Margaret Thatcher - Policies

Question 1

What were Thatcher’s three key policies

Answer 1

Monetarism, neoliberalism, privatisation

Question 2

Define monetarism

Answer 2

A policy where the main goal is to cut inflation by reducing the amount of money in the economy

Question 3

Define neoliberalism

Answer 3

A term used to describe modern free market capitalism. Main goal is to reduce private ownership and make industries more competitive and drive growth

Question 4

Define privatisation

Answer 4

Policy that Thatcher wanted because she believed a large state encouraged dependency culture and she wanted more dynamism and competition in industries

Question 5

What were the successes of monetarism

Answer 5

Inflation reduced to the single figures by 1982 and never rose above 9% for the rest of the 80’s

Question 6

What were the failures of monetarism

Answer 6

• 1982 unemployment at 3 million
• Initial failure with inflation rising to 22% in 1980
• Eventually phased out in 1983 for more supply-side policies

Question 7

What were the successes of privatisation

Answer 7

• £19 billion raised which allowed the government to pay for tax cuts
• Since the privatisation of water authorities in 1989, risk of low water-pressure decreased by 99%
• Examples of privatisation were BT being sold in 1984 and British Gas being sold in 1986

Question 8

What were the failures of privatisation

Answer 8

• By 1990 only 20% of shareholders were owned by individuals
• Privatisation led to prices rising faster than inflation
• Privatisation in some cases did not improve services e.g British Rail has not improved service and government spending has doubled since 1994

Question 9

What are examples of deregulation

Answer 9

• 1979 removal of exchange controls: Ended restriction on how many pounds could be converted and spent abroad
• 1986 “Big Bang” - Relaxed the rules of ownership and trading operations of banks

Question 10

What were the successes of deregulation

Answer 10

• Big Bang caused London to grow rapidly and become one of the major financial capitals of the world and caused massive amounts of reinvestment into areas that had previously not done well
• “Lawson” boom - Economic growth reached 4-5% per year in the late 80’s

Question 11

What were failures of deregulation

Answer 11

-The Big Bang led to riskier financial schemes that ultimately contributed to the culture that caused the financial crisis of 2008
-British people became a nation of borrowers rather than a nation of savers as Thatcher had wanted
-Private household debt increased from £16 billion in 1980 to £47 billion in 1989
By 2003 personal debt was £1.3 trillion which was the highest in Europe

Question 12

Examples of taxation

Answer 12

• Taxes cut substantially across the period with top rate dropping from 83% to 60% in 1980 and then further from 60% to 40% in 1988
• 1979 VAT increased from 8% to 15%

Question 13

What were the successes of Thatchers taxation policies

Answer 13

• Tax cuts contributed to the Lawson Boom

- Tax cuts helped to increased disposable income and consumer confidence

Question 14

What were the failures of Thatchers taxation policies

Answer 14

• Increase of regressive taxes like VAT and National Insurance Payments placed a higher burden on the poor
• Poll tax brought down Thatcher