Thatcher Revolution 1979-90: 4 Thatcherism: the second stage Flashcards
what is supply-side economics and what were the benefits of it?
monetarism was largely dropped in 1980s leading to the implementation of supply side economics
- rested on the belief that Keynesian policies had distorted the operation of the economy by attempting to create demand artificially
- idea was people would work harder and more productively if they were allowed to keep more of their earnings - this would stimulate the economy
chief policies include
- reducing tax for a greater incentive to work
- encourage competition
- limit powers of the trade unions so couldn’t block productivity
- cut wasteful welfare payments as a way of saving money
what were the chief policies of deregulation?
- finance: credit and exchange controls abolished
- transport: bus companies were deregulated to encourage competition
- education: schools entitled to opt out of the state sector and become responsible for their own financing
- health: hospitals required to operate an ‘internal market’ by taking control of their own finances and matching needs to resources
introduction of the ‘right to buy’
Housing Act 1980 - allowed council house tenants to buy the house they had been renting
critics argued it undermined the principle of social housing and reduced stock of available properties.
supporters claimed it provided incentive for poorer members of society
Thatcher saw it as a move towards a property-owning democracy
by 1985, over 800,000 tenants had begun to purchase the properties they had previously rented
overall, 68% of pop owned their home by 1990
which enterprises were privatised?
british airways, steel, coal, cable & wireless, telecom, regional electricity and water boards
the policy aimed at increasing ‘popular capitalism’ by giving a greater number of ordinary people the chance to become shareholders
1979-90 number of shareholders rose from 3 to 9 million
what happened as a result of financial deregulation?
encouraged banks and building societies to advance larger loans to customers
significant amount of the borrowed money was spent on consumer goods from abroad
balance of payments deficit rose from £16 billion to £47 billion between 1980 and 1989
what happened to North Sea oil?
privatised
1982 Thatcher’s gov sold its majority shareholdings
despite significant gains for Britain, world oil prices had entered a long-term decline
critics saw deregulation as part of a broader irresponsibility on the govs part that threatened to destroy large parts of Britain’s industrial economy
debate over deregulation and privatisation
pro - greater unemployment did not prove national decline - redundancy was necessary in order to modernise
1979-89 - Britain’s GDP was 2.1% compared to Europe’s average of 1.9%
critics - believe privatising north sea oil gave gov funds to cut back income tax, a policy the gov took great pride in therefore believe Britain did not experience an economic miracle
what was taxation like under Thatcher?
period of low taxation, mostly reduction in income tax
however the overall tax bill for ordinary people had not greatly altered due to increases in indirect tax such as VAT
which US film was released in 1987 that anti-Thatcherites believed to depict the amorality of her gov?
Wall Street
opponents believed it showed a precise description of the amorality of a system that allowed the powerless in society to be abused and exploited by the powerful
what was the Westland Affair?
1986
Westland was a British helicopter company which Heseltine (defence secretary) proposed to save by making it part of a European consortium
Leon Brittan (industry sec) proposed that Westland be taken over by US company Sikorsky
Thatcher backed the Sikorsky option and Heseltine stormed out and 2 weeks later resigned on 9 Jan
Labour suggested the affair showed bullying within Thatcher’s cabinet and her readiness to give in to US pressure
how many seats did cons win in the 1987 election?
375 v labs 229
results showed some recovery by Labour
what local gov reforms were introduced?
1988
- standard spending assessments (SSAs) enabled gov to control local gov expenditure levels
- councils required to adopt ‘compulsive competitive tendering’ to contract out their services to the companies that could provide the best service at the lowest price
Thatcher hoped these changes would create ‘more gainers than losers’
believed that public institutions needed to be more responsive to the needs of the people
what were the main provisions of the Education Reform Act in 1988?
- schools could free themselves from direct financial control by local education authority. i.e. head teacher and school governors could budget
- primary and secondary schools could opt to become grant-maintained and be free of their LEAs adn be financed by central gov
- national curriculum introduced containing core subjects
- schools were set to cover ‘key stages’ aimed at achieving a number of prescribed learning aims
- parents could specify which school they wanted their children to attend
- league tables showing examination results were to be published
what was the poll tax?
a flat rate levy to fund local services, to be paid by all adults resident in the local area, not just owners of the property
what were the two main reasons for Thatcher’s downfall?
the poll tax (‘a reform too far’) and opposition within her cabinet over her policy towards Europe
sign that after a decade in office she was losing her political touch
