Thatcher and the end of consensus 1979–1997

Question 1

1979 Election

Answer 1

Conservative: 339 seats, 43.9%
Labour: 269 seats, 36.9%

Labour seen to have failed to deal with inflation, unemployment and trade unions (winter of discontent) - in London, South & Midlands 40 seats changed hands - increased middle class that felt resentful about strikes
AND Liberal vote declined; dropped by > 1 mil = seen to have helped keep Callaghan in govt

Question 2

1983 Election

Answer 2

Conservative: 397 seats, 42.2% votes
Labour: 209 seats, 27.6% vote
Rise in unemployment and economic problems had reduced govt’s popularity
BUT Falklands War victory increased Thatcher personal popularity
Disastrous split of Labour & selection of Michael Foot as leader Nov 1980 (old fashioned views about unilateral nuclear disarmament, nationalisation of industry and increased govt regulation)
LED TO PLIT: modérâtes formed SDP March 1981
Labour manifesto = ‘the longest suicide note in history’
Liberal & SDP Alliance (modern LibDem) split anti-Thatcher vote

Question 3

1987 Election

Answer 3

Conservative: 376 seats, 43.4% votes
- selling council houses & hares in privatised industries were popular with middle class
- unemployment was falling, pound was strong
- June opinions polls were positive, people believed they were better off & supported

Labour: 229 seats, 31.7% vote
- Neil Kinnock brought party back to centre
- 1.5 mill more votes than 1983 BUT long-winded speeches and less international reputation than Thatcher
- affected by the Alliance who contested every seat (splitting anti-conservative votes)

Question 4

What is consensus politics?

Answer 4

• Post-1945 Keynesianism
• Labour nationalised industries 1945-51 seen as necessary - coal, gas, electricity, railways
• Govt should try and control prices / wages, & negotiate with trade unions in period of ‘emergency’
• challenged by right-wig economists; Sir Keith Joseph & Thatcher

Question 5

Thatcher’s View of Inflation

Answer 5

• Retail prices doubled 1973-79
  Thatcher saw INFLATION as…
• fuelled by govt spending
• direct result of Keynesianism
• hitting social ability by eroding middle class spending
• reducing incentives and enterprise as higher prices led to higher taxation
• only able to be tackled by reducing money in circulation ‘MONETARISM’

Question 6

Conservative Taxation Policy 1979

Answer 6

• Sir Geoffrey Howe, Chancellor of the Exchequer in June 1979 shifted tax burden from DIRECT to INDIRECT, worsening inflation; VAT increase pushed up price of goods, etc
• Howe as a result resorted to deflationary methods used by previous govts ; 1980-81 budgets CUT govt expenditure, reduced govt BORROWING, and increased TAXES
• 1981 budget called by Howe ‘the most unpopular in history’

Question 7

The Economy under Howe 1979-83

Answer 7

GOOD
- value of the pound increased which boosted financial sector (BUT made exports dearer)
- rate at which prices rose was reduced 18% - 4.5% 1980-1983
- high interest rate boosted overseas confidence BUT made conditions difficult for anyone with loans to pay

BAD
- manufacturing output fell by 14% = firms went out of business
- unemployment more than doubled 1979-1983 to >3 million
- April 1981 Brixton, South London RIOTS & Liverpool in July (places of high unemployment, poverty & racial tension)…continued over 3 weeks in 6 other locations
- govt expenditure rose by 13% 1979-90, but was reduced as a percentage of the economy as a whole (many saw this as the main reason for growing unemployment)

Question 8

Thatcher & Privatisation

Answer 8

• she saw it as ‘fundamental to improving Britain;s economic performance’, maintaining that nationalised industries were inefficient under govt control
• argued that sell-off would raise revenue to fund tax cuts and boost investment
• popular with those who bought shares in these new companies (3 mill to 11 mil private shareholders in all of Britain by 1990)
• assets undervalued, so value climbed steeply - encouraged shareholders to sell their allocation quickly usually to big financial operations, so hard-working families Thatcher admired didn’t have as much of a stake in the future of capitalism
  > 1979 British Petroleum
  > 1984 British Telecommunications
  > 1986 British Gas
  >1987 British Airways
  >1988 British Steel

Question 9

Tax Cuts & Deregulation under Thatcher

Answer 9

Nigel Lawson, chancellor of the exchequer after Howe, 1983-89…
- continued shifting revenue from direct to indirect
- reduced capital gains and inheritance (led to British incomes being more lightly taxed than anywhere else in Europe)
- Financial Services Act 1986 deregulated the London stock market = revitalised City Of London’s nmoney market by ending Stock Exchange’s monopoly on share dealings
- ‘Lawson’s Boom’ … actually just an ever widening gap between London & traditional rural

