Thatcher and the end of consensus

Question 1

What was consensus politics?

Answer 1

-A period during/after WW2 up until the election of Thatcher in 1979 that consitsted of a cross-party agreement that governments of all colours would ensure a commitment to:

• Mixed economy
• Full employment- since 1945, all parties agreed that unemployment, which had been high in the 30s (reaching 25%in 1933) would be kept low by government spending.
• Welfare state

A large part of consensus politics was based on the economic framework of J.M Keynes- kown as Keynesianism. Concept that planning was good for society.

• There was broad consensus that nationalised industries created from 1945-51 were required to maintain Britain’s essential services like gas, coal, electricity and the railways.
• Another aspect of consensus was the belief that the government would try to control prices + wages.

Question 2

What is monetarism?

Answer 2

• An alternative political theory to Keynsianism + consensus politics that dominated Britain after WW2.
• A set of views that inflation depended on how much money the govt printed. The school of thought also believes that moeny supply is the main way of determining economic growth. The theory relied on the free market to determine wages and prices.
• It was a return to the more Laissez Faire approach to politics- a school of thought from the Chicago School of Economics and is also closley associated with Milton Friedman who suggested that the govt. should keep the money supply fairly steady.
• It was this approach of the govt. stepping back from the economy with a liberal attitude that made monetarism link closely with the economist/philosopher F A Hayek, known for his defence of classical liberalism. As well as other renound thinkers in this field such as Karl Popper and Sir Keith Joseph.
• It was assocoated more with the right of the Conservative party ikn the 1970s and was first introduced into the British economy under Thatcher who disliked the post-war economic trend that she thought of to be a ‘nanny state’ although Heath attempted to implement it but buckle under the power of the TUs.
• against ‘lame ducks’

Question 3

What was the British disease?

Answer 3

• In a nutshell: Briain’s inability to pay its way…
• When there is a balance of payment deficit (borrowing too much and producing too little). + not being efficient enough and competitive enough compared to other countries.
• Some suggest that it was caused due to Britain’s decline after WW2.
• The power of the TUs linked to the British disease.
• demading rise in wages due to growing inflation which then casue a vicious circle of inflation continuing to grow due to rising wages. The increase in wages meant that money couldn’t counldn’t be invested in research and development of industry, preventing industry from becoming more efficient.
• The manifestation of the British Disease was the pattern of strikes such as the miner’s strike of 1972 and the more devastating miner’s strike spaning a year from 18984-85. -Other than the economic problems that the strikes caused, some of the most memorable apsects of the strikes such as the lights going out, leading to a 3 day week, made Britain appear as the ‘sickman of Europe’ at the time.

-Another example of the British disease would be the ‘winter of discontent’ of 1978/79. The visceral image of rubbish piling up in the streets and the news that grave diggers were refusing to bury the dead made it appear that there was something inherently wrong with Britain’s ability to manage its economy and its workers: ‘disease’.

It was just after this winter that Thatcher came into power.

Question 4

What was the de-regulation of the City (1986)?

Answer 4

• London’s financial market’s before 1986 were subject to a number of regulations that made it difficult for them to compete with foreign banking centres, especially New York.
• The Financial Services Act of 1986 deregulated the London Stock Market and was nicknames the ‘Big-Bang’ because of the increase amount of trade that was expected from this.
• This Act revitialised London’s money mawr by ending the Stock Exchange’s monopoly on share dealing.
• London therefore became a hub fro world financial services.

Question 5

What was Privatisation?

Answer 5

• After 1983, Thatcher’s govt. accelerated the sale of Britian’s state-owned enterprises and utilities into the private sector.
• Thatcher’s opinion of privatisation was that it was ‘fundamental to improving Britain’s economic performance’.
• Thatcher thought that nationalised industries were:
• inefficient and over-manned
• Would be better able to raise investment capital once released from govt. control
• Thatcher increased the number of shareholders by 8m by 1990 from the time she came into power. It was her belief that this policy would reward hard-working families who would achieve an economic stake in society’ from this policy.
• Thatcher’s long term plan was to create a ‘share-holding democracy’. It was thought that by workers having a share of the business that they were working for, it would not only be the bosses benefitting from profit but also workers which would unite the bosses and workers in their aims.

