Answer 11

Roy Jenkins
- replaced Callaghan as Chancellor
- strongly in favour of devaluation

Question 12

What did Roy Jenkins do?

Answer 12

Used deflationary methods
- increased taxes
- tightened gov. in all areas of economy

Made gov. unpopular

Economic improvement from 1969 –> 1970 general election victory

1969 achieved a balance of payments surplus BUT inflation still running at 12%

Question 13

Importance of relations w/ trade unions

Answer 13

Wilson reliant on union cooperation fro prices and incomes policy

Question 14

Why relations between trade unions + gov. begin to deteriorate in 1966?

Answer 14

National Union of Seamen strike –> Wilson critical
Wildcat strikes demonstated that union bosses were losing some of their control –> Conservative opposition announced Fair Deal at Work policy

Question 15

Labour response to strikes

Answer 15

In opposition to Conservative ‘Fair Deal at Work’, Wilson + Barbara Castle also wanted to use the law to limit unofficial strikes
Castle believed trade union movements should act responsibly

Produced