Thatcher's economic policies- supply side economics

Question 1

why did thatcher shift her economic policies

Answer 1

• thatcher shifted her economic policy at the end of 1982 because ministers admitted it was impossible to measure the money supply and therefore moneterism was largely abndoned

Question 2

Nonetheless

Answer 2

• Inflation was back on its way down and in single figures therefore thatcher believed that moneterism had done its job

Question 3

from 1982-88 Thtacher embraced a free market policy known as ..

Answer 3

• supply side economics
• The policy, which was designed to stimulate production in the private sector, inculded tax cuts and privatisations

Question 4

throughout the 1980’s the government cut …

Answer 4

• throughout the 1980’s the government cut income tax and corporation tax
• income tax was cut in 1982 and 1983

Question 5

what did chancellor of exchequer Nigel lawson do..

Answer 5

• chancellor of exchequer Nigel lawson continued this stratergy from 1984 .

-he cut the standard rate of income tax in 1986 from 30-27% and again in 1987 from 27-25%

Question 6

by how much did he cut the the higher rate of tax

Answer 6

• from 40-60%

Question 7

why was the tax cutting stratergy very popular

Answer 7

• popular with many of her supporters arguing the thatcher created a low tax economy in which people worked hard then they would be able to keep more of their money instead of it being wasted by the government

Question 8

what did thatcher’s critics say

Answer 8

• her critics claimed that this was another example of how Thatcher and thatcherism economic policy was to make the rich richer
• whilst the poorest , in particular the mass unemployed especially in Northen industrial areas

Question 9

whilst the poorest ….

Answer 9

• whilst the poorest , in particular the mass unemployed especially in Northen industrial areas where large numbers of industrial areas and a large numbers of industrial workers have been long term unemployed because thereare no alternative jobs

Question 10

what did supporters believe

Answer 10

• therefore like many of thatcher’s policies , they divided the nation between supporters who believed that thatcher had turned around the failing British economy and cut taxation for the mjority of working people
• and saved taxpayers money from being wasted

Question 11

whilst critics argued

Answer 11

• tax cuts are another example of the way in which Thatcher’s policies are designed to create wealth for wealthy minority

Question 12

whilst on the other hand

Answer 12

• cutting spending on social welfare to give to the rich. Thatcher had been responsible for causing social division in Britain between the rich and poor; employed and unemployed; and the affluent south and the poverty in the North

Question 13

what does breaking even mean

Answer 13

No longer making a losss

Question 14

what was one of the reasons for high levels of unemployment

Answer 14

• high levels of unemployment during the 1980’s was that thatcher continued with the policy ensuring that nationalised industries became more efficient

Question 15

what target did she set

Answer 15

she originally set a targets that most nationalised industries should break even by 1982 .

-However even with large job losses this failed to happen so the target was revised 1985

Question 16

huge number of redundancies…….

Answer 16

huge number of redundancies , restructing an investment led to a turnaround in many nationalised industries making a profit

Question 17

why were there a huge number of redundancies

Answer 17

• companies were no longer getting subsidies so they have to make cuts

Question 18

staticitics In 1984 the government was subsidising nationalised industries and profit by

Answer 18

In 1984 the government was subsidising nationalised industries by around 1.1 billion pounds by 1988 they were making a profit by 1.3 billion pounds

Question 19

there work some nationalised industries that was still that was still struggling but …..

Answer 19

• there work some nationalised industries that was still that was still struggling but these fell from 3.8 billion pounds in 1984 to £ 335 million pounds in 1987

Question 20

making these industries ….

Answer 20

making these industries profitable again led to large cale job losses

Question 21

British steel for example

Answer 21

• shed 95,000 workers between 1979 and 1983

Question 22

similarly in 1984 the national coal board annouced

Answer 22

In 1984 the national coal board annouced a plan to close 75 pits to make 64 ,000 coal miners redundant

Question 23

Therefore breaking even was a very controversial policy for some were very critical

Answer 23

• because the policy led to large scale unemployment in particular the nationalised heavy industries in the North

Question 24

without any plans to create new ……

Answer 24

• without any plans to create new jobs for redundant workers who faced a lifetime of dole , and created social division by destroying these close knit communities

Question 25

However thatcher supporters believed that

Answer 25

Thatcher had achieved a great success by turning around failing nationalised industries that would cost the British tax payer billions of pounds in subsidies , into actually making a profit

Question 26

what was the aim of breaking even

Answer 26

• to make nationalised industries profitable so they could be sold. this was a key policy of thatcher and of Thatcherism known as privatisation

Question 27

what was privatisation

Answer 27

• was a process whereby state owned businesses were sold to shareholders .

Question 28

what did thatcher believe about privatisation

Answer 28

• it decreased state involvment
• returning companies to the private sector would make them more profitable and efficient because they would be forced to make profit

Question 29

how was it true that nationalised industries were inefficient

Answer 29

• cost billions in taxpayers money
  -1979 nationalised companies employed 25% of British workers but only produced 10% of GDP

Question 30

thatcher also wanted to use privatisation as a way of making …

Answer 30

• thatcher also wanted to use privatisation as a way of making an entrepreneurial society

Question 31

know as

Answer 31

popular capitalism

Question 32

as what did thatcher want

Answer 32

-she wanted odinary people to also buy shares in the companies being privatised

Question 33

what did thatcher want and what did private companies do

Answer 33

-thatcher wanted a larger proportion of society to own shares and feel the benefits of the free market

• consequently privatisations were accompanied with large advertising campaigns designed to appeal to odinary people

Question 34

’ Tell sid campaign’

Answer 34

• accompanied the British gas sale
• stressed how easy it was to buy shares

Question 35

how was the campaign a success

Answer 35

• the 40 million pound campaign was a big success and 4.6 million people bought shares in the company

Question 36

what was the main reason that buying shares of the companies being privatised became popular in britain…

Answer 36

because the government usually sold the shares below the market rate.

• therefore purchasers of the shares could make a very quick profit because the share price would rise very quickly

Question 37

why was it difficult to say that ‘popular capitalism’ was a success

Answer 37

• because even though many people brought shares they only kept them from a short time because they wanted to sell them to make a quick profit

Question 38

in 1979

Answer 38

only 7% of the country owned shares but by 1990 that figure had lept to 25%

Question 39

how much of the population was a part of ‘share-owning democracy ‘

Answer 39

• one-quarter of the entire population

Question 40

she argued that privatisation had been a way of …

Answer 40

’ returning power back to the people’

Answer 41

• Thatcher began privatisation on a small scale during her first term
• but the policy became a centrepiece of her government during mid 1980’s in the four years between 1982-86

Question 42

conservative government privatised

Answer 42

-the remainder of british areospace and cable and wireless
- car manufacturer jaguar
- British Gas
-britoil
- British telecom

Question 43

how was the sale of former nationalised industries a step change

Answer 43

• Nationalised companies cost the tax payers billions of pounds , the sale of these companies brought billions of pounds into the treasury

Question 44

overall what was the view on privatisation

Answer 44

viewed by many as a great success, even the wets in the Tory party believed that privatisation would regenerate the British economy

Question 45

however what do critics argue

Answer 45

• the valuable state companies had been sold off cheaply in order to show privatisation was a success
• thefore the tax payer had lost money because the government had sold these companies below their market value

Question 46

what did this prove again

Answer 46

• that another thatcher policy was designed to make rich investors richer by selling them these shares below market value