Labour Great Britain (1964-1970)

Labour Government 1964-70

Wilson Government 1964-66

  • Inflation and a balance of payments deficit faced this government
  • The deficit was £800 million
  • International fear that Labour would devalue £ as in 1931 and 1949
  • There was a run on the £ as foreigners withdrew their money from London
  • International Monetary Fund willing to lend £1000 million while government took measures to rectify this
  • The government aims were –
    • Reduce inflation
    • Increase exports
    • Pay off overseas debts
    • Improve the economy and make Great Britain more competitive

Department of Economic Affairs

  • This was a new ministry to deal with the economy
  • Run by George Brown (deputy Labour leader)
  • Got employers and unions to sign:
    • The National Plan for industrial modernisation and expansion
    • The Declaration of Intent – an agreement to hold down wages and prices

Regulation

  • Prices and Incomes Board established to approve increases in wages and prices
  • The Industrial Reorganisation Corporation to help firms to merge into larger bodies
  • Leyland merged with the British Motor Corporation in hope of increasing ability to compete internationally

Other Reforms 1964-66

  • Prescription charges ended
  • Rent rebates for less well off
  • Local Education Authorities told to submit plans for introduction of comprehensive education
  • February 1966 white paper for Open University or ‘University of the Air’ – copied by other countries and remains the most enduring of this government’s reforms

1966 Election

  • People blamed Tories for £800 million deficit
  • They found it hard to argue against Labour policies
  • Their new leader, Edward Heath, was unknown to the electorate
  • Living standards had risen before the Incomes Board had intervened
  • So inflation and falling value of £ abroad not noticed

Result 

  • Labour 363
  • Conservatives 253
  • Liberals 12

Wilson Government 1966-70

Problems

  • Workers forced wage increases despite Income Board decisions
  • Strikes especially in car industry even though their leaders had signed the Declaration of Intent
  • Inflation got worse
  • James Callaghan, Chancellor of the Exchequer, introduced –
  • Prices and Incomes freeze – no increases allowed
  • 1966 budget – introduced Selective Employment Tax (SET) whereby employers paid a tax on every person employed, to force firms to modernise and reduce the amount of this tax paid
  • Credit squeeze included:
  • Reduced government spending
  • Higher interest rates
  • Hire Purchase regulations strengthened
  • Made it harder to sell goods in Great Britain so firms forced to export

Seamen’s Strike

  • Exports fell
  • Imports arrived in foreign ships
  • Balance of payments worsened

1967

  • National Plan abandoned
  • International Monetary Fund asked for a bigger loan
  • Government spending cut: education, housing and public works
  • Increased credit squeeze
  • De Gaulle said Great Britain too weak to enter European Economic Community

1967-9

  • Devaluation reduced £ to $2.40
  • Result – exports cheaper, imports dearer
  • 1968 tougher credit squeeze introduced by Roy Jenkins (new Chancellor)
  • Taxation rose too

1970

  • 1968-70 exports rose
  • 1970 GB exported £800 million more than imported

Problems in 1970s

  • Inflation – prices 18% higher than 1964
  • Jenkins abandoned wages freeze
  • Unions secured massive wage rises
  • This would increase inflation
  • Labour voters angry because the government was using ‘Tory policies’ to cure inflation
  • Wage freeze was resented – gas, electric. etc allowed to rise so people’s living standards fell

‘In Place of Strife’ 1969

  • White Paper from Barbara Castle (Secretary of State for Employment)
  • Proposed limit on union powers – made them angry
  • Withdrawn as unions threatened to withhold their support at next election
  • This lost support of many moderate voters who wanted unions controlled

Immigration

  • Asians with Great British passports expelled from Kenya by the African government to end their domination of economic life there
  • Labour brought in a new Immigration Act (1968) to step immigrants entering Great Britain unless they had family connections here
  • It was amended to let the Kenyan Asians in

Ulster

  • 1968 Civil Rights Movement founded
  • Protestant majority refused to agree to its demands
  • Serious disorder followed

Regional Nationalism

  • Grew because unemployment higher in Wales and Scotland
  • Plaid Cymru won a by-election in Carmarthen (Wales)
  • Scottish National Party (SNP) won a seat at Hamilton
  • Heath promised that the next Conservative government would give Scotland its own Assembly

1970 Election

  • Labour unpopular with its own voters due to –
  • Wage freeze
  • Lower living standards
  • Credit squeeze
  • Spending cuts
  • Castle’s White Paper
  • Young voters opposed Labour’s ‘Tory policies’ and turned to ‘direct action’ –
    • Anti-Apartheid Movement
    • Stop the Tour Campaign to stop South African cricket team playing in England
  • Heath promised to lower the rate of price increases
  • Conservative policies would be best implemented by a Conservative government i.e. cuts, credit squeeze and higher interest rates

Result

  • Conservatives 330 seats
  • Labour 287 seats
  • Liberals 6 seats

 

Category
World History (Post 1945)
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