Thatche's Conservative Government 1979-1990

Question 1

Examine the key individuals of Thatcher’s government

Answer 1

• Margaret Thatcher. Prime Minster 1979-90. Like Heath and Wilson, a grammar school educated product of a lower middle class home – her father was a shopkeeper – made her way to Oxford. A chemistry graduate she subsequently qualified as a lawyer. Rose unspectacularly through the Conservative ranks in the 50s and 60s but was catapulted into Conservative leadership by a ‘peasant’s revolt’ of backbench MPs in 1975. Self-styled, stubborn, abrasive, divisive – ‘a raw, double or quits killer when she was cornered’ (Andrew Marr, History of Modern Britain).
• William Whitelaw. Home Secretary 1979-83. Leader of the Lords 1983-88. Country gentleman and wartime winner of the MC. Bluff, amiable and shrewd, he was a natural conciliator who performed the important function in the early Thatcher years of acting as a bridge between the different factions within the Conservative Party. Badly missed after his retirement.
• Michael Heseltine. Environment Secretary 1979-83; Defence Secretary 1983-88. Self-made millionaire publisher, ambitious, charismatic, flamboyant, impetuous and darling of the Conservative Party Conference. Essentially a ‘wet’, Heseltine (or ‘Tarzan’) was Thatcher’s most dangerous adversary within the party.
• Geoffrey Howe. Chancellor 1979-83; Foreign Secretary 1983-89. One of Thatcher’s closest lieutenants, Howe was a highly capable and resourceful lawyer whose abilities were to some extent masked by his owlish appearance and mild mannered style. Denis Healey said being attacked by Howe was like being ‘savaged by a dead sheep’.
• Norman Tebbit. Employment Secretary 1981-83; Trade and Industry Secretary 1983-85; Conservative Party Chairman 1985-87. Former airline pilot and hard-line Thatcherite, the ‘Chingford Skinhead’ was the most ferocious and effective Conservative ‘attack dog’ of the 1980s. Described by Michael Foo as a ‘semi house trained polecat’. Famously, if unfeelingly, advised those unemployed to stop complaining and ‘get on your bike’ to look for work as his father and done in the 1930s.
• Nigel Lawson. Energy Secretary 1981-85, Chancellor 1983-89. Former financial journalist, clever, brash and self-confident. Presided over the mid-80s economic boom years of the Thatcher era.

Question 2

Outline Thatcher as an incoming PM

Answer 2

• February 1975, Thatcher elected Conservative leader in place of Heath after his second electoral defeat, Powell had become an MP in Northern Ireland and the other right free market candidate, Keith Joseph, was honourable but unsuited to leadership, ‘mad monk’, Heath – ‘you’ll lose’, second ballot of voting Heath stepped down, Thatcher had established her credentials and beat Willie Whitelaw
• New Tory – her father a shopkeeper, worked hard for Oxford, won the Tory safe seat o Finchley 1959, Heath’s token female Cabinet member 1970, conditioned by the Cold War – uncomplicated view of the evils of communism, western socialism – watered down Marxism, more ideological than predecessors, science not humanities

Question 3

Examine the incoming government

Answer 3

• New style of government reflected the new PM, loyal team of professionals, Robert Armstrong, Heath’s ex-private secretary as Cabinet Secretary, the promising Clive Whitmore as private secretary, cream of the civil service, a group Thatcher was suspicious of in many ways as declinist and consensual, press secretary was Robert Ingham, ex Labour supporter with an uncanny ability to guess her reaction to events, most dependable was her husband Dennis
• Almost weakness that her Cabinet was traditional Conservative moderates – ‘wets’, favoured moderate approach to union reform and the economy, most prominent was Whitelaw Home Secretary, his intense loyalty to her invaluable in heading off revolt
• Other ‘Heathites’ were Jim Prior at employment, Lord Carrington and Sir Ian Gilmour at the Foreign Office, Peter Walker at agriculture and Francis Pym at Defence
• Thatcher’s ‘one of us’ were in the minority, initially most important was Sir Geoffrey owe as Chancellor, his two deputies John Biffen and Nigel Lawson, all monetarists, other member was Keith Joseph, Secretary of Industry – Thatcher’s ‘band of believers’