Question 6

Who were the ‘wets’ and ‘dries’ of Thatcher’s cabinet? What were the reasons for their differences of opinion?

Answer 6

Some Wets: Jim Prior-secretary of state for employment, Francis Pym- Foreigh Secretary, Michael Heseltine- Secretary of State for Defence.

Some Dries: Geoffrey Howe- Foreign Secretary, Keith Joseph, Norman Tebbit- Employment Secretary, Nigel Lawson-Chancellor of Exchequer, Cecil Parkinson-Secretary of State for Trade + Industry , William Whitelaw-Home secretary.

• The ‘wets’ were generally on the left of the Cons party. - ‘One Nation Tories’ whilst the ‘dries’ were on the right of the party. They were Thathcher’s allies- mostly monetarists.
• Although ‘wets’ were brought into the Cabinet quite early on in Thather’s leadership such as Prior and Pym, she surrounded herself with loyalists like Tebbit and Parkinson.
• The main differences in opinion revolved around differences in ideological views. Thatcher wasn’t willing to accept alternative arguments without confrontation. the mere fact that she regarded the wets as wets e.g. feeble, willing to compromise with the unions etc. showed her devisive attitude
• One of reasons for differences in opinion came about after the retirement of William Whitelaw who was a calming and unifying figure for the party.

Thatcher’s set of principles were broadly supported by the ‘dries’ in what became known as Thatcherism.

• A number of differences in opinion divided and alienated Thatcer from her Cabinet. E.g.- Howe was too European for Thatcher’s liking.
• Thatcher blamed Lawson for the inflation of the late ’80s.

Question 7

What was Conservative anti-trade Union Legislation of the 1980s?

Answer 7

Thatcher believed that:

1. The existing laws on industrial relations had been ‘abused to protect restrictive practices and over-manning, to underpin strikes, and to coerce workers into joining unions and participating in industrial action against their better judgement’.
2. Union power made British firms uncompetitive because high labour costs ans restrictive practices meant that business was lost to more efficient overseas companies.
3. Jobs would become available once British industry adjusted to market conditions and unions lost their power to control labour conditions.

Thatcher’s legislation:

• The Employment Act of 1980 outlawed secondary picketing + increased rigths of employees who refused to join unions. Govt. money was made availabel to encourage unions to hold secret ballots.
• The 1982 Employment Act restricted sympathy strikes and allowed closed shops only if a ballot showed 85% support. Anyone sacked for not joining a union became entitled to high rates of compensation (fines meant that it would be made difficult for TUs to fund strikes).
• The Trade Union Act of 1984 required unions to hold secret ballots of their members before launching industrial action.

Question 8

What were the reasons for the failure of the miners’ strike of 1984-85?

Answer 8

• Miners weren’t united. Those who wanted to continue working formed a break-away union: Union of Demcratic Mineworkers in December ‘84.
• Strike, beginning in March, held in spring + summer. Less of demand for coal.
• Lab party reluctant to support Arthur Scargill (NUM leader) + he received little public sympathy-seen as an extremist.
• Violent incidents on picket lines undermined public support for the miners.
• People thought that it was impossible to continue to subsidise the mining industry.
• The govt. was prepared to ue considerable force to protect the rights of miners who wanted to continue working and it wasn’t swayed by the levels of violence + unrest.
• April ‘84, Scargill refused to hold naional ballot to determine whether to continue strike action. Stopped stike being legitimate + alienated many mineworkers.

Question 9

What was the Poll Tax?

Answer 9

-Thatcher thought that ‘the rates’ the general tax public payed (a tax on the owners of property and business) was ‘manifestly unfair’ as she calculated that more than half of electorate didn’t pay rates. -She believed that if more people paid taxes, there would be a greater interest in local politics and the spending of the local council.

-The poll tax/ Community charge was brought in in 1988 where the rates were replaced with a flat-rate tax on every individual. It was piloted in Scotland in1989 and due to being highly unpopular, millions refused to pay it.

• Thatcehr wasn’t deterred however (suggesting that she was becoming more dictatorial in the way that she enforced policies + brought the poll tax into England + Wales beginning of April 1990. The day before it was due to take effect, massive deomstration in Trafalgar Square- 300 people arrested, 400 policemen injured.
• Major abandoned the poll tax and replaced it with the council tax when he came in to power

Question 10

What was Thatcher’s view of the EU?

