The Economy and Industrial Relations 1964 to 1970

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Created on: 25-11-16 18:32


	The Economy and Industrial Relations 1964 to 1970
	Advantages The gap between the rich and the poor had narrowed considerably. When taking the broadest measure of disposable income, individuals on the highest incomes suffered a fall of a third, whereas lowest incomes went up by 104%. Public expenditure had risen to 38% of GDP, compared to 33% between 1959 and 1964. There had been a 12.7% increase in spending on education, 12.6% increase in spending on health, and 14.3% in social security. Living standards overall did improve therefore. Living standards did increase overall therefore. Roy Jenkins had been able to secure a balance of payments surplus of £387 million. A mixed economy continued to be followed. There was the renationalisation of iron and steel in 1967, and in 1968 the Transport Act created national bus and freight companies.	Disadvantages Unemployment rose from 400,000 in 1964 to over 600,000 in 1970. However, this did not exceed 2.7% of the workforce, which is modest in comparison to later years. The end of Roy Jenkins' tough budget in 1968 came to a sudden end, leading to steep wage increases, causing inflation to occur as prices rose as people had more money and demand increased. Prices were 18% than in 1964, and inflation reached 12%. The Prices and Incomes Board and the tough budget was resented by the people as the standard of living decreased. There was still many 'stop-go' policies, along with devaluation, throughout the period, which went against labour's claim that it was the 'party of modernisation'. The EEC rejection made the government's economic policies look futile. The government had to approach the IMF twice, showing that it was unable to plan appropriately for the future. Some of the economic policies, such as the National Plan, highlighted Wilson's weaknesses as a leader, as he didn't always pick the best people for the job. The number of working days lost in strikes rose dramatically, from 2,277,000 in 1964, to 10,980,000 in 1970. This caused production to decrease. Yearly growth rate was at 2.2%, which was less than the conservatives had managed between 1951 and 1964, and was still behind other western European countries. The government was unable to control the trade unions, as 'In Place of Strife' fell through in a humiliating way. The government also failed in other polices such as the National Plan and the Prices and Incomes Board. Britain continued to spend high proportions of R and D on defence. 25.6% of R and D was spent of defence, compared to 0.9% in Japan and 10.3% in West Germany.
	Evaluation Modernisation of the British economy was one of the key priorities for the labour government. By 1964, it was widely accepted that Britain was lagging behind other countries such as West Germany and Japan. The affluence of the post-war boom had not been reflected in productivity or growth rates. Britain's economy seemed to be trapped in the cycle of 'stop-go', with bursts of prosperity always leading to inflation, runs on the pound and regular crises over balance of payments. Reorganising the break out of this cycle was the key aim, along with reducing inflation, increasing exports, and paying off overseas debt. However, the government didn't achieve any of these aims. On the other hand, the government did give way for a balance of payments surplus, a transformation in comparison to the balance of payment deficit of £750 million in 1964. Throughout the period economically, labour lost the support of trade unions and the working classes as although public expenditure increased, this negatively impact the society directly due to a rise in taxes, which in turn did not help the government, even if there was a balance of payments surplus.

The Economy and Industrial Relations 1964 to 1970

Advantages

The gap between the rich and the poor had narrowed considerably. When taking the broadest measure of disposable income, individuals on the highest incomes suffered a fall of a third, whereas lowest incomes went up by 104%.
Public expenditure had risen to 38% of GDP, compared to 33% between 1959 and 1964. There had been a 12.7% increase in spending on education, 12.6% increase in spending on health, and 14.3% in social security. Living standards overall did improve therefore. Living standards did increase overall therefore.
Roy Jenkins had been able to secure a balance of payments surplus of £387 million.
A mixed economy continued to be followed. There was the renationalisation of iron and steel in 1967, and in 1968 the Transport Act created national bus and freight companies.

Disadvantages

Unemployment rose from 400,000 in 1964 to over 600,000 in 1970. However, this did not exceed 2.7% of the workforce, which is modest in comparison to later years.
The end of Roy Jenkins' tough budget in 1968 came to a sudden end, leading to steep wage increases, causing inflation to occur as prices rose as people had more money and demand increased. Prices were 18% than in 1964, and inflation reached 12%.
The Prices and Incomes Board and the tough budget was resented by the people as the standard of living decreased.
There was still many 'stop-go' policies, along with devaluation, throughout the period, which went against labour's claim that it was the 'party of modernisation'.
The EEC rejection made the government's economic policies look futile.
The government had to approach the IMF twice, showing that it was unable to plan appropriately for the future.
Some of the economic policies, such as the National Plan, highlighted Wilson's weaknesses as a leader, as he didn't always pick the best people for the job.
The number of working days lost in strikes rose dramatically, from 2,277,000 in 1964, to 10,980,000 in 1970. This caused production to decrease.
Yearly growth rate was at 2.2%, which was less than the conservatives had managed between 1951 and 1964, and was still behind other western European countries.
The government was unable to control the trade unions, as 'In Place of Strife' fell through in a humiliating way. The government also failed in other polices such as the National Plan and the Prices and Incomes Board.
Britain continued to spend high proportions of R and D on defence. 25.6% of R and D was spent of defence, compared to 0.9% in Japan and 10.3% in West Germany.

Evaluation

Modernisation of the British economy was one of the key priorities for the labour government. By 1964, it was widely accepted that Britain was lagging behind other countries such as West Germany and Japan. The affluence of the post-war boom had not been reflected in productivity or growth rates. Britain's economy seemed to be trapped in the cycle of 'stop-go', with bursts of prosperity always leading to inflation, runs on the pound and regular crises over balance of payments. Reorganising the break out of this cycle was the key aim, along with reducing inflation, increasing exports, and paying off overseas debt. However, the government didn't achieve any of these aims. On the other hand, the government did give way for a balance of payments surplus, a transformation in comparison to the balance of payment deficit of £750 million in 1964. Throughout the period economically, labour lost the support of trade unions and the working classes as although public expenditure increased, this negatively impact the society directly due to a rise in taxes, which in turn did not help the government, even if there was a balance of payments surplus.

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The Economy and Industrial Relations 1964 to 1970