Question 4

Examine Conservative attempts to set the economy right 1979-1982

Answer 4

• Thatcher’s economic prescription was to get the government to do less, required big decisions early on, mostly Howe’s first June budget:
o Minimum lending rate was raised to 14% to control the money supply
o Standard rate of income tax cut 33%-30%, highest rate 83%-60%, idea to provide more incentives, hard work encouraged and its benefits not confiscated
o To cover the lack of revenue, government raised VAT 8%-15%, major change in taxation philosophy, consumption not effort penalised
• Produce long term gains, but short term pushed up inflation, doubled by 1980 almost to 21.9%, cuts imposed on government spending and attempts made to reduce subsidies to nationalised industries, both more limited than hoped for, Thatcher had promised to increased defence expenditure and public sector pay awards under Callaghan’s government
• Other free market early changes were the abolition of the Price Commission and exchange controls on the movement of currency, with budget changes a bold strategy, value of the £ rose without exchange controls harming exports aiding unemployment – more benefits but less taxation
• Interest rates raised to 17% November, squeezing businesses and adding to unemployment, by 1980 many rejecting the monetarist experiment as stupid, Cabinet was unhappy
• Despite doubts, Howe’s second budge continued this, taking a further £900m out of public spending, heavy cuts in higher education, social security payments to those on strike reduced and made liable to income tax, prescription charges raised as were taxes on petrol and drink, unemployment hit 2.8 million by the end of the year, large scale deindustrialisation due to bankruptcy, Thatcher, Howe and Lawson a necessary evil as the inefficient collapsed, traditionally in northern Labour areas as well
• When unemployment reached 1 million under Heath in 1972 there was a U-turn, now there would be no U-turn, Conservative Party Conference 1980 ‘the Lady’s not for turning’, far from this 1981 brought more evidence of determination to continue pressing forth, removal of John Stevas as Commons Leader for Pym who resisted defence cuts
• Howe’s third budget truly abandoned Keynesianism, during the worst downturn since the war cuts were made instead of spending rises, government proposed to squeeze the economy by raising £4bn in extra taxes – hoping to squeeze out inflation, Howe’s most unpopular budget denounced by 364 eminent economists
• To Howe and Thatcher a determined minority taking a tough but correct stance in the face of wrong-headed prejudice for real economic recovery, would be 8 years of growth, inflation fell to 4.5% in 1983, many found the government responsible for lowering inflation, not responsible for unemployment and determined to go beyond where previous governments had backed down
• In contrast to economic handling, Jim Prior at Employment was notably gentle in handling the unions, Employment Act of 1980 outlawed secondary picketing and tightening rules regarding the closed shop, wasn’t a full frontal assault on union power, growing unemployment would sap their strength and militancy, Norman Tebbit succeeded Prior, a tougher Act pushed through 1982 which weakened the unions’ privileged position
• Even theoretically super dry Keith Joseph was forced by the realities of nationalised industries to retreat from cutting government expenditure to increasing it
• Increasing nationalised giants awaited subsidies which Joseph couldn’t refuse, British steel corporation losing £7m a week by the end of 1979, from inefficiencies, Joseph tried to get the Corporation to cut losses by closing inefficient plants with the loss of 50,000 jobs and those in work accepting a 2% pay rise, led to a massive strike in 1980 which lasted over 3 months, ended with a 16% pay rise but plant closures, Joseph installed a tough American manger to return the Corporation to profit, became most efficient steel producer in Europe within two years and almost profitable, at the cost of losing nearly half the workforce
• British Leyland another giant soaking up government subsidies, a byword for inefficiency and strikes, tough new chairman Michael Edwardes held out the prospect of change but needed a £900m subsidy, Joseph couldn’t face redundancies n the Midlands with its marginal seats and issued the money, £200m to computer giant ICL and £13m to write off the debts of the National Film Finance Corporation – hand-outs at odds with Thatcherism

Question 5

Explain the riots and resistance of the era

Answer 5

• April-July 1981 riots in Brixton, Southall and Toxteth, Thatcher denied them being due to unemployment but this was disputed, bad race relations and insensitive policing also major factors, Whitelaw noted many arrested for rioting were in steady jobs, Thatcher pressed Whitelaw to equip police with the best US anti-riot gear, her sympathies were with the ‘poor shopkeepers’
• More problematic for Thatcher was a Cabinet meeting on 23 July, Thatcher, Howe and Joseph isolated regarding future cuts, had Whitelaw given a lead to the opposition it may have been the end of her premiership, but he urged his loyalty on others, she now reshaped her Cabinet to remove some of the moisture, Ian Gilmour sacked, Lord Soame leader in the Lords, Jim Prior Secretary of Employment humiliatingly demoted to NI, replaced by ‘dry’ Norman Tebbit, Cecil Parkinson became party Chairman, replacing education secretary with Joseph, new Cabinet much more ‘Thatcherite’
• Prospects of the new government not good though, approval rating down to 18%, Thatcher reckoned the most unpopular PM since polling began, March Labour split, emerging the SDP led by the gang of four: personable Shirley Williams stood in the safe Tory seat of Crosby, produced a political earthquake when she took an 18,000 majority November 1981, now no Tory seat was safe, mutterings among backbenchers for new leadership

