The National Government - Formation, Economic Policies; Successes/Faliures, Political Impact (Britain 1900-1951 Period Study 1918-51)


  • Formation of the National Government
  • Reasons for the Formation of the National Government
  • Policies to deal with economic problems
  • >Successes
  • >Faliures
  • Political Impact of the National Government

Part of Domestic politics 1929-39

For OCR Unit 1

Britain 1900-1951

Period Study 1918-51

  • Created by: oanderton
  • Created on: 25-08-20 16:06

Formation of the National Government

An emergency national government formed on 24th August 1931

  • 4 Labour minister's from MacDonald's previous government.
  • 4 COnservative minister.
  • 2 Liberals
  • Role was to pass the National Economy Act
  • Measures to reduce spending it proposed
    • Slightly less severe
    • Decided to raise taxes by a greater amount than Snowden had agreed .
  • Ecomony Act 1933 was passed by 61 votes.
    • 12 Labour MPs voted for
    • 250 Labour MPs and the TUC opposed
      • Especially the 10% cut in unemployment benefit and reduction in forces’ wages.
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Reasons for the Formation of the National Governme

Reasons for the Formation of a National Government

  • Labour failed to solve the financial crisis
    • Caused by the consequences of Wall Street Crash 1929 and the cost of rising unemployment.
  • George V persuaded MacDonald to lead a coalition of the 3 main parties.
    • For the sake of national interests.
    • Put country before party.
  • Believed the Banking Crisis was a national emergency.
    • Required party differences to be set aside
  • MacDonald had lost confidence in his party.
    • Cabinet split over issue of unemployment benefits cuts.
      • Most MPs and party members opposed them.
  • Macdonald was ambitious
  • Conservatives could lay the blame on Macdonald if It went wrong
  • Macdonald got on well with Baldwin
    • It would be personally more rewarding for Macdonald than working with his party.
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Successful Economic Policy

Government actions to revive the economy...

  • Abandoned the gold standard
    • To encourage exports and trade
    • Unexpectedly positive effects on the economy.
    • Promoted recovery and stimulated growth for much of the rest of the decade. 
    • Led to a fall in the exchange rate
      • Increased the competitiveness of domestic products, including exports and import substitutes.
      • Introduction of ‘cheap money’ after 1932
        • Important stimulus for economic growth - especially housing sector.
  • 1932 Import Duties Act
    • Protected certain British industries
    • General tariff of 10% on most imports
  • Low interest rates
  • 1934 Special Areas Act 
    • Gave aid to the areas of Britain which had the highest unemployment rates.
    • £2 million available to most deprived area
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ii. Successful Economic Policy


  • Fall in unemployment 
    • From 3 million in 1932 to 1.5 million in 1939
  • Encouragment from government to find work
    • Meant some workers moved to find employment
  • Dole payments still made
    • Although reduced after 1931 crisis
    • Means test introduced
  • 1934 Unemployment Act
    • Introduction of the Unemployment Assistance Board under the act 1934
      • Was effective from 1937
    • Dislike for the mean test reduced because of it.
  • Low unemployment in many areas of England
    • Especially in the South and the Midlands
    • Due to the expansion of the building industry, providing new houses.
      • Due to the benefits of abandoning the gold standard.
    • Introduction of new industries like  cars and chemicals
    • Rearmament 1935
      • Assisted the revival of the staple industries 
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Unsuccessful Economic Policy


  • Levels had never been high or persistent as in the 1930s
  • Mass unemployment in the old staple industries
  • Limited improvement for unemployed people
  • Umemployment movements remained active.
    • National Unemployed Workers’ Movement.
  • Hunger marches were frequent
    • Famous being the Jarrow Crusade in 1936.
  • Special Areas act
    • Only available to the most severe areas not overall effective 
  • Staple Industries
    • Failure to stop the structural decline
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Labour -Political Impact of the National Governmen


  • Major defeat and was severely divided.
  • Labour disowned Macdonald 
    • Was bitterly criticised by the TUC and the party
  • The ILP left in 1932
  • Pacifist Lansbury’s leadership in 1935
    • Was not effective or dynamic
    • Replaced by Atlee and party recovered
  • Left wing urged for socialist planning on the Russia model
  • Did not come back into power until 1940 in the war coalition  

However, the party recovered from the splits under Atlee.

Was not politically fatal.

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Conservatives- Political Impact of the National Go


  • Dominated government 1931.
    • Despite only holding 11/20.
  • Get tarriff reform
    • Emergency and national governments let them.
  • Introduction of Neville Chamberlain who became Chancellor.
  • Baldwin was able to distance himself from the right wing of his party.
  • Extreme imperialist and critics of his India stance were cast into political wildness including Churchill
  • Rise of Neville Chamberlain
    • Became the dominant force
    • Became PM in 1937
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Liberals & Impact of Foreign Affairs- Political Im


  • Split and lost all previous influence 
    • Samuel and his support left gov after serving as home secretary
  • Lloyd George ceased to be a political force 
  • Did not recover like Labour
  • Fewer than 2.5 million votes

Defence + foreign affairs

  • National gov excluded supporters of a strong imperial foreign policy 
    • E.g. Churchill
  • Brought in those who prioritised economic recovery and control of expenses.
    • Rather than those who prioritised aggressive nationalism from Japan, Germany and Italy
  • No action against rising threats from Japan or Germany till 1935 with increased defence 
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Evaluation of Nat Gov Policies


  • Failed to prevent the decline of the staple industries.
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How National was the National Government?

  • Represented all main parties.
  • Formed to put country before party.
  • Formed in national emergency to solve country's main issues, for the whole country's benefit.
  • Import duties to protect Britain and its struggling industries before all else.

Fairly national.

Represented the interests of the country; main one being unemployment.

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