Britain Transformed - The Impact Of Thatcher’s Governments

Question 1

Key Features of Thatcherism

Answer 1

Thatcherism is bet understood as the set of aims which Margaret Thatcher sought to achieve during her 11 years as Prime Minister
Reverse Keynesianism
- Keynesianism to be abandoned and the free market allowed to operate
Cut Government Spending
- Monetarism would end wasteful government spending
- Government subsidies for unprofitable industries to end and the competitive spirit to be promoted
- Welfare dependency to be discouraged by targeting benefits on those who genuinely need it rather than giving it indiscriminately
Cut Taxes
- Income tax and corporation tax to be reduced so that individuals and companies could keep more of their own money
Restrict Bureaucracy
- Public institutions and bodies, in particular locals government, to be made truly accountable to the public their existed service
- The undemocratic power of the trade unions to be broken and union leaders to be made fully responsible for their members
- Companies and the public utilities to be removed from the government control and privatisation to be introduced
Take Government Off The Backs Of People
- The maintenance of law and order to be given priority in order to provide greater protection to ordinary citizens
- British independence and sovereignty to be enhanced by resisting EEC encroachments
- Britain would promote the cause of world freedom by promoting international justices in the face of Communist oppression
- The rights of the individual and the family would take precedence over abstract notions of social good

Question 2

Thatcher’s Economic Policies 1979-90 Context

Answer 2

To some people, Thatcher was an economic saviour
- she tried to tackle inflation and stood up to trade unions that were causing it
However, others believe that she ruined the economy
Popular consensus is that she transformed the economy
Her ideas were very different from the economic consensus from 1945-1979 and it has been said that she increased the gap between the richest and the poorest
Her economic policies encouraged ‘greedy capitalism’
Although her ideas are known as ‘Thatcherism’, her ideas were influenced by other people

Question 3

Friedrich Von Hayek

Answer 3

Economist and critic of Keynes
Against state intervention in the economy
Role of the state was not to involve itself in the welfare of its citizens, but to provide conditions to make individuals free to make their own choices
Supporter of the free market and had a distrust of trade unions who he considered to be a direct cause of unemployment and destroyer of democratic freedoms

Question 4

Keith Joseph

Answer 4

Leading Conservative intellectual
Introduced Thatcher to the ideas of Von Hayek and encouraged her to adopt monetarism as her government’s financial strategy

Question 5

Monetarism

Answer 5

Thatcher adopted monetarism as her main economic policy
This was done to tackle the rampant inflation who gripped the country in 1979
Thatcher broke the economic consensus of believing that unemployment was then main issue
Monetarism can be defined as the basic cause of inflation is an increase in the money supply and therefore, that in order to control inflation, governments should restrict the amount of money in circulation and cut public expenditure
This meant that interest rates needed to increase
This would make credit harder to get
This changed spending habits and some industries struggles to survive, which created unemployment
Within one year of her premiership, inflation has rose to 22% (inflation in 1978 = 11%, inflation in 1980 = 22%)

Question 6

The 1979 Budget - Taxes and VAT

Answer 6

The new Chancellor, Sir Geoffrey Howe’s, first budget was on 12th Junes, barely a month after the General Election and pretty much the first feasible date
Treasury ministers planned the budget around a substantial reduction income tax, aiming to improve incentives and hence economic performance
The basic rate was cut from 33p to 30p
- the top ‘earned’ rate of 83p and the top ‘unearned’ of 98p were cut to 75p
Thresholds were increased by an average of 18%, well above inflation, taking 1.3 million out of income tax all together and 550,000 out of the higher rates
The 8 and 12.5% VAT rates were unified at 15%, putting around 3.75% on the RPI
They’re was also a 7p increases in petrol duty, adding 10p to a gallon when VAT was added in
(For RPI reasons, alcohol and tobacco duties were left untouched)
The oil companies were tapped: Petroleum Revenue Tax (PRT) was increased from 45p to 60p and BNOC lost its exemption from the tax

