Economy 1964-1970

economic aims of Labour

economic aims of Labour

• modernisation of the British economy

• reorganising the economy to break out of the stop go cycle

economic problems by 1964

• trapped in the stop-go cycle

• deficit of £800 million - this could be addressed through either deflation or devaluation

deflation

reducing rates of inflation

• this would support the value of the pound, but it was an old ‘stop-go’ approach that Labour were trying to move away from

devaluation

lowering the value of the pound

• would make exports by making British goods cheaper in other countries, encouraging trade

• but would make imports to the UK more expensive

• would also make Britain appear weaker internationally, as they would have to scale back global activities

DEA

Department of Economic Affairs set up in 1964 by George Brown

• DEA set growth targets and devised a national system of economic planning councils

• aim - to secure the restraint needed to prevent inflation

Prices and Incomes Act

1966 - establishes a Prices and Incomes board which works to keep down inflation

examples of economic successes

house construction increases, higher infant mortality and low tariffs

DEA failures

• DEA did not have united gov support

• virtually in competition with Chancellor of the Exchequer, Callaghan, Brown undermined

• 1966 - Wilson moves Brown to be foreign secretary

• DEA abandoned 1967

Seamen’s strikes

1966-67 - National Union of Seamen go on strike

• eventually defeated by government, but this deteriorated the relationship between Labour and unions

• contributed to the Sterling Crisis of 1966

devaluation in 1967

brought the value of the pound by 14% to $2.40

devaluation impact

• Wilson gives a speech on ‘the value of the pound in your pocket’, causing more panic than necessary

• short term success = increased trade, improving the balance of payments

Chancellor Callaghan replaced by…

Jenkins in 1967

Jenkin’s deflationary measures:

1967 - raising taxes, tightening government spending

His top priority was improving the balance of payments

Balance of Surplus achieved

on 1969 - an economic success for Labour, Jenkin’s top priority

inflation by 1967

12% - deflationary measures directly impacted the average voter, received negatively

Context to In Place of Strife

1966-67 trade union & industrial relations deteriorating, wildcat strikes arise (unofficial and local disputes)

Employment Minister

Barbara Castle

In Place of Strife Year

1969

In Place of Strife Propositions

• 28 day ‘cooling-off’ period before a strike can go ahead

• imposing strike ballots before strikes can happen

• setting up an industrial relations court

• gov. would be able to impose settlements on disputes between unions

Positive reception to In Place of Strife

some saw that it tried to limit the economic damage that strikes caused - seen in the recent seamen & dockers’ strikes, strike action was a prominent economic problem

Negative reactions to In Place of Strife

‘political suicide’ - unions were appalled, seemed like Labour was betraying their roots

Home Secretary James Callaghan and other Labour leaders linked to trade unions threatened to rebel

the white paper did not go through