Chapter 6 - Thatcher And The End Of Consensus 1979 - 1997 Flashcards
Why did Thatcher win 3 general elections in a row? Brief details
1) 1979 election
2) 1983 election
3) 1987 election
- Tory Party
- Labour Party
1) 1979 election largely decided in London, south of England, Midlands as 40 seats changed to Conservative. Voters punishing Labour for its percieved failure to deal with inflation, unemployment and over-mighty trade unions, culminating in the depressing scenes of the winter of discontent. Liberal vote significant, Liberals geld most of their seats but vote dropped by a million as blamed them for keeping Callaghan in power. Constituencies in the Midlands/South, collapse of Liberal vote enough to hand seat to the Conservatives even though Labour didnt decline. Labour succeeded in retaining traditional support in industrial areas where won twice as many seats.
2) Rise in unemployment/economic problems had reduced popularity of government by 1981 but electon saw Conservative victory with reduced popular vote. Victory in Falklands seen as sign of UKs confidence and unity. Increase popularity of Thatcher in own strongholds. Disastrous split in Labour and selection of Michael Foot as leader in 1980 played important part in outcome. Foot lacked assured manner on TV and belief in unilateral nuclear disarmament further nationalisation of industry and government regulation seemed old fashioned. Made little appeal outside traditional voters. More moderate elements split to form SDP in 1981 damaging the Labour Party - manifesto longest suicide note in history. Alliance between Liberals and SDP - modern liberal democrats succeeded in spliting anti-Thatcher vote.
3) Conserbative Party won more votes but lost 21 seats - weakness of Labour leadership, split in party, no longer as important and no Falkland factor o winter of discontent. Policies that were popular among key electorate sections and sense that economy was doing well.
- Tories = government policies of selling council houses/shares in privatised industries appealed to middle class and skilled working class. People were either better off or believed government supported desire to increase their wealth. Unemployment falling, pound strong. Conserbatives benefited from split in the Left vote
- Labour = not fully recovered from defeat but new leader Neil Kinnock, publicly criticsed prominet left wingers and brought party towards centre. Labour polled over 1.5 million votes more than in 1983 and won 20 more seats. Style limited appeal to votes and often long winded speeches and Thatcher to be stronger leader with firm hold over colleagues and growing international reputation
How successful were Thatcher’s policies when dealing with…
1) Inflation
2) Taxation Policies
3) Howe’s policies/economic problems
1) Retail prices doubled between 1973 - 79 and Thatcher and key adviser Joseph convied their economic recovery depended on conquering inflation. Inflation in her view: Hit Social stability by eroding middle class savings/causing strikes for higher wages. Made UK indusry over priced, spiral of rising prices/wages. Reduced incentives/enterprise because higher prices led to higher taxation. Was fuelled by government spending and lack of effective control of money. Direct and harmful result of Keynesianism which was abandoned. Only be tackled by reducing money in circulation - known as monetarianism - believed governments should help by reducing money supply. Deflation and reduction in jobs in short term but would establish basis of economic growth in long term. Rejected post war trend to increase government interference and wanted market to be allowed to determine wages and prices.
2) In June 1979 Chancellor of exchequer, Howe signficantly shifted tax burden from direct to indirect taxation. Honoured the pay awards by Callaghans government to some low paid workers, VAT increase pushed up price of goods. Hower then resorted to deflationary methods, cut government expenditure, reduced government borrowing, increased taxes.
3) Rate at which prices rose was reduced from 18% to 4.5% in 1983 and manufacturing output fell by 14% and many firms out of business. Unemployment doubled between 1979 - 83 to over 3 million, government didnt act to support industries which facing problems, high interest rates which boosted overseas confidence made conditions difficult for anyone with loans to pay and value of pound increased made exports derear though boosted financial sector. Social costs came like riots in Brixton, and in July Toxteth in Liverpool, unemployment continued to rise, UKs growth rate/productivity showed signs of recovery in 1982. Weaker businesses failing but stronger ones thrived and wage demands/inflation falling , UK more competitive and argued increase in North Sea oil production turned UK into net exporter of oil by 1980.