Question 7

1979 Budget - Main Cuts

Answer 7

There were £2.5 billion reductions in planned spending total (housing the biggest single cut), holding the projected PSBR for 1979/80 to £8.25 billion (4.5%)
Howe minuted MT on the 21st May that the effect of the measures would be “quite severely contradictory”, given projection, closer to £10 billion
£1 billion in asset5 sales were announced, mainly from selling a further tranche of BP shares

Question 8

1979 Budget - Arguments for Further Cuts

Answer 8

The papers show that while generally Margret Thatcher generally accepted the logic of the direct/indirect tax switch, which she had publicly endorsed, she worried mightily about the political and economic effects on the RPI
Instead, she grew passionately for further spending cuts
- notably in a meeting with all the top Treasury ministers and officials on the 16th May when they were being “not nearly tough enough”
This was in the hope of holding VAT increases to 12.5%
She also sought ways not to backdate income tax cuts and even suggested deferring them all together the following year
But Howe did not yield

Question 9

1979 Budget - Further Budget Plans

Answer 9

On the monetary side, the budget lowered the existing £M3 target range of 8-12% (for the year to mid-October 1979) to 7-11% (mid-June 1979 to mid-April 1980)
To deliver this target, alongside action on the PSBR, MLR was increased from 12-14%
The Supplementary Deposit Scheme (a.k.a. “The corset”) was extended for a further 3 months
(Final abolition was in June 1980)
The budget also saw the first step towards abolition of exchange controls, easing restrictions on individuals and small outward investments
From the outset, the Bank of England strongly encouraged the new government to ease exchange controls, but initially showed wariness of full abolition

Question 10

1979 Budget - National Income Forecast

Answer 10

The unpublished National Income Forecast on the 1st June predicted that the UK economy is likely to move further into recession
“The volume of GDP is unlikely to rise much and is more likely to fall from the level reached in the second half of 1980. Manufacturing output may fall significantly”
The reactions is now judged to have begun in the third quartet of 1979 and ended in the second quarter of 1981

Question 11

1980 Budget

Answer 11

In the 1980 budget, Howe announced increases in prescription charges and indirect taxes
- broad reductions in public spending announced but more resources would be made available for the police and defence
James Callaghan described it as the “meanest since 1931”

Question 12

The 1981 Budget Speech

Answer 12

The budget speech of the 10th March 1981 delivered by Chancellor of the Exchequer, Geoffrey Howe, is seen by many commentators to have been the most significant of all of those during Thatcher’s Premiership
The nub of the budget was cuts in public expenditure and increases in personal and indirect taxation
Notably a windfall tax was levied on bank profits and North Sea Oil
The 25p lower rate of tax, introduced by Labour in 1978, was abolished
The new Leader of the Opposition, Michael Foot, condemned a ‘no hope budget produced by a nope hope Chancellor’
These announcements came at the bottom of a deep recession
They were in a diametrically opposed intellectual framework to the Keynesian economic orthodoxy which had prevailed since the 1940’s, and a change of policy was being urged on Thatcher by many of her own supporters, including members of the government
Her refusal demonstrated more clearly than ever her commitment to monetarism
One week after the budget was delivered, during a debate on the budget resolutions, the Conservative member Christopher Brocklebank-Fowler crossed the floor on the House (to join the SDP)

Question 13

The 1981 Budget Breakdown

Answer 13

• Britain was in recession
• Stealth Taxes - didn’t increase the tax band for inflation - this meant that people were paying more tax
• Windfall tax on oil and bank profits
• 364 economists wrote a letter to the Times opposing the budget
  “I’ve actually produced a definition of economists as a result: that an economist is a man who knows 364 ways of making love, but doesn’t know any women”

Question 14

The Impact of the 1981 Budget

Answer 14

• Unemployment rose from 1.2 million to 3 million
• Industrial output fell by 11%
• Interest rates rose to just under 16%
• The pound rose in value against the dollar - this had a negative impact on exports
• There was an increasing north-south divide
• Urban areas and social tensions - riots in Bristol and Liverpool

