Effect Of Thatchers Economic Policies Flashcards
What is Thatcherism?
Thatcherism stands for sound finance, honesty, living within your means, incentives, and wider ownership of property, houses, shares, and savings.
This encapsulates the goals of Thatcher’s economic policies.
What did Thatcher aim to achieve with her economic policies?
Thatcher aimed to:
* Smash restrictive practices of trade unions
* Promote individualism
* Overcome inefficiencies of state-owned industry
* Promote growth and investment by reducing red tape
* Lift the tax burden on successful businesses
* Foster public participation through ownership.
These goals reflect her practical approach to economic policy.
What was the priority of previous post-war governments compared to Thatcher’s approach?
Previous post-war governments prioritized employment, while Thatcher was willing to risk temporary higher unemployment to tackle inflation.
This marked a significant shift in economic policy focus.
What steps did Thatcher take to reduce inflation?
To reduce inflation, Thatcher and her advisers:
* Cut access to money
* Raised interest rates
* Refused to print money to cover inflation.
This approach led to struggles for many companies, especially in manufacturing.
What was the inflation rate in 1978 and how did it change by 1980?
In 1978, inflation was 11 percent; by 1980, it had doubled to 22 percent.
This increase was largely due to spiraling pay demands.
True or False: Thatcher aimed to reward reckless borrowers by printing money to cover inflation.
False
Thatcher believed printing money punished careful savers.
Fill in the blank: Thatcher’s economic views were influenced by a mixture of her moral upbringing and the influence of ______ thinkers.
[new right]
‘New right’ thinkers played a significant role in shaping her economic philosophy.
What is the post-Thatcher consensus?
A broad agreement among Conservatives, Labour, and Liberal Democrats on principles of a market economy, low direct taxation, and a smaller role for the state.
This consensus reflects a significant political shift in the UK.
How did Thatcher’s approach to economic policy differ from her predecessors?
Thatcher was more practical than theoretical, willing to accept higher unemployment to combat inflation, unlike previous governments that focused on maintaining employment.
This pragmatic approach defined her economic strategy.
What is monetarism?
Monetarism is an economic theory that emphasizes the role of governments in controlling the amount of money in circulation.
What were the consequences of the 1980 and 1981 budgets in the UK?
The budgets slashed government spending, leading to negative consequences for many people in inner-city areas, including riots and a rise in unemployment.
What sparked the riots in several UK cities during the early 1980s?
The riots were partly sparked by racial issues, but poverty in those areas heightened tensions.
What was the unemployment rate in the UK by 1982?
Unemployment had risen to over three million, the highest figure at that time.
What was a key aspect of Thatcher’s privatisation policy?
Thatcher’s privatisation policy involved the sale of government monopolies to cut government revenue and reduce the number of civil employees.
What was the timeline for privatisation under Thatcher?
Privatisation occurred from 1979 to 1987, including British Petroleum and British Aerospace.
What was the Right to Buy policy?
The Right to Buy policy allowed tenants to purchase their council houses.
What was the impact of privatisation on the British economy?
Privatisation aimed to generate revenue, reduce taxes, and promote wider ownership, creating an incentive to work.
What was a significant privatisation event in 1986?
The sale of British Telecom in 1986 was a significant event that popularised the concept of privatisation.
What was a key part of Thatcher’s economic strategy?
Privatisation of state-owned companies aimed to cure Britain’s economic stagnation.
What were the intended benefits of privatisation under Thatcher?
It aimed to cut government expenditure, promote competition, and create wider ownership of shares.
How did the number of shareowners change from 1979 to 1990?
The number of shareowners increased from three million to 11 million.
What was the distribution of shares among different worker categories?
Only nine percent of unskilled male workers owned shares, compared to half of all professional males.
What was the most successful aspect of ‘popular capitalism’?
The sale of council houses, with over a million sold between 1979 and 1988.
How much money was raised by the sale of state assets?
£19 billion was raised, which was used for tax cuts.
What was the impact of privatisation on service quality in sectors like water and gas?
There was little appreciable difference in quality, while prices increased faster than inflation.
