National Government's economic + social policies


Economic and Social policies faced by Gov

-Unstable currency

-Industrial decline

-Weak exports and negative balance of trade

-Unemployment (Peak = £2.8m in 1932 + poverty (overcrowding, poor living and working conditions)

1 of 9

Social policies

  • Very few social policies undertaken by NG
  • Unemployment Act of 1934 lowered age of insured benefits to 16 years, but dole for unisured workerd remained low and was means tested by new Unemployment Assistance Board
  • Seebohm Rowntree - new survey of poverty in York in 1935 "Poverty and Progress" 1/3 still living in poverty
  • Housing Acts 1933 + 1935: Increased gov subsidies to local councils to clear slums and build more council houses. 1936 average weekly rent in council house = 11 shillings p/w (affordable)
  • Other successful social policies: Rosla raised to 15 in 1936 to be implemented in '39, 30mph speed limit introduced in urban areas, shop workers hours limited to 48 hours a week
  • Success? Unemployment remained high during whole period, never fell below 1.3m until 1939 (11% of workers), but even higher in staple areas (16% of total workers in north + celtic regions unemployed until rearmament) (almost 30% in wales in 1936)
  • But, overall trend in unemployment was down, especially for all insured workers. Cyclical unemployment reduced but Structural still barely touched. Still many living in poverty
  • NG gov did not extend National Insurance to all 
2 of 9

Economic policies of Government

-Response to the 1929 Wall Street Crash and ensuing Depression took form in 4 main ways:

  • Financial measures including cutting expenditure, devaluation of £ (out of control of gov) and low interest rates 
  • Protection/Tariffs: eg Abnrmal Duties Act (1931), Import Duties Act (Oct 1931) and Ottowa Conference (1932 to establish imperial preference)
  • Direct help to depressed regions: Special Areas Act (1934 £2m to Swales and Tyneside to encourage new industries growth increasing to £5m in 1937 after gift from Lord Nuffield),  40,000 workers encouraged to move and 30,000 retrained (v small numbers), Support for new steelworkss at Ebbw Vale, £9.5m to build 2 super-liners Queen Mary + Q Elizabeth. 
  • Managing production: control supply by riaising prices of goods in depressed regions normally by cost-cutting. Coal mines amalgamated + profits nationalised in 1938. Some increase in productivity. Cotton Industry Reorganisation Act of 1936.
3 of 9

Financial Measure in detail

  • Cutting expenditure: Economy Act Aug 1931 cut spending by 10% raimed to restore balance of payments, keep britain on the gold standard and keep down inflation. FAILED in all. Impact of cuts cushioned by falling prices = real wages stable
  • Devaluation of £ (not a policy gov forced to), Off Gold and 10% cuts in spending (1931 both) = stable currency (£ = $3.40). Helped reassure investors= confidence in banking sector, new flexibility in gov's monetary policy can alter their own interest rates. Inflation therefore low and thus rise in real wages. but, measures were forced onto gov, so not a policy
  • But, later on, God took deliberate action to keep value of the pound low (recog + to exports)
  • Low interest rates: went from 6% to 2% from 1932-39. Permissive factor -> perhaps allowed the housing boom to occur but this was not predicted and difficult to prove.
4 of 9

Protection/Tariffs in detail

-Chancellor NC's idea

  • Had helped british industries in the 20s
  • Abnormal Duties Act (1931) 50% import duty on imported cutlery, pottery, woollen and cotton good
  • Import Duties Act (Oct 1931) 10% general tariff, later 30% on some goods, DID help steel 
  • Ottowa Conference 1932 = some imperial preference established but Canada + Austra opposed to any Imperial preference. There WAS a 10% increase in exports to the Empire, but not overall. Imports from empire increased from 25% of tot. imports to 38% in 1939, but this was a pre-exisiting trend.
5 of 9

Direct Help to Depressed regions in detail

  • Special Areas Act (1934) £2m encouraged growth of new industries in SWales and Tyneside, increased to £5m in 1937 after gift to gov from Lord Nuffield
  • 40,000 workers encouraged to move to new areas, and 30,000 retrained (v small no.s)
  • Support to new steelworks at Ebbw Vale + subsidies to London Transport and British Airways, £9.5m  to subsidise building 2 superliners, Queen Mary + Elizabeth -> but mostly prestige measures only creating few jobs
  • Success or not? Industrial production increased by 12% from 1935-8 + real GDP per head increased by 16%, HIGHEST RECORDED INCREASES in GB HISTORY-> but gains felt in South and Midlands almost exclusively.
6 of 9

Managing Production in detail

  • Aim: cut supply to raise prices of goods in depressed industries (normally cost-cutting in most cases)
  • Coal Mines amalgamated + profits nationalised in 1938 -> did result in some increase in productivity
  • Amount of steel produced increased 7x b/w 1933 + 1937
  • Cotton Industry Reorganistion Act 1936, reduced some capacity and shut down inefficient factories
  • Sucess? Productivity increased little in Staples, Gov Subsidies did keep them alive, but old practices reamined. New industries more productive eg motor cars + planes, but not due to Gov Policy
7 of 9

Other Factors leading to Recovery

  • Rise in real wages = increased by 15% in the 1930s for those in work, maybe helped by gov's cheap money/low inflation rates policy?
  • Social change: smaller families (4.2 children in 1929 to 3.2 in 1939) = consumer demand for new products all helped by:
  • New industries: boom in SEast + home counties mostly
  • Housing boom: £2.7m houses built in Thirties, without gov support, but cheap money and Housing Acts perhaps did help slightly
  • Trade Cycle- 1937 upward curve of cycle ended as recovery slowed, recovery sign that it was cyclical and following international trends?
  • REARMAMENT (main reason) - Y a policy, but forced by circumstance- 1935-39 created around 1m new jobs. £1m spent on radar stations 1938-39, conscription in 1939- pessimists argue that unemployment would have reached 3m in 1939!!!
  • Productivity did not increased JUST employed more people. 
8 of 9

What was the EXTENT of recovery by 1940?

  • Evidence of continuing unemployment + poverty in depressed NW eg Jarrow March 1936
  • Home counties arguably never suffered depression anyway!
9 of 9


No comments have yet been made

Similar History resources:

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