Question 15

Issues with Monetarism

Answer 15

One problem is that people didn’t understand monetarism
By 1983, even fans of this policy advised Thatcher to give it up and move to supply side economics
This change coincided with a change in the Chancellor of the Exchequer to Nigel Lawson

Question 16

Supply Side Economics

Answer 16

Supply side economics focused on giving people a reason/incentive to work
Thatcher believed that one of the main economic problems was that people didn’t want to work and therefore the cost of benefits was increasing
She believed that the rich shouldn’t be taxed to pay for the poor
Thatcher developed the following supply side polices:
- Reduce taxation to provide employees an incentive to work
- Encouraging competition in order to lower prices
- Limiting the power of trade unions
- Cutting welfare payments to save public money and reduce dependency

Question 17

1984 Budget

Answer 17

Nigel Lawson’s first budget (he had been promoted from the Department of Energy after the 1983 election) was hailed by Conservative MPs
The Chancellor offered them some progress in his aim of ‘radical tax reform’ and abolished the national insurance sub charge, raised some personal allowances by more than inflation, cut corporation tax, made home-buying a little cheaper by raising the threshold for stamp duty, abolished the investment income surcharge and cut the top rat of transfer tax
The only qualm from the government benches concerned the abolition of life assurance premium tax reliefs
The Leader of the Opposition, in his first Budget reply, spoke for 25 minutes and declared that “ this is a budget which does more for the City of London than it does for the country;’
The Chancellor ‘gave away’ about £750 million (around half the amount he had hinted would be available at the time of the 1985 autumn statement)
Lawson also raised tax allowances
Excise duties were increased

Question 18

1983 Election

Answer 18

This was Labour’s worst electoral performance since 1918, and losing over 3 million votes
Labour took a turn left after Thatcher’s election and consequently ran on a hard left manifesto which, when the results came in, was dubbed “longest suicide note in history” by Labour MP General Kaufman
Despite only winning 11 seats, the SDP (Liberal/Labour offshoots) came with a few percentage points of eclipsing Labour’s popular vote, winning 25.4% of the votes to Labour’s 27.6%

Question 19

Time Line of Thatcher’s Career From 1983

Answer 19

June 1983 - Election victory for the Conservatives
March 1984 - Miner’s strike begins
March 1985 - Miner’s strike ends in defeat
October 1985 - Kinnock attacks the Militant Tendency
January 1986 - Michael Heseltine resigns
June 1987 - General Election - Conservatives = 376 Labour = 229
October 1987 - Stock market crash
September 1988 - Thatcher makes ‘Bruges speech’
November 1990 - Resignation of Geoffrey Howe
December 1990 - Fall of Thatcher

Question 20

Competition and Privatisation

Answer 20

Thatcher believed that there should be competition in all aspects of life and believe that this was the way to make somebody the best that there could be
Thatcher said that competition encouraged hard work
This belief influenced Thatcher’s policy of privatisation
Privatisation is where a publicly owned company is sold into the private sector
Thatcher said that this would make industries work harder to gain customers and this would benefit 50 enterprises were sold off, including:
- British Airways
- British Steel
- British Coal
- British Telecom

Question 21

Opinions of Privatisation

Answer 21

In 1982, the British Oil Corporation was sold to the private sector
For many people, this was a stop too far with privatisation
Critics complained that Thatcher had squandered a national asset for short term gain
Britain now had not control over its oil prices
The decision to sell this asset was based on the belief that the price of oil was entering a period of long term decline and shares were at their most valuable
Thatcher wanted to sell while money could be made
Thatcher introduced capitalism
This policy gave ordinary people the chance to become shareholders
- between 1979 and 1990 this grew from 3 million to 11 million and raised £10 billion

Question 22

Privatisation Advantages

Answer 22

• The number of shareholders rose from 3 million in 1979 to 11 million in 1990
• Privatisation of British Telecoms in 1984 and of British Gas in 1986 marked the rise of popular capitalism
• Most successful aspect of popular capitalism was of popular capitalism was the sale of council houses - over 1 million were sold between 1979 and 1988
  Sum of £19 billion was used to fund tax cuts
  The Private Finance Initiative led the construction of some impressive buildings