Question 6

Explain how General Galtieri rescued Thatcher and her government

Answer 6

• Thatcher aware of her inexperience with Foreign Policy, largely left to her aristocratic Foreign Secretary Peter, sixth Baron Carrington, handled her skilfully, she did concern herself with Britain’s contribution to the EEC, by 1980 Britain paying £1bn more than she was getting out, with a smaller economy than Germany or France, the largest net contributor, Thatcher determined to ‘get our money back’ and went about it shocking professional diplomats and Roy Jenkins President of the EC, lectured other leaders and established a terrible relationship with French PM D’Estaing, he snubbed her at an official dinner in Paris being served first and she responded at a dinner in Downing Street sitting him facing portraits of Nelson and Wellington, eventually she got most of what she wanted and a reputation as a troublesome battle-axe
• This reputation totally enforced by the Falklands, rescuing her premiership and making her almost unassailable, despite it partly being her fault, the Falklands had been occupied by Britain in the 1830s 400 miles off Argentina, defence cuts left a small British garrison there and the withdrawal of Antarctic exploration vessel Endurance was planned, the only naval ship present in the area, had been threat of invasion in the 70s but Callaghan diffused it using a hunter killer submarine, while Britain was a great power Argentina accepted the status quo, but General Galtieri’s dictatorship saw weakness and seized he islands now in April 1982, gambling Britain lacked the means and the will to respond
• Initially the occupation seemed another national humiliation, a Lion mangy without teeth, but Thatcher rose magnificently to the challenge, navy and First Sea Lord Sir Henry Leech assured her it could put together a task force, enormous risk of military disaster, she gave the go ahead determined to restore the Islands to British control, feeling of self-respect and the rule of law articulated Thatcher’s response to the majority of her compatriots
• Weeks of stress, first peace initiatives threatening rewarding Galtieri, and then conflict, controversy surrounded the sinking of the cruiser General Belgrano and the loss of 368 sailors, Thatcher approved naval request even though the cruiser was steaming away from the island, accused of doing it to torpedo settlement, but in fact was based on sound military ground, difficulties of a liberal democracy conducting the war, Argentinian navy stayed in port thereafter
• War ended in total victory but with considerable luck and Argentinian military mistakes, crucial help from US sidewinder missiles, PMs finest hour, decisiveness, patience, grim determination despite tears surrounding British casualties, elevated her public esteem
• Yet experience of war leadership encouraged autocratic tendencies, speed and convenience of working through a small wartime Cabinet led her to bypass Cabinet in favour of ad hoc committees and personal advisors, belie that her firmness had brought victory encouraged the belief that refusal to cooperate was the language foreigners understood

Question 7

Explain Labour’s abandonment of Consensus politics

Answer 7

• Labour antics in these years could have been scripted by the Conservative Central Office, Joseph and Thatcher felt trusted politics had failed and new initiative were vital, so did Labour, but instead called for full blooded Socialism, compromises with Capitalism, the EEC and NATO increasingly denounced, Militant Tendency members infiltrated poorly attended branches and bullied party activists into silence, endless resolutions for nationalisation passed by constituency parties and funnelled up to the party conference, Callaghan retired in 1981
• Hoped by retiring before the rules of electing a leader could be challenged, Healey would inherit the crown, Healey beat Foot on the first ballot, but when the two other candidates withdrew Foot was successful, Foot was a supporter of CND, a Republican and Atheist, Labour had surrendered to the extremes
• Leader of the left was Tony Benn, now Foot was 67 it appeared he would inherit the crown, particularly as a special Labour conference in January agreed to a tripartite system of electing future leaders, MPs, constituency parties and associated unions, left triumph, immediately a group of right wing Labour MPs led by the gang of four issued the Limehouse declaration
• Initially the council for Social Democracy was to be a pressure group within Labour, but March 1981, 12 Labour MPs withdrew from the party whip and the SDP was born, formed an alliance with the Liberals under David Steel, the Alliance, initially a massive success, by-elections revealed its potential and the unpopularity of the two main parties, Roy Jenkins chose to stand I the safe Labour seat of Warrington and nearly won, Shirley Williams in the Merseyside suburbs of Crosby overturned a Tory majority, Jenkins then returned to parliament with a victory in Glasgow, 29 Labour MPs joined the alliance, but only one Tory, Christophe Fowler
• Looked as if the alliance would change British politics, but then came the Falklands War

Question 8

Explain the General Election 1983

Answer 8

• PMs approval ratings leapt and the Tories crept into a comfortable lead, Thatcher cashed in on her newfound popularity calling an election in June 1983
• Other developments favoured the Tories, inflation had fallen rapidly and economic growth spread a sense of affluence, high tech industries springing up in place like Cambridge, M4 corridor from London to Wales
• Labour Party Election Manifesto described by frontbencher Gerald Kauffman as the ‘longest suicide not in history’, withdrawal from the EEC had the support of a sizeable minority, but unilateral nuclear disarmament was unpopular, Labour abandoned consensus politics, doing its worst since 1918, 27% vote although 209 seats
• SPD may have been expected to do well, formal deal with the Liberals but only after much acrimony, agreed if they won Jenkins would be PM, Alliance secured 26%, but only 23 seats due to FPP, 17 Liberal, 6 SDP
• Thatcher romped home with a majority of 142 but secured only 43%, less than in 1979, 397 seats won, Britain being polarised geographically as never before, but traditional class identification with parties declining, Conservatives won 31% of the union vote, only 40% voted Labour, working or ex-working class now voted Conservative, on the other hand the Conservatives were losing their hold on the professional middle class, many identifying with the Alliance

Question 9

Outline Thatcher’s entrance into her second term: ‘The high tide of Thatcherism’

