79-87 Economy Flashcards
north sea oil discovery
-offshore oil made britain into an energy powerhouse
-rescued britain from a balance of payments crisis
-however it sent the value of british pound up, rose unemployment in manufacturing sector
Monetarism
-milton friedmans economic theory
-control inflation by restricting gov spending and borrowing
-strict curbs on money supply and currency in circulation
Impact of monetarism
-inflation above 15% and unemployment above 15m 1980
-stagflation returned
1981 budget
-implemented more monetarist policies
-gov borrowing decreased, grants to local councils cut and benefits frozen
-howe called it ‘the most unpopular budget in history’
Shift from indirect taxation
-top rate of income tax fell 83% to 40% by 1988
-standard rate fell 33% to 25%
-vat went up 8% to 15% in 1979
-taxes on petrol, cigarettes, alcohol increased
Rate capping
-used to control labour local authorities spending
-limited money council could raise in local taxation
-1985 sheffield and liverpool rebelled against the cap
-had to back down threatened with bankruptcy
-1986 local gov app abolished big local authorities
Privatisation
-BT sold 1984, momentum for privatisation
-British gas sold 1986, biggest share offer in history
-1979-90 individuals owning stocks and shares 3m-9m
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Benefits of privatisation
-belief that private sector more effective than public
-brought in alot of revenue for the government
-businesses competed which encouraged improvements
Problems with privatisation
-critics argued sold off cheaply to ensure sale of shares
-some people lost jobs as enterprises cut back on staff
-some had no long term job security or reliable pension
-radical thatcherites wanted to privatise coal, rail, nhs
Deregulation
-government interfered as little as possible
-made it easier for businesses to trade and grow
-encouraged entrepreneurship and wealth creation
Government schemes
-loan guarantee scheme, easier for small businesses to borrow money
-enterprise allowance scheme, encouraged unemployed to start their own businesses by giving them £40 a week
Big Bang
-27 october 1986 deregulated london stock exchange
-restored londons position as a world financial centre
-introduction of yuppies
-2.2% growth in GDP during 1980s no better than 1970s
Inflation
-interest rates used to control inflation, 17% in 1979
-led to a decline in both output and demand, economy in recession many businesses bankrupt
-inflation peaked at 22% in may 1980
-reached a low of 2.5% in 1986
Monetarisms effect on industry
-many industrial plants shut down permanently
-midlands, north, scotland, wales hit badly
-output fell 15% in 2 years
-production in west midlands fell by 1/4
-steel production cut 30% to 14 millon tons
Unemployment
-unemployment over 3 million by 1983
-13.5% of total workforce, highest post ww2
-didnt fall below 3 million until 1987
-25% in liverpool
Government policies to help unemployment
-youth employment scheme, employers paid to take on young people
-national insurance rates reduced for lower paid jobs
-government focused more on inflation than unemployment
Economic realignment
-old industries facing competition from abroad
-britains economy becoming more focused on services
-foundations of working class communities crumbled
-increased north south divide
Sale of council houses
-1980 housing act, tenants right to buy council houses
-received a 33%-50% discount based on time lived there
-2 million homeowners had used scheme by 1988
Negatives of sale of council houses
-predominantly in better off areas, not worse estates
-councils made to use profits to reduce debts not build new council houses
-number and quality of homes for renting reduced, many people housed in emergency B&Bs
Print union strikes
-newpaper proprietors tried to reduce print unions power
-confrontation at murdochs wapping plant 1986
-failed to prevent newspaper publication, strike collapsed 13 months in
Start of pit closures
-1981 NCB warned of need to close 23 pits
-tories had been worried about a rerun of 1973/74 events
-1984 government felt confident due to stores of coal built up, north sea oil, NCB announced need to close 20
Scargills reaction to pit closure
-claimed he had seen a secret plan to close 70 pits
-ian mcgregor rejected this but leaked cabinet papers showed plan to close 75 pits over next 3 years
Divisions of miners
-scargill didnt gain total support for a national strike
-nottinghamshire miners broke away and formed UDM
-scargillites called UDM scabs and traitors
Police battles
-new equipment, tactics, more experience of riot control
-thatcher blamed for the politicisation of the police
-most famous battle of orgreave june 1984
Failure of preventing pit closures
-by 1979 coal industry employed 200,000
-by 1990 down to 60,000 and falling
Union loss of power
-total union membership 2/3 of 1979 levels
-british steel and airways reorganised, job losses
-could no longer intimidate governments
Poll tax
-aimed to make local councils more accountable to their electors by ensuring everyone contributed
-difficult to justify why pensioners and millionaires paid the same local tax
Poll tax in scotland
-introduced 1989 unpopular from the beginning
-further damaged tories relationship with scotland after deindustrialisation and recession
Protests against poll tax
-anti poll tax unions set up across the country
-30% of people in some areas are non payers
-mar 1990 200k people demonstration in trafalgar square
-5000 injured, 300 arrests made