Question 23

Disadvantages of Privatisation

Answer 23

• However, the distribution of these shares was uneven - 9% of unskilled male workers compared to 50% of professional males
• Most damaging to the long-term success of popular capitalism was the rapid sale of shares to pension and investment firms - while in 1979 38% of shares were owned by individuals, by 1990 this figure was 20%
• There was little appreciable difference in the gas and water supply while prices have risen faster than inflation
• The privatisation of British Rail was felt to be, even by Thatcher, a privatisation too far - it led to a highly confused situation where the government continued to subsidise private firms that operate the trains

Question 24

Evaluation

Answer 24

Thatcher felt that the selling of state assets was essential to curing British economic stagnation
It would reduce government spending on loss-making industries and on wages as civil servants would be replaces by government employees
It was believed privatisation would increase competition and therefore innovation
The revenue could be used to fun tax reduction, another one of Thatcher’s aims

Question 25

Deregulation

Answer 25

Thatcher also believed in the free market and therefore introduced deregulation
This policy removed financial and legal restriction, which was blamed for low productivity and efficiency in many areas
Measures included:
- credit and exchange controls were abolished
- bus companies err deregulated to encourage competition
Education, Health and Housing policies are also examples of deregulation

Question 26

Summary of How the Economy Changed Under Margaret Thatcher

Answer 26

(Hugh Pym Chief Economic Correspondent, BBC News, 8 April 2013)
Whether is was the invitations to tea from Labour Prime Ministers Bali and Brown, or the fact that large swathes of Conservative reforms survived through the New Labour years, Baroness Thatcher’s impact on her opposition is amongst her lasting economy legacies
The trademark privatisations, the embedding of market economics and much of the Labour market reform agenda were left untouched after Labour’s victory in 1997
Few commentators or economists would disagree that Margaret Thatcher’s premiership had a profound impact on the British economy
The old line about Britain being the “sick man of Europe” in the late 1970s still rings true. Double-digit inflation and what was perceived as excessive union power were part of national like. The Winter of Discontent and a minority Labour Government, seemingly unable to get a grip, cemented the sense of national decay.
Professor Patrick Milford of Cardiff University was ab economic adviser to Mrs Thatcher in opposition and remained a close confidant during her early years. He likens the power of vested interests and the refusal to countenance reform in the Britain of the late 1970s to the more recent economy history of Italy.
“The establishment didn’t want change, there was so much opposition but she transformed the economy - without her it wouldn’t have happened” he said.

Question 27

Soaraway Prices

Answer 27

Taming inflation was Thatcher’s first priority
Though budgetary policies, aimed at controlling public spending combines with a tight monetary stance, were designed to reduce inflation expectations
Getting people to believe inflation would fall, and so reduce their wage demands, was the aim
For a while, it worked
Cost of living increases fell rapidly in the early 1980s
An acceptance that monetary discipline should be central to policy making shaped the inflation targeting of subsequent decades

Question 28

Dominant State Sector

Answer 28

Cutting back the power of a dominant state sector was a mantra of Thatcherism
The public sector was to retreat from large areas of the industrial landscape
Privatisation, including Rolls-Royce, BT, British Airways and British Gas, would have seemed unthinkable a few years before, but were pushed through with zeal
Re-nationalisation never found its way back onto New Labour’s Agenda

Question 29

Destruction of Manufacturing

Answer 29

The critics will point to the destruction of manufacturing capacity in the early years of Thatcher
Tight monetary policy, which fuelled a strong pound, acted like a dose of salts on a Swathe of Industrial Britain
Jobs and skills lost in some communities have never been fully replaced
For those who believe in the importance of manufacturing in a 21st century economy, the Thatcher years hastened the decline of a key exporting sector

Question 30

The ‘Big Bang’

