BRITISH HISTORY 2

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CONSERVATIVE DOMESTIC POLICY 1951-1964

SOCIAL POLICY:

The cons still suported the NHS. Butlers first budget was introducing 2 shillings per prescription, however this wasn't a radical break with Labout policy as Hugh Gaitskell had introduced charges in Labours 1951 budget. In 1953 the gov showed committment by accepting the findings of the Guillebaud Committee, which concluded that the NHS gave value for money.

The gov published a plan to build 90 new NHS hospitals, remodel 134 new ones and by 1962 improved a further 356.

The cons continued to administed the model of education that the Butler Act had introuduced. Though reports had crticised the triparite system, arguing that it hindered social mobility - the gov faced pressure to to introduce a non-selective education model.

The cos increased the proportion of gov spending devoted to welfare from 39.2% in 1951 to 43% in 1955.

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CONSERVATIVE DOMESTIC POLICY 1951-1964

RIGHT WING ALTERNATIVES TO CONSENSUS:

A minority of Cons MP's believed that a more free market approach should replace consensus policies.

OPERATION ROBOT - was a free market policy advocated in 1952 one of which was Butler. It proposed solving Britains balance of payment difficulties by ending sterlings role as a reserve currency allowing it to float freely. This would have opened the British economy to foreign markets, forcing more competitions among British firms.

THOUGH this would have meant that firms would have had to cut jobs to reduce their costs so OPERATION ROBOT would have ended full employment. Anthody Eden led the cabinet which rejected the plan. Right wing cabinet ministers argued that the gov was sacrificing economic effieciency for full employment.

Enoch Powell critised how inflatin was allowing to rise during the late 1950's, he said that cuts to gov spending was essential to stop inflation from rising.

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THE ACHIEVEMENTS OF ECONOMIC MANAGEMENT 1951-1964

KEYNESIANISM:

Cons chancellors used fiscal policy and monetary policy to manage the economy according to keynesianism.

  • In 1954 Butler cut income tax by 6d and reduced interest rates
  • Butlers 1954 measures increased inflation, he then increased interest rates and indirect taxes to try and bring inflation down.
  • The cons cut income tax in 1956 and 1959 leading to a boom in 1959 and 1960.
  • The boom led to a rise in inflation, gov tried to combat this by raising interest rates and increasing indirect taxes.
  • The cons cut income tax again in 1963, instead of stimulating growth it led to higher demands for imports which causes a balance of payments deficit.

critics described it as stop-go economics - short periods of rapid growth then economic slow down.

 

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THE ACHIEVEMENTS OF ECONOMIC MANAGEMENT 1951-1964

AFFLUENCE:

  • Most rationing came to an end in 1953. Austerity was soon replaced with an affluent consumer society. For example between 1951 and 1964 the number of privately owned cars rose from 2.5 mill - 8 mill. 80% people owned a radio, and over 70% owned a vaccum cleaned.
  • Macmillan captured this in his famous statement 'most of out people have never had it so good'.

HOW WIDESPEAD WAS AFFLUENCE UNDER THE CONSERVATIVES?

  • Good time were not equally shared. One indication of this was the amount of goods bought on credit.
  • A 1957 study 'young mothers at work' indicated that working-class women had been left out of the affulent society. The study showed that women had to work to avoid living in poverty.

CRITICS OF THE LEFT:

Argued that western econmies needed to be rebalanced and to move away from consumer goods towards public spending

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ECONOMIC PROBLEMS AND CORPORATISM 1959-1964

RELATIVE ECONOMIC DECLINE:

End of the 1950's British politicans were concerned about britains relative economic decline. After 1950, France, Japan and the USA were growing faster than Britain.

Japan - 9.4% (rate of growth 1950-1973)France - 5% (rate of growth 1950-1973)USA - 3.7% (rate of growth 1950-1973)

Britain needed to achieve higher growth rates to maintain its position as a major economic power.