What was the outcome of the privatisation of British Rail?
It led to confusion, with the government subsidising private firms while spending on trains doubled.
What initiative was launched under John Major to increase privatisation?
The Private Finance Initiative aimed to inject private funding into state-run services.
What is ‘contracting out’?
Offering contracts for government-funded work to private companies to reduce costs.
What is ‘popular capitalism’?
The idea that everyone should have the opportunity to own property and shares in companies.
What is a ‘public-private partnership’?
A collaboration between a public sector body and a private company to provide a service.
What was the tagline used in the advertising campaign for British Gas shares?
‘If you see Sid, tell him.’
What was the minimum investment for British Gas shares?
No more than £150.
What was Thatcher’s approach to deregulation?
Thatcher aimed to remove rules and regulations that stifled innovation and competitiveness.
What was the significance of the removal of exchange controls in October 1979?
It fueled greater overseas investment and increased consumer spending on foreign goods.
What was the ‘Big Bang’ of October 1986?
It relaxed rules on bank ownership and trading, leading to massive growth in financial services.
What was one long-term effect of deregulation?
It enabled unscrupulous individuals to profit in unsustainable and illegal ways, contributing to the 2008 financial crisis.
How did deregulation affect private household debt?
Private household debt rose from £16 billion in 1980 to £47 billion in 1989.
What happened to mortgage debt from 1980 to 2003?
Mortgage debt rose from £43 billion to £235 billion, and by 2003, personal debt stood at £1.3 trillion.
What was Thatcher’s view on taxation?
She believed taxation should not be used to subsidize the poor and that tax cuts for the wealthy would promote growth.
What were the changes in the top rate of income tax during Thatcher’s tenure?
The top rate was cut from 83% to 60% in 1980 and then to 40% in 1988.
What was the impact of indirect taxation during Thatcher’s government?
The shift to indirect taxes like VAT contributed to a growing gap between the richest and poorest in society.
What are regressive taxes?
Regressive taxes take a higher proportion of income from the poor than from the rich.
What was Thatcher’s stance on trade unions?
She aimed to reduce their influence and viewed them as bullying individual workers.
What were the Employment Acts of 1980 and 1982?
The 1980 Act limited unions’ power, and the 1982 Act restricted strike action.
What was the miners’ strike and its significance?
The miners’ strike was a key conflict that highlighted the power struggle between trade unions and the government.
What was the impact of Thatcher’s governments on trade unions?
Thatcher’s governments gradually undermined the power of trade unions through a series of Employment Acts and legislation that restricted union activities.
What did the 1980 Employment Act entail?
The 1980 Act meant workers did not have to join a union when employed.
What was the significance of the 1984 Trade Union Act?
The 1984 Trade Union Act required that a strike had to be approved by a majority of union members in a secret ballot before it was legal.
What was the outcome of the miners’ strike that began on March 6, 1984?
The miners’ strike was defeated on March 3, 1985, almost a year later, leading to a significant decline in union membership and power.
How did the miners’ strike affect union membership?
Trade union membership fell from 13.5 million in 1979 to under 10 million in 1990, indicating a significant decline in union power.
What tactical errors did Arthur Scargill make during the miners’ strike?
Scargill did not ballot NUM members about strike action and launched the strike with ‘flying pickets’, causing divisions among miners.
What was the public perception of Scargill during the strike?
Scargill lost public sympathy due to provocative methods, with his disapproval rating remaining high throughout the strike.
What were the consequences of the Employment Acts passed in 1988, 1989, and 1990?
These Acts further weakened trade unions, contributing to a decline in union influence and membership.
What was the effect of Thatcher’s policies on the coal industry?
The coal industry became increasingly uncompetitive, leading to large-scale redundancies and a significant decline in the number of miners.
What was the impact of the miners’ strike on local communities?
Many local communities were greatly affected by the end of major local industries, leading to economic decline and social issues.
How did the number of miners change from 1974 to 1991?
The number of miners fell from 200,000 to 10,000 during this period, reflecting the decline of the coal industry.