How successful was Thatcher in dealing with issues…
1) Privatisation
2) Tax Cuts and reregulation
1) Government accelerated sale of UK state owned enterprises and utilities into private hands. Thatcher believed privatisation was fundamental to improve economic policy - maintained nationalised industries were inefficient and over manned and better to raise investment capital once released from government control - argued that sell off would raise revenue with which to fund tax cuts and boost investment and enterprise. Privatisation popular with those who bought shares in new companies. Britain had 3 million private shareholders but by 1990 there were 11 million. Hoped poliy would reward people she admired, hard working, thrifty families given stake in capitalism. Government tended to undervalue assets of each industry being privatised, value of shares climed steeply. Encouraged shareholders to sell their allocation quickly at a profit, to big financial operations rather than other small shareholders.
2) Nigel Lawson - exchequer from 1983 to 1989 continued Howes policy of shifting revenue from direct to indirect taxes, reducing both tap and basic rates of income tax. Capital gains and inheritance tax reduced so UK incomes more lightly taxed than incomes anywhere else in Europe. However, indirect taxes such as VAT, petrol tax and other duties increased. Fiancial Services Act 1986 deregulated London stock market in Big Bang. Revitalised City of Londons money market by ending Stock Exchange monopoly on share dealing. Chancellors policies produced called Lawsons Boom. Seemed hap between very thriving and high earing financial sector and depressed areas of traditional industry and mining even greater
Describe the economic record of the Thatcher governments? Look at Thatcher supporters and critics
Thatcher supporters
- succeeded in bring down rate of inflation
- privatisation improved peformance, lowered prices/offered consumers more choice
- deregulation of City ensured London reamined centre of global financial market
- Extension of shareholding gave many more people at stake in success of economy
Critics
- Such economic success as there was in 80s came from bonazana of North Sea oil not from Thatchers policies
- Too many privatised services/ultilities run for profit of few big shareholders
- Deregulation of City encouraged selfish get rich quick attitude among bankers and currency dealers that contrasted badly with bleak prospects for unemployed and disadvantaged in society
- Social cost of policies pushing up unemployment and destroying communities hit by fall in manufacturing, outweighing benefits
Describe the social policies of the Thatcher governments?
- NHS
- Schools
- Universities
- Council House Sales
Discuss criticisms to her policies
1) Government reforms to make NHS more efficient by applying business principles to administration. Hospitals allowed to become self-governing NHS trusts in control of own budget, NHS services expected to compete with one another to provide most efficient and cost-effective services to GPs, GPs became fund holders with own budgets to manage. Critics argued first stage in privatisation of the NHS, profit motive would take priority over patient care.
2) Quality of secondary education been a matter of concern, two-tier qualification system of O Levels and CSEs. Feeling Britain was lagging behind other countries and teachers not subject to quality control common in other jobs. At 16 more academic pupils took O levels while reaminder took CSEs which didnt lead to further training/education easily. Both replaced in 1986 with GCSE. In 1988 bigger cahnge when government introduced national curriculum with regular national testing of pupils and state schools given right to opt out of control by local education authority and become grant maintained schools with control over their budgets/operations. Concerns were that Thatcher doubtful bu. Persuaded by Keith Joseph that GCSEs wouldnt lead to lowering of standards. Some argued GCSEs not academically rigorous enough. Content of naional curriculum especially in subjects like English/History caused disagreement and thought setting down what should be taught was too restrictive. Some felt Thatcher not consistent allowing schools to control budget suggested extention of freedom from government control but national curriculum meant Department of Education decided what schools teach
3) Government cut university budgets in 1981, forcing unis to seek alternative sources of revenue/accept more students. 1988 Uni Funding Council created to ensure uni education reflected needs of economy rahter than concentrating on research. Some uni staff lost security of tenure. Government removed polytechnics, institutions specialised in vocational courses from local authority control and under UFC control. Government didnt abolish grants for young people. Changes controversial and Oxford refused to grant Thatcher an honorary degree
4) Thatcher wanted to create property owning democracy and wanted to reward those who shared he values she admired, hard work, self-reliance, initative, enabling them to own own homes. Believed owning property gave people stake in communities and made them less likely to support socialism. First actions was to allow long term council tenants right to buy their houses. To encourage home ownership she also insisted that home owners should continue to get tax reliefs on their mortgages. During premiership the amount of government money spent on subsidising mortgages doubled and property ownership increased by 12%
How successfully did Thatcher deal with industrial relations?