Answer 9

• New Cabinet even drier, Pym sacked as Foreign Secretary, replaced by quiet but loyal Geoffrey Howe, dry but flamboyant Nigel Lawson became Chancellor, Leon Brittan became Home Secretary replacing Whitelaw, who went to the Lords as deputy PM, still capable of exercising restraint and guidance on his increasingly confidant chief
• Thatcher – ‘every PM needed a Willie’, few leading wets survived, Peter Walker sent to energy to prepare for battle with the miners Thatcher appreciative of his abilities, Jim Prior hung on for 12 more months as Secretary for NI, resigned 1984, Michael Heseltine most dangerous and unconventional wet took Defence, wanted Thatcher’s job, darling of the Conservative party conference

Question 10

Explain the government’s confrontation with miners: ‘The Enemy within’

Answer 10

• Central drama of the second term was the great miners’ strike of 1984-85, Thatcher again lucky in her enemies, canny and moderate miners’ leader Joe Gormley retired and NUM overwhelmingly elected Scargill 1981
• A Marxist, but had left the communist party for Labour, some revolutionary aspirations, ballot box hadn’t removed the Tories, turned to direct action
• Central issue between miners and government was the closure of uneconomic pits, government drive to reduce subsidies to inefficient industries, union which accepted this in the 50s and 60s now dug their heels in and refused to contemplate ay form of closure
• Intolerable and showdown was inevitable, many Tories including Thatcher looked forward to revenge for past humiliations, Walker made preparations for conflict, Scargill was Thatcher’s new Galtieri, ‘enemy within’, a battle between new South England and the Old North
• Considerable resistance within the mining communities to striking, in the strike run up 50,000 out of 70,000 balloted locally were against striking, Scargill thus committed a double blunder, beginning the strike in spring not winter and didn’t hold a national ballot, but began strike action in militant areas
• Idea to escalate action, initially worked by April 4/5 miners were on strike however in the crucial area of Nottinghamshire large numbers kept working, government used police to allow those who wanted to work to work, and stop secondary picketing, result was repeated confrontation and violence, Tony Benn – looks like civil war
• To Conservatives and many non-Conservatives it was a struggle about parliamentary democracy and the rule of law on one side and an ideologically motivated egotist wishing to be the British Lenin on the other, to Benn and the extreme left a class struggle
• Strike dragged throughout 1984, mining communities showing intense loyalty in a strike many had not wanted but could not stand aside from, government equally determined to win using police from all over the country, flying pickets met with flying police, alleged some troops in police uniform
• By early 1985 more and more miners seeking to return to work and the government determined to protect their rights to do so, divisions in communities, by the end of February over half the NUM’s members were back in the pits dispute ended early March, Scargill defeated
• Miners’ defeat was symbolic and probably necessary to modernise the economy, similarly newspapers tight hold over fleet street broken, a byword for restrictive practises

Question 11

Examine Thatcher’s more radical reform and the rolling back of the states

Answer 11

• Second term concerted effort to reduce the roll of the state in the economy through privatisation, to overthrow post-war settlement of 20% state owned industry, some privatisation in the first term, Cable and Wireless sold in 1981 for £240m, PM stressed the efficiency of business for economic performance and long run growth, enterprise culture
• Other advantages, raised revenue, weakened unions strong in the public sector, hoped to create Tory voters through share-owning citizens
• After 1983 more and more selling of government assets, raised more than £1b from company sales, climax in 1988-89 when £7.1b was raised, sale of Jaguar 1984, as part of British Leyland making a loss of £32m on £224m turnover, 1985 a private company making profit of £121m on £747 turnover
• 1984 huge sale of BT the pinnacle success, £6b offering for shares worth £1.5b, share price doubled the first day, 2 million people became shareholders, many for the first time
• Roll of companies followed, British Gas for £5.5b, Trustees Savings Bank, British Airways, Rolls Royce and BP, number of shareholders rose from 3 million in 1979 to 9 million by 1990
• % of electorate in unions fell from 30% 1979 to 22% 1987, social and economic revolution, 1990 a greater proportion of population were shareholders than France or Germany
• Lawson’s Personal Equity Plans encouraged savers to buy shares and shelter them in their PEPs free of tax, his 1988 budget income tax reduced to 25% standard and 40% at the top, 1970s some unearned income taxed at 98%
• Another aspect of the same revolution was the sale of local council houses, 1979 1/3 houses council owned, 1980 ‘right to buy’ for residents of a property for 3 years, lowered to 2 in 1984, enormously popular and over a million council houses sold in the 80s, Britain a property owning democracy
• Restrictive practises of City of London as well as unions attacked, class ridden culture of the stock exchange exposed to the free market, foreign banks and dealers poured into London following the ‘big bang’ of October 1986
• American and Japanese banks took over smallish British investment banks and brokers, computerised trading introduced and the city began a crazed expansion increasing national wealth, being a poor 3rd behind Tokyo and New York London reclaimed its lace as the world’s leading financial centre, position not held since 1914

