When the results of the 1945 general election were announced, Churchill and many key figures in the British Government were still attending the Potsdam Conference, which would determine how defeated Germany would be administered. Eventually, the Big Three (Churchill, Truman and Stalin) came to an agreement, and so the conference concluded on August the 2nd 1945. The following month, the Second World War officially came to a close, as Japan agreed to unconditional surrender.
However, Churchill was wary of the new global arrangement – the Soviets had bypassed their agreements with the Western Allies at Yalta, and had installed a communist government in Poland, without a single discussion with the Polish Government-in-exile. In addition to this, all of Eastern Europe, bar Greece, were becoming Soviet satellite states. The Prime Minister knew that this Soviet bloc posed a threat to global peace, and so, when addressing the House of Commons in early 1946, Churchill warned of the dangers of the Soviets, and advised the Western Allies to stick together in the post-war world. The highlight of Churchill’s speech came when he declared:
‘From Stettin in the Baltic to Trieste in the Adriatic an iron curtain has descended across the Continent. Behind that line lie all the capitals of the ancient states of Central and Eastern Europe. Warsaw, Berlin, Prague, Vienna, Budapest, Belgrade, Bucharest and Sofia, all these famous cities and the populations around them lie in what I must call the Soviet sphere, and all are subject in one form or another, not only to Soviet influence but to a very high and, in some cases, increasing measure of control from Moscow.’
Later in the year, Churchill met with President Truman, to discuss how the British Empire and the United States could combat the Soviet threat. Yet, before that is discussed, it is worth looking at the early domestic decisions of Churchill’s second administration.
At the end of the Second World War, the UK, although triumphant, was in a dire economic position. In 1945, economic growth was -4.6%. Thus, John Anderson, the Chancellor of the Exchequer, had a significant amount on his plate to deal with. For the 1946 Budget, Anderson announced numerous measures to deal with the UK’s economic woes, such as the removal of economic controls imposed during the war, the privatisation of the coal industry and a reduction in taxation, so as to stimulate productivity. Anderson’s economic policies, began to take effect, as in 1946, the UK’s economic growth was -1.4%, and in 1947 economic growth was +3.00%.
As the economy improved, Churchill decided to start the implementation of a cornerstone pledge of the Conservative Manifesto – a major house building programme. For the Government, this policy would kill two birds with one stone – first, it would repair the damage done to the UK’s cities by the Blitz. It would also allow demobilised soldiers to be provided with work upon returning to the UK. So, in 1946, the Government launched the Housing Scheme (established through the Housing Act, 1945) – soldiers who were returning to the UK were offered jobs in the scheme and most accepted, providing a workforce more than ready to launch the project. Between 1945 and 1950, as the Government had hoped, the number of houses in the UK rapidly increased, and the target set out in the Conservative Manifesto (200,000 houses) was easily met by the time the Housing Scheme ended in 1949.
Other policies introduced by the Government included the establishment of a Civil Aviation Authority, created in 1947, and the encouragement of the growth of small businesses through the reduction of taxation organised by Anderson in his Budgets which were introduced during Churchill’s second term.
By 1947, Churchill’s Government had taken major steps to implement manifesto commitments made at the 1945 general election. However, Churchill still had one major area to deal with, the implementation of the Beveridge Report, while the Government was also making decisions relating to foreign policy and the Empire. Thus, the Government’s task was far from complete.