Thatcher Government 1979-90 Flashcards
Margaret Thatcher’s style of leadership and ideology
- End to post-war consensus (Butskellism).
- Wanted to ⬇️ state intervention➡️promote personal responsibility + initiative.
- Needed to improve B’s economic situation➡️became unpopular for triggering lots of unemployment but helped economy long-term.
- Anti-TU legislation.
- Adopted monetarism 1980.
- Disliked one-nation Cs (“wets”), slowly replaced w/ “dries”.
How did Thatcher win the 1979 election?
Conservative strengths🔵💪🏼
- Supported by most press🗞.
- Campaigned using unpopularity of L govt on unemployment, law + order, power of TUs.
- Benefited from drop in support for Liberals + Scottish Nationalist Party.
✅Won w/ 43% majority + 70+ more seats than L.
How did Thatcher win the 1979 election?
Labour weaknesses🔴👎🏼
- Political landscape reshaped by ‘Winter of Discontent’:
- economic situation worse.
- Reputation of TUs damaged.
- Many workers (traditional L voters) began to consider voting C.
- 1978 Jim Callahan waited to call election.
- 1979 govt lost vote of no confidence on issue of Scottish devolution*➡️forced to resign.
- L lost Scottish support when referendum voted against Scottish devolution.
How did Thatcher win the 1983 election?
Conservative strengths🔵💪🏼
- Massive impact of Falklands War victory on domestic politics (1982)➡️patriotism. Even supported by L.
- T ⬆️ confidence.
- Splintering of political opposition.
✅Anti-C vote over 3mn more than pro-C, but huge majority of 144 seats➡️landslide victory.
How did Thatcher win the 1983 election?
Labour weaknesses🔴👎🏼
- L leadership lacked credibility - Michael Foot struggled w/ Party divisions + performed badly on TV.
- L election manifesto dominated by left-wing promises (UND, withdrawal from EEC) - too extreme, scared off potential voters.
How did Thatcher win the 1987 election?
Conservative strengths🔵💪🏼
- Campaigned on issues of strong defence, growing economy + ⬇️ taxes.
- Supported by most press🗞.
✅Only 11.4% more votes, but 146 more seats than L.
How did Thatcher win the 1987 election?
Labour weaknesses🔴👎🏼 + other factors
- New L leader Neil Kinnock restored some Party discipline + made Party organisation more efficient but L still seen as unelectable, hard left extremist.
- ⬇️ support for SDP-Liberal Alliance - opposition to T not enough unity, personal differences.
- SDP began to shrink.
Thatcher’s early policies
-1st year characterised by U-turns: allowed pay ⬆️ for steel workers + miners (end strike) + subsidised failing British Leyland. Inflation ⬆️ by 19%.
•By 1981 using New Right economic policies - 1981 monetarist budget introduced by Geoffrey Howe (Chancellor of Ex) cut govt expenditure, ⬆️taxes + took £4bn out of economy.
-Many leading economists called for U-turn.
What is monetarism?
Economic theory (Milton Friedman) that best way for govts control inflation is ⬇️ amount of currency in circulation by ⬇️ govt spending + borrowing.
Thatcher’s monetarist policies
- Govt aimed to make sure PSBR (Public Sector Borrowing Requirements - govt borrowing to pay for running public services) not in deficit.
- Interest rates kept high to deter excessive borrowing + keep value of pound strong in international finance markets🗺.
What impact did Thatcher’s monetarism have on inflation?
✅Rate of inflation ⬇️ from 19% (1979) to 5% (1983).
✅North Sea oil + gas saved B from severe balance of payments crisis.
What impact did Thatcher’s monetarism have on local government?
❌Cutting public spending➡️clashes between C central govt + many L-controlled local councils.
❌T blamed left-wing councils for wasting resources➡️”loony left” term given by rightist press to leftist local councils promoting liberal/PC policies e.g. Ken Livingstone (GLC).
❌Govt introduced rate capping to control overspending of L local authorities (limited amount could raise in local taxation).
❌1985 authorities in Sheffield + Liverpool tried to rebel, refused to set budgets but backed down, threatened by bankruptcy.
❌1986 Local Govt Act abolished big metropolitan local authorities set up under Heath➡️ ⬆️ powers of central govt but long-term damaged local accountability.
What impact did Thatcher’s monetarism have on unemployment?
❌ ⬆️ unemployment after 1980 since ⬇️ inflation not accompanied by economic growth + creation of new jobs➡️economic recession.
❌Unemployment ⬆️ by 1mn➡️ ⬆️ spending on social security.
❌1981 ⬇️ orders for manufactured goods.
What impact did Thatcher’s monetarism have on public support?
❌V unpopular➡️disturbances in reaction to recession e.g. 1981 Brixton 100s of young people rioting, burning shops + looting property.
