Thatcher 1.1 - economic policies

Question 1

what was inflation in 1978 compared to 1980?

Answer 1

1970 = 11%, 1980 = 22%

Question 2

what was introduced to replace monetarism in the 1980s?

Answer 2

range of supply-side economic policies - e.g. cuts in income tax, cuts to welfare payments + wide range of deregulation

Question 3

what was unemployment in 1982 + why was this significant?

Answer 3

3 mil
highest figure since 1930s

Question 4

when was inflation reduced to single figures?

Answer 4

1982
never rose above 9% for rest of 1980s

Question 5

what were 4 positive effects of privatisation under Thatcher?

Answer 5

+1. reinvigorate British economy
+2. wider ownership of shares -> greater incentive to work
+3. cut gov expenditure on loss making industries
+4. reduction in tax -> entrepreneurs investing in job-creating ventures

Question 6

what did ‘popular capitalism’ lead to?

Answer 6

• no. of shareholders increased from 3 mil - 11 mil (1979-90)
• sale of council houses increased, >1 mil sold (1979-88)

Question 7

what was a positive effect of privatisation after Thatcher?

Answer 7

+ public-priv partnerships were designed to inject private funding + expertise into traditionally state-run concerns (e.g. schools + hospitals)

Question 8

what were the negative effects of privatisation after Thatcher?

Answer 8

• clear by 1997, future gens would have to pay huge amounts of ££ to priv firms that put in the initial investment
• privatisation of British Rail (1994-97) led to a highly confused situation where gov continued to subsidise priv firms that operate the trains
  (gov spending on trains doubled since 1944 but most agreed service didn’t improve)

Question 9

what was a positive + negative impact of the removal of exchange controls in October 1979?

Answer 9

+ end fuelled greater overseas investment, returning profits to Britain
- led to huge increase in consumer spending on foreign goods, draining wealth from Britain

Question 10

what was the most significant example of deregulation + what did it do?

Answer 10

Big Bang (October 1989)
- it relaxed rules on ownership + trading operation of banks, resulting in massive growth in financial services
- City of London rapidly grew, became 1 of the major financial centres in the world!

Question 11

why was deregulation bad?

Answer 11

• enabled unscrupulous individuals to make a lot of money in an unsustainable + illegal way
• major contributor to financial crisis of ‘08 which wasn’t tackled by New Labour

Question 12

what were some effects the Big Bang had on priv individuals?

Answer 12

1. unregulated finance -> rise in priv household debt (£16 bill in 1980 - £47 bill in 1989)
2. easier access to mortgages -> mortgage debt rose (£43 bill - £235 bill)
3. personal debt (incl. mortgages) stood at £1.3 trillion - highest in Europe!

Question 13

what contributed to 6 million families facing issues with debt?

Answer 13

rise of credit cards
(1st introduced in Jun 1966, by 1980 there were 10 mil credit cards - 27 mil by 1990)

Question 14

what % was the top rate of income tax in 1980 + 1988?

Answer 14

1980 - 83%->60%
1988- 40%

Question 15

what did VAT % increase to in 1979 + why was this important?

Answer 15

8%->15%
regressive tax so took more from the poor than the rich + contributed to growing inequality gap since late ’70s

Question 16

why didn’t Thatcher like trade unions?

Answer 16

• they bullied people into joining them
• they forced people into strike action they didn’t want
• they acted irresponsibly with no regard for a democratically elected gov

Question 17

how did Thatcher limit trade unions’ power?

Answer 17

1980 Employment Act - workers weren’t forced to join a union, no sympathy strikes
1982 Employment Act - unions could be sued for illegal strike action
1984 Trade UnionAct - strike had to be approved by a maj. in secret ballot to be legal

Question 18

why did the 1984 Miners’ Strike fail?

Answer 18

• Thatcher built up coal reserves in 1984 (didn’t want to resort to a 3-day week like Heath)
• Arthur Scargill:
  1. began strike on 6th March when UK req. less energy as winter was over
  2. didn’t ballot NUM members, chose to launch with ‘flying pickets’
  3. lost public sympathy due to his ‘provocative methods’ (disapproval rating never fell below 79% in year-long strike)

Question 19

what were the effects of the 1984 Miners’ Strike?

Answer 19

• unions became more willing to work with the gov
• no. of union members decreased (13.5 mil 1979, 10 mil 1990, 6.7 mil 1997)
• coal industry scaled back at a much faster pace (no. of miners fell from 200,000 - 100,000 (1974-91)
• Employment Acts 1988,’89,’90 which further limited BUs