Question 10

Overall Economic Record of Thatcher Government

Answer 10

GOOD
- decreased rate of inflation
- privatisation improved performances, lowered prices & gave more options to consumers
- London stayed at center of global finance through dereguation
- more shareholders = more with a stake in the success of the economy

BAD
- arguably economic policies played less of a role than North Sea Oil
- privatised service became profit of big shareholders, less customer focused
- social costs: unemployment up, communities hit by fall of manufacturing

Question 11

Economic Policies of Thatcher Government

Answer 11

• Monetarism and Inflation
• Taxation Policies (under Howe)
• Privatisation
• Reduced Government Expenditure
• Tax Cuts & Deregulation (under Lawson)

Question 12

Social Policies of Thatcher’s Government

Answer 12

• The NHS
• Schools
• Universities
• Council House Sales

Question 13

Thatcher’s Social Policies: NHS

Answer 13

• aimed to make it more efficient by applying business principles to its administration
• hospitals were allowed to become self governing NHS trusts in control of own budgets
• NHS services expected to compete to provide most efficient / cost-effective serve to GPs
• GPs became fun-holders with their own budget to manage
  GOOD saw it as much needed Financial discipline
  BAD saw it as first stage of privatisation (profit motive over patient care)

Question 14

Thatcher’s Social Policies: Schools

Answer 14

1986 O levels & CSEs replaced by the GCSE = Thatcher doubtful, convince by Sir Keith Joseph that wouldn’t lead to lower standards / less academically rigorous
1988 introduced national curriculum with regular national testing (some saw as too restrictive, and lack of consistency over how much govt control!)
- state schools given right to opt out of local education authority and become grant-maintained schools with complete control of budget

Question 15

Thatcher’s Social Policies: Universities

Answer 15

1981 university budgets cut = forced larger intake of students
1988 University Funding Council = ensured education reflected needs of economy (not just research)
No more polytechnics under local authority, under UFC instead
Didn’t abolish grants for students, BUT some staff lost their security of tenure
CONTROVERSIAL: 1985 Oxford refused to grant Thatcher an honorary degree (give 6 x before)

Question 16

Thatcher’s Social Policies: Council House Sales

Answer 16

• wanted to create ‘property-owning democracy’, rewarding those who worked hard / had initiative
• she believed owning property gave people a stake in their communities, less likely to become ‘socialist’
  AS A RESULT long-term council tenants could buy their homes, insisting that home owning should continue to get tax relief on their mortgagees
  > amount of govt spending on subsiding mortgages doubled
  > property ownership + 12%

Question 17

Industrial Relations: Thatcher’s Legislation

Answer 17

• she believed the existing laws on industrial relations had been ‘abused to protect restrictive practices’, union power made British firms uncompetitive & jobs would become available one British industry adjusted to market conditions and less business was lost t overseas
• learned from 1971 Industrial Relations Act, adopted piecemeal strategy…
  > Employment Act 1980 (increased rights of employees who refused to join unions)
  > Employment Act 1982 (closed shop only if a ballot showed 85% support)
  > Trade Union Act 1984 (secret ballot needed before action)

Question 18

Industrial Relations: Was Thatcher’s Legislation Successful?

Answer 18

1979: WORKING DAYS LOST = 29,474,000, UNION MEMBERSHIP = 12,128,000
1990: WORKING DAYS LOST = 1,903,000, UNION MEMBERSHIP = 8,405,000

BUT other factors also played a role…
- high levels of unemployment
- Trade Union membership falling anyway, especially after the 1960s

Question 19

The Miner’s Strike under Thatcher

Answer 19

• National Coal Board facing loss of £250 mill for 1983-4 = Thatcher wonted to show that govt didn’t support loss-making nationalised industry = pit closure programme
• Coal Strike began March 1984 (after 20 announced close, leading to 20,000 job losses)
• Thatcher better prepared; 1981 secret Whitehall committee stoke piled coal, as did Central Electricity Generating Board PLUS National Reporting Centre set up by Home Secretary to ensure central control of policing

Question 20

Effects of The Miner’s Strike on the union & Thatcher

Answer 20

• NUM membership dropped from 250,000 to 100,000 1979 - 87
• union ended strike bankrupt

The strike divided opinion about Thatcher more than anything else:
> forced acknowledgement by workers of un-sustainability of mining industry
> demonstrated trade union power couldn’t defeat govt
> BUT also destroyed livelihoods & historic communities, some of which never recovered

Question 21

Why did the Miner’s Strike Fail?

