Editing Harold Wilson (section)

====Economic policies====
Wilson's government put faith in [[economic planning]] as a way to solve Britain's economic problems. The government's strategy involved setting up a [[Secretary of State for Economic Affairs|Department of Economic Affairs]] (DEA) which would draw up a National Plan which was intended to promote growth and investment. Wilson believed that scientific progress was the key to economic and social advancement, as such he famously referred to the "white heat of technology", in reference to the modernisation of British industry. This was to be achieved through a new [[Ministry of Technology]] (shortened to "Mintech") which would coordinate research and development and support the swift adoption of new technology by industry, aided by government-funded infrastructure improvements.<ref name="Thorpe64702001"/>

In practice, however, events derailed much of the initial optimism. Upon coming to power, the government was informed that they had inherited an exceptionally large deficit of £800 million on Britain's [[balance of trade]]. This partly reflected the preceding government's expansive fiscal policy in the run-up to the 1964 election. Immediately the pound came under enormous pressure, and many economists advocated [[devaluation]] of the pound in response, but Wilson resisted, reportedly in part out of concern that Labour, which had previously devalued sterling in 1949, would become tagged as "the party of devaluation". Wilson also believed that a devaluation would disproportionately harm low-income Britons with savings and poorer [[Commonwealth of Nations]] countries in the [[sterling area]]. The government instead opted to deal with the problem by imposing a temporary surcharge on imports, and a series of deflationary measures designed to reduce demand and therefore the inflow of imports.<ref>{{Harvp|Thorpe|1997|p=125-145}}</ref> In the latter half of 1967, an attempt was made to prevent the recession in activity from going too far in the form of a stimulus to consumer durable spending through an easing of credit, which in turn prevented a rise in unemployment.<ref name="inequality">{{cite book |last=Townsend |first=Peter |editor-last=Bosanquet |editor-first=Nicholas |publisher=[[Fabian Society]] |title=Labour and inequality: Sixteen Fabian Essays |isbn=978-0-7163-4004-1|year=1972 }}</ref>

After a costly battle, market pressures forced the government to devalue the pound by 14% from $2.80 to $2.40 in November 1967.<ref name="Thorpe64702001"/> Wilson was much criticised for a broadcast soon after in which he assured listeners that the "pound in your pocket" had not lost its value.<ref>{{cite news |title=1967: Wilson defends 'pound in your pocket' |date=19 November 1967 |url=http://news.bbc.co.uk/onthisday/hi/dates/stories/november/19/newsid_3208000/3208396.stm |work=[[BBC News]] |access-date=16 January 2019 |archive-date=24 August 2020 |archive-url=https://web.archive.org/web/20200824050638/http://news.bbc.co.uk/onthisday/hi/dates/stories/november/19/newsid_3208000/3208396.stm |url-status=live }}</ref> Economic performance did show some improvement after the devaluation, as economists had predicted. The devaluation, with accompanying austerity measures which ensured resources went into exports rather than domestic consumption, successfully restored the trade balance to surplus by 1969. In retrospect Wilson has been widely criticised for not devaluing earlier, however, he believed there were strong arguments against it, including the fear that it would set off a round of competitive devaluations, and concern about the impact price rises following a devaluation would have on people on low incomes.<ref name="Thorpe64702001"/>

The government's decision over its first three years to defend sterling's parity with traditional deflationary measures ran counter to hopes for an expansionist push for growth. The National Plan produced by the DEA in 1965 targeted an annual growth rate of 3.8%, however, under the restrained circumstances the actual average rate of growth between 1964 and 1970 was a far more modest 2.2%. The DEA itself was wound up in 1969. The government's other main initiative Mintech did have some success at switching research and development spending from military to civilian purposes, and of achieving increases in industrial productivity, although persuading industry to adopt new technology proved more difficult than had been hoped.<ref name="Thorpe64702001"/> Faith in indicative planning as a pathway to growth,<ref>An influential study at the time, [[Andrew Shonfield]]'s ''Modern Capitalism'' (OUP, 1965), provided intellectual backing for the belief that indicative planning largely underlay the superior growth performance of France and Germany compared to the UK.</ref> embodied in the DEA and Mintech, was at the time by no means confined to the Labour Party. Wilson built on foundations that had been laid by his Conservative predecessors, in the shape, for example, of the [[National Economic Development Council]] (known as "Neddy") and its regional counterparts (the "little Neddies").<ref name="Thorpe64702001"/> Government intervention in industry was greatly enhanced, with the National Economic Development Office greatly strengthened and the number of "little Neddies" was increased, from eight in 1964 to twenty-one in 1970. The government's policy of selective economic intervention was later characterised by the establishment of a new super-ministry of technology, a connexion not always publicly grasped, under [[Tony Benn]].<ref name="ReferenceN">''The Labour Government 1964–70'' by Brian Lapping.</ref>