Answer 30

The ‘Big Bang’ reforms in the City of London have been seen by some as an early contribution factor in the unquestionable expansion of the banking industry
In some sense the dominance of the belief in minimal regulation and market forces which prevailed in the years before 2008 was another legacy of Thatcher
Agree with her or not, Thatcher’s influence on economic philosophy is demonstrated by the3 fact that so many of her ideas, which seemed radical at the time, are now mainstream thinking
In destroying and old consensus, she created a new one

Question 31

Reality of Government Spending

Answer 31

Overall, government spending did actually go up in the Thatcher period
It rose by almost 13% between 1979 and 1990 in real terms (stripping out the effect of inflation)
Nonetheless, as a percentage of GDP, thanks to some economic growth and the money saved through privatisations, government spending decreased

Question 32

Inflation Rate (%) and Unemployment 1976-1992

Answer 32

Inflation peaked at 18% in 1980
After that, the rate decreased remarkably, although started to sharply rise before and after she left office
Unemployment was never lower in the Thatcher period than it was in 1979 when she was elected Prime Minister
It did not return to that level until the mid 2000s and has not returned to the heights it reached in the mid 1980s

Question 33

The Miner’s Strike Context

Answer 33

Thatcher was determined to subside any unprofitable industries
She felt that this rewarded the inefficient at the expense of the efficient
The coal industry has been a problem for a long time
- it was expensive and difficult to mine
British mines by the 1970s were running at a loss
The Government’s Case:
- unwilling to put public money into an industry which would never be able to compete in the open market
- inaction by previous governments was delaying the inevitable
- there was no point in pretending things would get better
The Miner’s Case:
- the miner’s union claimed that with proper investment, coal be established as a long-term power source
- they also argued that the social consequences were significant
- in South Wales, Yorkshire and Durham, coal was a way of life
- whole communities would die out as a result of pit closures

Question 34

Anticipation of The Miner’s Strike

Answer 34

Employment Acts were introduced in 1980 and 1982
They were introduced in anticipation of a prolonged miner’s strike
- Forbade Mass Picketing (workers stopped people coming in and out and held protests by doing so - this was no longer allowed to happen)
- Outlawed the “closed shop” (unions were stopped from telling openers to only hire people who would join their union with treating to strike if they did hire people who didn’t)
- Declared industrial action illegal without a formal ballot (unions had to draw complaints and vote to strike, which would slow down the process)
The government also started to stockpile coal and drafting emergency plans for importing further stocks

Question 35

Miners Strike Timeline

Answer 35

(1984)
1 March - National Coal Board (NBC) announces closure of Cortonwood pit it Yorkshire
6 March - Scotland Yorkshire made strike official
12 March - Half of country’s miners are on strike
15 March - Miner, aged 23, killed while picketing
25 May - Scab (working miner) groups emerge with government and business backing
30 May - Scargill arrested at Orgreave. More than 80 others arrested and 62 injured
15 June - A miner is crushed to detach while picketing at Ferry Bridge power station
18 June - Second mass picketing at Orgreave with 5,000 miners. Official figures show more pickets injured than police for the first time
27 June - TUC day of action. Some 50 schools take unofficial strike action and over 50,000 people march for the miners
31 July - High Court fines South Wales NUM £50,000. Labour leader Neil Kinnock says “The courts will have their way”
2 November - NCB offers miners a back to work cash bonus
5 November - Neil Kinnock refuses to speak at a series of rallies
21 November - Government cuts supplementary benefits to £16 per week for strikers’ families
5 December - Ian MacGregor announces plans to privatise pits
(1985)
7 January - NCB claim 1,200 miners return to work across the country
24 February - Mass rally in London for the miners sees many arrests
28 February - NCB head Ian MacGregor pledges that sacked miners will not be re-employed
2 March - Yorkshire votes to continue strike
3 March - NUM conference votes 98 to 91 to return to work
5 March - Miners march back to work

