MAJOR 1990-7 CHAPTER 17 Flashcards
fall of thatcher/rise of major inc. economy
THE FALL OF THATCHER
- In some ways the decline of Margaret Thatcher can be traced back to 1987, as it was then that a number of problems began to surface.
what were the 3 economic problems?
- In 1987 the stock market crashed following the ‘Big Bang’, the deregulation of the city in 1986.
- The policies of Thatcher’s Chancellor, Nigel Lawson, especially his 1988 budget, led to the rapid expansion of the economy in the ‘Lawson boom’; this resulted in a balance of payments problem.
- By 1990, inflation had risen to 10.9 %, higher than it had been in 1980. This was a problem for a government that had set as its key economic objective, low inflation.
THE FALL OF THATCHER AND HER LEGACY
- Many Conservative MPs feared defeat at the next election - what was the catalyst for this?
think loss of a specific seat
the loss of the ultra-safe seat of Eastbourne to the Liberals ha by-election in October 1990 was especially alarming if the Conservatives could lose Eastbourne, they believed they could lose anywhere.
THE FALL OF THATCHER
- The Conservative Party’s unpopularity was partly caused by economic problems, but it was also due to the introduction of the Community Charge or poll tax Thatcher was strongly advised to
what did she do and what did it lead to
drop the scheme. She ignored the advice and pressed on.
* After the poll tax riot in March 1990 the governments popularity in the opinion polls fell sharply.
THE FALL OF THATCHER
- These problems helped to heighten division within the Conservatives:
over 3 things
over economic policies, over Europe, over Thatcher’s style.
THE FALL OF THATCHER
- At the same time, by 1990, the Labour Party’s recovery under Neil Kinnock and John Smith was evident.
what did the opinion polls show
It led the Conservatives in the opinion polls throughout 1990.
THE FALL OF THATCHER
tensions within government came to a head when Sir Geoffrey Howe resigned from the government. This proved to be a catalyst.
why?
- Howe’s resignation speech galvanised Michael Heseltine, who had been a long-standing critic of Thatcher ever since Westland, into action.
THE FALL OF THATCHER
- Heseltine announced a leadership challenge.
- After failing to win on the first ballot, Thatcher
resigned as prime minister.
THE FALL OF THATCHER
Thatcher’s fall
In the first ballot, Thatcher got 204 votes against Heseltine’s 152. Under Conservative Party rules this was not sufficient, and a second ballot was needed. At first, Thatcher intended to fight on. However,
what changed her mind?
after meeting with her cabinet ministers, one at a time, she found most of them advised she won’t win. This allowed cabinet ministers Douglas Hurd and John Major to enter the race as anti-Heseltine candidates. It would have been seen as disloyal to do this if she was still running.
THE THATCHER LEGACY
. Even when she left office, she promised she would be a very good backseat driver.
how?
- She remained an important influence on the Conservative Party for the next 15 years and her premiership also affected the development of the Labour Party.
MAJOR AS LEADER
- John Major was Thatcher’s choice of successor and one key reason for Major’s rise to the leadership was
that Thatcherites saw him as ‘one of them’.
MAJOR AS LEADER
- In fact, this view of John Major was not especially accurate - Major’s natural instincts were to unify the party.
- This would be a difficult job;
why
there was ongoing hostility to Michael Heseltine and a fierce determination amongst some to take revenge against those who had ‘betrayed Maggie’.
MAJOR AS LEADER
- Nevertheless, the Conservatives jumped ahead in the opinion polls and the tone of the national press was very positive.
why?
- Some of this was the honeymoon effect experienced by new governments; but it also reflected Thatcher’s unpopularity by 1990.
MAJOR AS LEADER
John Major’s first big task involved foreign affairs and Europe:
- Britain was already fighting the First Gulf War, which reached a successful conclusion in March 1991.
- Major then turned his attention to Europe, making a speech that set out his aim to see Britain take a place at the very heart of Europe - Major and his supporters hoped that it would be possible to follow a middle way on Europe.
MAJOR AS LEADER
At home Major needed to deal with the poll tax. Many wanted him to scrap it immediately, but this risked splitting the party.
what happened in novemnber 1991?
, after very lengthy discussions, the poll tax abandoned in favour of the new council tax - doing this meant that €1.5 billion had been wasted but it allowed Major to get away from an unpopular policy that could be blamed on his predecessor.
THE CONSERVATIVE ELECTION VICTORY OF 1992
- Major called the election in March 1992, almost the last possible moment before the end of the five-year parliamentary term.
what were the opinion polls like?
- The opinion polls placed the Conservatives on an average 29 %, with Labour ahead on 41 % and the Liberals at 15 %. Most observers predicted a Labour victory.
THE CONSERVATIVE ELECTION VICTORY OF 1992
- The Conservatives ran a good campaign. John Major won a lot of respect for
his old-fashioned ‘soapbox politics’, making impromptu speeches on the street in towns like Luton, standing on his soapbox.
THE CONSERVATIVE ELECTION VICTORY OF 1992
- Although people blamed the Conservatives for the economic recession, they were still seen as
the party best able to get the country out of the mess.
THE CONSERVATIVE ELECTION VICTORY OF 1992
- In 1992, Labour’s weaknesses mattered as much as the strengths of the Conservative campaign. Many voters probably just did not feel
Labour had reformed enough; memories of the 1980s were still too strong.
APRIL 1992 GENERAL ELECTION RESULTS
CONSERVATIVES
LABOUR
LIBERAL DEMOCRATS
seats and % of votes
CONSERVATIVES 336 51.6
LABOUR 271 41.6
LIBERAL DEMOCRATS 20 3.1
ECONOMIC DEVELOPMENTS INCLUDING ‘BLACK WEDNESDAY’
- John Major’s government had inherited a difficult economic situation the end of 1990. The British economy was suffering from a
4 things
declining manufacturing output, high interest rates, a steep rise in unemployment, and a slump in house prices.
ECONOMIC DEVELOPMENTS BEFORE THE 1992 ELECTION
- From mid-1991 to early 1992, unemployment rose from
1.6 million to 2.6 million.
ECONOMIC DEVELOPMENTS BEFORE THE 1992 ELECTION
Many homeowners were trapped in ‘negative equity’ .
which meant
(having to repay mortgages that were higher than the current value of their homes)
Many had their homes repossessed. Unlike in the recession of the early 1980s which largely hit working-class and northern communities, this affected traditional Tory voters.
ECONOMIC DEVELOPMENTS BEFORE THE 1992 ELECTION
- With an election imminent, Major’s government resorted to high public spending.
this affected
Half of this spending was forced, as a result of rising unemployment, but huge government borrowing was used for subsidies on transport and increased spending on the NHS.
BLACK WEDNESDAY AND ITS IMPACT
- Within a few months of winning the general election, Major’s government suffered a severe crisis and Britain was forced to leave the Exchange Rate Mechanism (ERM) . What became known as Black Wednesday came to dominate the rest of Major’s premiership.
what was the ERM
it was set up in 1979, it aimed to stabilise the exchange rates between different currencies in the European Economic Community by limiting how much their value could change
BLACK WEDNESDAY AND ITS IMPACT
- Britain joined the ERM in 1990 when Thatcher was persuaded that
it would help to combat inflation which was starting to rise.
BLACK WEDNESDAY AND ITS IMPACT
- The ERM required Britain to maintain a fixed rate of exchange with a narrow band allowed for fluctuations.
what was the rate?
(2.95 German marks to the pound)
