Economic Policy, 1951-2007

These are my notes for The Making of Modern Britain, 1951- 2007.

ANy questions i am happy to help, just PM

These are only my notes and you will need to consolidate your own knowldege also.

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  • Created on: 29-05-15 10:23
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ECONOMIC POLICY- QUICK REVISION
Sharnie6
1951- 1964
What was the inherited situation like?
Churchill Chancellor Rab Butler inherited a balance of Payments Deficit of £700
million from Attlee's Labour government. This provided a scapegoat for a failed
economy at the end of term, if they did well then it shows a greater commitment to the
economy and growth. They wanted to reduce expenses, but this would have made them
unpopular, so they would end up spending more.
Due to the commitment to the Post War Consensus, there was a very low rate of
unemployment with the average of 3%, this meant that people have money to spend,
they pay taxes but also do not have to claim benefits. Servicemen during WW2 had
been promised full employment after victory, and no government of the period was
prepared to break this pledge, and this was possible as the government controlled all
businesses. Based on technological advances, leading to more jobs, success of Keynesian
economics and a reasonably stable international environment.
What was this period the Golden Age of Prosperity?
The weekly wage was increasing after the conservatives came to power, from
£7.50 in 1949 to £11 in 1955 to £18 by 1964, the wage was increasing by 50% compared
to the cost of living being only 30%. This meant that people has more money to spend
on consumer goods, such as TVs and cars. This led to a surge in TV ownership from 4%
in 1950 to 91% in 1964, with 15,000 TV license holders in 1946, increasing to over 5
million by 1956. With all the TV ownership in Britain it motivated the advertising
industry, creating TV advertising and the birth of ITV in 1955.
Increased wealth also brought a boom to car ownership in Britain; in 1952 there
were 2.5 million private cars, and by 1964 there were 8 million. In addition due to the
increased usage of cars, transport infrastructure was improved, with building the M1
connecting London and Birmingham in 1958.
Home ownership between 1955 and 1964, increased from 25% to 44%
respectively due to easier access to cheaper mortgages. This in turn dealt with the
desperate need for housing that would replace the war damaged ones. In addition, over
half of the houses built were owner-occupied.
In 1955, Chancellor Ra Butler exploited this situation further with a budget
that provided the middle classes with £134 million in tax cuts. This led to a feel good
factor in the run up to the 1955 election.
What was the role of Rab Butler during this period?
Butler restored the morale of the Conservative party during the Attlee years,
helping to modernise the party's attitude and policies, so to stop Labour claiming a

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ECONOMIC POLICY- QUICK REVISION
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monopoly of modern thinking.
His policies between 1951 and 1955 showed that he has accepted the new forms
of Keynesian economics adopted by the preceding Labour government. He continued
Labor's main aims of: Trying to maintain full employment while at the same time
achieving economic growth; expanding the welfare state; keeping to Britain's heavily
committed military defense programme and developing a nuclear weapons programme.…read more

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Stop- Macmillan raised the bank rate, making it harder to borrow cash, therefore
inducing deflation.
Go- Chancellor Thorneycroft reduced taxes and credit restrictions. More tax cuts for
1959 election. Accused of more interest in voted than a stable economy.
Criticisms:
· Not enough investment in industry- Stop-Go policy discouraged industrialists
from risking long-term investment. Could lose their money before they increased
the rates again, no faith in the rate, and no prior knowledge to when it would
change.…read more

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ECONOMIC POLICY- QUICK REVISION
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1964- 1979
Wilson
What was the inherited situation like, and how did Wilson want
to fix this?
Chancellor Jim Callaghan inherited a terrible situation from predecessor
Reginald Maudling, a £400 million balance of payments deficit.
Wilson wanted to modernise the economy, and reduce UK's reliance on US loans,
which had been relied on heavily since the end of WW2.…read more

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the conservatives in the lead with 0.5%.
July 1966, Labour lost Carmarthen by-election. 9,000 majority overturned by
Plaid Cymru. Voters turned on Labour, losing them a seat in the process.
What was the significance of Callaghan as Chancellor?
In 1964 had to borrow heavily from the IMF because of Balance of Payments
Deficit, this damaged his and the party's credibility.…read more

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In Place Of Strife
Wilson's failure to take the UK into Europe made him even more determined to
deal with the unions i.e. the economy could not weaken any further.
A government white paper was produced in 1969. Proposed a ballot of all
members before a strike could be called. Also, a 28 day period for discussion between
employers and workers, and a fine for those who broke the rules.…read more

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On entering the EEC, Britain had joined a protectionist organisation that was
already beginning to look dated, now that the world was entering the era of
global markets.
Were Heath's aims similar to Wilson's?
"Reduce the rise in prices, increase productivity and reduce unemployment."
However, unlike Wilson, Heath declared his intention to break with the Post War
Consensus.…read more

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1970- 6 million people UK people going abroad for holidays by 1974 this had
increased to 11 million.
Home ownership: only building societies were allowed to lend, but in September
1971 banks were allowed to lend as well.
The period 1971 to 1972 were known as the `Wimpey Years'. New towns were
built e.g. Peterborough, by 1972 50% of Peterborough's residents owned their own
home.…read more

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BBC technicians secured a 15% rise when they threatened to blackout TV screen over
Christmas. Other unions eventually followed, causing the Winter of Discontent.
What was the Winter of Discontent?
Occurred from December 1978 to January 1979. Unions went on strike which
caused many problems such as: Graves not being dug, rubbish not being collected,
school meals were disrupted, No oil so petrol stations were closing.
Impact
Prepared the ground for Thatcher to come to power in May 1979.…read more

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1979- 1990
First thatcher Government 1979- 1983
What was monetarism, and how was it significant?
Cuts in public spending, less government borrowing, less money in circulation. Aim
is to cut inflation. It was untired outside of Dictator Pinochet's Chile. This represents a
clear movement away from the Post War Consensus.
However it caused many problems during the first administration:
High interest rates prevented people from borrowing and the government was
unwilling to help.…read more

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