The continued relevance of industrial [[nationalisation]] (a centrepiece of the post-War Labour government's programme) had been a key point of contention in Labour's internal struggles of the 1950s and early 1960s. Wilson's predecessor as leader, [[Hugh Gaitskell]], had tried in 1960 to tackle the controversy head-on, with a proposal to expunge [[Clause Four]] (the public ownership clause) from the party's constitution, but had been forced to climb down. Wilson took a characteristically more subtle approach: No significant expansion of public ownership took place under Wilson's government, however, he placated the party's left-wing by renationalising the steel industry under the [[Iron and Steel Act 1967]] (which had been denationalised by the Conservatives in the 1950s) creating the [[British Steel Corporation]].<ref name="Thorpe64702001"/>

One innovation of the Wilson government was the creation in 1968 of the [[Girobank]], a publicly owned bank which operated via the [[General Post Office]] network: As most working-class people in the 1960s did not have bank accounts, this was designed to serve their needs, as such it was billed as the "people's bank".<ref>{{cite web |title=THE NATIONAL GIRO |url=https://discovery.nationalarchives.gov.uk/details/r/ea8cf00b-5d7e-4c7c-b8fe-264110303bd1 |publisher=The National Archives |access-date=28 January 2020 |archive-date=28 January 2020 |archive-url=https://web.archive.org/web/20200128163504/https://discovery.nationalarchives.gov.uk/details/r/ea8cf00b-5d7e-4c7c-b8fe-264110303bd1 |url-status=live }}</ref> Girobank was a long-term success, surviving until 2003.<ref>{{cite news |title=Girobank disappears in A&L brand makeover |url=https://www.telegraph.co.uk/finance/2857020/Girobank-disappears-in-AandL-brand-makeover.html |publisher=The Telegraph |access-date=21 January 2020 |date=7 July 2003 |archive-date=22 June 2020 |archive-url=https://web.archive.org/web/20200622095731/https://www.telegraph.co.uk/finance/2857020/Girobank-disappears-in-AandL-brand-makeover.html |url-status=live }}</ref>

Wilson's government presided over a rate of [[Unemployment in the United Kingdom|unemployment]] which was low by historic (and later) standards but did rise during his period in office. Between 1964 and 1966 the average rate of unemployment was 1.6%, while between 1966 and 1970 the average stood at 2.5%.<ref name="Thorpe64702001"/> He had entered power at a time when unemployment stood at around 400,000. It still stood at 371,000 by early 1966 after a steady fall during 1965, but by March 1967 it stood at 631,000. It fell again towards the end of the decade, standing at 582,000 by the time of the general election in June 1970.<ref>{{cite web|url=http://www.socialiststudies.org.uk/cinc%201930s.shtml|archiveurl=https://web.archive.org/web/20121028013514/http://www.socialiststudies.org.uk/cinc%201930s.shtml|url-status=dead|title=Socialist Studies – Capitalism in Crisis – Unemployment in the 1930s.|archivedate=28 October 2012}}</ref>

Despite the economic difficulties faced by Wilson's government, it was able to achieve important advances in several domestic policy areas. As reflected by Wilson in 1971:

{{blockquote|It was a government which faced disappointment after disappointment and none greater than the economic restraints in our ability to carry through the social revolution to which we were committed at the speed we would have wished. Yet, despite those restraints and the need to transfer resources from domestic expenditure, private and public, to the needs of our export markets, we carried through an expansion in the social services, health, welfare and housing, unparalleled in our history.<ref>Harold Wilson, The Labour Government 1964–1970: A Personal Record</ref>}}