Thatcher and the end of consensus 1979-997 exam q Flashcards
Why did the Conservatives win 4 successive elections 1979, 1983 and 1987 under Thatcher and 1992 under Major? - Conservative strengths
By 1983 Thatcher had shown she was a strong leader, whereas Foot in 1983 & Kinnock in 1987 were seen as weak. Major in 1992 was not as strong a leader as Thatcher but he was more popular than Kinnock & less unpopular than Thatcher; the election result showed the Tories were right to change their leader.
Victory in the Falklands War in 1982 revived national pride more than perhaps any other event since WW2 & made Thatcher look like a strong, patriotic leader. This & Labour’s adoption of unilateral nuclear disarmament convinced voters that only the Tories could be trusted with the nation’s defences.
Many voters admired Thatcher for standing up to the trade unions, unlike Wilson, Heath & Callaghan, & her victory over the miners in the 1984-5 strike contributed to her election win in 1987.
The economy began to recover in 1982 & from then until the economic crisis after the election in 1992 the economy grew & the incomes of those in work grew faster than wages.
The Tories’ “popular capitalism” policy of selling council houses & shares in privatised utilities appealed to the social aspirations of skilled working class voters & created a “property owning democracy”. In effect the Tories were buying votes.
Why did the Conservatives win 4 successive elections 1979, 1983 and 1987 under Thatcher and 1992 under Major? - Labour weakness
The “Winter of Discontent” 1978-9 destroyed Labour’s claim that only they could control the trade unions; it also wrecked Callaghan’s premiership & persuaded voters that a change of govt. was necessary even though at that stage he was more personally popular than Thatcher. The Tories won in 1979 despite Thatcher rather than b/c of her.
The economic crisis of 1976 (when the £ plummeted & GB had to be bailed out by an IMF loan) gave Labour a reputation for economic incompetence; by 1983 voters were convinced that only the Tories could be trusted to run the economy. The Tories were able to point out that every Labour govt. there has ever been left office with unemployment higher than when they started.
The election of Foot as Labour leader in 1981 & their adoption of extreme left wing policies split the Party & led to the formation of the breakaway SDP (Social Democratic Party) who despite their Alliance with the Liberals succeeded only in dividing the anti-Tory vote, enabling Thatcher to treble her majority despite her share of the vote falling. In fact the divided opposition allowed the Tories to win 4 successive elections despite their % of the vote falling in every one.
The takeover of the Labour Party by the “loony left” in the early 1980s led to the adoption of extreme policies like unilateral nuclear disarmament, massive nationalisation & withdrawal from the EEC. Their 1983 manifesto was described as “the longest suicide note in history
The Thatcher gov was responsible for an economic revolution - Monetarism and Keynesianism
Thatcher broke with the Keynesian consensus followed by both Tory & Labour govts. since WW2. Heath’s “Selsdon Man” approach had hinted at this but unlike Thatcher he did not (as her supporters saw it) have the courage she had to stick to it. Keynesianism meant accepting that the govt. had an obligation to maintain full employment (rather than leaving it to the capitalist free market as she did) & using controls on wages & prices as opposed to raising interest rates (which would increase unemployment) to control inflation.
Thatcher’s monetarist policy meant allowing interest rates to rise 1979-81 which by restricting the money supply succeeded in reducing inflation (from 18-4.5 % 1980-3) but at the expense of doubling unemployment. She was prepared to risk unpopularity (former Labour Chancellor of the Exchequer Denis Healey called her a “sado-monetarist”) in her determination to reduce inflation & make British industry more competitive (uneconomic car & steel factories were allowed to close without being bailed out by the govt.)
BUT:
It could be argued that Thatcher raised interest rates so high that the £ was overvalued, making British exports less competitive b/c they were too expensive.
It could be argued that the fall in inflation owed as much to the drop in world oil prices as it did to Thatcher’s monetarist policies, just as the oil price rise caused rampant inflation in the 1970s.
The Thatcher gov was responsible for an economic revolution - taxation and public spending
Thatcher cut the top rate of income tax from 83% in 1979 to only 40% in 1988 & corporation tax was also cut, especially for small businesses. The idea was that this would create an “enterprise culture” by incentivising successful people to work harder b/c they would be able to keep more of what they earned & entrepreneurs to invest more in their business so they would be able to keep more of the profits. This succeeded in the sense that revenue from top earners increased despite the cut in tax rates.
Thatcher also succeeded in her aim of reducing the % of GDP accounted for by govt. spending from 45% in 1979 to 39% in 1990.
BUT:
Thatcher did not cut taxes overall: she cut taxes for the rich while raising them for everyone else. For middle & lower income earners the rises in VAT outweighed the income tax cuts.
Thatcher did not reduce govt. spending; in fact it rose by 14% in real terms 1979-90 b/c she knew that she had to spend more on public services, especially the NHS (older voters who used the NHS voted Tory) in order to stay in power. She dared not cut the NHS as Callaghan did after the IMF loan in 1976.
