5 The Effect of Thatcher's Economic Policies Flashcards
What were Thatcher’s beliefs?
- Radically different beliefs to mainstream conservatives
- Conviction politician - believed politics should be rooted in the beliefs of leaders
- Rejected consensus politics - viewed them as morally wrong
- Believed main problems of Tory party were EH’s willingness to compromise in 1970s
What were Thatcher’s economic beliefs?
- Against dependency, high levels of tax, debt and powerful unions
- Thought everyone should work hard to earn a living, against state dependency
- Believed that hard work should be rewarded - low income tax
- Individual entreprise = economic growth, privatisation
What was the rule of law that Thatcher believed in?
- Believed GB law central to politics - democratic process that defended individual rights
- Thought reform should come through elections not radical forms of protest as thought they were undemocratic
How was Thatcher a nationalist?
- Thought GB had civilised values of individual rights, hard work and democracy
- Suspicious of black rights groups that accused the police of racism or feminist groups who campaigned for women’s liberation
- Opposed interference of GB affairs from other countries
What did monetarism involve in 1980-1982 and what happened?
- Controlling inflation through tax rises and spending cuts
- Thought it gave an incentive to work hard
- Increasing VAT hit the poor harder than the rich
- Cutting income tax benefited the rich more than the poor
How did Thatcher raise VAT between 1980-1982?
Raised VAT from 8% to 15%
How did Thatcher cut the standard and top rate of income tax between 1980-1982?
Cut standard rate of income tax from 33% to 30%
Cut top rate of income tax from 83% to 60%
What spending cuts did MT make?
Public spending dropped from £11 billion in 1980 to £9 billion in 1981. Designed to rebalance the economy so the gov did less and private sector could do more
What was controversial about the 1981 budget?
Raised income tax in the middle of 1981 recession. Taxes introduced on NSO and taxes imposed on the banks as a one off. Tax totalled £4 billion. 364 economists wrote to The Times protesting.
How did cabinet respond to the 1981 budget?
Cabinet rebellion of 1981 rejected a further £5 billion of cuts
Why did Thatcher nationalise industry?
Believed they were inherently inefficient as they did not have to make a profit and didn’t think that gov money should be used to keep dying industries afloat
How did Thatcher allow British Steel to decline?
53,000 workers made redundant in 1979 although further gov payouts for redundancy settlements made - £1 billion, more than had been spent in last years of 1970s
How successful was British Steel by 1981?
Still making a loss of £450 million
What is an example of the gov only willing to invest money into industry that made job losses?
£990 million of gov money invested into loss making car manufacturer in British Leyland. GB Leyland made 30,000 workers redundant in 1981.
Why did Thatcher shift to supply side economic in 1982-1987?
As not possible to measure money supply so monetarism abandoned. Inflation in single figures so she believed her policies had worked. Free market policy now embraced.
