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)
BLACK WEDNESDAY AND ITS IMPACT
- By September 1992, the British currency (together with several other ERM currencies) came under pressure.
what did major aim?
- Major’s government was determined to avoid any devaluation of the pound and to remain within the ERM.
BLACK WEDNESDAY AND ITS IMPACT
- At 7pm, Norman Lamont announced the decision to leave the ERM live on television because
despite all the government’s efforts, the pound continued to sink.
BLACK WEDNESDAY AND ITS IMPACT
- The effects of Black Wednesday on the British economy proved much less catastrophic than was feared at the time.
how?
- Within a relatively short time, the economy stabilised, and it could be seen that leaving the ERM had many beneficial effects.
BLACK WEDNESDAY AND ITS IMPACT
The political consequences, however, were disastrous for the Conservative government:
4 points why
- The long-standing Conservative electoral asset of being trusted on the economy was thrown away.
- There was a steep drop of support for the Conservatives in opinion polls. John Major’s personal authority was badly weakened.
- He was fiercely criticised by newspapers that had previously supported him. The Labour Party shot ahead in the polls.
- Many observers, including John Major himself, looked back at the events of 16 September 1992 as ‘the beginning of the end’.
BLACK WEDNESDAY AND ITS IMPACT
describe Black Wednesday
Foreign exchange speculators buy and sell currency. If a lot of speculators want to buy pounds, the pound will gain in value in comparison to other currencies. If they sell a currency it will fall in value. In September 1992 there was a wave of speculative selling of the pound on financial markets.
The Chancellor, Norman Lamont, announced an increase in interest rates (already high at 10 %) to 12 % and then to 15 %, hoping to persuade foreign investors to buy pounds again. The Bank of England spent huge amounts from its reserves in buying up pounds.
THE BRITISH ECONOMY AFTER BLACK WEDNESDAY
- Britain’s economic situation started to improve almost immediately after Black Wednesday in 1992.
how?
- Leaving the ERM prevented Britain from having to keep high interest rates to protect the stability of sterling and it allowed exchange rates to float downwards, which helped British exporters.
THE BRITISH ECONOMY AFTER BLACK WEDNESDAY
how did black friday effect housing and unemployment?
Unemployment rates slowed down and the housing market began to pick up.
THE BRITISH ECONOMY AFTER BLACK WEDNESDAY
The British economy was also benefiting from the impact of financial deregulation and flexible working practices which the Conservative Party had introduced since 1979.
In comparison, the German economy was
struggling with the huge costs of unification and had sluggish growth rates compared with Britain
THE BRITISH ECONOMY AFTER BLACK WEDNESDAY
By 1997 most economic indicators were positive:
6 points (unemployment, productivity, spending, etc.)
- Unemployment was down.
- Productivity was up, though not by much.
- Consumer spending went up.
- Car ownership increased.
- House prices rose and negative equity became a thing of the past.
- Business was supportive of government policies.
THE BRITISH ECONOMY AFTER BLACK WEDNESDAY
Yet people were surprisingly reluctant to give Major’s government credit for this.
why?
The ‘feel-good factor’ was missing.
POLITICAL SLEAZE, SCANDALS, AND SATIRE
Part of the reason that Major’s government found it difficult to claim credit when things went right is that it became associated with
things going wrong.
POLITICAL SLEAZE, SCANDALS, AND SATIRE
this perception was strengthened by scandals and accusations of ‘Tory sleaze’ that dogged Majors years in office:
sex scandals
- There were more than a dozen sex scandals involving MPs having extramarital affairs including two cabinet ministers, Mellor, and Yeo, both of whom were forced to resign.
POLITICAL SLEAZE, SCANDALS, AND SATIRE
- Other scandals centred on corruption 1994, the Scott Enquiry, set up by Major to investigate illegal arms dealing, proved
that government ministers had broken the rules and lied in enabling the arms company Matrix Churchill to supply arms components to Iraq.
POLITICAL SLEAZE, SCANDALS, AND SATIRE
the so-called ‘Cash-for-questions’ affair erupted, it was very damaging to the Major government because
it lasted such a long time and kept Tory sleaze in the news right through the 1997 election campaign.
POLITICAL SLEAZE, SCANDALS, AND SATIRE
what was the Cash for questions affair?
The Cash-for-questions affair arose when Hamilton and other Conservative MPs were accused of accepting money in return for lobbying (asking questions in Parliament) on behalf of the controversial owner of Harrods, Mohammed Al Fayed. Hamilton was ruined by losing a very public libel case, but refused to resign, to the intense irritation of John Major
POLITICAL SLEAZE, SCANDALS, AND SATIRE
The sleaze and scandals made the Major government ripe for satire. Private Eye created
+ their effect on major
an Adrian Mole spoof, The Secret Diary of John Major aged 47 and three-quarters. None of this satire was vicious and Major remained personally more popular than his party; but the image of Major as a well-meaning but inadequate leader stuck to him.
POLITICAL POLICIES
A number of other Conservative policies in the 1990s also proved controversial and confirmed the feeling that the Conservative government was prone to crisis:
2 examples of policies of privatisation
- The coal industry was privatised in 1994, the railways in 1996.
- The government also set about privatising the Post Office but ran into opposition and eventually abandoned the scheme due to public concern.
POLITICAL POLICIES
- Major also introduced the Private Finance Initiative (PFI).
which was?
- These were public-private partnerships that meant private companies would fund infrastructure improvements and then deliver public services that the State would pay for over the length of the contract.
POLITICAL POLICIES
- Major also introduced the Citizen’s Charter in 1991.
which was?
an attempt to give public service users more power over the quality of the services they received by providing information about the standards they should expect.