Question 12

Explain the problem of Northern Ireland

Answer 12

• Throughout the decade was the NI problem, violence had exploded in the 70s erupting from time to time on the mainland, 1979 Tory MP Airey Neave who had done so much to get Thatcher elected leader was murdered by a bomb in the Palace of Westminster, Ian Gow, closest MP to Thatcher was murdered on his drive in Sussex 1990
• Most shocking was an attempt on the PM by an exploding a bomb at the Grand Hotel Brighton where most of the Cabinet were staying for the 1984 party conference, five killed and Norman Tebbit’s wife crippled, Thatcher appeared immaculate as ever in the conference chamber next morning faultlessly delivering her speech – doubtless courage
• NI violence continued but at a reduced level than 1971-73, two dozen police and armed forces killed and around 50 civilians each year, cost of subsidies to the economic infrastructure and deployment of 12,000 troops a drain on the exchequer
• Thatcher a devout Unionist and saw no reason for altering her position while the majority of NI’s population wanted to remain part of the UK, pressure from Dublin and USA for a compromise settlement was considerable, IRA’s successful tactics using hunger strikes by prisoners in the Maze prison 1980, demand for status as political prisoners not criminals, Maze conformed to all aspects of the human rights charter but denounced as a British death camp by the IRA, convincing propaganda despite being nonsense
• Bobby Sands starved himself to death May 1981 outrage, yet Thatcher was rightly unmoved, took political courage to accept these deaths, a display of moral courage and determination but unpopular liberally
• 1984 Jim Prior resigned as NI Secretary replaced by Douglas Hurd, aware that those around him would unlikely be able to save him but could kill or catch assailants
• Answer was a political deal – impossible, Irish Republic demanded a commitment to modification of British sovereignty, Thatcher would never agree to this, had she, the ire of Ulster Protestants would have made such a deal unworkable, nearest she came to the deal, a forerunner for the 1997 Good Friday Agreement was the Anglo-Irish Agreement November 1985
• A modest concession to Irish nationalism, agreeing to regular consultations with Dublin about NI, even so produced outrage among Unionists and Thatcher felt guilty of betraying them, problem was unsolved but contained

Question 13

Examine Neil Kinnock’s Labour and the road back to sanity

Answer 13

• 1983 Election a disaster for Labour, party had lost touch with voters, Foot resigned young left wing activist Neil Kinnock replaced him, personable and young, an able speaker, immediately embarrassed by the miner’s strike, came to resent Scargill, had to support the strike despite finding its tactics idiotic – an unfortunate beginning
• Equally embarrassed by the far left Militant Tendency pushing the party into unelectability, Derek Hatton a militant leader of Liverpool City Council got the 1984 Labour conference to pass a resolution supporting councils that broke the law by resisting government attempts to set limits to rate increases
• Kinnock counter attacked the next year delivering a stinging attack on Hatton and fellow militants in Liverpool, their resistance to government policy ended in fiasco, he was booed and heckled, Eric Heffer a left wing Labour MP stormed off the platform, but it was the beginning of Labour’s fight for electability, Benn saw it as an attack of the Labour left
• After the conference an internal Labour investigation was launched into the activities of militants in Liverpool, Hatton and may colleagues expelled from the party, slowly Kinnock with support from the ‘solid left’ recaptured the NEC
• By 1987 election Labour’s extreme policies such as withdrawal from Europe and opposition to council house sales had been dropped, still a commitment to unilateral nuclear disarmament and the repeal of Tory Union legislation
• Party didn’t expect to win but hoped for improvement on the results of the disastrous 1983 election, improvement and the attempt by the hard left campaign group to stop the return to moderation and consensus policies was beaten off in 1988 when Benn and Heffer stood against Kinnock and Roy Hattersley for leadership

Question 14

Briefly outline the 1987 General Election

Answer 14

• In many ways unexciting, Tory victory expected, economy was booming, Liberals and Social Democrats unhappy in their alliance and for all Labour’s improvements it was still too extreme and riven
• Result was convincing Tory victory, won 376 seats with 42.3%, Labour slightly increased their share with 229, Alliance lost votes to 22, Conservatives swept the South and Midlands but faced extinction in Scotland

Question 15

Examine the government’s education and health reform

Answer 15

• Many questioned state education provision compared with other states, Callaghan in 1976 speech asked why so many pupils leaving secondary schools lacked basic literacy and numeracy skills
• Worrying that middle class families bypassed state education altogether through private schools, this had flourished as the drive from comprehensives reduced grammar schools
• Government didn’t prioritise education but an Act in 1981 coming into effect 1983 extended education provision for those with special needs
• More wide Act passed 1988 to free schools from tight local authority control, increased powers given to school governors and parents’ representatives were to dominate these bodies rather than nominees of local authorities
• Schools had greater budge control, strategy reflected a faith in greater freedom and belief that some competition could be introduced to raise standards, other prong of the attack involved the exact opposite approach, greater government control through the imposition of a national curriculum on all state schools
• The other great public purse drain the NHS saw a similar approach to raise efficiency through market competition, but also impose greater bureaucratic accountability and extra costs of management
• Health costs had spiralled as more treatments became available and people lived longer, 1981 twice as many over 80 compared to 1951, various reforms considered but not until 1989 that the principles of reform were unveiled in the white paper ‘Working for Patients’
• Attempted to introduce the ‘internal market’, GPs would control their budgets and choose where to refer patients meaning competition, Hospital Trusts would run large hospitals and health authorities would buy their services
• Theory was that as with education, delegation of budgets and choice would improve efficiency, increased management and costs, implementation came largely after Thatcher