The Thatcher gov was responsible for an economic revolution - trade union reform
Thatcher’s Employments Acts in 1980 & 1982 & Trade Union Act in 1984 (a) banned secondary picketing (picketing of a workplace not directly involved in the dispute), (b) gave workers the right not to belong to a trade union & (c) made it compulsory for unions to hold a secret ballot before they could call a strike.
As a result the number of days lost in strikes in 1990 was only 6% as many as in 1979 & the number of union members fell by 1/3 1979-90. Thatcher’s supporters boasted that she had cured the “British disease” of excessive strike action & therefore GB was no longer the “sick man of Europe” she had been in 1979. Thatcher succeeded where Heath failed: she beat the miners who had brought him down & showed that the unions could be tamed if the PM was resolute enough in dealing with them.
BUT
it could be argued that the reduction in trade union power & membership was the inevitable result of long term economic change, the shifting of employment from heavy industry like steel & coal mining which was heavily unionised to services which were not, rather than the result of Thatcher’s policies. It could be seen as the result of de-industrialisation rather than trade union reform.
The Thatcher gov was responsible for an economic revolution - privatisation and deregulation
Thatcher privatised 1/3 of state controlled companies (e.g. BP & Jaguar cars) & utilities (e.g. water & gas), employing 600,000 people. She claimed that privatisation would make them more efficient & more able to raise money from the private sector as well as raising money from the sales which could be used for tax cuts or improving public services.
Some privatisations, especially of telecommunications in 1984, genuinely did make the service more efficient, competitive & more responsive to consumer demand.
Thatcher ensured that the shares were sold cheaply & could be bought in sufficiently small quantities to allow ordinary people to buy them, creating “popular capitalism” by spreading share ownership more widely. By 1990 nearly 11 million people owned shares compared with only 3 million in 1979.
BUT
Not all privatisations were good for consumers, e.g. the privatisation of water in 1989 created a series of regional monopolies which made big profits at consumers’ expense by raising prices.
The shares were sold so cheaply that the benefit to the govt. was minimised & most small shareholders gave in to the temptation to make a quick profit by selling them, so most of them ended up in the hands of banks & big corporations & the extent to which privatisation created “popular capitalism” was limited.
How successful were Thatcher’s social and economic policies? - The Economy
Inflation was reduced from 18% in 1980 to 4.5% in 1983. It had been hitting middle class savings and also causing strikes for higher wages.
The increase in unemployment 1979-81 was a price worth paying to reduce inflation & make British industry more competitive. Living standards for almost all employed people rose, especially from 1982 onwards, with wages rising faster than prices.
High interest rates boosted overseas confidence and led to capital flowing into the UK, boosting the financial sector which in turn boosted tax revenue from the banks.
Deregulation of the City strengthened London’s position as a major global financial centre.
Thatcher’s trade union reforms & victory over the miners in the 1984-5 strike succeeded where Heath had failed in ending the excessive union power of the 1970s & making GB more competitive; no longer was she “the sick man of Europe”, as shown by the “Winter of Discontent” under Callaghan.
BUT:
Unemployment more than doubled between 1979 and 1983, especially among those who worked in traditional heavy industries like steel & coal mining.
The UK economy declined 1979-81, in 1984 & 1990-2: GDP allowing for inflation was no higher in 1990 than in 1979.
The govt. didn’t act to support failing industries, leading to closures and job losses.
High interest rates hit people who were in debt.
How successful were Thatcher’s social and economic policies?- Privatisation
Thatcher achieved her goal of privatising large sectors of the economy. Examples of companies privatised were BT, British Gas, Rolls-Royce and British Airways.
Thatcherites would argue privatisation improved the performance of these companies, lowered prices and offered consumers more choice, e.g. in telecommunications.
Image result for tell sid advertThatcherites would argue that the increased shareholding resulting from privatisation gave many more a stake in the success of the economy. The % of the population who owned shares more than trebled 1979-90.
BUT:
Privatised utilities pushed up bills for water and failed to create the competitive market the neo-liberals envisaged. These companies still had an effective monopoly.
Privatisation and share-sales increased the divide between the haves and have nots or rich and poor, especially as most people who bought shares quickly sold them for short term profit so there was no long term increase in share ownership.
How successful were Thatcher’s social and economic policies?- Public service
Thatcher increased NHS spending, reversing the cuts under Callaghan, while reforming it to make it run in a more businesslike way.
Educational curriculum reforms did help establish a more consistent syllabus across the country & educational standards improved.
The number of students going to university increased despite the introduction of student loans rather than grants.
BUT:
Education policy started to create a system which teachers believed was too restrictive and test based. The rise in standards arguably owed more to better teaching rather than govt. policy.
The replacement of grants instead of loans restricted access to higher education & unis received less funding per student.
Thatcher’s NHS reforms arguably encouraged the pursuit of profit at the expense of patient care.
How successful were Thatcher’s social and economic policies?- Housing
Council house sales gave people who had never before owned a home a chance to do this, fulfilling the Tory dream of a “property owning democracy”.
BUT:
Council houses which were sold were not replaced, hitting the poorest in the community hard with a lack of social (affordable) housing.
