Thatcher's Impact Flashcards
What was Thatcher’s first priority?
Tackling inflation - she was the first prime minister to do so in a long time
What was inflation at when she first started?
13%
How much did productivity improve?
Up 77%
What did unemployment rise from and to between 1980 and 1990?
3.4% to 9.1%
How much does public expenditure rise from and to by 1997?
39% to 44%
What economic model did Thatcher follow between 1979 and 1983?
Monetarism
What was monetarism?
Theory that the primary driver of inflation is how much money is in the economy - the more money circulating, the higher prices rise. Managing money supplies.
How did Thatcher control money supplies?
Raising interest rates, slash government spending and accept unemployment and inequality
What economic model did Thatcher follow in 1983-1990?
Supply side theory
What is supply side economics?
Policies that increase productivity and how much the economy provides. Idea of Thatcher and Reagan - economic growth comes from lots of supply in the economy.
How did Thatcher increase productivity?
Cut tax for businesses to invest, free market economic, deregulation, privatisation and spending cuts
What was the issue with supply side economics?
Reduces funding for social and welfare provision
What did Thatcher want to end?
Post War Consensus
How did Thatcher explain her economics?
Housewife economic - living within your means
What other aim did Thatcher have?
Reducing the power of the Unions
What did she want to do with nationalised industries?
Make them more efficient - privatise if possible
What kind of capitalism did she want?
Popular capitalism - owning property and shares
What was Thatcher against?
State intervention
What were these policies?
Highly controversial - based on short term pain for long term gain - accusation was that not everyone felt the pain equally
What was inflation in 1980?
22%
What caused many businesses to go bust?
Rising interest rates
What policies did Thatcher adopt?
Milton Friedman - New Right Thinker
Where was the only place where monetarism was implemented?
Chile - military dictatorship
What was the issue with Thatcher using monetarism?
She didn’t really understand it and there was no agreed definition of money supply
Where were there huge cuts in public spending?
Welfare and Housing
What did unemployment rise to?
3 million
How much did production fall?
14%
Where were there riots?
Toxteth, Handsworth and Brixton - some had a racial element
What was inflation at in 1982?
9%
What stopped Thatcher from losing the 1983 election?
The Falkland’s War and the Weakness of the Opposition
What would privatisation do?
Reduce government expenditure
What would the sale of companies do?
Generate income that could fund tax cuts
What would privatisation encourage?
Innovation and competition - get rid of monopolies
When was BT sold?
1984
When was British gas sold?
1986
When was British Aerospace sold?
Before 1983
What did share ownership rise to and from?
3 to 11 million
How many council houses were sold between 1979 - 1988?
1 million - Right to Buy Scheme
What group were most likely to buy shares?
Already affluent individuals
What did competition lead to?
Better customer service - in telecoms
How much money was raised from selling of state owned businesses?
£19 million
What % of the working class owned shares?
9%
By 1990, what % of shares were owned by individuals?
20% - the rest were owned by pension funds and investment firms
What had to be sold off?
Family silver
What happened in many sectors?
No competition so prices rose - benefitted shareholders and executives
What watchdogs were created to monitor prices?
OffWat, OffGas and OffTel
What was privatised in 1994-1997?
British Railways
What was the issue of the privatisation of British Railways?
V complicated - track v rolling stock. Government spends 2x on railways since 1994 and the service is still bad!
What was established in 1992?
Private Finance Initiative and Public - Private Partnerships were set up
What were Public-Private Partnerships?
Private companies would invest in public sector concerns such as schools and hospitals - they would build and operate services (eg new hospital wards
Why did PPPs cost a lot of money?
Infrastructure was leased - it was also controversial to have private money in the NHS
What did Thatcher believe?
Rules and regulations around the economy should be removed to make the market ‘free’ and promote competitiveness and innovation.
What did Thatcher do in 1979?
Removed exchange controls - limits on how much money could be converted into foreign currency and spent abroad
What did this removal of exchange control do?
Encouraged overseas investment and led to a huge increase in spending on foreign goods
When was the Big Bang?
1986
What was relaxed?
Rules around the operation of the banks
What did the Big Bang do?
The City of London became the financial centre and huge profits were made
What became popular?
Get rich quick culture - financial products became riskier.
How much did personal debt rise to?
£16 billion in 1980 to £47 billion in 1989
What did mortgage debt reach in 2003?
6 million families (20%) were in debt due to spiralling house prices
What did Thatcher reject?
The idea that the rich should taxed to help the poor (wealth distribution). She thought this created a culture of dependency
What is trickle down economic?