Question 16

Explain Thatcher’s decline and fall

Answer 16

• Thatcher’s cabinet relationship was always unusual, she wasn’t a team player and inclined to be bossy becoming worse with time, trivial incidents illustrate this .g. straightening ties or flicking specks of dust off coats – Paddy Ashdown
• Had dramatically clashed with Heseltine in 1987 one of her most talented ministers ‘Tarzan’, entered lengthy confrontation over a bid for British helicopter company Westland
• Thatcher and her protégé Leon Brittan at Trade and Industry, preferred an American bid, Heseltine at Defence argued for European consortium, ended in theatrical walk out from the Cabinet by Heseltine January 1986, clear leaks to the press in breach of regulation and transpired these came from Downing street, Brittan resigned and took the blame instead
• Thatcher let off the hook, partially because Kinnock failed to answer the right questions in the commons, she now had the most ministerial resignation of any PM
• Election victory in 1987 added to Thatcher’s certainty and self-belief, prepared the way for her downfall, 1987-88 appeared that the economic miracle was spurious, stock market crash in 1987 followed by a series of undesirable developments, pound fell and inflation took off again, Lawson responded by raising interest rates, hurting mortgage holders, and to try to tie the pound more closely with European currencies particularly the German mark
• Both Lawson and Foreign Secretary Howe seemed in favour of joining the European Exchange Rate Mechanism, precursor to the Euro and single currency, PM would have none of this and bitter arguments ensued, Lawson as Chancellor had an arrogance to match Thatcher’s, her persistence in retaining the services of Professor Alan Walters as an independent financial advisor led to his resignation in 1989
• Thatcher stirred up discontent by enthusiastically backing the reform of the financing of local government, existing systems of rates based on antique valuations of houses as unfair and unpopular with many
• A pensioner who consumed few local services could pay more than all five adult occupants of a smaller house, Thatcher wanted to make councils more responsible to electors by ensuring rate payers experience the pain of free spending local authorities and thus control them
• If electors chose left wing councils who she felt frittered away money they should have to suffer for it, obvious answer seemed a poll tax, all adults should pay the same amount since all gained from it, a considerable increase in local taxes for smaller properties
• Last poll tax led to the Peasant’s revolt 1381 – similar, riots and lost by elections, Tory MPs feared for their seats, mood grew that ‘the Lady must at last go’
• Final trigger bringing her downfall was Howe’s resignation, demoted in 1989 and humiliated in Cabinet he finally resigned over Europe in 1990, most mild mannered man (Healey – ‘savaged by a dead sheep’) delivered one of the most effective parliamentary attacks in history – ‘being sent in to bat, to find out the captain had broken the bats before’
• Howe finished with a call for challenge to Thatcher’s leadership, Heseltine responded and although Thatcher won the first ballot, was short of the necessary majority, after Cabinet consultation she resigned
• Fall of one of the most powerful PMs was sudden and dramatic, proof that Britain was truly a parliamentary democracy, Thatcher had alienated colleagues with her increasing bossiness and they took revenge
• Lost touch with Tory backbenchers and relied on the services of loyal acolytes such as Ian Gow and robust Willie Whitelaw who had kept her in touch was gone by 1990, increasingly isolated, frozen inside her own certainties
• Economic downturn, disputes over Europe and unpopularity of the poll tax suggested her time had passed, MPs feared that unless she was jettisoned their seats would be lost, removed and her successor John Mayor won a further term in office, her only consolation was that Heseltine was denied the crown he desperately wanted

Question 17

Assess the Thatcher government

Answer 17

• Thatcher one of the most controversial post war PMs, long adored and toasted in golf clubs of South England, she was reviled in the north, despised the chattering classes as a crude philistine and Oxford refused to grant her an honorary degree much less accept her in the prestigious post of Chancellor, preferred Roy Jenkins of the SDP
• Thatcherism believed in the beneficence of market forces to turn Britain around and re-establish national greatness but not much else, attacked welfare, power of the state to improve lives, professional ethic of service, local government, unions, community, Europe, her conviction led her to destroy not create, and her narrowness of vision presented her from seeing the long run effects of her policies
• Up to 2007 appeared she had succeeded, British wealth overtook Italy, France and Germany, Britain no longer Europe’s sick man but a free market model to be emulated
• Britain had stopped doing what she was poor at, heavy manufacturing and focused on the good: financial services, entertainment, education and the aspects of a sophisticated service economy
• Collapse of manufacturing in the 80s in notable, but wasn’t inevitable, Thatcher merely switched off the life support, banking collapse in 2007-2008 brought this interpretation into question, 1979-90 witnessed the most sustained and single minded approach to reversing long term economic decline

Question 18

Explain ‘Thatcherites’ and ‘Wets’

Answer 18

• The difference was essentially between tender-minded Keynesians (the wets) and tough minded monetarists (Thatcherites). The wets chief priority was full employment and in consequence accepted the need for government intervention in the form of incomes policies and tax policies to stimulate or slow down the economy according to circumstances. The Thatcherites, strongly influenced by Friedman saw the government’s main priority as the creation of stable low- inflation, something they believed could be achieved by the control of the money supply (too much money chasing too few goods). Aside from the counter-inflation strategy, Thatcherites believed governments should leave things to market forces. If workers won excessive pay increases they would price themselves out of jobs. The monetarist experiment of the early 80s was made essentially possible by North Sea oil, which offered tax revenues that paid for social benefits and ensured that international confidence in the £ remained high.

