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History - Britain Transformed > Thatcher part 1: economic policies > Flashcards

Thatcher part 1: economic policies Flashcards

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1
Q

What is monetarism?

A

Belief that inflation in the economy is caused by the amount of money that there is in the economy

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2
Q

What did Thatcher think about the amount of money in the economy in 1979?

A

There was to much

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3
Q

What was Thatcher’s theory on tackling monetarism?

A
  • Cut government spending

- Raising interest rates

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4
Q

Where had Thatchers theory of monetarism been seen before?

A

Tested once in Chile which during 1970s Chile was a military dictatorship

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5
Q

When did Thatcher introduce monetarism?

A

In her first term

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6
Q

What was a success of monetarism?

A

Inflation reduced to single figures by 1982, never rose above 9% for the rest of the 80s

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7
Q

What happened to budgets in 1980 and 1981?

A

They were slashed

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8
Q

How did the people react to the 1980/81 budget cuts?

A

There were riots in several cities (incl. Brixton in London)

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9
Q

What happened to manufacturing in 1980-81?

A

Fell 14%

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10
Q

What happened to inflation in 1980?

A

Rose to 22% due to soaring pay demands

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11
Q

How many people were unemployed in 1982?

A

3 million

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12
Q

What was an effect of unemployment?

A

Unemployment benefits forced up government spending

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13
Q

What happened to monetarism by 1983?

A

By 1983 monetarism was phased out in favour of more successful supply-side policies (tax cuts + deregulation)

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14
Q

What happened overall to inflation from 1979-90?

A

1979 inflation 10.3% - 1990 inflation 10.9% - no change

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15
Q

What was Thatchers opinion on privatisation?

A

Thatcher wanted more privatisation

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16
Q

Why did Thatcher want more privatisation?

A

She thought a big state made people lazy and non incentivised to achieve for themselves

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17
Q

What happened to British Telecom in 1984?

A

It was sold

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18
Q

Which British companies were sold before 1983?

A
  • British Aerospace
  • British Sugar
  • British Petroleum
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19
Q

What did Thatcher specifically aim to cut to help privatisation?

A

Aimed to cut government expenditure, reinvigorate the economy and incentivize workers

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20
Q

Why did Thatcher believe in popular capitalism?

A

She believed everyone in society should own property and shares in companies

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21
Q

What happened to British gas in 1986?

A

British Gas sold

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22
Q

How much did British gas raise in 1986 when sold?

A

£5.4 billion

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23
Q

What were people encouraged to do when British gas sold?

A

People were encouraged to buy shares with the advertising campaign, ‘If you see Sid, tell him’

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24
Q

Why were shares sold quickly?

A

To ensure a quick, wide take up

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25
Q

What happened to British rail in 1994-97?

A

Became privatised, part of her privatisation legacy

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26
Q

How much money was raised due to privatisation?

A

£19 million, able to pay for tax cuts

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27
Q

What happened to the amount of shareholders?

A

Number of shareholders went front 3 million to 11 million between 1979-1990

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28
Q

What happened as a result of the privatisation of the 10 state-owned regional water authorities in 1989?

A

The number of customers at risk of low water pressure has fallen by 99%

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29
Q

What happened as a result of BT becoming privatised?

A

Better customer service - before customers waited 6 months for the installation of a BT line, today BT lines installed within 15 minutes

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30
Q

What % of unskilled male workers owned shares?

A

Only 9%

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31
Q

What was the distribution of shares like?

A

It was uneven

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32
Q

By 1990 what % of shareholders were owned by individuals?

A

20%

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33
Q

What does a lack in individual shareholders suggest?

A

There was a failure of popular captlism

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34
Q

What effect did privatisation have on prices?

A

Privatisation led prices to increase faster than inflation (gas)

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35
Q

What was the effect on jobs due to privatisation?

A

Less jobs

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36
Q

How many jobs were lost in the coal industry due to privatisation?

A

200,000

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37
Q

What did Harold Macmillan describe the privatisation as?

A

Harold Macmillan compared it to ‘selling off the family silver’ - seen against traditions of conservative

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38
Q

Did privatisation improve British rail?

A

Service did not improve while spending doubled since 1994

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39
Q

What does deregulation mean?

A

The removal of rules and regulation

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40
Q

Why did Thatcher adopt deregulation?

A

Thatcher hoped this would encourage innovation and competitiveness

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41
Q

When was the removal of exchange controls?

A

1979

42
Q

What did the removal of exchange controls do?

A

Ended restriction on how many pounds could be converted and spend abroad

43
Q

When was the ‘Big Bang’?

A

1986

44
Q

What did the ‘Big Bang’ do ?

A

Relaxed rules of the ownership and trading operations of banks

45
Q

What effect did the ‘Big Bang’ have on London?

A

City of London grew rapidly, became one of the major financial centres in the world

46
Q

What effect did the removal of exchange controls have on oversea investment?

A

Fuelled greater overseas investment (with profits returned to Britain)

47
Q

What was the ‘Lawson’ boom?

A

Economic growth reached 4-5% a year in the late 80s.

48
Q

What effect did the removal of exchange controls have on consumer goods?

A

Increases spending on consumer gods, drained Britain

49
Q

What negative effect did the ‘Big Bang’ have?

A

Riskier financial schemes - individuals made huge sums of money, in turn contributed to 2008 financial crisis

50
Q

What did British people start to do becasue of deregration?