1) Aims
2) Legislation
1) existing laws on industrial relations abused to protect restrictive pracatices and over manning, to underpin strikes and to coerce workers into joining unions and participating in industrial action against better judgement. Union power made UK firms uncompetitive because high labour costs and restrictive practices meant business was lost to more efficient overseas companies. Jobs become available once UK industry adjusted to market conditions and unions lost their power to control labour conditions.
2) Thatcher benefited from lessons of 1971 Indusrial Relations Act, incorporated all measures to restirct union power making it easy for unions to mobilise their opposition. So Thatcher adopted piecemeal strategy introducing restrictive measures stage by stage… Employment Act of 1980 outlawed secondary picketing and increased rights of employees who refused to join unions. Government money available to encourage unions to hold secret ballots. 1982 Employment Act restricted sympathy strikes and allowed closed shops only if a ballot showed 85% support. Anyone sacked for not joining a union became entitled to high rates of compensation. Trade Union Act 1984 reuired unions to hold secret ballots of their members before launching industrial action. Number of working days lost to strikes dropped considerably, government legislation played part in this. High levels of unemployment deterred strike action. Wrokers less ready to strike knowing they could easily be replaced from pool of unemployed and economic policies accelerated social/economic changes that had affecting trade union membership since 60s.
Describe the miners strike 1984-85?
1) Events
2) Preparations for strikes
3) Why it was defeated
4) Impact of the strike
1) National Coard Board faced loss of £250 million for 1983-84 alone and to demonstrate government was serious about refusing to support loss making nationalised industries, pit closure programme essential. Coal strike began in March 1984 in response to announcement that 20 uneconomic pits were to close with loss of 20,000 jobs. Dispute became bitter/violent because neither side would compromise
2) 1981 Secret Whitehall committee set up to organise stockpiling of enough coal to keep power stations running. Central Electricity Generating Board built up large stocks of coal and oil. Home Secretary Brittan set up National Reporting Centre in New Scotland Yard as soon as strike began to ensure central control of policing co-ordinating intelligence and movement of police officers to toruble spots
3) Miners not united, those wanted to continue working formed breakaway union. Strike held in spring and summer when less demand for coal, deprived miners of a key weapon as coal stocks remained adequate. Labour Party reluctant to support NUM leader who recieved little public sympathy. Violent incidents on picket lines undermined public support. Other workers suffered from economic change. Mining suffered from cheaper power sources and falling demand but many saw it impossible to continue to subsidise the industry regardless of its importance in British industry history. Government not prepared to use considerable force to protect right of miners who wanted to work and not swayed but scale of unrest. April 1984 Scargill refused to hold national ballot of miners to continue strike action which deprived the strike of legal legitimacy and alientated mine workers
4) NUM member dropped to under 100,000 by 1987 and union ended strike bankrupt virtually. Miners strike divided opinion about Thatcher more. To Thatcher supporters she succeddful in terms of forcing miners to come to terms with fact that much of industry unsustainable and demostrating trade union power couldnt be used to defeat government.
How successful was Thatchers management of her Cabinet?
- Allies?
- Machieved mastery of her cabinet?
- Growth of opposition?
She didnt have the backing of many senior members of the party. Few allies in her shadow cabinet, many older and experienced and loyal members of Heath government. Wanted to maintain unity by ensuring government spent money to maintain welfare/employment. Thatcher called these One nation Conservatives Wets. She had limited experience of government only cabinet post under Heath as Minister of Education and her gender divided opinion.
But she did succeed in establishing band of loyalists, backed in commons by energtic group of supportive MPs and popular with grassroot member of party, defeating socialism and restoring UK greatness
When she chose her first cabinet, felt obliged to appoint wets to senior positions. Made sure the dries occupied key ministries. Geoffrey Howe became exchequer and Keith Joseph was Deptartment of Trade and Industry. Made sure to promote other supporters. Thatcher strengthen her ontrol over economic policy by moving Jim Priot from Employment and replaced with loyal Tebbit by sacking two other wets. Enabled her to promote more of her supporters like Nigel Lawson and Cecil Parkinson - she was careful to keep support of key figures like deputy PM but after 1983 and prestie of winner second election and strength in Falklands she allowed her to be more commanding. Thatchers immense hard work and thorough preparation won admiration and didnt suffer woolly thinking/weakness of argument in cabinet discussion. Her courage in Brighton bombing earned her respect but downside was resentmess about her inflexibility of style and unwilingness to accept alternative arguments without confrontation.
