However, the government’s drive for exports proved a great economic success, especially once British industry had re-adjusted to peacetime production. Exports increased by nearly 80% between 1946-50 and the motor vehicle industry was booming due to the lack of competition with Germany and Japan which had been more damaged by the war. Another success was how Stafford Cripps, the new Chancellor of the Exchequer, devalued the pound against the US dollar whilst USA was in recession. America had a reduced demand for British exports which produced another balance of payments crisis. So the sharp devaluation of the pound (from $4.03 to $2.8) made British exports to America considerably cheaper so reduced the trade deficit between exports and imports, even though it was a blow to the British prestige. Therefore, by 1950 the balance of the payments was in surplus.
However, a limitation of the success is that it did not last due to external events. The 1950 Korean War, which was feared to turn into WW3, caused the Labour government to embark on a rearmament programme, which required more imports and caused another balance of payments crisis for Britain. Despite this, the condition of Britain’s trade and balance payments was in much better condition in 1951 than in 1945.
Another economic success was how Labour dealt with wage and costs through arrangements with the trade unions. Between 1945 and 1950, wages rose by 1% and inflation only by 3%. However Labour’s controls began to stifle enterprise by 1948 and by 1951 needed to be set free from the restrictions. Also the agricultural subsidies were proving very expensive. Their policy of nationalisation (by 1951, 20% of the economy under state control) was hampered by the fact that they were very run down and the government had run out of money to invest in them. Perhaps keeping them private would have helped the economy more, and arguably nationalisation caused inefficiency and high cost.
Moving onto Labour’s social reforms, the Beveridge Report of 1942, written by William Beveridge played a huge role, which stated the five giants of evil and need to introduce welfare, which included want, disease, squalor, ignorance, and idleness. Attlee wanted to build on these points. The Labour Government passed a variety of welfare and social reforms through parliament, such as the National Insurance Act in 1946 and the National Assistance Act in 1948. The National Insurance Act provided sickness and unemployment benefit, retirement benefit, and widow and maternity benefit; this act covered most eventualities, but it was still criticised because benefits were restricted- many workers were not included in this scheme. The National Assistance Act provided benefits for people who were not covered by the National Insurance Act, but this scheme had the same problem as the National Insurance Act- benefits were set too low; so, many citizens remained below subsistence level. These acts slayed one of the five giants: Want. Want is involved with the needs of the citizens. Britain was already known as a ‘welfare society’; although, there were still differences in health and living standards between social classes and regions.
Disease is another giant that was destroyed. The National Health Service (NHS) became effective on July 5, 1948. Citizens could receive medical, optical, and dental services for free. It was established by Aneurin Bevan (Minister of Health and Housing). The NHS covered everyone after 1945. Before 1945, healthcare was not free. Setting up the NHS was not easy because Bevan had opposition - the Conservatives and people who had vested interests in the medical profession. Bevan needed support from the British Medical Association (BMA), but they were against doctors being salaried state employees because they believed that it could weaken their professional status. Bevan had to compromise; he said that consultants were allowed to have private patients and work in the NHS. Doctors would get some of their salary from the state and the rest would come from a fee for each patient treated. The NHS did improve health; the number of infant mortalities and patients with tuberculosis and other diseases had decreased considerably. However, the NHS was limited as in 1950 in order to meet the financial demands imposed by the Korean War, Hugh Gaitskell introduced prescription charges for dental care and spectacles, which caused Bevan to resign. But even so, the NHS provided lots of extra care to the working class and was a very successful reform.
Housing was quite successful in a way (Squalor was another giant); many houses were built. 1.5 million Council houses were built and ¼ million pre-fabricated houses were built. Although, compared to the amount of houses which were destroyed by bombs, not enough houses were built and also the Conservatives complained that not enough houses were being built. Ignorance and idleness were two of the five giants; ignorance was based around education and idleness was based around employment. Both of these ‘giants’ were also partly centred around economic conditions. Economic policies also included rationing, loans from the USA, and economic planning. They may have suffered more austerity with food shortages and rationing than during the war.
Ignorance was dealt with by implementing the Education Act from 1944. This act was proposed by the Conservatives but implemented by the Labour government. The Education Act made secondary education compulsory until the age of 15. All students had an exam at the age of 11 which decided what school they should attend. If they failed this exam, they were not expected to stay at school after they turned 15and were expected to get the unskilled jobs. The main focus was on the primary sector due to the baby boom. This act was successful because many students learned about being a skilled worker. The negative side of this act was that this did not give working class children equal opportunities, and made the classes even more rigid. The last of the five giants is idleness. Attlee’s aim was to create and maintain full employment. Full employment was maintained through the period 1945-51; unemployment did not get higher than four percent. Improving idleness was very successful during this time period.
Overall, the Labour government was very successful with their aims to improve the social and economic conditions in Britain. So overall, considering the economy, Britain was in far better shape in 1951 than in 1945 when the war had ended: unemployment remained low throughout the whole country and brought confidence in British industry’s ability to compete. However, although Labour’s policies paid a large role in the upturn of the economy, Marshall Aid was key and USA provided a huge market for exports, especially due to the lack of competition from Germany and Japan. Also, there were some failures and obstacles, such as not enough housing or Bevan’s opposition, but the Labour government did improve lives, they managed to slay the five giants.