❌Disturbances over unemployment; poor job prospects (especially for Afro-Caribbean community); police discrimination against black people w/ ‘sus’ law during Brixton rioting; unemployment of black youths in Brixton at 55%.
❌Govt saw rioters as political trouble makers. 1982 ⬆️ social + economic problems threatened T’s continuance in office. Opinion polls showed her personal + govt popularity ⬇️.
What impact did Thatcher’s monetarism have on government borrowing and spending?
✅Govt borrowing ⬇️ (deterred by high interest rates).
✅Grants to local councils cut + benefits frozen.
❌Cutting govt spending➡️ ⬇️ direct + ⬆️ indirect taxation + clashes w/ L-controlled local councils.
❌Spending on social security for unemployment➡️couldn’t cut public spending in real terms.
What impact did Thatcher’s monetarism have on taxation?
✅ Belief that individuals spent money more efficiently than govt➡️shift away from direct tax (on incomes/property) to indirect tax (on goods/services).
❌Top rate income tax ⬇️ from 83% to 40% by 1988 while VAT ⬆️ from 8% to 15% in 1979.
✅Supporters argued ⬇️ direct tax would allow people to keep more of what they earned.
❌Critics argued that transferring burden to indirect = less progressive + hit poorer harder➡️ ⬆️ inequality.
What was supply side economics?
- T’s second term: monetarism less significant + move towards supply side economics.
- Economy stimulated by creating greater demand.
- Better for company owners + shareholders.
Thatcher’s aims with supply side economics
🔹⬆️incentive to work as ⬇️tax means can keep more of money earnt.
🔹Encourage competition to lower prices.
🔹Limits power of TUs - can’t block productivity.
🔹Supports free enterprise economy (small businesses).
Financial deregulation
- Housing Act 1980 (‘right to buy’) - council house tenants could buy the homes they were renting.
- By 1990 homeownership ⬆️ by 15%.
- Loan Guarantee Scheme➡️easier for small businesses to borrow.
- Credit + exchange controls abolished💳.
- Enterprise Allowance Scheme encouraged unemployed to start own businesses by giving £40 per week for up to 1 year.
- Lawson Boom after deregulation.
Privatisation
- 1982 sold majority of North Sea Oil shareholdings to private sector.
- Sale of B Gas 1986 biggest share offer in history.
- 50 enterprises sold of during T years.
- 1979-1990 shareholders in B ⬆️ from 3mn to 9mn (popular capitalism).
- Privatisation brought govt lots of revenue.
- Belief that private sector more efficient.
- Businesses compete w/ others➡️encourage improvements + innovation.
- Signalled end of post-war consensus about economic management.
Positive impact of Thatcher’s supply side economic policies?✅
✅B industry shed wasteful practices.
✅26% ⬆️ real wages 1979-94.
✅ ⬆️job creation + self-employed.
✅Restored London’s position as world financial centre, could compete w/ Wall Street.
✅Unemployment didn’t necessarily prove national decline - redundancy part of modernising process.
✅’Right to buy’ provided incentive for poorer people to become property owners➡️move towards B as property-owning democracy.
Negative impact of Thatcher’s supply side economic policies?❌
❌More insecurity for employees as private enterprises cut back on staff➡️unemployment.
❌Productivity didn’t ⬆️ by much (0.3%).
❌Economic growth balanced by underperformance.
❌By 1989 balance of payments deficit ⬆️ to £47bn.
❌Industrial recession 1981-87.
❌GDP no better than in 1970s.
❌’Right to buy’ undermined principle of social housing + ⬇️stock of available properties.
❌Denationalisation seen as selling of part of national identity.
❌Despite revenue from North Sea Oil, world oil prices in long-term decline.
❌Critics say govt squandered national asset for short-term gain w/ denationalisation of North Sea Oil.
❌Most target investors sold of their shares relatively quickly.
❌By 1990 inflation ⬆️to almost 11%.
What was the poll tax?
- T’s attempt reform local govt finances by local councils more accountable to electors➡️more efficient spending.
- Replaced council tax.
- Everybody contributed + charged same rates
- Introduced in Scotland 1989 then England + Wales 1990.
- T hoped local electors vote out high-spending L councils for Cs.
Why was the poll tax unpopular?
👎🏼Regressive tax - hardest on poorest + larger households as everyone charged same rates.
👎🏼Middle classes (prev T supporters) protested 1990 - was double original estimate.
👎🏼One-nation Cs (Heath + Heseltine) wanted redistributive tax to help disadvantaged. 1988 C backbench rebellions against PT.
👎🏼March 1990 anti-PT demonstration London, over 200,000 attended. Turned into riot➡️nearly 5,000 injured. Criticism of politicisation of police.
👎🏼Anti-Poll Tax Unions set up across UK urging people not to pay.
👎🏼V unpopular in Scotland.
