Topic 4: Economics/Industrial (1979-87) Flashcards
1
Q
2
Describe monetarism
A
- Restrict money supply and reduce public expenditure to tame inflation
- Done through raising interest rates, making cuts and strengthening the pound on the FOREX
2
Q
4
Describe Thatcher’s supply-side economics
A
- Low taxation encourage consumption
- More flexible labour regulations to encourage enterprise
- Re-organisation from direct to regressive indirect tax
- taxes on petrol, cigarettes and alcohol went up in almost every single budget from 1979-87
3
Q
4
Describe Howe’s June 1979 budget
A
- Income tax: top rate cut from 83% to 60%; lower rate cut from 33% to 30%
- VAT up from 8% to 15% to finance income tax cuts
- Public spending reduced by £4bn
- Interest rates increased from 12% to 14%
4
Q
4
Describe the effects of 1979 budget
A
- 1980, serious recession occurred
- led to rise in public spending as benefit payments increased
- Unemployment reached 2m (13.2%) - highest in Western Europe
- 1980 Tory Party Conference, Thatcher indicated she would not reverse policy with aimed dig at Heath (‘U-turn if you want to…’)
5
Q
3
Describe the economy by 1980
A
- Inflation stood at 22% in early 1980
- Mood worsened by Tebbit’s comments for the unemployed to get on their bike and find work
- Only North sea oil receipts kept balance of payments in reasonable condition
Tebbitt a junior minister at time
6
Q
6
Describe the terms of 1981 budget
A
- Many expected governmental reversal, instead they doubled-down
- Marked monetarist triumph against Keynesian Treasury orthodoxy
- 20p increase on petrol tax
- £3.5bn spending cuts
- Grants to local councils cut
- No changes to low income tax
7
Q
5
Describe the effects of the 1981 budget
A
- Amounted to biggest fiscal squeeze in peacetime
- expenditure rose due to collosal bill of social security payments stemming from increased unemployment
- from 1979-81, British GDP fell by 2.5%
- productive capacity falling more rapidly than ever recorded before
- return of stagflation
8
Q
2
Describe the response to the 1981 budget
A
- Government standing fell to 27% in opinion polls
- In a famous letter to the Times, 364 economists denounced the government’s economic approach as ruinous
9
Q
2
Describe the 1982 budget
A
- £1.3bn tax giveaways
- condemned by Con MP Ian Gilmour who had advocated £5bn reflation package
10
Q
2
Describe privatisations in Thatcher’s first term
A
- Majority of shares in British Aerospace sold in 1981
- Sale of Amersham International 1982
11
Q
4
Describe the sale of Amersham International 1982
A
- Radiochemical Centre, a specialist medical services group
- Renamed to Amersham International in 1981and sold in 1982
- First complete privatisation where govt sold 100% of shares
- $130m paid to government was $38m less than the prevailing market share of the company - set negative precedent
12
Q
4
Describe the shift in inflation levels (1979-83)
A
- early 1980 - 22%
- 1981 - 12%
- 1982 - 8.8%
- 1983 - 5%
13
Q
3
Describe the economic positives of Thatcher’s first term
A
- Productive capacity would have worsened had the govt continued to support ‘lame duck’ industries of British Leyland and Rolls Royce
- Delivered on pledge to reduce inflation
- Monetarism quitely abandoned by 1984 through falling exchange rates and loosening of money supply limits
14
Q
5
Describe the economic negatives of Thatcher’s first term
A
- Inflation reduction due to mass unemployment
- Monetarism destroyed value of privatised companies
- productive capacity was falling more rapidly than ever recorded
- 25% of manufacturing capacity lost in 1st term
- 81 other nations saw GDP rise by 5%; britain’s fell more rapidly than ever before
15
Q
4
Describe Nigel lawson as CX
A
- Became chancellor following re-election in 1983
- Exuded econmic competence
- Abandoned monetary control and shifted to supply-side focus
- Urged cuts in public spending though spending increased anyways due to high unemployment
16
Q
4
Describe the 1987 budget
A
- £2.6bn tax giveaways
- Cut standard rate of income tax from 29p to 27p
- Corporation tax cut fom 29p to 27p
- Funded through previous increases in VAT which led to £16bn budget surplus, confirming success of supply-side policies
17
Q
5
Describe Lawson’s privatisation policy (1983-87)
Don’t need to know all firms, but major ones will suffice
A
- Substantially more privatisation than first term
- 1984, British Telecom sale cost Government £3m as a result of underpricing and lavish advertising campaign promoting buying shares
- 1986, British Aerospace, Britoil and British Gas
- Rolls Royce, British Shipbuilders, British Leyland and British Airports followed
- Former PM Macmillan likened privatisation to ‘selling off the family silver’
18
Q
3
Describe the sale of British Gas 1986
A
- Sold for £5.434bn
- Shares went public with famed ‘Tell Sid’ campaign
- Allowed ordinary people entry into stock-market sphere - increased sense of stakeholding in society
19
Q
2
Describe the Lawson’s deregulation policy (1983-87)
A
- Big Bang 1986
- Proposed relaxation of Sunday Trading laws defeated
20
Q
5
Describe the Big Bang 1986
A
- Reform of London Stock Exchange
- Abolished fixed commissions
- Opened up trading to wider financial institutions, notably foreign banks
- implemented electronic platform to allow faster computerised dealer networks
- Replaced archaic ‘open outcry’ whereby traders mulled Exchange Floor
21
Q
4
Describe the positives of economy by 1987
A
- Easy credit availability drove up household consumption boom, especially in South