CONSERVATIVE CORPORATISM:

Macmillan believed the solution to RED was greater state intervention. Macmillan tried corporatism, an approach whereby the gov worked together with the unions and employers to increase growth. It brought together the two sides of industry for the good of the whole nation. He hoped it would allow britains economic growth to reach 4% each year. The two corporatist instituions were the National Economic Development Counci l and National Incomes Commission (1962)

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ECONOMIC PROBLEMS AND CORPORATISM 1959-1964

NATIONAL ECONOMIC DEVELOPMENT COUNCIL AND OFFICE (NEDDY):

'Neddy' brought employers,unions and the gov together. It was designed as a forum which employers and workers could discuss common goals and make voluntary agreements to help industry grow. Macmillan had hope this would lead to economic effieciecy and growth

Neddy had the support of the Trades Union Congress (TUC) but its powers were limited and its role was advisory.

NATIONAL INCOMES COMMISSION (NICKY):

A panell of independent experts who advised the gov on appropriate wage rates to help persuade employers and unions to stick to gov pay recommendations. Though it was advisory.

CRITICS OF CON CORPORATISM:

LEFT WING - gov should pass laws forbidding wage increases that exceeded Nickys recommendation.

RIGHT WING - less gov intervention was the solution to RED

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SUPERMAC: THE ROLE OF HAROLD MACMILLAN

THE SUEZ CRISIS - 1956

  • Anthony Eden (57-59) authorised an invasion in Egypt to regain control of the Suex canal since it was a profitable trade route, until the Egypitian gov nationalised it in 1956.
  • Eden said the invasion was a peace-making exercise.
  • The USA withdrew loans to britain and pressured them to withdraw since they wanted a better relationship with Egypt.
  • Britain could not import vital goods and it temp crippled the british economy.
  • Eden resigned for misleading the public and taking the country into war.

CONSENSUS PRIME MINISTER

Macmillan played a key role in sustaining consensus:

  • committed to full employment due to his experience of the depression, he always prioritised employment over deflationary policies unlike Butler and Eden.
  • committed to keynesianism
  • he was highly pragmatic and continued policies which he believed would help economic growth. 
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SUPERMAC: THE ROLE OF HAROLD MACMILLAN

COMMITMENT TO FULL EMPLOYMENT:

Even though he had committed to full employment he neglected other economic priorities. Consequently inflation grew to a high of 5.5% in the 1960s. The balance of payments situation worsened from a surplus of £345 mill in 1958 to a deficit of £258 mill in 1960.

UNFLAPPABLE MAC:

His relaxed style and his privaledged backrgound implied that he was out of touch. He was described as 'unflappable' - calm leader who could take anything in his stride.

MANAGING DECLINE:

Macmillan recognised that Britain could no longer play a major world role. Therefore he emphasised international co-operation with the USA and advocated entry to the EEC.

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THIRTEEN WASTED YEARS? WHY LABOUR WON IN 1964

ECONOMIC PROBLEMS:

  • Unemployment reached 878,000
  • Unions refused to adopt pay restraint as advised by NICKY
  • Economic growth shrank by 2% a year
  • Balance of payments problems meant that Britain needed to borrow £714 mill from the International Monetary Fund to support the value of the pound.
  • Beeching report caused 33% of rail routes to close to save money

SECURITY SCANDALS:

  • June 1963 john profumo (secretary state of war) confessed to a affair with christine keeler, who was also sleeping with a russian diplomat. Particularly damaging since profumo denied sleeping with keeler. Led to many questioning the honesty of the gov.
  • Oct 1962 william vassal was found guilty of passing secrets to russia. 
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LABOUR AND CONSERVATIVE GOVERNMENTS 1964-1979

Harold Wilson became labour leader in 1963, he was younger and more dynamic than douglas-home. With a northen accent he came across classless, unlike the cons who were obviously from the upper class. Wilson could present himself as an expert economist.

1966 ELECTION:

Harold wilson called an election in 1966 to gain a larger majority than in 1964. The labour gained a majority of almost 100.