Question 19

Examine the Conservatives Economic Management

Answer 19

• There were three distinct phases in the management and development of the economy in the Thatcher era:
o Howe’s first budget 1979 had big income tax cut, especially for the wealthier, VAT was increased 8% to 15% hitting the poorest and increasing inflation. The VAT increase alongside rising world oil prices pushed inflation to 21% in 1981. At the same time unemployment rose as the government’s free market approach began to bite. In 1979 there were 1.3m unemployed, but by 1982 there were 2.8m and by 1986 3.2m. Manufacturing areas were hardest hit: 1979-81 Britain lost almost a quarter of its manufacturing capacity. Social tensions – Brixton riots 1981, Toxteth and Moss side. Thatcher came under pressure from cabinet wets from the Heath government to do an economic U turn. In response, Conservative Party Conference in 1980 ‘You turn if you want to: the lady’s not for turning’ and to sack three cabinet wets in a 1981 reshuffle, exiling a fourth, Jim Prior to Ulster Secretary. Poll ratings were bad but two things allowed Thatcher to recover and win the 1983 GE:
 Labour’s left swing and its Left-Right civil war: Foot replaced Callaghan as leader 1980; Roy Jenkins, three other members of the ‘gang of four’ ad twenty right wing Labour MPs broke away to form the Social Democratic Party 1981; and Labour fought the 1981 GE on the basis of a left-wing manifesto described by right-winger Gerald Kaufman as ‘the longest suicide not in history’
 The Falklands War 1982 – Argentinian junta headed by General Galtieri seized the Falklands and a hastily assembled British Task Force seized it back (US military and logistical support). Huge success on an electorate accustomed to national decline and incapacity, bolstered by Thatcher’s determination boosted the Conservative majority from 43 to 144, with Labour reduced to only 209.
o Mid 80s economic recovery, inflation fell to 3% and unemployment from 3.2m in 1986 to 1.6m 1990. Employees saw a consumer boom: sizeable tax cuts in 1986 and 1988; deregulation in the City of London (Big Bang) made it easier to get mortgages, with mortgage debt in the UK rising from £42bn 1979 to £298bn 1988; big privatisations enabled people with modest incomes to make quick profits. Chancellor Lawson spoke of a British ‘economic miracle’, mid 80s boom described as the ‘Lawson boom’
o Late 80s however, the boom sucked up imports and balance of payments problems returned; interest rates payable by mortgage holders rose from 7% 1988 to 15% 1989; inflation started to rise reaching 10% in 1990.

Question 20

Examine the governments relationship with the Trade Unions

Answer 20

• Clear in 1979 manifesto that measures would be introduced to curb the legal powers of TUs
• 1971 Industrial Relations Act had given the unions a single target, Employment Secretary Jim Prior (1979-81) advocated avoidance of this by adopting a ‘step by step’ approach in which union power would be progressively limited
• Five measures relating to TU law were passed under Thatcher: the Employment Act 1980; the Employment Act 1982; the Trade Union Act 1984, the Employment Act 1988; the Employment Act 1990. Together they made secondary strikes illegal: laid down that strikes were only lawful is supported by a majority of workers in a secret ballot; provided for the regular secret-ballot election of union officials; required regular ballots to be held on whether or not a union was to have a political fund; made it unlawful for employees to be dismissed for refusing to join a union, effectively outlawing ‘closed shop’; and made it illegal for a union to discipline a member for refusing to strike.
• 1984 the government on grounds of national security banned civil servants working at GCHQ Cheltenham, Britain’s electronic eavesdropping centre, from being members of a union. The TUC held a ‘Day of Action’ and mounted a legal challenge, but the courts upheld the government’s action.
• The 1984-85 Miner’s Strike. In 1982 Arthur Scargill, a militant socialist who had shot to prominence as the organiser of the ‘flying pickets’ during the 1970s coal strike was elected to succeed Joe Gormley as President of the National Union of Mineworkers. In 1985 NCB Chairman Ian Macgregor announced a programme of pit closure due to falling coal demand. Scargill wanted a political and economic fight with the government and a miners’ strike ensued. It lasted for a year and ended in contrast with 1972 and 74 with comprehensive defeat for the NUM. The difference:
o Scargill didn’t hold a national ballot of the miners, instead sending ‘flying pickets’ from the pro strike areas in to the moderate areas to persuade them to join in: this undermined the legitimacy of the strike and left the NUM open to the charge it was intimidating non-striking miners
o The strike began in Spring 1984 when warmer weather meant lower electricity use
o The government was prepared and had stocker 50 million tonnes of coal above ground
o Vigorous use of anti-union laws – when the NUM was fined for contempt of court in a picketing case and refused to pay, all of its financial assets were seized
o Large numbers of police deployed in strike areas to ensure mass picketing was unsuccessful, notable the brutal ‘battle of Orgreave’
• Thatcher’s stock didn’t rise too much as a result of her victory: the miners, given the nature of their job, enjoyed a measure of public sympathy and Thatcher’s description of them as ‘the enemy within’ was ill judged
• Employers followed where the government led: 1986 Rupert Murdoch took on the feared printing unions, moving News International out of Fleet Street to Wapping, having done a secret one union deal with the moderate electricians union. After a protracted struggle, the printers were defeated as comprehensively as the miners.

