The Thatcher agenda 1979
• Cutting back government spending and end government control over nationalised industries
• Reducing taxes
• Allowing the free market to operate
• Ending ’corporatism’ which means agreements between the government, unions and industry which had happened throughout the 60s and 70s
• Ending ‘Keynesianism’ – reducing unemployment through government subsidies. Steel, shipbuilding,, textiles etc eg in 1979 British still was the biggest loss maker in Europe and only kept going because of government subsidies – Thatcher wanted to end this and allow failing industries to die – at the cost of unemployment – so that new high tec industries could flourish
• Ending the power of Trade Unions who had a stranglehold on the economy
• Ending lavish welfare spending which led to a ‘dependency culture’ which allowed people to live off the state and not work
• Reduce inflation by controlling the money supply
The Beginnings of Thatcherism
She put Geoffrey Howe in charge of the economy as Chancellor as he would do as she said
(b)she packed the committees which deals with economic policy with her supporters
Between 1979-82 she and Howe - -
(a) cut government spending and introduced ‘cash limits’ on what government departments and nationalised industries could spend (on wages etc)
(b) Cut income tax from 33% to 30%
(c) Refused to bail out failing industries (although there were some exceptions eg Rolls Royce)
(d) Cut government borrowing by £3,500 million.
The Crisis of 1979-82
The immediate effects were catastrophic -
- Britain entered a sudden recession
- Manufacturing fell by 10% between 1980-81 as Britain began to ‘de-industrialise’
- This led to a massive rise in unemployment to 3 million or 13% of the workforce – as workers mostly in the North and Midlands who worked in the old traditional manufacturing industries were thrown out of work (this led to lasing bitterness as whole communities were affected in steel and coal mining towns). Steel production dropped by 30%.
- Inflation did not come down
- There were serious riots in Brixton, Toxteth (Liverpool) and Moss Side (Manchester) by young black youths - who tended to suffer most from unemployment.
- Opinion polls showed Thatcher as the most unpopular PM since Neville Chamberlain in 1939.
- The ‘Wets’ in the cabinet were beginning to move against her - particularly because of her aggressive and abrasive style of leadership. There was talk of replacing her as Prime Minister.
Why did Thatcher Triumph?
- Determination - not prepared to do a U-turn 'this lady's not for turning'
- The purge of sept 1981 - got rid of her enemies inside the Conservative government – in her own ‘night of the long knives’ she sac ked 3 of the leading Wets and demoted another
- economic recovery - Inflation fell from 22% to 5% - the lowest for years
- The Falklands War - made sure she won next election, got to rule over gov., public backing
- the disarray of the Labour Party
- Internal civil war – a bitter dispute took place between the Left of the Party led by Michael Foot and Tony Benn and the old Right led by Roy Jenkins and Shirley Williams.
- The Left Victory - Michael Foot's policies were too left wing, incl. unilateral nuclear disarmament, more nationalisation, withdrawal from the EEC
The election of 1983
- Was a massive Conservative victory
- They won an overall majority of 144 seats
- Labour got only 27% of the vote – ther Left wing election manifesto which included the Nationalisation (government takeover) of the top 100 companies in the UK, withdrawal from Europe and NATO, the abandonment of Britain’s nuclear weapons – has been called ‘the ongest suicide note in history’
- The Alliance got 25% of the vote – only a little behind Labour
The triumph of Thatcherism 1983-89?
- Privatisation- After 1983 she began to 'de-nationalise' E.G. British Gas/Airways, brought in money for the gov. (the sale of BP alone brought in £7 million) which enabled her to cut taxes
- Sale of council houses - 1980 a law was passed to allow council tenants to buy their own council house at a discount, Home ownership grew from 55% in 1950 to 64% by 1987.
- The big bang - de-regulating the banks, this led to a massive growth in banking profits, 2008??
- Lowering Taxes - cut from 29% to 25% and Lawson encouraged personal pension plans
- Taming Trade Unions- The Miners Strike 1984-85 - (a)pit closures and the no. of miners fell(b)a defeat for the power of trade unionism in general - lost their economic and political power.
Was Thatcherism an economic success?
- The British economy was now finally modernising, the numbers employed in manufacturing fell from 40% in the 1960s to 22% by 1990
- The British economy grew by nearly 4% per year in this period
- The defeat of the unions led to new 'flexible working practices'
- Taxes were lower than ever and government finances were in surplus not in debt
- Inflation had been defeated and stayed low from now on
- Unemployment stayed high - it leaked at 3.2 million in 1985
- Some have argued that the success of the balance of payments and government finances was due to the money gained form North Sea Oil
- Her economic polices cause a 'North South
- The miners strike caused permanent hatred in mining communities and hatred of the police
- The gap between the rich and poor - in 1985 the top 6% of rich in Britain 25% of the countries national income, the poorest 20% saw their share of wealth drop. There were real tax cuts for the better off because the top rate came down from 80% to 40%.
The triumph of Thatcherism 1983-89?
- The defeat of the left wing councils - most important were the GLC (Greater London Council) led by Livingstone and the 6 'Metropolitan County Councils which ruled cities like Greater Manchester, Mersyside, West Midlands. In 1986 Mrs Thatcher abolished all of these
- The defeat of the miners 1984-85 - Their most important was the NUM (miners union). Main force behind the defeat of Heath and also had tried to take the Conservative government on in 1981. Their total defeat in the year long strike of 1984-85 destroyed their power. This, with anti trade union laws in 1980'82 and 84, removed serious political threat to the Conservatives
- The continued disunity of the opposition - The party had lost the 1983 on a Left Wing manifesto and the leader Michael Foot resigned.
- The 1987 General Election - Mrs Thatcher won an easy victory in the 1987 election to carry on as PM. The Conservatives got 376 MPs to Labours 229. The Lib Dems got only 22
- Northern Ireland - The in 1984 the IRA sent a massive bomb in the Grand Hotel in Brighton where the Conservative leaders were staying. Came no where near a solution.
The downfall of margaret thatcher 1989-90
- The end of the Lawson boom - growth 1987-88 was 4.5% - much higher than any other European country, unemployment fell from 3 million to 1.5 million. Economic growth dropped to just 1%, North Sea oil was now passed its peak, a balance of payments crisis occurred
- Political resignations - in 1989 her Chancellor Nigel Lawson resigned because she also overruled him and preferred to listen to her economics advisor Alan Walters. In 1990 her Deputy PM Geoffrey Howe resigned over her attitude towards Europe and her tmt of him
- The problem of europe - in 1988 she made her speech in Bruges attacking European integration- "We have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed at a European level, with a European super-state and a new dominance from Brussels"
- The poll tax - the 'Community Charge' or 'poll tax' was a local income tax and everyone paid the same no matter how rich or poor
- Fear of election defeat - By Sept 1990 the Conservatives were 14% behind Labour in the opinion polls, Kinnock had began the process if 'modernising' the Labour Party
- The leadership challenge of michael heseltine - announced that he would challenge her in a leadership election, She won the first vote by 204 to Heseltines 152 BUT party rules stated that if the winner on the first vote does not win by 15% over the rival there would have to be a 2nd vote? Thatcher missed this by just 4 votes - so there had to be a second ballot
- The revolt of the cabinet - the majority told her that she would lose and should step down