Question 36

Why Was The Strike Defeated

Answer 36

Arthur Scargill (NUM leader) had an abrasive manner which alienated the Nottinghamshire miners who continues to work throughout the strike
Scargill’s persistent refusal to hold a ballot made the strike appear undemocratic
Few other trade unions supported the strike
While the miner’s claimed police brutality was causing the violence, the broad public perception was that miners were mostly at fault
The Labour opposition did not perform well, Neil Kinnock tried to take a middle path which did not impress voters
The Employment Acts gave the National Coal Board (NCB ) leverage against the miners
Police were successful in helping strike breakers to get to work and getting coal out across the picket lines
Coal was no longer the main source of fuel and therefore didn’t have as much impact as it would in previous years

Question 37

Impact of the Strike

Answer 37

The nation was divided 65% for the government and 35% for the miners
- this reflected the divide in society
- Traditional vs Modern, North vs South
Social commentators suggested that the violence reflected increasing lawlessness in Britain
The violence also convinced most people in Britain that industrial action needed to change (coincided with the anti-authority and new social wave, which worried many people)(something needed to change in industries and TUs)(last time TUs were truly powerful)
The failure speeded up the process of the mine closures
- job losses, redundancy, social disruption and the decline of traditional communities
Gave Thatcher the confidence to take on other components

Question 38

What is the Public Sector

Answer 38

The post was consensus favoured state intervention in the economy, but still a relatively large state apparatus
In the eyes of Thatcher’s government, a large public sector led to individuals becoming lazy and dependant on the state, as well as the belief that the state monopolies leaf to complacency and an uncompetitive work force
Thatcher thought that state ownership of industry crushed innovation, and led to inferior products that people did not want to buy
Success for Thatcher would have meant leaving Britain with a scammer state bureaucracy, less government interference in people’s lives, less government spending and a cheaper tax bill for the British public
She attempted to achieve this by promoting efficiency in administration, privatisation of state-ownership assets and ‘contracting out’ of government services
Historians have disagreed about the text t of the success in this area

Question 39

Monopoly Meaning

Answer 39

Where one organisation has total control of acommodity or service
Governments round the world agree that these are bad and try to ensure this doesn’t happen
The companies can charge whatever they want because there is no one else to go to

Question 40

The Civil Service

Answer 40

Some success in slimming this area down
732,000 civil servants in 1980
- this was 3x as comparable nations
Advisors brought in from outside of the government to help achieve reduction
Michael Heseltine closely monitored the cost and responsibilities of civil servants
Where there were inefficiencies, there were job losses
Done through an agency known as MINIS
1 in 4 workers at the Environemnt Ministry were sacked in 3 years
By 1988, 22.5% of civil servants had been sacked
- saved an estimate of £1 billion
‘Next Steps’ report indicated that outside agencies would complete these roles
By 1991, there were 57 such agencies
Examples include the Prison Service (for the Home Office)

Question 41

Local Government

Answer 41

Wanted to slim down and reduce independence
Local Government Act 19085 enables Thatcher to abolish troublesome councils such as Greater London
Some councils, represented by ‘left wingers’ who rejected Thatcher’s policies
She cut funding to local governments
Wanted to scrap local rates to stop dependence on lazy Britton’s
Wanted to widen financial responsibilities through the Poll Tax
- Poll Tax meant that everyone, regardless of wealth, would pay for local services
- this old be calculated based on how many people live in your house
Contracted over council services to introduce competition to services such as rubbish collection
Housing Act 1980 “Right To Buy’
- aimed at stopping reliance on local government
- people could buy council houses
- would also cut government spending on property maintenance
- very popular reform
- 204,000 council houses were bought in 1982-1983
- however, it made it harder for councils to house the poorest in society

Question 42

Thatcher and the NHS

Answer 42

Thatcher wanted to slash the cost of the NHS and make it more efficient
She wanted to add competition to healthcare
She wanted to enforce private health insurance
However, people liked the NHS and so she had to tread carefully
Between 1980-1987, spending rose by 60%
The 1987 election victory gave her the confidence to make more radical reforms
1989 White Paper ‘Working for the Patients’ called for an internal market where health authorities would purchase service from hospital trust
- ran by managers, rather than doctors
- higher demand = more funding
- highly unpopular with doctors (felt they had to see people quickly to get money) and didn’t deliver cost savings like Thatcher had anticipated
Cost of the NHS rose by 25% from 1985 to 1991
The requirement to meet targets led to demoralisation
Attempts to cut costs impacted on patient care