Question 21

Examine the Conservative government’s programme of privatisation

Answer 21

• Selling of government shareholdings in private companies
• Only a central feature in Conservative strategy after 1982 scarcely mentioned in 1979 manifesto
• Main privatisations were British Aerospace 1983, British Telecom 1984, British Airways 1986, British Gas 1986, British Airports Authority 1987, British Steel 1988, Water Companies 1989, Electricity Companies 1990
• According to one enthusiast, Masden Pirie, constituted the ‘largest transfer of property in Britain since the dissolution of the monasteries’: total receipts amounted to £50bn
• Some businesses sold off as monopolies and made subject to regulation in the public interest, Oftel, Ofgas etc.
• Privatisation removed one of the main planks of the ‘post war consensus’ – the mixed economy

Question 22

Examine the government’s public sector reforms

Answer 22

• Those parts of the public sector where competition and free market forces did not operate in the ordinary way saw the creation of quasi markets. In education, the 1988 Education Reform Act allowed school to opt out of local authority control ad established both the National Curriculum and SATs. Publication of SATs and other results enabled parents to compare school performance. In health care, the 1990 National Health Service and Community Care Act allowed hospitals to opt out of regional health authority and to become self-governing trusts – and it gave GPs control of their own budgets. In the civil service the post 87 Next Steps reforms created executive agencies within the civil service which controlled their own budgets and were expected to operate on business lines.
• One government concern was that its approach would be subverted by Labour controlled local authorities. The 1985 Local government Act abolished the Greater London Council and six big ‘metropolitan’ city councils, all of which were Labour strongholds. In 1986 a system of rate capping was introduced, essentially to prevent Labour local authorities from charging excessive local taxes when there had been cuts in the support from central government.

Question 23

Explain Thatcher’s downfall

Answer 23

• In 1987 Thatcher won a third election victory off the Lawson boom. The reduction of the Conservative majority to 102 owed to the spirited campaign fought by Neil Kinnock, who succeeded Foot as Labour leader in 1983. Thatcher was now 62 and her appetite for power diminished, in 1990 she was ousted by her own party:
• Conservative reputation for economic competence as tarnished by the late 80s inflation
• Poll Tax Fiasco. The 1988 Local Government Finance Act ended the system of part-financing local government through rates paid by property owners and replaced it with one in which all adults in a locality paid the same contribution. The ‘community charge’ or ‘poll’ tax was regressive and seen as unfair. It led to serious riots in London in 1990. Forced through by Thatcher and her lieutenants in defiance of Tory backbenchers who facing electoral backlash were resentful.
• Damaging tensions with the Conservative Party over the European Community. Thatcher viewed the EC with suspicion, in 1984 had fought successfully to get a rebate on Britain’s contribution but alienated other leaders. In the late 80s EC ‘federalist’ began to push for single currency, calling on the UK to join the ERM (Exchange Rate Mechanism). Lawson and Howe wanted to join: Thatcher didn’t. Dispute led to Howe’s resignation 1990 and his bitter attack on Thatcher in his resignation speech. Shortly after, Heseltine, who had been out of office since 1986 when he resigned after clashing with Thatcher over the Westland affair, launched a leadership bid against her. She won 204-152 on the first ballot but not outright victory. It became evident her support was waning she resigned before the second ballot. Lawson had resigned 1989 claimed he had been publicly undermined by Thatcher and her private economic adviser, Alan Walters.

Question 24

Why was Thatcher such a divisive figure?

Answer 24

• Thatcher polarised opinion
• Loathing came from well-defined sections of societies. First, industrial workers and trade unionists in old manufacturing heartlands who were the victims of both the shake-out in manufacturing in the early 80s and out of anti-union legislation. Second, the middle class liberal intelligencia, who thought Thatcher lacked refinement personally and blamed her for the materialistic ‘loadsmoney’ culture of the 1980s. ‘Britain by the late 1980s had become a more grasping, greedy and mean spirited society’ (Eric Evans, Thatcher and Thatcherism 1997). Tellingly, Oxford, Thatcher’s old university in 1983 refused her the customary acknowledgment of an honorary degree. Third, much Scottish and Welsh opinion regarded Thatcher as gratingly English: the Conservative party collapsed electorally in Wales and Scotland in the Thatcher era.
• The hero-worship came from the city, business opinion and the traditional middle classes who benefited from tax reductions and privatisation; who welcomed the Thatcher emphasis on enterprise; who relished seeing the unions and the ‘loony left’ local authorities cut down to size; and who believed that Thatcher had tuned an ailing and declining country around. Less obvious, but real, hero-worshippers were the aspirational skilled working classes (‘Essex man’). Who were no friends of the ‘nanny state’ and who admired Thatcher’s toughness, liked her meritocratic instincts and her anti-Europeanism and who benefitted from council house sales.