By mid 1980s Thatcher achived domination that critics thought Cabinet had been cowed. Loyal supporters admired firmness and conviction but mastery of Cabinet made her increasingly intolerant of disagreement from even her most loyal supporters. Heseltine one of last surviving wets wasnt afraid express indepdent views and resigned in Jan 1986 over Westland Affair. Dec 1987 she lost calming and unifying William Whitelaw after suffering a stroke, 1989 she fell out with Lawson and Howe over economic policy and role in Europe and Hower resignation speech in Nov 1990 played signficant part in her downfall
Why did Thatcher inspire such passionate support and hatred?
Support - Thatcher was resolute, clear sighted leader who brought extensive and much needed change and arrested national decline symbolised by industrial unrest and rampant inflation. Believed implementin coherent set of principles/policies called Thatcherism defined. By Lawson - not only necessary but radically different from approach of all governments. Credited her with influencing changes around the world especially under Reagan - UK who had strong economic reasons to support her like those who benefited from council house sales or privatisation and deregulation of the city. Admired for personal toughness in face of adversity and in 1980 responded to claims she might copy U Turn by telling the lady is not for turning. Cemented her iron lady image as did her single minded focus on victory in Falkland campaign and unwavering hostility to USSR.
Criticism - policies were controversial from the start, shifting emphasis of the tax system to indirect taxation was criticised disproportionately hitting the poor. Those who lost their jobs in industries which hit hardest by her policies, especially in coal mines became implacable opponents. Also some in prosperous middle classes who felt she created culture of vulgar greed which rewarded acquisitive selfishness but ignored plight of dispossessed. Disturbed by growth of cardboard cities made up of homeless people sleeping rough with only boxes for shelter. Some Church of England bishops publicly drew attention to problems of inner city poor. Oct 1987 intended to show her siapproval of culture of dependency that had grown up with Welfare State, Thatcher remarked in an interview that there no such as thing as sociey - remark confirmed her heartlessness
Why did Thatcher resign as PM in Nov 1990?
1) Poll Tax
2) Economic Difficulties
3) Divisions over Europe in cabinet
4) Growing personal isolation and unpopularity
1) Since 1925 principal source of local government revenue been the rates - tax on owners of property/businesses. Thatcher calculated that more than half of local electorate didnt pay rates and velieved system was unfair. She thought more interest in local politics and in controlling local council spending if more people paid local taxes. Due to rise in hosue prices, many lived in homes worth a lot but had little money. Local Government Finance Act 1988 introduced Community Charge which known as poll tax. Replaced rates with flat rate tax although concessions on the least well off. Some members of the cabinet and number of Tory MPs opposed poll tax because it was hugely unpopular. Millions of Scots endorsed by SNP refused to pay it in 1989. Day before took action 1990, massive demostration in Trafalgar Square and turned violent with 300 people arrested. Thatchers decided to press ahead, critics felt her style was increasingly dictatorial and alienating voters
2) In Oct 1987, stock market crash wiped 24% off share prices. Nigel Lawson thought might trigger recession so 1988 budget he reduced income tax rates. Which stimulated consumer spending boom pushing up prices. By June 1989 inflation running at 8.3%. Lawson tried to control inflation not by monetarist policy of cutting expenditure, but by raising interest rates and in Oct 1989 reached 15%. Home owning mortgage payers, found themselves paying heavily for houses theyd been encouraged to buy by Thatcher. Claim for economic miracle now began to look unconvicing.
3) Thatcher accepted Single European Act 1986 believing it was essential step towards free market in Europe. She later regretted doing so because committed member states to work towards mometary and political union. She didnt want as she made clear in her speech at Bruges in Sept 1988. Following year with economic difficulties, Lawson and Howe keen for UK to join ERM aimed to create European monetary stability by minimising exchange rate fluctuations between members. Thatcher disagreed and fortified in her opposition by her unelected economic adviser Walters. June 1989 demoted Howe to deputy PM. Lawson Oct 1989 resigned at chancellor. Rift weakened authority and made her more isolated as she alientated 2 important political allies. Early 1990 UK joined ERM and reluctantly persuaded by Major the new chancellor, that membership would help combat domestic inflation and reduced high interest rates. She denounced plans for further integration of Europe No, No, No
4) 1989 - by election, Labour overturned Tory majority. Elections to European parliament won by Labour with 38.7% to 33.5% for Tories. Another by election in 199, Tories went to Labour with majority of 9400. June 1990 Labour 16 points ahead of Tories in polls.