Answer 21

• miners weren’t united =those who wanted to continue working formed Union of Democratic Mineworkers Dec 1984
• less demand for coal in spring and summer so coal stocks were adequate = less power
• Labour Party reluctant to support Arthur Scargill = seen as extremist
• violence on picket lines, plus view of declining industry reduced public support
• April 1984 Scargill refused to hold national ballot of miners = no legal legitimacy, alienated workers

Question 22

Thatcher’s Cabinet

Answer 22

• appointed a number of ‘wets’ at first (Jim Prior, Francis Pym and Michael Heseltine’
• ‘dries’ as major ministers (Howe as Exchequer, Keith Joseph given (Do)Trade & Industry)
• 1981 replaced Prior with Norman Tebbit in (Do)Employment, promoted Lawson and sacked more ‘wets’
• at first cared about support of key figure like deputy prime minster William Whitelaw BUT following Falklands & 1983 election she was more commanding; Pym sacked as foreign secretary (replaced by Howe, Lawson as Exchequer implanting her radical economic policies)
• courage @ Brighton bombing won respect, hard work won admiration, never weak in cabinet discussion BUT her inflexibility caused resentment

Question 23

The Growth of Opposition to Thatcher (in her cabinet)

Answer 23

• Michael Heseltine resigned jan 1986 over the Westland Affair (whether Britain’s last helicopter manufacturer joined a European consortium or taken by US firm) = one of the last Tory Cabinet ‘wets’ = became a possible alternative leader
• Dec 1987 William Whitelaw retired after a stroke = lost unifying figure
• 1989 fell out with Lawson & Howe over economic policy & role in Europe
• Howe’s resignation speech Nov 1990

Question 24

Arguments Supporting Thatcher

Answer 24

‘Thatcherism’ defined by Lawson 1981 as ‘a mixture of free markets, financial discipline, firm control over public expenditure, tax cuts, nationalism, “Victorian values” (of the self-help variety), privatisation and a dash of populism’

• PERSONALITY: resolute, clear-sighted, personal toughness in the face of adversity, “the lady’s not for turning”, defiance “iron lady”, single-minded focus on victory (Falklands), unwavering hostility to USSR, determination, self-confidence
• ACHIEVEMENTS: brought about much needed change and arrested national decline symbolised by industrial unrest and inflation in 1970s, seen as influencing changes around the world (especially US / Reagan ), supported by those who benefitted from council house sals, privatisation & dereguation of the City.

Question 25

Critisims of Thatcher

Answer 25

CONTROVERSIAL!
- shift from direct to indirect tax = seen as disproportionately hitting the poor
- implacable opponents from those who lost jobs in industries like mining
- some middle class thought she created a culture of vulgar greed which rewarded acquisitive selfishness but ignored the plight of the dispossessed
- ‘cardboard cities’ = desperate and homeless people with only boxes as shelter
- seen as HEARTLESS = she said “there is no such thing as society” in Oct 1987 to show disapproval of culture of dependency on Welfare State

Question 26

4 reasons for Thatcher’s downfall

Answer 26

• impact of poll tax
• Economic difficulties
• division within cabinet over policy towards Europe
• growing personal isolation and unpopularity

Question 27

Thatcher’s Downfall: The Poll Tax

Answer 27

• Thatcher calculate that >50% local electorate didn’t pay ‘rates’ (principle source of local govt since 1925, tax on owners of property and business) = saw that as ‘manifestly unfair’, that if everyone paid there would be more interest in local politics
• Local Government Finance Act 1988 introduced Community Charge = ‘poll tax’ = flat-rate tax on all individuals, instead of rates, concessions for the least well off
• first introduced in Scotland 1989 = millions refused (encouraged by SNP)
• 31 March 1990 (day before due to take effect in England/Wales) TRAFALGAR SQUARE demonstration = violent riot, 300 arrested, 400 police hurt
• Thatcher seen as increasingly dictatorial / alienating voters because she pressed on with policy despite Cabinet warnings

Question 28

Thatcher’s Downfall: Economic Difficulties

Answer 28

• oct 1987 stock market crash wiped 24% off share prices = Lawson, for fear of recession, reduced income tax rates in 1988 budget = stimulated consumer spending boom= pushed up prices = June 1989 inflation at 8.3%
• Lawson employed (not ‘monetarism’ but) increased interest rates = oct 1989 thus at 15% = home-owning mortgage payers were paying heavily now for houses thatcher encouraged them to buy - NOT WHAT SHE WANTED (she admired these people)

Question 29

Thatcher’s Downfall: Divisons over Europe

Answer 29

• Thatcher accepted Single European Act 1986 = ‘essential step towards free market Europe’ BUT committed member states to work towards closer monetary/political union = REGRET
• Lawson & Howe in 1989 were keen to join ERM = aimed to create monetary stability by minimising the exchange rate fluctuations between members BUT Thatcher and unelected economic adviser Alan Walters disagreed!
  > JUNE 1989 demoted Howe (foreign office to deputy pm)
  > OCT 1989 Lawson resigned as chancellor

! This rift weakened her authority / left her isolated !