- Average earning rose consistently above inflation throughout in the 1980s (reached peak 4.5% difference in 1986), especially in service-sector
- Average annual growth rate of 4%
- Inflation continued to fall
22
Q
6
Describe the negatives of economy by 1987
A
- In 1983, balance of trade in manfactured goods went negative for first time
- by 1985, the poorest 20% held only 5% of national wealth
- Unemployment reached 3.3m in April 1985
- House prices appreciated higher than annual incomes, accentuating regional inequality
- Economic growth was in part due to worlwide expansion of trade
- Skills shortages in tight labour markets had pushed up wages
23
Q
3
List the points you could consider in an essay on whether there was an economic miracle 1979-97
A
- Growth and productivity (tax cuts, supply-side policies, consumption boom, inflation, GDP)
- Structure of economy (privatisation, Big Bang, balance of payments)
- Industrial factors (trade union legislation, strikes)
24
Q
5
Describe the Employment Act 1980
A
- ‘flying pickets’ made illegal - strikers travelling nation to prevent entry to work
- Restrictions on closed shops
- Restricted legal immunity for sympathy strikes
- Introduced ballot requirements prior to strike - Scargill would disobey
- Removed provisions of Employment Protection Act 1975 which obligated employers to reinstate employees after maternity leave, claiming it damaged small businesses
25
Q
3
Describe the Employment Act 1982
A
- Challenged immunity unions had received from financial charges incurred during strike
- Had been a privilege dating back to 1906
- Several Unions fined this way e.g. National Graphical Association
26
Q
4
Describe the effects of the Employment Act 1980 and 1982
A
- 4.2m days lost to striking in 1981 compared to average of 13m in 1970s
- Union membership had fallen from 13m in 1980 to 10m in 1983
- Union members unwilling to risk strike action in ballots for fear of unemployment
- Unions wary of running up huge fines in court
27
Q
2
Describe limits to the Employment Act 1980 and 1982
A
- Arguably recession and resulting unemployment had driven down union membership and strikes rather than legislation
- Economic shift to service-sector further eroded powers of union
28
Q
3
Describe the terms of the Trade Union Act 1984
A
- Thatcher used huge majority to pass contentious legislation
- Required unions to select new general secretary every 5 years
- Required unions to ballot members on retention of their political funds
29
Q
2
Describe the effects of the Trade Union Act 1984
A
- Intended to damage Labour funding, though majority of unions continued to support them
- Conservatives continued to benefit from individual and corporate funding
30
Q
3
Describe the background to the Miners strike (1984-85)
A
- 1984, NCB faced strike by NUM
- Clash bewteen abrasive style of marxist Scargill (leader of NUM) and Thatcher-installed Ian Macgregor (NCB Chairman)
- Macgregor had been tasked with overseeing the closure of uneconomic pits
31
Q
6
Describe Government preparation for the Miners’ Strike (1984-85)
A
- Ensured coal supplies were well stocked, aided by low demand and cheap market price
- Pits now only supplied 1/5th of nation’s energy supply, far behind oil
- Protected power networks with aid of European nations
- Police powers increased in anticipation, especially over ‘flying picket’ control
- Imposition of roadblocks to prevent the travel of striking miners to picket lines
- Prevented repeat of strikes under Heath
32
Q
4
Describe the UDM split in miners’ strike (1984-85)
A
- Scargill failed to ballot members
- Properous Nottinghamshire coalfields broke away to form UDM to continue work
- UDM criticised Scargill for using strike to advance his hard-left politics to the detriment of miners
- Supplied coal for entire nation, permitting government victory
UDM - Union of Democratic Miners
33
Q
4
Describe the end of the miners’ strike (1984-85)
A
- Strike lasted almost a year, demonstrating deep illusionment within mining communities
- Entire families had depended on charitable handouts
- Scargill determined to reject compromise but could not sustain support as miners’ drifted back to work
- Ended in March 1985
34
Q
1
By what margin did the NUM vote to end the 1984/85 miner’s strike by?
A
98-91
35
Q
3
Describe the political impact of the miners’ strike (1984-85)
A
- Kinnock distanced Labour from the revolutionary ideals of Scargill and the NUM
- Thatcher proved that she could protect public against mass industrial action unlike predecessors
- Capitalised on this success in 1987 election
36
Q
4
Describe the industrial impact of the miners’ strike (1984-85)
A
- Decimation of mining industry accelerated due to weakness of unions post-strike
- By 1989, less than 5k miners in Wales (formely 250k)
- Even UDM collieries closed encouraging bitter resentment
- Militant Kent coalfields closed entirely
37
Q
3
Describe Battle of Orgeave
A
- June 1984, Rotherham
- Attended by 5k miners
- Violence led to injuries of 51 miners and 72 police
38
Q
3
Describe the death of David Wilkie
A
- Welsh taxi driver
- Attempted to take 2 scabs to work
- November 1984, killed when concrete slab dropped on his car
39
Q
2
Describe the involvement of women in the 1984-85 miner’s strike
A
- National Women Against Pit Closures rally held in August 1984
- They presented a petition to the Queen
40
Q
2
Describe shifts in employment 1979-87
A
- Technological advances and recession 1980-82 had reduced demand for unskilled and semi-skilled labour
- between 1978-85, the number of semi-skilled/unskilled jobs reduced by 1m
