1964-70 Economy

Balance of payments — pressure from American creditors Deficit of £800m from Tories Labour had to turn to programme of spending cuts and tax rises Britain's declining share in world markets Trapped in cycle of "stop-go" economics

Announced scheme of tax rebates for mortgage holders and also promised the decimalisation of sterling by February 1971

Helped gain support for Labour in run up to 1966 election

Labour had already devalued the £ under Attlee in 1949

It would ruin the image of the party and £ would lose its prestige

Established by deputy leader of the Labour party George Brown to deal with the £800m deficit inherited by Conservatives and the issues of deflation and devaluation

Brown set growth targets and decided a national system of 'economic planning council'

Tried to establish voluntary agreement about wages and prices with industrialists, trade unions and civil servants leaders (state involvement)

Aimed to secure the restraint necessary to prevent inflation and bring an end to the stop-go cycles of the 1950s

Competition with Callaghans treasury (lacked united govt support) , Brown was an impulsive drunk.

Wilson in some way responsible for the confusion as he juggled to keep key people happy

Old fashioned Civil servants who were anti-Labour and undermined Brown's efforts by tapping his phone or refusing to hand over papers

Lack of planning — no single document ever produced that outlined the role of the DEA

1967 — outbreak ofArab-Israeli war affected oil supplies Major national dock strike in August 1967 affected balance of payments Devaluation became unavoidable as the £'s value dropped 14% from £2.80 to $2.40

Damaged Labour's credibility and Britain's prestige Few weeks later, Britain's application to the EEC was rejected, primarily on economic grounds — made govt's economic policies loook futile

Used deflationary methods such as raising tax and tightening govt spending Made govt unpopular BUT by 1969, balance of payments surplus achieved Inflation still high however at 12%

1967-70

French were able to recover from WW2 using 'indicative planning' — state directing money into particular industries and regions, whilst obliging French banks to invest in new factories

Britain had too few economists and sceptical unionists and industry barons who were unwilling to do the same + highly independent, anti-manufacturing city

Supersonic airliner at risk of being cut Labour's promise of generous welfare programme and housing programme jeopardised

1966 — attempt to bring down inflation

Workers wanted higher wages due to inflation but govt could not provide this

Partly caused by long and bitter strike by the National Union of Seamen Exacerbated by 1967 major oaks strike in London and Merseyside

October 1967

A situation in which international investors and market speculators sell sterling and sell sterling en masse, forcing its value down

Britain faced one in 1967 due to dealers around the world selling sterling and bank rate raised to a crisis-inducing 16%

the reduction in the official value of a currency in relation to other currencies

Cut back public spending and increased taxes Seen as turning point for Labour Govt

Made imports more expensive so fewer people buy foreign goods, more inflation and humiliating on the world stage Would also mean that Britain's overseas spending would have to be dramatically cut back, as implied by 1953 ROBOT scheme Unfair to many poorer Commonwealth countries whose reserves were in Sterling

exports cheaper, giving British companies a chance to win back the markets that they were losing

it would force Britain to break with US, allowing them entry into the EEC (would break commitment as devaluation would see Britain pulling troops out of East of Suez, whilst there was conflict in South-East Asia)

1964

To deliver on the Labour govt's manifesto promise to modernise and bring a "white heat of technology" to Britain

Wilson govt lacked both financial resources and expertise necessary to produce an economic revolution Frank Cousins appointed Minister for Technology despite having no Parliamentary experience and Roy Jenkins Minister for Aviation despite having no scientific expertise

Led by George Brown when in the DEA — devised the National Plan in collaboration with union leaders and industrialists to reach agreements on wages and prices in order to curb inflation

Government intervention to set limits on price rises and to call for wage restraint in negotiations between unions and employers

Aimed to work with unions, employers and industrialists to achieve this

Alienated the Labour left and trade unionists as Wilson as actively working against their best interests Frank Cousins eventually resigned — further divisions within Labour Party

Resulted in various trade union strikes

Lasted 7 days and disrupted economy

Unions aimed to secure higher wages and reduce working week from 56 hours to 40 hours

Targeted major ports

Britain's exports decreased as a result and this heightened the balance of payments deficit

Loan was $1.4 billion which was the biggest loan Britain had ever requested

Raised the Selective Employment Tax Raised petrol duty Restored NHS prescription charges (which Wilson had abolished in 1964) Introduced a special "one-off" charge on personal incomes over £3000

Tax's raised £923 million total