1929 Labour Government

1929 Labour Government

1. Aims

   • MacDonald believed this was Labour's chance to remove doubts about Labour
     • Could gain experience
       • Could win over more voters
   • Unemployment figures dropped as they took power
     • Optimistic feeling
       • Good time to take government
   • Reform aims
     • Build council houses
     • Raise the school leaving age to 15
     • Take control of the London transport system
     • Tackle Unemployment

2. Cabinet

   • Similar to MacDonald's first cabinet
     • Chancellor of Exchequer
       • Philip Snowden
     • Ministry of Works
       • George Lansbury
         • Prominently left wing
     • Foreign Office
       • Arthur Henderson
         • Supporter of the League of Nations
           • Supported the process of international disarmament
     • Minister of Labour
       • Margaret Bondfield
         • First women cabinet minister
     • Overall tone of government was cautious rather than radical

3. Domestic Policies

   • Although largely dependent on the Liberals, the 1929 Labour government managed to push through some important reforms
     • Housing Act, 1930
       • Arthur Greenwood
         • Increased subsidies and introduced slum clearance
     • Coal Mines Act, 1930
       • Reduced miners' working hours from 8 to 7 1/2 shifts
     • Land Utilisation Act and Agricultural Marketing Act, 1931
       • Established marketing boards to help producers
         • Power to fix prices and arrange supplies efficiently
     • London Transport Bill, 1931
       • Herbert Morrison
         • Public corporation for providing cheap and efficient public transport in London
   • Unemployment
     • Benefits increased
       • Put a strain on the government when unemployment increased in 1931

4. Economic Crisis

   • Great depression as a result of the Wall Street Crash
     • Trade suffered
       • The value of British exports halved between 1929-31
         • Unemployment rose to 2.5 million by 1931 and 3 million by 1932
           • Serious problem for the new Labour government
   • MacDonald set up the Economic Advisory Council to provide advise
     • MacDonald remained wary of new ideas however
       • Still believed in a balanced budget
   • Labour party divided on how to deal with the crisis
     • Snowden
       • Balanced budget
         • Stay on Gold Standard
     • Mosely
       • Called for increased spending
         • Public work schemes and social reform
         • MacDonald not convinced by Mosley's ideas
           • Ideas of Keynes
           • Feared radical measures would undermine confidence in Britain overseas
   • Banking crisis in 1931
     • Liberals suggested a committee to consider Government spending
       • MacDonald appointed May Committee
         • May Committee report published 31st July 1931
           • Budget deficit of £120 million by 1932 unless cuts were made
             • Recommended cuts of £96 million
               • Cuts to public sector employees wages
                 • Teachers
                 • Policemen
                 • Civil servants
               • 20% cut in unemployment benefit
               • Heavier taxation
           • Caused an outcry from many Labour party members and Trade Unionists
             • Wanted government to find money by taxing the rich
               • Rather than making cuts to the unemployed
             • MacDonald felt compelled to follow the report
               • He accepted a reduction to the unemployment benefit was a price the party had to pay
                 • Cabinet divided
                   • Cabinet Economy Committee met
                     • Agreed to cuts amounting to £56 million
                       • Leaders of other parties thought this was too small
                       • TUC leaders rejected any cuts
                         • Rejected any cuts which would affect the unemployed
                           • Rejected the May Committee's proposals entirely
                     • Sunday 23rd August
                       • Cabinet approved substantial cuts to unemployment benefits
                         • 11 to 9 votes
                           • The vote split the Labour party badly
                             • MacDonald could no longer continue to lead it
                               • 24th August MacDonald handed in his resignation