Fall of Thatcher 1987-1990 Flashcards
When was the fall of Thatcher?
1987-1990
Who was Chancellor?
Nigel Lawson (1983-1990)
John Mayor (1990)
What did Lawson do with Taxation?
continued with vigourous supply-side policy of tax-cutting
- reached climax in March 1988 budget
- reduced the rate of income tax of 40% for the rich and 25% for all the other income taxpayers
What did Lawson do with Interest Rates and Inflation?
- Consumer credit and a spending boom fuelled inflation, not government borrowing
- Lawson’s chosen response was the most politically damaging he could have chosen
- successive increases in interest rates, to reach a minimum lending rate of 15% by October 1989
What did Lawson do with privitisation?
- After 1987 the privatisation agenda was renewed
- this time involved British Steel, water and electricity
- relative popular policy of privatisation did not meet with as much enthusiasm regarding the electricity and water supply industries
What were the negatives of Lawson’s policy in relation to inflation?
- worst of all, inflation rose to 8.3% by June 1989 - govs main boast seemed undone
What happened with the Stock market?
- Huge stock market crash in Oct 1987
- nearly £102 billion wiped off City stock values
- many thousand of small savers saw funds decimated
- up to 1990s - values not recovered
What happened with Oil?
- Non oil imports had been steadily rising - 1987-88
- deficit 1989 nearly £20 billion - largest figure on record
Concerns with privitisation?
Some felt Thatcher denationalising for the sake of it, without making a case on managerial or cost grounds
- HOWEVER - privatisation bred regulation
- many regulatory bodies developed
- OFTEL, OFGAS, OFWAT
Division between Thatcher and Chancellor
- basically accused him of starting inflationary spiral
- Lawson seeing benefits in European monetary system (EMS) as stabilising factor
- 1988 - Thatcher spoke against political and economic union with Europe
- Lawson threatened to resign if she didn’t concede that one day would join REM
- L resigned over continued arguments in 1989
What about Mayors budget?
- reasonably well received but rapidly rising inflation and interest rates at 15% made the gov deeply unpopular with mortgage holders
- slow down in industrial production and rise in unemployment
- recession
What was Thatcher’s housing policy? - positive
- from 1979 - promoted “property owning democracy”
- on back of gov subsidies - (right to by scheme + tax relief on mortgage interest)
- house prices shot up + home ownership increased 54%-65% of population
How did Thatchers housing policy go wrong?
- from 1979 - “property ladder” slipped
- interest rates soared, house prices surped
- 2 million households found themselves stuck with houses worth less than they had borrowed to pay for them
What did Thatcher do with Education? - act
- passed the 1988 Education Reform Act
- laid down national curriculum - all students must take maths, English and science as core subjects
- religious studies compulsory
- testing and assessment of all pupils ages 7,11, 14 and 16 introduced
- parental choice increased
- control of school budgets given to school heads
Interpretation of the education act?
- david childs - development as a result of deep seated prejudice of conservatives against local education authorities and teachers (many labour)
Negatives of Education Act - conservative critics
- By international standards, - schools continued to be underfunded
- discipline in schools broken down thus academic failure (view of C critics)
- more focused on what they believed to be poor teacher training, informal teaching styles and lack of attention to testing etc
- these evils associated with comprehensive education
Negatives of Education Act - leftist critics
- blamed under funding of schools, - problem of immigrant children,
- failure to ensure that more girls took science and
- the imbalance and divisive nature of a system based on wealthy private schools
Concerns with funding of schools
- Student Grant frozen
- loans offered as alternative
- concern that students from less well off backgrounds discouraged from applying
What was proposed in relation to health?
- 1989
- Kenneth Clarke - minister of health - introduced “market mechanism”
- doctors have control over their own budget + doctors could contract out of NHS altogether
- one of gov’s most strongly challenged ideas
Problems regarding the state of the health service
- britain spent less of health than any Western European country and US
- nurses, doctors + staff felt underpaid and overworked
- The BMA denounced government policy
- massive rise in prescription charges over 1980s and dentists virtually private by 1990
What was the poll tax?
- intended to replace existing system of local rates
- new poll tax meant everyone had to pay and not just householders
- came into force 1990
Why was the poll tax so unpopular?
- the heavy burden would impose on working class families in urban areas
- added enormously to government’s unpopularity
What happened in response to the introduction of the poll tax?
- immense protests all over England and Wales, many violent
- Opposed by Labour; the alliance and nationalist parties
- riot occurred in central London - march 1990
Who instigated the poll tax riot?
What was the poll tax riot?
- Nov 1989 - militant tendency set up the Anti Poll-Tax Federation
- Huge demonstration planned to take place in Trafalgar Square
- 200,000 maybe 250,000 showed up to demonstrations
- surrounding streets choked by crowds
- fighting and scuffles broke out
- escalated into major riot
- 5,000 people injured
- many shop windows smashed + extensive looting
How did the poll tax effect the conservative party?
- following riot, some local Tory councillors resigned
- labour achieved some by-election success
- Public turned against Thatcher
- Gov forced to withdraw poll tax in 1991
- replaced by new council tax
What were Thatchers political troubles within by elections?
- 1989 Conservatives defeated in Glamorgan by-election - further by-election defeats follow
What were the problems within Thatcher’s cabinet?
- Lost loyal colleague Willie Whitelaw to ill health
- Norman Tebbit fallen out with Thatcher and left gov for backbenchers
- Leon Brittan taken up post in Brussels
- Edwina Currie forced to resign
- By early 1989 Mrs Thacther at odds with several colleagues
What were Thatcher’s problem with Lawson + Biffen?
- Quarrelled incessantly with Nigel Lawson
- Joe Biffen - publicly criticised PM’s strident, dogmatic style
- leader became more remote and isolated
- doubt whether she would win next election (emphasised through situation with Europe)
How was labour rising as opposition?
- gaining credibility - threat to Tories
- Kinnock established firm leadership of party
- accepted mixed economy - moved away from far left and unilateralism, warmer espousal of Europe, need for union control and strong law and order
- gained support
- 1989 - led strongly in opinion polls
- European election won 45 seats to Tories 32 - first defeat for Thatcher in 10 years
What happened with Howe?
- Geoffrey Howe - Foreign Office
- incurred her wrath due to sympathy for EMU
- Europe most embarrassing cause of weakness, Cabinet in dissaray
- Thatcher’s antagonistic approach led to dramatic resignation of Howe with fierce assault of Thatcher’s style in his resignation speech to the house
What was the stalking horse?
- by end of 1989 Thatcher being challenged for leadership
- Anthony Meyer agreed to be “stalking horse”
- 33 MPs voted for him whilst 24 abstained
- clear for Michael Heseltine to make a comeback he challenged for leadership
- she won first ballot but clear that she lost the confidence of majority - withdrew from contest
- second ballot won by John Major
