1. Were governments successful at dealing with economic problems between 1964 and 1970?
In this lesson, we will:
Assess to what extent Labour were successful in economic policy whilst in office.
Starter: “Wilson was a pragmatic centrist within the Labour Party” Is this an accurate view? Identify evidence to support or counter the statement.

2. What were the problems facing Labour?
By 1964, it was widely accepted that Britain was lagging beyond other countries in the world. British industry and manufacturing needed targeted intervention and investment.
It was trapped in a cycle of “stop-go” – bursts pf prosperity always leading to inflation. A department of economic affairs had to devise a national plan to inform government economic planning.
The deficit stood at £800 million in 1964 – Wilson and Callaghan rejected both deflation and devaluation as a way of combating this.
Despite higher economic growth, the UK performed relatively poorly compared to our major competitors, such as Germany, Japan and US roared ahead UK productivity growth was relatively lower due to several factors.
After devaluation in 1967 there was massive pressure on the pound – restrictions had to be put in place to limit government spending. Taxation would have to increase to ensure a Balance of Payments surplus.

3. How successful was the Department for Economic Affairs?
The Department of Economic Affairs aimed to be expansive and would be free of the restraints of the Treasury.
George Brown drew up a very ambition five year national plan to allow Britain to march West Germany’s miraculous post-war growth. After nearly a year's work the Plan was unveiled on 16 September 1965, pledging to cover "all aspects of the country's development for the next five years". The Plan called for a 25% growth in Gross Domestic Product (GDP) from 1964 to 1970, which worked out at 3.8% annually. There were 39 specific actions listed, although many were criticised as vague.
However, the trouble was the Treasury still controlled taxation and spending policy. The National Plan may have included all kinds of emphasis such as devolution to the nations and regions, measures to ease the cost of living, an end to price rackets, a fair taxation system which attacked tax avoidance, but by 1969 it had utterly failed to deliver much of this.
The influence of this Ministry was questionable – for example in 1966 the DEA heavily backed devaluation yet the cabinet voted 17-6 against. In 1965 Brown had struggled over a 12 hour meeting with the TUC to persuade unions to accept a tougher prices and incomes policy.

4. Why was the pound devalued in 1967?
In both 1965 and 1966, Labour survived a sterling crisis but in 1967 it was unavoidable due to two factors – an outbreak of war in the Middle East affecting oil supplies and a major national dock strike in August 1967.
By 1967, Britain suffered a balance of payments crisis, spending (importing) more than it was earning (exporting). That made it crucial to keep the pound strong. The hitch was that supporting the pound was fast becoming unaffordable. The Bank of England burned through £200m in gold and foreign currency reserves in just one day alone.
And so in November, sterling was devalued by 14.3% against the dollar. It was a personal defeat for Prime Minister Harold Wilson. But on 19 November, he went on radio and television to reassure consumers that devaluation “does not mean, of course, that the pound here in Britain, in your pocket or purse, or in your bank, has been devalued”.
Heath accused Labour of failing in one of its foremost duties - to safeguard the value of the country's money. He said: "Having denied 20 times in 37 months that they would ever devalue the pound, they have devalued against all their own arguments. That broadcast will long be remembered for that sentence. It will be remembered as the most dishonest statement ever made.”

5. Learning Task One
Read through the pack provided to your by your teacher.
Highlight evidence of success, and evidence of problem.
Using the information, plan the following essay:
“Labour governments were successful at tackling economic issues in the period 1964 to 1970” Assess the validity of this view