There was a substantial increase in homelessness, which more than doubled 1979-81. The phrase ‘cardboard city’ began to be used about areas in London where there was a big population of homeless, drawing criticism from the Church of England.
How successful were Thatcher’s social and economic policies?- an increasingly divided society
Deregulation of the City encouraged a “get rich quick” attitude which contrasted with the areas in the North which were losing jobs and opportunity.
The government had to use the Metropolitan Police to fight the striking miners, further creating a sense of “us and them”.
The poll tax caused riots (right) and had to be abandoned. It contributed significantly to Thatcher’s downfall in 1990.
There were riots in inner city areas like Brixton (London) and Toxteth (Liverpool) in protest against police brutality, unemployment & social deprivation. Shifting the emphasis of the tax system from direct to indirect tax was criticised for hitting the poor. The Tories claimed to have cut taxes but in fact they cut them for the rich & raised them for everyone else.
In 1987 Thatcher criticised what she saw as a dependency culture created by the welfare state saying ‘there is no such thing as society’. To many this showed her heartlessness
To what extent was there a social revolution under Thatcher? - Education
The 1987 Education Act created grant maintained schools & City Technology Colleges, both of which were independent of local authority control. This marked a departure from the educational model set by the 1944 Education Act previously accepted by governments of both parties & was designed to create an educational “market place” in which schools competed with each other like businesses & parents had more choice about what kind of school they wanted to send their children to.
This Act also introduced the National Curriculum which was designed to improve standards & make schools more accountable for improving them. It dictated to an unprecedented extent what teachers could teach & was a deliberate attack on the supposedly left wing “educational establishment” of teacher unions & local authorities promoting “progressive” education.
To limit govt spending on higher education, Thatcher cut funding per student & introduced loans to partly replace grants for university students. She also set up a University Funding Council to ensure priority was given to economically relevant courses. She was accused of being anti-intellectual & so controversial were her policies that in 1985 she became the first PM who had been educated at Oxford to be denied an honorary degree there.
BUT:
Thatcher’s attempt to revive grammar & grant maintained schools had limited impact; the great majority of state secondary schools remained comprehensive.
So did her attempts to give parents more say; in practice grant maintained schools & City Technology Colleges were to a significant extent controlled by central govt. In fact only 1 in 24 schools became grant maintained & only 15 CTCs were set up.
Although student grants were reduced & partly replaced by loans, they were not abolished completely.
To what extent was there a social revolution under Thatcher? - NHS
Govt spending on the NHS rose more slowly under Thatcher than any time since the NHS was founded in 1948 with local authorities required to make annual “efficiency savings”, saving nearly £1 billion in hospital & community service budgets by 1990.
Similarly to what she did with schools, Thatcher tried to make GP practices & hospitals function more like businesses with more independence from regional health authorities & control of their budgets so they could compete with each other. She believed this would make the NHS more efficient.
BUT:
These changes were not introduced until 1990 & took effect during Major’s premiership.
Thatcher knew the NHS was popular, especially with Conservative voting OAPs, so she didn’t dare cut funding as Labour had done after the IMF loan in 1976. NHS spending increased by 1.5% per year in real terms during her premiership.
To what extent was there a social revolution under Thatcher? - Welfare
From the mid 1980s the value of unemployment benefit in relation to inflation steadily fell.
Thatcher largely succeeded in turning the welfare system into just a “safety net” for those at the bottom of society, increasingly irrelevant to the middle class (this is why she abolished the earnings related supplements to unemployment & sickness benefit).
BUT:
For all Thatcher’s professed commitment to cutting state spending on welfare, the proportion of GDP absorbed by the welfare state increased significantly because of unemployment trebled 1979-1981. In that sense, far from reducing the ”dependency culture”, Thatcher actually increased it.
By the time of her fall from power in 1990, there was no real change in the proportion of GDP devoted to social security compared with 1979, with social security absorbing just over 10 per cent of national income in both years. If the aim had been to cut the size of the state, Thatcher’s welfare policy was not revolutionary.
She increased spending on old age pensions (b/c most pensioners voted Tory) & families of all incomes continued to rely on child benefit.
To what extent was there a social revolution under Thatcher? - Housing
Following the traditional Tory idea of creating a “property owning democracy” & knowing that home owners were far more likely than tenants to vote Tory, Thatcher’s 1980 Housing Act forced local councils to sell council houses to any tenants who wanted to buy them at a heavily discounted price.
Councils were forbidden to use the proceeds of council house sales to build new ones; the result of this & the abolition of rent controls was that homelessness more than doubled.
Thatcher doubled the amount of govt spending on mortgage interest tax relief to help home owners & property ownership increased by 12% during her premiership.
BUT
It could be argued that by selling council houses & shares in privatised companies, both at very advantageous prices, Thatcher was subsidising home & share ownership to buy votes & creating a generation of upwardly mobile working class voters who now saw the Conservatives rather than Labour as the party for them. This was, however, at the expense of the poor, creating a more unequal society.