Belief that tax cuts for the rich would promote economic growth and everyone would benefit
What was the tax rate in 1980?
High rate of tax cut from 80% to 60%
What was the tax rate in 1988?
40%
What financed the tax cuts?
North Sea Oil revenue
What did the government cut down on?
Tax avoidance - claimed the richest paid the same despite the rate cut
What was basic rate reduced from and to?
33% to 25%
What was inheritance tax cut from and to?
75% to 40%
What happened to the overall tax burder?
Rose by 6%
Why did the tax burden rise?
VAT rose in 1979 from 5% to 15% - regressive tax - impacts the poor the most
What did Thatcher think about Unions?
They were socialist and undemocratic
What did Thatcher want to promote?
Individualism
What did she want the economy to move away from?
Heavy industry and towards financial services
Why did she target unions?
Revenge for the 1970s strikes and the 1974 election
What did she think Unions did?
Forced workers to go on strike and bullied union members
When was the Employment Act?
1980
What did the Employment Act 1980 do?
Workers did not have to join a union when they joined a particular firm (“closed shop”): also meant unions could only organise strikes against their direct employers, not allowed to strike in sympathy.
When was the second Employment Act?
1982
What did the 1982 Act do?
Meant that Unions could be sued for illegal strike action.
When was the Trade Union Act?
1984
What did the 1984 Act do?
Strikes had to be approved by a majority of the union’s members in a secret ballot before it was legal
How did Thatcher prepare for strikes?
Built up coal reserves so that they did not have to resort to a three day week
When was the Miners Strike?
May 1984 - March 1985
When was the Battle of Orgreave?
June 1984
What happened at the Battle of Orgreave?
Over 10,000 arrests, 3 murder and 2 suicides
What was the impact of the season?
Less demand for coal - therefore the strike impact wasn’t as significant
Who was the leader of the NUM?
Arthur Scarsgill
What did Scarsgill do?
Failed to ballot for strike action and used flying pickets (strikers who travelled to different coalfields to prevent miners from working)
What happened as a result of his extreme tactics?
Nottinghamshire miners broke away and formed a new Union (Union of Democratic Miners (UDM) which continued working
What happened to union membership?
13.5 million to under 10 million in 1990
What happened to the number of strike days lost from 1980-84 and 1990-94?
10.5 million to 0.8 million
What did the coal industry become?
Increasingly uncompetitive - likely they would’ve been scaled back slower if the strike had not occurred
What impacted small communities?
Affected small communities - Sunderland for Shipbuilding and steel in Sheffield
Who was Von Hayek?
Social and political philosopher and theorist - Hayek’s Constitution of Liberty was the basis for Thatcher’s economic plans.
Who was Geoffrey Howe?
Thatcher’s chancellor till 1983, then took on the role of Foreign Affairs and then Deputy Prime Minister - resigned and openly criticized Thatcher. Monetarist.
Who was Nigel Lawson?
Chancellor of the Exchequer after Howe - resigned due to tensions between him and Thatcher.
What united the nation?
Foreign Policy
What was stressed in speeches?
The threat of Russian Communism
What did the Falklands present?
An affront to the British values of democracy and the rights of British people.
Initiated a complex and difficult military operation to take back the islands to restore “honour”.
What undermined national unity?
Class, unions
What increased class conflict?
Increasing class inequality
Why did Thatcher lose Scotland and Wales to Nationalism?
Inequality
What emerged?
An underclass
What meant that the country was less reliant on coal?
Alternative sources of power - gas and nuclear
How many pits were closed?
20 - intended to close 70 pits
Who was the head of the National Coal Board?
Ian MacGregor
What did MI5 DO?
Infiltrated the NUM to find out strategy
Who supported the miners?
WAPC - rallies in London - formed by Anne Scargill - soup kitchens.
Race Today Collective support.
Lesbian and Gay support the Miners - marches.
How did Labour split?
Labour split - right wing believed that union power was out of hand and refused to support the illegal strike.
Left supported the strike - defending the jobs across an entire industry.
Who opposed the strike?
Tabloids and media opposition and public disapproval
What % of its members did the NUM lose?
84%
What years reduced striking rights further?
1988, 1989, 1990, 1993
What happened in 1988?
Legal protection for crossing picket lines.
What happened in 1993?
Forced ballots and submit voting process to independent scrutiny.
How much did overall trade union membership decline?
40%
What did Labour do?
Distance itself from unions
How many pits were closed by the end of the period?
94/170
What did Thatcher believe?
Public sector was too big
What was she afraid of?
People becoming too reliant on the state - lead to them being lazy and dependent - Nanny State
What assumption did Thatcher make?
Everyone is able to work