british history 3

HideShow resource information

CONSERVATIVE GOVERNMENT 1970-1974: ECONOMIC POLICY

  • 1970 general election led to a surprise cons victory. Edward Heath became PM with a parliamentary majority of 43.

BREAK WITH CONSENSUS - 'SELDON MAN'

  • The cons 1970 'seldon man' manifesto was a radical break with the consensus - it promised to reduce gov intervention with the economy.

THE 'QUIET REVOLUTION':

Heath quickly introduced free market policies by abolishing:

  • the NBPI, ending gov control of the level of prices and incomes.
  • cutting corporation tax and income tax
  • ending the provision of free milk to school children
  • raising prescription charges.

Overall, in 1970 he cut gov spending by £330 mill.

1 of 6

CONSERVATIVE GOVERNMENT 1970-1974: ECONOMIC POLICY

U TURN:

The quiet rev didn't stimulate econmic growth. Unemployment increased reaching 1 million by january 1972 along with inflation which increased by 15% by 1971. Thus, the gov policy charged course during the summer of 1971. Critics called it a U-Turn.

INCREASED GOVERNMENT INTERVENTION:

Heath tried to end unemployment by returning to high levels of state invention:

  • In 1971, Heath announced a £100 mill public work scheme to create jobs in special development areas.
  • Gov nationalised struggling industries like Rolls Royce in 1971
  • Anthony Barbers 1972 budget increased spending on pensions, the NHS and education. 

RETURN TO CORPORATISM:

Gov intervention increased inflation which reached 20% in 1972. In response heath began working with union and workers to agree a voluntary prices and incomes policy.

2 of 6

CONSERVATIVE GOVERNMENT 1970-1974: ECONOMIC POLICY

The TUC rejected the policy unless gov reappealed to the ind relations act. After this failure, Health introduced a statuory three stage prices and incomes policy.

  • 1 - nov 1972 - all prices (except fruit and veg) and pay was frozen for 90 days.
  • 2 - april 1973 - wages rises were capped at £250 a year
  • 3 - oct 1973 - wages rises were capped at £350 a year

THREE DAY WEEK:

  • 1973 OPEC crisis quadrupled the price of oil. 
  • Due to strikes, there was an limited amount of coal - creating an energy crisis.
  • gov declared a state of emergency. Emergency energy saving meaures were introduced:
  • reducing the working day to 3 days
  • lowering speed limit to 70 mph
  • ending TV at 10:30 pm
3 of 6

CONSERVATIVE GOVERNMENT: 1970-1974: ECONOMIC POLIC

Heaths economic policy was largely unsucessful:

  • success - in 1973 unemployment dropped by 20,000
  • failure - unemployment rose between 1970-1973 and inflation had increased.
  • failure - balance of payment crisis in 1973 due to the OPEC crisis.
  • failure - gov had to adopt emergency measures during 1973-1974 for the energy crisis.

1970 - 1974: HEATH AND THE UNIONS.

Trade union reform. The ind relations act 1971 created the National Industrial Relations Court. They could:

  • halt strike action for 60 days to allow for negotiation
  • ensure stries reflected the wishes of union members

SUCCESS AND FAILURE:

  • Unions opposed the Ind Relations Act and refused to co-operate with the voluntary policy in 1972.
  • Ind Relation Act was unenforceable, during Heaths gov were several major strikes
4 of 6

CONSERVATIVE GOVERNMENT, 1970-1974: HEATH AND THE

THE ROLE OF EDWARD HEATH:

Biggest success was negotiating Britains entry to the EEC (1973 jan) though he is remembered as the least successful PM. This is due to his lack of skill in handling the media and his inability to set out his political vision.

  • he abandoned his original economic policies - people thought he was inconsistant and lack of courage.
  • his union policies antagonised the unions worsening industrial relations
  • between 1972-1974 heath declared a statenof emegency 5 times. The public associated the gov with crisis measures.

HEATHS CRITICS: labour and wilson criticised heath for many reasons

  • industrial relations act attempted to strip trade unions of their traditional rights
  • wilson argued that growing unemployment and heaths u-turn showed that the economic policy was failing
  • wilson said that heaths cuts in 1970 then his spending increases in 1971-72 was a return of stop-go economics.
5 of 6

CONSERVATIVE GOVERNMENT, 1970-1974: HEATH AND THE

HEATH CRITICS: Even cons attacked Heath

  • One Nation Cons argued that heath's refusal to help failing industries in the north risked destroying working-class communities
  • right wing cons wanted to go back to free market policies once economic stability was restored.

1972 MINERS' STRIKE:

  • the NUM rejected the coal board's annual pay offer. Thus 280,000 miners went on strike for 6 weeks until miners accepted pay rise 3 times higher than original

1974 MINERS' STRIKE:

  • 1973 NUM rejected coal board's pay offer.
  • Oil prices were really high so heath declared a state of emergency to keep industries running
  • NUM called for strike in 1974 - heath refused the miners demands and called for a general election.
  • Heath lost - labour gov settled the miners strike.
6 of 6

Comments

No comments have yet been made

Similar History resources:

See all History resources »See all Modern Britain - 19th century onwards resources »