Many Tory MPs feared Tory Party lose next election if Thatcher remained in charge. Autumn of 1989, Meyer challenge her for leadership of party. In ballot of Tory MPs he won 33 votes and 30 abstained. Result unimportant and fact there was a challenge at all indicated Thatcher had difficulties by a credible candidate. Her fall triggered by Howe. Resignation speech in 1990 to house of commons caused sensation. TV cameras admitted but made it clear government was divided badly. Called obliquely for a challenge to her leadership.
Heseltine challenged Thatcher and next day annoucned candidature of leadership. Thatcher won the contest but not by a large margin to avoid second round. She announced her intentions of resigning on 22 Nov and was replaced by John Major
Why were the Conservatives under Major so badly defeated in 1997?
1) Authority? Lacking?
2) Tory divisions over Europe
3) Black Wedensday
4) Leadership election 1995
5) New Labour
1) Major elected by Tory MPs due to majority didnt want Heseltine who they blamed for engineering the fall of Thatcher. Thatchers supporters voted for him because recently appeared to mark him out as her successor. He was affable, reliable, conscientious and appealed to those MPs who become tired of Thatchers bossiness. Lacked authority as PM because limited experience. MP since 1979, been in cabinet only since 1987 and briefly foreign secretary in 1989 and then chancellor. Uncharismatic personality was soon ridiculed in media. Major gained credit for unexpected win in 1992 election, vigorous campaigning, speaking to crowds on plastic container won admiration but they were slashed 21 seats.
2) Euroscpetics loathed European Commnuitys moves towards monetary and political union. But sizable section of party who believed UK should play full part in Europe. Dec 1991 European member states signed Maastricht treaty committed to full integration. Europe would have common currency, foreign policy, defence and community known as European Union. Major succeeded in negotiating UK opt outs from two key aspects, Social Chapter and single European currency. Fierce battle to secure ratification of Treaty by UK parliament. Faced unlikely alliance between sceptics and Labour Party. During prolonged wrangling, Conservatives rebels twice succeeded in inflicting defeats on government. Major to force the ratification bill through parliament telling MPs unless they voted in favour, government would resign
3) Sept 1992, measures to curb inflation tipped economy into depression. Unemployment rose, businesses went under and GDP diminished. Pound fell sharply in value as international bankers sold it at artifically high rate before devalued, Major and chancellor tried unsuccessfully to sustain value but pushing up interest rates and getting Bank of England to buy pounds. Desperate effortss failed and on 16 Sept known as Black Wednesday, UK withdraw from ERM. Not only ruined reputation but emboldened Euroscpetics. Signs of economy recovery only reinforced view EUrope had little to offer Britain
4) Major severely weakened by public displays of dissent from Eurosceptics in both party and cabinet. During Maastricht ratification process, caught off guard complaining about his cabinet. Seemed not in control of either his party of his government. 1995 tried to face down critics by holding electon for party leadership. Major won easily but fact that third of party hadnt voted for him emphasised divided party
5) Kinnock leader from 1983 to 1992, done great deal to make party electable. Expelled members of extreme left who infiltrated party in 70s. He was blamed for over confidence in performance in 1992 election and resigned afterwards. Following leadership of John Smith, popular and moderate, Tony Blair been an MP since 1983 and leader in 1994. Set about reconciling Labour Party to Thatchers reforms and in April 1995 abolished Clause IV by which it was pledged to nationalise British industry. Modernisation image: Party rebranded as New Labour - Blair appealed to hitherto Tory supporting businessmen and City bankers by reassuring them abour policies and won support of leading figures in media like Murdoch.
The 1997 Election
Why did Tories lose?
Why did Labour win>
Labour won 418 seats and Conservatives got 165 seats.
Tories - Major struggle with Eurosceptics had reinforced perception he was weak, reputation for economic performance badly tarnished for withdrawing from ERM, Tory party looked sleazy, sexual indiscretions of MPs and accusation levelled at MP Neil Hamilton he accepted cash from owner of Harrods to ask questions in parliament undermined confidence. After long period, felt time for change in style and policy
Labour - Blairs youth and optimism appealed to voters, media presentation slick and effective, Blair reform of Clause IV and wooing of businessmen and media tycoons made nonsense of Tory campaign message that he and Labour were socialists in disguise