ECONOMIC POLICY:

  • To increase growth - aimed to get a growth rate of 4% per year
  • balance of payments surplus
  • avoid devaluing the pound

ECONOMIC PLANNING:

1964 - Wilson set up the department for economic affairs (DEA) who had to oversee a national plan published in 1965. Though the plan was too optimistic and had to be abandoned in 1966

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LABOUR AND CONSERVATIVE GOVERNMENTS 1964-1979

CORPORATISM:

1965 - Wilson established the National Board for Prices and Incomes (NBPI) to extend corporatism. Attempting to bring the gov, industries and unions together to regulate economy. Wilson hoped wage restraint would reduce purchasing power and thus end the balance of payments deficit by increasing demand. The gov developed an incomes policy:

  • Even though NBPI was voluntary advise the gov criticised companies who ignored its recommendations
  • Prices and Incomes Act (1966) - six month wage freeze from july 1966
  • Prices and Incomes Act (1967) - allowed small wage increase for companies that increased productivity.
  • Expanded the role of NEDDY - oversee regional investment and devlopment.

INDUSTRIAL POLICY:

The Iron and Steel Act (1967) - renationalised the iron and steel industries. Transport Act - created national bus and freight corporations.

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LABOUR AND CONSERVATIVE GOVERNMENTS 1964-1979

The gov also set up a Industrial Reorganisation Corporation (IRC) to promote industrial effciency and organising merging. During 1966-1970 IRC loaned up to £103 mill. E.G they loaned a new company, Upper Cylde £20 mill.

DEVALUATION:

The balance of payments problems were unresolved. The Arab-Israeli War restricted the availability of oil and pushed the price up. The gov had to devalue the pound in 1967 to £1:$2:40. Devaluation was a huge embarrassment for the gov - leading to the resignation of James Callaghan (chancellor)

ECONOMIC RECORD:

SUCCESS: 1968- GDP grew by 4.1%, by 1969 britain had a balance of payments surplus of £445 mill.

FAILURE: Pound was devalued by 1967. National plan was abandoned in 1966. In 1969 GDP only grew by 1.9%

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LABOUR AND CONSERVATIVE GOVERNMENTS 1964-1979

SOCIAL LIBERALISATION:

  • The Murder Act (1965) - death penalty was abolished in 1969, suspended all future death sentences.
  • The Race Relations Act (1965) - illegal to discriminate people based on race. Affected public places like pubs but did not outlaw racism in housing or employment
  • The Abortion Act (1967) - legalised abortion in some circumstances - considerable support from labour MPS.
  • The Family Planning Act (1967) - NHS had to provide contraception.

WELFARE - HEALTH AND HOUSING:

Abolished NHS charges in 1965 but had to introduce new charges in 1969 due to economic problems. (these charges were higher than the cons charges) In 1964 labour committed to build 500,000 houses but even in 1968 (labours high point for housing) they only built 413,00 houses due to financial constraints.

Ronan Point Disaster - partial collapse of a tower block, 4 deaths - gov criticised for building cheap high density tower blocks

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LABOUR AND CONSERVATIVE GOVERNMENTS 1964-1979

WELFARE - EDUCATION:

Labour expanded high education in many ways. Wilson was prepared to embrace radical educational reform:

  • 1965 - established new universities such as Kent University.
  • 1967 - gov set plans to open 30 new polytechnic colleges.
  • 1969 - established the Open Uni to help mature student access higher education,

Secondary education also changed, Anthony Crosland (Labours Education Minister) argued that a triparite system created a form of class segregation, as middle class went to grammar schools and working class went to secondary moderns.

Gov planned to replace the triparite system with comprehensive schools designed to educate all students in an area - end class bias in the educational system.

The comprehensive scheme was introduced in 1965 but not fully implemented by 1970.

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LABOUR AND CONSERVATIVE GOVERNMENTS 1964-1979

UNIONS:

Union strike action was an increasing problem during the 60s. Between 1963-1964 around 4 mill working days were lost due to strike action. This rose to 11.5 mill between 1968-1969 - wilson recognised that growing strike action was damaging economic performance Barbara Castle (secretary of state for employment) proposed a new policy entitled 'In Place Of Strife' 1969:

  • designed to limit the power of unions to call strikes
  • proposed that unions should have to ballot members before calling strikes
  • established an Industrail Board - they could enforce pay settlements on employers and unions

The plan was very controversial in the labour party and was rejected by TUC. In place of strife never became a law. The gov compromised with TUC that unions no longer could engage in unofficial strikes - made gov look weak. Cons claimed that the labour gov was unwilling and unable to control unions.

1970 July election - Polls suggested that Labour would win since Wilson was more popular than cons leader Edward Heath. Wilson expected a labour victory. 

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