How important was R.A. Butler to Churchill’s government between 1951 and 1955? In this lesson, we will: Define stop-go economics Assess the effect that this model of economics had on Britain between 1951 and 1955. Starter: Who is this man? Have a discussion at your table and identify what his position is in the British government.

Who was R.A. Butler? He was the key figure in Churchill’s government, acting as Chancellor of the Exchequer. He was the major leader in developing the modern Conservatives, forcing the party to be more progressive (e.g. 1944 Education Act) Responsible for drafting the Industrial Charter of 1947, which pledged the Conservatives to a mixed economy. His time as Chancellor of the Exchequer show a policy that accepted Keynesian economics and maintained many economics adopted by Attlee’s Labour government. The similarities between Chancellor Butler, and Labour Shadow Chancellor (later leader) Hugh Gaitskell. In 1954, The Economist coined the term ‘Bustekllism’ to describe Conservative economic policy.

“Power is the first goal of party politics, the sine qua non of political effectiveness… a good Tory in history has never been afraid of the use of the state.” RA Butler, 1947

Dr Robert Crowcroft University of Leeds, 2013 Under Butler’s guidance, the party thus forged a new coalition of voters based on the issue of living standards. And the middle classes were central to this. Middle class living standards had fallen significantly under the Attlee government. The staples of their lifestyle – ample food and clothes, access to consumer products, entertainment, luxuries like motor cars, travel, and perhaps domestic service – were all squeezed very considerably. Middle class protein and calorie intake was reduced sharply during the war and failed to recover thereafter. It is true that the working classes were also hit by shortages, but in general terms this was offset by full employment. The middle classes suffered disproportionately in Attlee’s Britain. In early 1950, Gaitskell confided to his diary that the people in the middle felt they had ‘suffered considerable economic disadvantage by our actions’. Dr Robert Crowcroft University of Leeds, 2013

Post-war ‘Consensus’? Government should maintain full employment. Economic growth should be stimulated by the state. The welfare state should be maintained, and expanded. Defence spending should be maintained Britain’s nuclear programme should be well funded. The public and private sector should operate in unison. Trade Unions should a legitimate and respected role in promoting workers rights. Post-war ‘Consensus’?

How did he manage the economy? Butler was a big advocate of ‘Stop-Go’ economics. This was a pattern where the government would encourage economic growth through low interest rates, tax cuts which would increase consumer spending. When the economy was at risk of ‘over-heating’ e.g. high inflation; interest rates would increase, wages would be frozen, government spending would decline which would decrease demand. This was denounced by the opposition as damaging Britain’s economy as it caused problems with balance of payments. Labour accused the Conservatives of having short term goals (e.g. bribing the electorate to win votes) and not having long-term solutions to modernise the economy.

How do Butler’s budgets show this in action? E.g. 1951 budget increased interest rates which reduced imports due to pressure of Korean War 1952 budget – interest rates slashed, income tax slashed. 1953 – VAT increased to cut public spending Budgets of 1953 and April 1955 include lots of tax cuts (prior to election) Budget of July 1955 includes deflationary measures such tax increases (post-election)

Learning Task Two Collect the handout pack that your teacher has provided you. For each point on the line graph: Explain why inflation is at that level by linking to Butler’s policies at that time. Provide as much detail as you possibly can.

1953 1955 (April) 1955 (July) Designed to promote expansion. Cut taxes £1.6 million off tax (6d off income tax, 25% purchase tax cut) Sugar was de-rationed. A tax cutting budget in advance of the general election. (The date of the election was already known at the time of the budget). Tax cuts of £134 million. Cut 2.5p off the standard rate of income tax in April 1955, and just over a penny off the lower rates. Tax allowances were raised and purchase tax on some items was cut. Unemployment falls by 0.3% by 1954. Inflation falls from 3.1% to 1.8%.

How was Eden able to win the 1955 General Election? Under Churchill, the Tory government of the previous four years had enjoyed quiet success. The Chancellor, Butler, had just passed a tax cutting budget and the Labour Party was in disarray. Opinion polls showed the Government running 4% ahead of the opposition. Eden’s manifesto made much of Labour’s internal divisions, suggesting that a Labour government would be socialist. Labour’s manifesto promised little except scrapping the 11+ exam and dental charges. Overall Attlee was visibly older, and his party lacked direction.

How much of a victory was it? The Conservatives won 344 seats to Labour's 277, the Liberals holding only six. Turnout dropped from the 82% registered in 1951 to 76%, this helped the Conservative Party. In the House of Commons, Eden’s government had a majority of 58 seats. For the first time since the 1800s, a British government had held onto power whilst also increasing it’s majority. The Party had benefitted from a reasonably stable economy and the strength of the 1951-1955 government both domestically and foreign.

Learning Task Two Your teacher thinks that it was Butler who allowed his party to win the 1955 General Election. As a collective, you need to think of evidence to both support him, and argue against him!