Britain government 1964-79

  • Created by: Amber
  • Created on: 30-03-20 18:30

Assess the reasons for the fall of Edward Heath's government in 1974-

- Industrial relations
- 1971 Industrial Relations Act was very unpopular: the TUC told it's members to de-register and defy the NIRC, so people went out of their way to destroy the act. It increased confrontation between unions and employers and made it harder for Heath to negotiate with the TUC over strikes about prices and wages
- Strikes increased not just due to the Act, but also because of the increase in inflation which was not dealt with by Heath: it went from 5% to 10% over his term
- Success of miner strike damaged the government by encouraging others to strike for wage increases, adding to inflationary pressure, making Heath look weak and emphasising the failure of the industrial relations act

- Economy
- Number of days lost to strikes in Heath's 4 years was twice that of Wilson's 6 years
- Inherited balance of payments surplus turned into a substantial deficit
- Inflation rate doubled from 5% to 10% over his term 
- The system of fixed exchange rates ended in 1971, so exports to USA became more expensive, value of pound decreased due to poor industrial performance, and imports went up in price

- Europe
- Joined EEC in 1973, but the terms did not favour Britain: sacrifice preferential trade deals with the Commonwealth and subsidise French farmers
- Furthermore it had little economic impact at first so it was seen as a waste

- U-turn
- The supporting of Rolls Royce through nationalisation and a £35 million grant to Upper Clyde Shipbuilders showed Heath wasn't strong in sticking with his policies
- It increased government expenditure and thus increased the deficit
- 1973 oil price shock negated any positive impact the implimentation of price and pay policies with trade unions, and the three day week made the government look powerless in the face of strike action, embarrassing Heath

How successful were the economic policies of the Labour governments of 1964-70 and 1974-79?

- 1964-70 (Failure)
- Unemployment was higher in 1970 than 1964
- Rate of inflation had not slowed
- Britain's percentage share of global exports declined from 16% in 1960 to 11% in 1970
- Investment and research and development on the British military was higher than all NATO countries except the USA, and this reduced investment in other areas of the economy
- The securing of loans from the USA in autumn 1964 to prevent a run on the pound committed Britain to maintaining it's Far Eastern bases, which was very expensive
- The National Plan of 1965 failed to meet its growth rate target and to wipe out the balance of payment deficit as its recommendations were undermined by deflationary measures and it had no power to enforce its decisions
- Deflationary measures were unsuccessful, forcing the humiliation of devaluing the pound, which had little impact, so more deflationary measures were needed, along with a withdrawal of British troops


No comments have yet been made