For example, in education there would be more testing and schools would publish the results. However, some elements such as the ‘Cones Hotline’ - a phone number motorists could call if motorway lanes were closed off without any sign of roadworks - became targets of satire.
POLITICAL POLICIES
- Pit closures continued - 1991 Heseltine announced the closure of 31 pits including some in Nottinghamshire; this was seen as
a poor reward by Conservatives who remembered that it was the Nottinghamshire miners who had stood against Scargill.
The outcry forced Heseltine into a U-turn in the short term though eventually the closures went ahead.
POLITICAL POLICIES
Major’s government also had to deal with the BSE (Bovine spongiform encephalopathy) crisis, better known as ‘Mad Cow Disease’.
what did this mean / lead to
This had been first identified in the mid- 1980s but was recognised as a potential threat to human health in 1996. This led to British beef being banned in Europe.
POLITICAL POLICIES
None of Major’s policies or events in themselves appears to be big enough to undermine a government’s reputation. But
together and combined with the other issues, they helped to cement an image of incompetence.
APPROACH TO NORTHERN IRELAND
Thatcher’s policy towards Northern Ireland did not change in the final years of her administration.
what did she do?
The government banned organisations which were believed to support terrorist activities from broadcasting in Britain; broadcasters got around this ban by employing actors to read the words of those affected.
APPROACH TO NORTHERN IRELAND
However, the State’s activities during the Troubles also came under scrutiny.
There were accusations of a
‘shoot to kill’ policy after three IRA members were killed by the SAS (Special Air Service, one of the British military’s Special Forces) in Gibraltar in 1988; high-profile miscarriages of justice such as the Birmingham Six and the Guildford Four were revealed.
APPROACH TO NORTHERN IRELAND
The Birmingham Six and the Guildford Four
what happened to these groups?
The Guildford Four were jailed in 1975 for life for the bombing of 2 Guildford pubs in which 5 people died. The verdict was overturned in 1989.
The Birmingham Six were jailed in 1975 for life for the bombing of 2 Birmingham pubs in which 21 people were killed. The verdict was overturned in 1991.
APPROACH TO NORTHERN IRELAND
what happened on July 1989
London Stock Exchange bombed by IRA
APPROACH TO NORTHERN IRELAND
- There was, however, a political breakthrough in Northern Ireland under John Major.
what di he receive from sinn fein?
- From 1993, the government received secret messages hinting that Sinn Fein was ready to discuss a peace agreement.
APPROACH TO NORTHERN IRELAND
the fact that the first steps in the peace process were taken by a Conservative prime minister was helpful.
why?
- A Labour leader might have found it easier to get the trust of the republicans but may have struggled against a Conservative and unionist backlash.
APPROACH TO NORTHERN IRELAND
- Major also had a good working relationship with the Irish Taoiseach, Reynolds.
they also had the support of
The new American president, Bill Clinton, also made a constructive contribution, encouraging Sinn Fein away from armed struggle.
APPROACH TO NORTHERN IRELAND
- Major and Reynolds went public in 1993 with their joint Downing Street Declaration
in 1994, the IRA
announced a ceasefire. Loyalist paramilitaries matched this with a ceasefire of their own.
APPROACH TO NORTHERN IRELAND
- Getting a final agreement was very difficult - why?
unionists vs IRA
- Unionists did not believe in the IRA’s commitment to peace.
- The IRA got impatient and went back to violent methods and bombed manchester and canary wharf.
CONSERVATIVE DIVISIONS
By the last years of Thatcher’s premiership divisions had become more apparent in the Conservative Party.
what did she do to cause this (2)
- Thatcher’s use of Professor Walters as an economic advisor infuriated her chancellor, Lawson - resigned in 1988.
- Thatcher alienated Howe by removing him from the foreign office and placing him in a lesser position - resigned in 1990.
CONSERVATIVE DIVISIONS
Despite Major’s efforts to unify the party and the election success of 1992, the divisions in the party worsened:
right/eurosceptics/leadership challenge
- Right wingers pushed for more radical social policies.
- Politicians with leadership ambitions saw a chance to advance their leadership.
- Eurosceptics saw an opportunity to push the UK out of EU.
These divisions had the effect of drowning out any achievements.
CONSERVATIVE DIVISIONS
Press speculation continued about possible challenges to leadership - comments in right wing press was relentlessly hostile, calling for a strong leader to save the party.
1955 - Major insecure – what did he do?
called a leadership election so he could be re-elected to his own job.
THE RE-ELECTION OF JOHN MAJOR AS CONSERVATIVE LEADER
- On 22 June 1995 John Major initiated a Conservative leadership election to try to
silence his critics and to re-establish his authority.
THE RE-ELECTION OF JOHN MAJOR AS CONSERVATIVE LEADER
- Michael Portillo decided not to run so the main challenger was
John Redwood, who was backed by Thatcherites and Eurosceptics.
THE RE-ELECTION OF JOHN MAJOR AS CONSERVATIVE LEADER
- Before the ballot Major met with Heseltine and agreed that Heseltine would become deputy prime minister.
this ensured major’s win as
- Heseltine made sure everyone in the party knew he had voted for Major.
THE RE-ELECTION OF JOHN MAJOR AS CONSERVATIVE LEADER
- The result of the first ballot was decisive:
votes for major and redwood?
218 for Major, 89 for Redwood.
* There was no need for a second ballot.
THE RE-ELECTION OF JOHN MAJOR AS CONSERVATIVE LEADER
Adding fuel to the criticism of Major was Thatcher:
what 3 things did she do?
- Encouraged the Eurosceptics by demanding a referendum on Europe.
- Gave support to Redwood in his challenge to Major in 1995.
- 1997 - comments seemed to show more approval of Tony Blair than Major.