Question 43

Thatcher and Education

Answer 43

Most radical reforms after 1987
- wanted to raise standards and value for money
LEAs and teachers were hostile to measures needed to fulfil these aims
Created one single GCSE
The 1988 Education Act introduced the National Curriculum (be be dictated by political interests)
Added key stages
- broke eduction into blocks to allow for milestones
- standardised education
- however, these key stages didn’t have to be related
Exam results were published in league tables which allowed parents to select ‘better’ schools for their children
Over subscription was an increasing issues
Stressed teachers and students
More government involvement

Question 44

Political Divisions

Answer 44

The first political divisional was regional
The Conservatives did far better in the South and East of England and lost support in the North of England
The Conservative Party was wiped out in Scotland
- this was accelerated with devolution under the Nee Labour Government
Thatcher started a trend to use outside advisors rather than career politicians
- this continues throughout Major’s time in power and the New Labour government
This meant that people think that their vote won’t change governments and therefore voting rates fall
- Thatcher’s use of outside advisors meant that more MPs had university degrees
- political divide between career politicians in London and the rest of the country
- the number of MPs who had a university degree rose from 40% (1918-1945) to 75% (2010)
- the number of MPs from a legal background from 70% in 1987 to 30% in 1997

Question 45

Changes in the Political Spectrum

Answer 45

Under Thatcher, those on the left wing moved further left and those on the right moved further right
We can therefore see more divisions on the political spectrum
Thatcher’s policies were much more right wing than previous Conservative Governments
In a reaction to this, Labour became much more left wing or socialist
This was a stark contrast to the consensus politics of 1945-1979
After Thatcher left the Conservative Party, the re-defined ‘left’ and ‘right’ meant Tony Blair wanted to create a ‘third way’ and remained the centre ground
He used many Thatcherite ideas and therefore the ‘centre’ moved more right

Question 46

Thatcher and Different Levels of Government

Answer 46

Local and national government was also divided with Thatcher trying to limit the powers of local government
Local government has continued to decline since Thatcher’s reign
- Thatcher demolished 8 metropolitan local government councils, including Greater London Council

Question 47

Thatcher’s Impacts of Different Classes

Answer 47

One of Thatcher’s main policies was to promise an incentive to work
- a main part of this was to cut income tax
In 1989, the bottom 10% of all earner paid £400 million less in income tax than thye had in 1979
However, we cannot see this as easing social divisions, as the top 10% paid £9.3 billion less
As there was now a loss of income through taxation, Thatcher needed to cut public spending
- she did this by cutting welfare support
Income Support fell from 61% to 53%
- the impact of this can be seen throughout the North, with many working classes now living below the poverty line
- pensioners living below the poverty line increased from 13% to 43%
Thatcher is accused of making the rich richer and the poor poorer, thus increasing the social divide between the richest and poorest in society
- this can be seen by the fact that the income of of the richest 10% increased by 61% whereas the poorest 10% saw a reduction of 18%

Question 48

Regional Divisions

Answer 48

Regional divisions also widened
London and the South East t got richer whist the North East and North West got less productive
The South of England saw huge boosts of investment whilst the North saw the closure of many traditional industries, such as the mines
She is blamed for creating the North/South divide
The North and South of England were like two different countries
- whilst the South was blooming, the North had high unemployment, was in economic depression were ran down with empty housing and boarded up shops
Thatcher did try to tackle this problem with ‘enterprise zones’, where private firms received money to move into economically challenged areas
This did lead to some impressive developments, such as the waterfront in Newcastle, but th wider impact was limited

Question 49

Thatcher’s Downfall - Miscalculations

Answer 49

The Community Charge/Poll Tax
Calling the Liberal Democrats a ‘dead parrot’ was illadvised
Appointing her PSS Peter Morrision to lead her campaign during the first ballot n
Gong to the CSC meeting in Paris during the first ballot
Permanent revolution