Answer 10

• Thatcher was divided in her opiniojn over the EU and can be consdered to be a Eurosceptic.
• She was accepting of the Single European Act of 1986 as she considered it as a step along the way towards the free market that she believed was essential for the economy.
• Yet Thatcher didn’t like the fact that the Act committed the member states to work towards closer monetary and political union.
• Thatcher wanted to protect the sovereignty of Britain and thought that measures taken by the EU would create a ‘European Superstate’ that would undermine this.
• Those who Thatcher believed to be too Europhilic such as Geoffrey Howe were soon demoted and her unyielding attitude towards becoming closer to Europe and joining the ERM and her reliance on Walter, a Eurosceptic caused the Chancellor, Lawson to resign.

Question 11

‘Euroscepic’ Definition

Answer 11

• A person who is opposed to the increasing powers of the EU.
• Although some argue that Thatcher wasn’t wholly Euroscpetic but mainly disliked some of the power that it had as a ‘European Superstate’, she certainly didn’t appreciate the idea of intergrating Brtain further into the EU, famoulsy saying ‘No, No, No’ in parliament in regards to this.
• Euroscetics within Thatcher’s close advisory cirlce included her unelected economic advisor, Alan Walters.

Question 12

What’s ‘New Labour’?

Answer 12

• Tony Blair’s endeavour to modernise Lab party.
• Part of this modernisation involved abolishing Clause IV of the 1918 constitution where Lab pledged to nationalise industry to bring the party in line with Thatcher’s reforms.
• The rebranding of the party as ‘New Labour’ made Blair appeal to Cons- supporting business men and City bankers whom he reassured about Lab’s policies.

The Blair style change to Lab’s image went a lot further than Kinnock had from 1983-1992. -However, his expelling of the members of the extreme left went part of the way towards these reforms for Blair’s more right leaning party.

Question 13

Reasons for Thatcher’s fall in 1990

Answer 13

• the terror of the Poll Tax.
• Economic difficulties: the stock market crash and Lawson’s inability to control the impact of this by reducing income tax rates which inadvertedly pushed up prices + therefore increased inflation (8.3% 1987). -disenchanted home-owning mortgage payers (the people Thatcher admired) paying heavily for the houses they were encouraged to buy.
• Divisions over Europe: The rift between hatcher + her colleagues weakened her authority as it alienated important political allies such as Howe and Lawson.
• Thatcher’s growing isolaion and unpopularity amongst her colleagues and electorate. -Many Tory MPs believed that they would lose the next election if Thatcehr remained in power. The slow stab in the back of Thatcer which she would later recall as ‘treachery with a smile on its face’ began with Antony Meyer’s challenge for the leadership of the party. Although her fall was first tirggered with Howe’s parlimentary resignation speech which questioned Thatcher’s leadership in a way that hadn’t been seen in parliament since such senior figures had attacked Chamberlain back in the late ’30s.

-This was the cue for Heseltine to seriously challenge Thatcher for leadership who was eventually advised to step down on which she did on the 22 Nov 1990.

Question 14

Reason’s for Major’s fall in 1997

Answer 14

• 1997 = worst defeat for Cons since 1906
• Major’s lack of authority: - Was elected because majoroty of party didn’t want Heseltine who was beleived to have engineered Thatcher’s downfall. -Had limited experience: MP since ‘79, only in Cabinet since ‘87.
• Ridiculed for being uncharismatic by media.
• Cons majority smashed in his election to 21 seats- made parliamentary defeat more likely.
• Major’s struggle with the Eurosceptics: -Major had to battle to secure ratification of Maastricht Treaty. Eventually forcing it through parliament after facing both Eurosceptics and the Labour Party who made an unlieky alliance.
• Back Wednesday: Britain withrew from the exchange rate mechanism (ERM) after the measures to curb inflation had failed and it became clear that the exchange rate was too high.
• Hightened eurosceptics’ argument that Europe didn’ offer Britain much.
• Cons reputation for economic competence had been tarnished by this fiasco.
• Major’s leadership election, 1995: A third of party didn’t vote for him- showed how divided tories were. He no longer seemed in control of his party with the public displays of dissent from Eurosceptics.
• The popularity of ‘New Labour’. A slick media presentation + reforms that proved to business men Lab weren’t socialists in disguise.