The Thatcher Revolution - Economics (Complete notes AQA - 10/16)

These notes are for the 'Making of Modern Britain' course on AQA and as such follow the spec, although would be useful for all modern britian courses. They contain hystoriography, detail and explanations. 

The notes are devided into the sections of the spec, therefore there are 16 documents (as there are 4 areas (politics, economics, society, and foriegn policy) and there are 4 periods (Post war, Wilson + heath, Thatcher, and Blair)). 

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  • Created on: 08-10-15 22:39
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The
`Thatcher
Revolution',
1975-1990
­
Economy
Monetarist
policies
and
their
impact
on
the
economy;
the
extent
to
which
the
economy
had
been
transformed
by
1990
Wilson
1974-1976
Denis
Healy
­
Chancellor
of
the
Exchequer
1974
Budgets
­
deflationary
- Tax
increases
o £1,500
million
increase
o 3p
increase
in
standard
income
tax
! Lowered
for
higher
bands
o Excise
taxes
on
alcohol
and
cigarettes
raised
o Corporation
tax
raised
o VAT
introduced
on
petrol,
soft
drinks
etc
! Then
VAT
dropped
from
10%
to
8%.
- Tax
reductions
o Personal
tax
allowances
and
child
allowances
increased
o Higher
retirement
pensions
o £500
million
food
subsidies
- Price
increases
o To
Steel,
coal,
electricity,
postage
and
rail
fares.
1975
Budgets
­
try
to
cut
public
deficit
- Cut
public
spending
by
£900
million
- Increased
taxation
o VAT
on
`luxury
goods'
25%
o Raised
on
tobacco
and
alcohol
o Income
tax
raised
by
2
further
pence
(35p
in
pound)
o Exercise
duty
on
cars
riased
- Reduction
in
subsidies
to
nationalised
industries
Wages
policy
­
try
to
hold
back
inflation
- Social
contract
aimed
to
control
wages.
o Didn't
really
work.
- 1975
July
limit
of
£6
a
week
limit
on
increases
o £6
a
week
was
about
10%
of
average
earnings
o Those
earning
more
than
£8,500
would
get
no
increases
o No
exception.
o Voluntary,
in
that
it
wasn't
against
unions,
but
strong
rules
imposed
through
Price
Code.
Issues

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Inflation
o 1975
26%
inflation
- Wages
o 1975
35%
a
year
- Unemployment
o 1975
700,000
o 1976
1
million
- Balance
of
Payments
o 1974
$1.5
billion
! made
worse
by
the
price
of
oil
- Deficit
- Stagflation
continued
- Industrial
production
o Lower
in
1975
than
in
1973.…read more

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Deal
with
the
sterling
crisis
caused
by
concerns
of
over
borrowing
- Spending
cuts
were
a
condition
of
the
loan
o £3000
million
cuts
over
2
years,
and
taxation
increases.
o Some
see
these
spending
cuts
as
the
end
of
consensus.
o Sell
£500
million
BP
shares
! 17%
of
Government
shares.
- Effect
o Reassured
the
markets
o Economy
stabilised
o Neo-liberal
ideas
first
materialise
in
Britain.
1976
moves
- 4.…read more

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­
Economy
in
a
fairly
good
place
- Unemployment
falling
- Inflation
falling
- Improved
balance
of
payments
Historiography
- David
Childs
o The
rapid
improvement
in
the
economy
was
`based
on
the
fact
North
sea
oil
was
starting
to
flow'.
- William
D.
Rubenstein
o `If
a
key
part
of
`Thatcherism'
was
to
abandon
the
Keynesian
goal
of
full
employment
in
order
to
fight
inflation,
then
Callaghan
and
Healy
initiated
an
important
part
of
Thatcherism.…read more

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Taxes
should
be
reduced
so
that
people
could
keep
more
of
their
earnings.
o Businessmen
should
chase
markets,
make
profits
and
create
new
jobs.
o Unsuccessful
businesses
should
be
allowed
to
fail
and
not
be
bailed
out
by
government.
o Conservatives
should
not
have
economic
planning
and
policy.
o Incomes
policy
could
not
solve
the
crisis
of
inflation
­
wage
control
was
ineffective.…read more

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Chancellor
of
the
Exchequer
-
Geoffrey
Howe
Right
to
buy
­
1980
Housing
Act
- Why
introduce
o It
had
been
a
pledge
in
1979,
well
received
by
voters.
o It
gave
people
something
for
the
hard-earned
money
they
paid
­
rather
than
wasteful
rents.
o Raised
revenue
and
cut
expenditure
for
local
governments.
! By
1983
it
had
raised
£1.87
billion.
o Reduced
the
power
and
range
of
local
government.
! 1979
­
1/3
of
all
housing
was
owned
by
local
councils.…read more

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Tories
had
pledged
to
honour
the
pay
rises
agreed
by
Labour
before
the
election.
! VAT
made
prices
higher
thus
driving
up
inflation.
· RPI
4%
increase
from
VAT
alone.
! Oil
prices
were
rising.
! By
the
end
of
1980
inflation
was
21.9%
o Value
of
the
pound
increased
harming
exports.
! Due
to
demand
as
a
strong
petro-currency.
! Dealt
with
by
dismantling
exchange
controls.
o Unemployment
increased
because
manufacturing
decreased
because
exports
were
expensive.
o Less
tax
revenue.…read more

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The
final
abandonment
of
Keynesian
economics.
o In
the
middle
of
the
worst
economic
crisis
since
1945.
o The
economy
was
being
squeezed.
The
belief
was
that
inflation
would
be
squeezed
out
of
the
system
once
and
for
all.
- It
was
a
highly
controversial
Budget.
o 364
economists
denounced
as
did
5
ex-Chief
Economic
Advisers
to
the
Treasury.
- The
Cabinet
and
back-benchers
didn't
like
it
either.
- Howe
cut
spending
even
further.
- Raised
£4
billion
in
extra
taxes.…read more

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Encourage
people
to
have
a
sense
that
they
owned
something
that
developed
the
nation.
- Criticism
o Many
shared
Labour's
ideas
­
that
privatisation
encouraged
greed.
They
rejected
`popular
capitalism'.
o It
didn't
help
that
many
leading
politicians
(usually
Conservatives)
gained
highly
lucrative
seats
on
the
board
once
they
had
retired
from
politics.
o One-nation,
traditional
Tories
such
as
Heath
and
Macmillan
were
critics
of
her
policies.…read more

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October
1986
­
the
change
happened
overnight.
o Largest
deregulation
of
the
London
stock
market
in
modern
times.
o It
transformed
London
and
restored
London
to
the
financial
status
it
had
enjoyed
in
1914.
1987
`Black
Monday'
­
October
- Event
o Stock
Markets
around
the
world
were
damaged.
o London
lost
£90
billion
in
share
value
in
2
days.
- Reaction
o Lawson
continued
selling
off
shares.
o Lowered
interest
rates.…read more

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