A

Borrow more money

51
Q

What effect did British people borrowing money have?

A

Debt

52
Q

How much did Private household debt increase by?

A

From £16 billion in 1980 to £47 billion in 1989

53
Q

How much did Mortgage debt increase by?

A

Rose from £43 billion to £235 billion

54
Q

What was Britain’s personal debt by 2003?

A

£1.3 trillion

55
Q

What was Thatchers opinion on taxation?

A

Thatcher did not believe that taxation should be used to take money from the rich to subsidise the poor

56
Q

What did Thatcher think socialism led to?

A

She thought this led to a lack of incentive to work hard and bred dependence at the bottom of the social scale

57
Q

What was Thatcher’s aim with taxation?

A

Aimed to promote more investment, growth and therefore government income through tax cuts

58
Q

What happened in the 1980 budget?

A

Top rate of income tax cut from 83% to 60%

59
Q

What happened in the 1988 budget?

A
  • Basic rate of income tax from 29% to 25%,

- Higher rate of income tax was cut to 40%

60
Q

What is the 1988 budget referred to?

A

The giveaway budget

61
Q

What were taxation cuts subsidised by?

A

The discovery of North sea oil

62
Q

What happened to the average tax bill?

A

Rose by 6% between 1979 and 1990 due to increase in indirect taxation

63
Q

What happened to 1979 VAT?

A

Increased from 8% to 15%

64
Q

What happened to tax avoidance schemes?

A

Decline in tax avoidance schemes - wealthiest 5% paid as much tax in 1988 at the 40% rate as they did in 1978 at the 83% rate

65
Q

Which boom did the tax cuts contribute to?

A

‘Lawson’ boom

66
Q

Which tax brought down Thatcher?

A

Poll tax

67
Q

What did an increase in regressive taxes do?

A

Regressive taxes like VAT and National Insurance Payments placed a higher burden on the poor - increasing wealth inequality

68
Q

Overall how did Thatcher’s economic policies help Britain?

A

Reversed Britain’s relative economic decline

69
Q

What impact did Thatcher’s policies have long term?

A

Thatcher’s policies did little to change Britain’s long-term economic performance

70
Q

What did Thatcher’s econmic policies do to British industry?

A

Weakened British industry

71
Q

What happened to the balance of wealth in Britian?

A

She unbalanced Britain’s economy and created massive inequality of wealth

72
Q

What was Thatcher’s first priority when she came to leadership?

A

The economy

73
Q

What did Thatcher set out to do with the economy? (4)

A
  • Reduce budget deficit
  • Reduce power of trade unions
  • Reduce inflation
  • Increase effeicency of economy
74
Q

How many people were unemployed at the start of her economic policies?

A

3.6 million

75
Q

What helped Thatcher get re-elected in 1983?

A

Success of Falklands war

76
Q

What did Thatcher do during her 2nd term?

A
  • Had confidence to expand privatisation of state owned assets
  • Began to centralise more power in Whitehall at the expense of local authorities
77
Q

What problems did Thatcher face in her 2nd term?

A
  • Miner’s strike
  • IRA
  • Soviet Union
78
Q

What did some people see Thatcher as?

A

Churchill-like patriot

79
Q

What did Thatcher want to do with home and share ownership?

A

Encourage home ownership and share ownership

80
Q

What did Thatcher want to do with major manufacturing industries?

A

Wanted to end state subsidies

81
Q

Why did Thatcher pursue the supply side policies?

A

To increase efficiency and productivity

82
Q

What were Trade Union strikes like during the 1970s?

A

At an all time high

83
Q

What did they think were key factors in holding back industry?

A

Poor industrial relations and strikes

84
Q

What helped reduce the power of Trade Unions?

A

A series of Employment Acts

85
Q

How did the 1982 act affect Trade Unions?

A

Unions could be sued for illegal strike action

86
Q

What did the 1980 act affect strikes?

A

Ended ‘closed shop’ and sympathy strikes

87
Q

What did the 1984 act mean Trade Unions had to do?

A

Strikes had to be approved by a majority of union members in a secret ballot

88
Q

What did Thatcher do to deal with coal strikes?

A

Build up coal reserves

89
Q

What was the NUM strike?

A

Lasted 1984-1985

90
Q

What did Thatcher brand strikers as?

A

‘The enemy within’

91
Q

What was the NUM?

A

National Union of Miners

92
Q

What problems did the NUM strike face?

A
  • Strike began after winter, UK needed less energy.

- Scargill did not ballot members about strike action

93
Q

How did the people react to the NUM strike?

A

His provocative methods angered the public - he held 79% disapproval rating during the strike

94
Q

What happened to Trade Union membership during Thatcher’s time?

A

Fell from 13.5 million in 1979 to under 10 million in 1990

95
Q

What happened to relationship between Trade Unions and the government after the NUM strike?

A

Unions became far more willing to work with government

96
Q

What happened to the number of working days?

A

Fell from 10.5 million in 1980-84 to 0.8 million in 1990-1994

97
Q

What happened to Government subsidies after the NUM strike?

A

Subsides for failing industries was removed?

98
Q

What happened to crime rate during the 1980s?

A

It doubled

99
Q

What happened to the number of of miners?

A

Fell form 200,000 to 10,000 between 1974-1991

100
Q

What happened to communities within industry areas?

A
  • Mass unemployment
  • High crime rates
  • Emotional suffering (deverstation)

History - Britain Transformed (60 decks)

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