How successful were the Labour Government reforms of 1945-51 in improving social and economic conditions?

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How successful were the Labour Government reforms of 1945-51 in improving social and economic conditions?

After Clement Atlee’s successful campaign of “Let Us Face the Future,” Labour won the 1945 election, winning 393 seats. However, the newly elected Labour Government faced a far more serious economic situation than what had faced the last Labour Government in 1931. From 1939-45, the British economy had been effectively harnessed to the war effort. The production of some luxury goods were severely cut back and essential goods like food and clothing were rationed, which limited British society, however by mid 1940 there was almost full employment. But by the end of August 1945, after World War Two had ended, the future looked deeply worrying. The economy had taken a turn for the worst and Britain was burdened by enormous debts after the war and continued to face massive expenditure on overseas commitments, such as the Cold War.

Atlee aimed to improve both the social and economic conditions of the time. The main plans to improve the social conditions were: to create a fairer society through a welfare state, build on the recommendations of the Beveridge Report, slay the five giants (want, disease, squalor, ignorance, and idleness) and create the NHS. His aims regarding the economy were to improve fulfil the Nationalisation programme and reduce unemployment – Labour had to recover from being identified with the failures of the 1930s.

First to consider is the extent of success Labour’s reforms in the economy, a subject which overshadowed almost the whole of the party’s time in power. There were both successes and failures in how they dealt with finance and trade. A success was Maynard Keynes negotiated loan of $3,700m from USA repayable over 50 years, and although they had to pay interest and the government had to promise to make the pound sterling fully convertible to the US dollar in 1947, the loans meant the government had money in which to buy essential imports. However the extent of success is limited, as the loans ran out years before it was supposed to due to the bad winter of 1946-47 causing a huge fuel crisis. So the money was insufficient and led to another financial crisis in 1947 over convertibility, as the Chancellor (Hugh Dalton) had to allow holders of sterling to convert these into dollars but there were simply not enough dollars and this had to be suspended. Britain was helped by America’s very generous Marshall Aid in 1948, however this was not due to any of Labour’s reforms and was based around the red scare in America, so cannot be considered a success of Labour.

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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 ...

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