Question 50

Thatcher’s Downfall - Resignations

Answer 50

Nigel Lawson, Chancellor of the Exchequer, resigned on 27th October 1989
- he wanted Britain to join the ERM, but Thatcher resisted
- he eventually resigned over this issue
- when a Chancellor resigns, it usually means that a government is in trouble
Geoffrey Howe resigned from the government on 1st November 1990
- he disagreed with Thatcher’s stance over Europe
- Howe’s departure made even loyal Tories feel that perhaps Thatcher should go

Question 51

Thatcher’s Downfall - By-Election Results

Answer 51

22nd March 1990, the Conservatives lost the Mid-Staffordshire by-election, which they had previously enjoyed a 19,000 majority
18th October 1990, the Conservatives lost the Eastbourne seats to the Liberal Democrats, with a wing of over 20%
- Thatcher had previously called the Liberal Democrats a ‘dead parrot’ 6 days earlier
8th November by-election defeats in Bradford North and Bootle

Question 52

Thatcher’s Downfall - Leadership Challenge

Answer 52

Heseltine had a clear ambition to be leader
After Howe’s speech, he formally announced he would challenge for leadership of the party
On 18th November, Thatcher flew to Paris for a conference
Many papers said Heseltine deserved to win, leaving London with a serious error
Polling day, 20th November 1990 arrived, with Thatcher still in Psirs
- Thatcher relieved 204 votes, Heseltine revived 154
- Thatcher has won, but her margin of victory fell 4 vote short
- there has to be a second ballot

Question 53

Thatcher’s Downfall - Colleagues

Answer 53

Thatcher was not prepared to stand down and intended to fight for a second ballot
It was only at this point that she took the challenge seriously
She approached her cabinet colleagues for support and this was less than forthcoming
It was this which forced her concede defeat

Question 54

Thatcher’s Downfall - Europe

Answer 54

Thatcher was deeply unhappy about Britain joining he ERM (Europe Rate Mechanism) on the 8th October 1989
Many Tories disagreed with her stance
- she was in a tiny minority
Thatcher continued to be outspoken
- full monetary union (EMU), she said “would be be entering a federal Europe through the back-Defors”
Thatcher’s views on Defor’s visions for a federal Europe were made quite obvious in parliament when she famously said “No! No! No!”

Question 55

Labour in the 80’s

Answer 55

Labour had 2 leaders during this time
- Michael Foot (1979-1983)
- Neil Kinnock (1983-1992)
The party lost 4 elections in a row and was out of power for 18 years
The Labour Party was considered too close too the unions and responsible for the Winter of Discontent
The party became divided between left wing (militants) and the centre ground of the party

Question 56

Michalel Foot

Answer 56

Foot made little impact on voters
- many felt that he was too old and unable to connect with ordinary voters
The 1983 manifesto0 was extremely left wing
- it pledged to nationalise more industries, complete nuclear disarmament and to leave the EEC
- it was described as “the longest suicide note in history”
Foot’s pacifism made him appear unpatriotic during the Falklands an he was criticised for wearing a ‘donkey jacket’ to a Remembrance Sunday service

Question 57

The Social Democrat Party

Answer 57

Believing the the Labour Party had been hijacked by the left wing extremists, 28 Labour MPs moved to create a new political party
- it was led by the “Gand of Four”: David Owen, Roy Jenkins, Shirley Williams and Bill Rodgers
They pledged to move away from dependance on the Trade Unions and be more pro-European
They formed an alliance with the Liberals in 1983, which led to a formal merger in 1988

Question 58

Neil Kinnock’s Leadership

Answer 58

He rejected many of the polices of Foot’s Leadership
- most notably when, in 1985, he stood up to the “militant tendency”
Kinnock regained the ground of the SDP
- he made Labour a more moderate party
By abandoning so many of the party principles, Kinnock found it difficult to gain the trust of the people, but is considered a great reformer of the Labour Party