• OCT 1990 joined ERM (convinced by John Major, new chancellor) BUT denounced plans for further integration of Europe “No, No, No” - delighting eurosceptics, but not her own ministers

Question 30

How did Thatcher’s Downfall actually happen?

Answer 30

• JUNE 1989 elections to the European Parliament: 33.5% Tories, 38.7% Labour
• JUNE 1990 Labour Party 16 points ahead in opinion polls
  THUS Tories feared a defeat if Thatcher remained!
  > AUTUMN 1989 Anthony Meyer challenged her for leadership (won 33 votes, 30 abstained)
  > result irrelevant: just that MPs willing to vote against her! BUT fall triggered by Howe…
  > Resignation speech 13 Nov 1990 to Commons (seen on to too) called for a challenge to her leadership DESPITE being a stanch ally before / unbroken cabinet service since 1979
  > Heseltine took the cue & announced candidature next day, Thatcher won but only by a little = second round of voting needed = advised by a succession of cabinet ministers that she would not win = 28 NOV 1990 RESIGNED!

Question 31

Why were Conservatives defeated under Major so badly, 1997?

Answer 31

WORST DEFEAT SINCE 1906: Labour (43.2%, 418 seats) Conservatives (30.7%, 165 seats)
- Major’s lack of authority
- Conservative reputation for economic competence badly tarnished by withdrawal from ERM
- Divided conservatives about Britain’s role in Europe: Major struggled with Eurosceptics = seemed weak
- Revitalised Labour Party under New Labour = people wanted change of style after long Tory rule = Blair was young, optimistic with slick & effective media presentation, CLAUSE VI & wooing of businessmen / media tycoons undermined Tory claims that Labour were socialists

Question 32

MAJOR’S DEFEAT: Lack of Authority

Answer 32

• Major elected by Conservative MPs because the majority didn’t want Heseltine (blamed for engineering Thatcher’s fall)
• limited experience = MP since 1979, Cabinet only since JUNE 1987
• SCANDALS - looked sleazy (MP Neil Hamilton bribery by Harrods owner & sexual indiscretion of MPs)
• some credit for unexpected APRIL 1992 election victory - vigorous campaigning BUT majority slashed to 21 seats THUS by-elections were dangerous, and MPs could threaten him with defat in parliament
• affable, reliable, conscientious, uncharismatic (mocked by media) - very unlike Thatcher
• Thatcher’s support / supporters because she appeared to mark him as successor

Question 33

MAJOR’S DEFEAT: Divisions about Europe

Answer 33

• December 1991; European members signed the Maastricht Treaty (full integration, common currency, foreign policy, defence… EU!)
• Major succeeded in British opt-outs (Social Chapter & currency) BUT fierce battle to secure ratification by parliament = unlikely alliance between sceptics in Tories (supported by Thatcher) & Labour Party
• Tory rebels twice succeeded in inflicting defeats on govt BUT Major forced bill through by saying govt would resign unless they voted in favour
• ERM withdrawal ruined reputation for sound economic management & embolden Eurosceptics = Major weakened by public displays of dissent = seemed like he wasn’t in control (caught complaint about ‘the bastard’ in his cabinet without firing)
• 1995 = tried to face down critics through election for party leadership - won against Redwood (Eurosceptic) BUT 1/3 of party hadn’t voted for him!!!!!!

Question 34

MAJOR’S DEFEAT: Black Wednesday

Answer 34

SEPTEMBER 1992; measure to curb inflation had tipped British economy into depression
- unemployment rose
- businesses went under
- GDP diminished
- Exchange Rate too high : international bankers sold it at its artificially high rate before it was devalued
- pound fell sharply in value = Major & chancellor (Norman Lamont) tried unsuccessfully to sustain value by using up interest rates
16 SEPTEMBER ‘Black Wednesday’ Britain withdraw from ERM

Question 35

MAJOR’S DEFEAT: New Labour

Answer 35

• Neil Kinnock made party electable after 1983 defeat (especially by expelling extremist left) BUT blamed or over-confidence in 1992 election party performance = RESIGNED
• 41 yo Tony Blair (after John Smith briefly) became leader in 1994
• April 1995 succeeded in abolishing CLASUE VI of Party’s 1918 constitution (pledge to nationalise British industry)
• MODERNISATION - ‘New Labour’ = appealed to Conservative supporting businessmen & City bankers, reassured them about Labour policy & won support from leading figues (like Rupert Murdoch)