Conservative Decline and the Rise of New Labour - Economics (AQA compete notes 14/16)

These notes are for the 'Making of Modern Britain' course on AQA and as such follow the spec, although would be useful for all modern britian courses. They contain hystoriography, detail and explanations. 

The notes are devided into the sections of the spec, therefore there are 16 documents (as there are 4 areas (politics, economics, society, and foriegn policy) and there are 4 periods (Post war, Wilson + heath, Thatcher, and Blair)). 

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Preview of Conservative Decline and the Rise of New Labour - Economics (AQA compete notes 14/16)

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Conservative
decline
and
the
rise
of
New
Labour,
1990-2007
­
Economy
`Black
Wednesday'
and
its
impact
on
the
economy
and
public
opinion;
the
role
of
economic
issues
in
weakening
support
for
the
Conservatives;
Labour's
economic
policies
and
their
impact,
1997-2007
John
Major
1990-1997
Chancellor
of
the
Exchequer
­
Norman
Lamont
Issues
of
1990
- When
Major
became
leader
in
1990
­
he
inherited
a
difficult
situation.
o Inflation
though
fell
to
4.3%.
o Balance
of
payments
deficit
was
huge
-£7
billion.
- Lawson
boom
had
led
to
a
Lawson
bust
­
steep
recession.
o Manufacturing
output
declined.
o In
1991
the
economy
shrank
by
2.5%.
o Unemployment
rose
from
1.6
million
to
2.6
million
in
six
months.
o As
interest
rates
increased,
so
did
repossessions
and
house
prices.
! Millions
were
trapped
in
negative
equity.
o This
recession
hit
the
middle-class
and
the
south
-
Tory
voters.
! Earlier
recessions
had
hit
the
north
and
industry
­
Labour
voters.
- Major's
solution
o Increased
public
spending!
! The
very
opposite
of
Thatcher
and
Thatcherism.
! He
had
reverted
to
a
Keynesian
response
of
spending
and
not
constricting
the
money
supply.
o Why?
! Half
of
the
increase
in
spending
was
caused
by
rising
unemployment.
! Huge
government
borrowing
was
used
to
subsidies
transport
and
the
NHS,
which
were
both
in
a
poor
situation.
! There
was
an
election
due
in
1992.
· Governments
usually
spend
more
and
cut
income
tax
before
an
election.
- ERM
issues
o The
Pound
was
the
weakest
currency
in
the
ERM,
so
to
maintain
a
level
similar
to
the
Deutschmark
interest
rates
had
to
remain
high,
but
high
interest
rates
meant
the
economy
was
depressed
(as
it
discouraged
spending,
particularly
as
it
increased
mortgage
prices).
- Tax
issues
o In
1991
in
order
to
lower
the
cost
of
the
poll
tax
(because
so
many
were
refusing
to
pay
it
was
costing
a
lot)
VAT
was
raised
to
17.5%,
which
meant
people
had
even
less
money
(very
unpopular).
o Lamont
also
removed
tax-free
nature
of
mortgage
repayments
for
people
in
the
40%
tax
band,
which
led
to
a
huge
increase
in
mortgage
repayments
for
middle
class
property
owners.

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September
1992
ERM
crisis
­
`Black
Wednesday'
- Background
o 1989
­
Britain
had
joined
the
ERM
(the
first
stage
of
EMU
membership).
o Thatcher
had
joined
reluctantly
after
advice
from
Major
(her
Chancellor).
o ERM
linked
the
currencies
of
Europe
to
the
DM
­
it
was
the
strongest
currency
in
Europe.
o When
Britain
joined
the
£
was
linked
to
the
DM
at
a
high
rate.
This
made
exports
expensive
and
worsened
an
already
unhealthy
balance
of
payments
deficit.…read more

Page 3

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Replaced
with
Ken
Clarke.
Post
election
policies
- Privatisations
o 1994
Coal
industry
was
privatised.
o 1996
Railways
were
privatised
but
only
the
trains,
the
infrastructure
was
separate.
o Attempted
privatisation
of
the
Post
Office,
but
heavy
opposition
prevented
it.
- Creation
of
the
`National
Lottery'
o 28%
of
money
went
to
`good
causes'
such
as
arts
and
heritage,
with
grants
to
such
causing
being
of
great
benefit.
o Government
gained
12%
which
was
very
helpful
to
finances.…read more

Page 4

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This
put
conditions
of
people's
lives
above
market
forces,
so
was
very
much
a
Labour
style
policy.
- Moved
the
regulation
of
Banks
away
from
the
Bank
of
England
to
the
Financial
Services
Authority.
o A
kind
of
deregulation
that
is
perceived
to
have
added
to
the
problems
of
2008
recession,
and
so
they
were
reversed
in
2013.
-
Privatisation
- 1998
­
sold
£12
billion
of
public
assets
including
the
Tote,
the
Royal
Mint,
Air
Traffic
Control
and
the
London
Underground.…read more

Page 5

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Increases
in
spending
- Between
2001
and
2005
o Health
by
increased
by
8.2%
per
annum
o Education
increased
by
5.4%
per
annum.
- From
2001
o Money
into
public
services
into
schools.
o Blair
announced
that
the
NHS
would
have
year
on
year
increases
above
the
rate
of
inflation.
o Brown
is
reported
to
have
said
that
Blair
had
`stolen
my
budget'.…read more

Page 6

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The
2008
crash
made
the
debt
a
problem.
Euro
- Blair
was
pro-Euro
- Blair
said
he
wouldn't
join
unless
the
5
economic
indicators
devised
by
Gordon
Brown
were
met.
o This
was
because
Gordon
Brown
didn't
want
to
join
the
Euro.
- Historiography
o Ben
Wright
(BBC
annalist)
`Browns
great
legacy
was
stopping
Blair
from
joining
the
euro.'
Achievements
- Reduction
in
unemployment
­
by
2007
75%
of
the
labour
force
was
in
work
(European
average
was
64%).…read more

Page 7

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