Topic 5: Fall of Thatcher (1987-97) Flashcards
5
List the factors that contributed to the downfall of Thatcher
- Poll tax
- Economic factors
- Failure of social policy
- Party division
- Sucess of Labour
4
Describe Black Monday 1987
- Stock market crash on Oct 1987 - wiped off 24% off stock prices
- By end of week, £102bn wiped off City stock values
- Small savers saw funds decimated
- Values had not been recovered by 1990s
5
Describe Lawson’s economic policies 1987-89
- Continuation of supply-side tax cuts and privatisation
- Consumer and credit boom exacerbated inflation to 8.3% by June 1989
- Contradicted initial Thatcherite pledge to keep inflation low
- Lawson steeped interest rates to minimum lending rate of 15% by Oct 1989
- Non-oil imports rose steadily 1987-88
4
Describe the March 1988 budget
- 60% upper rate income tax rate abolished
- 40% became new upper-limit
- basic rate cut from 27% to 25%
- deficit reached £20bn, easily worst on record
4
Describe privatisation 1987-90
- British Steel privatised in 1988
- 1989 Water Act - privatised British water
- Privatisation of water and electricity not met with same enthusiasm
- Thatcher nationlised on philosophical dogma rather than empirical analysis of costs
4
Describe the resignation of Lawson
- Divisions over ERM
- Thatcher blamed Lawson for initiating inflationary pressures
- Lawson disgruntled by Thatcher’s reliance on anti-ERM Professor Alan Walters as an advisor on European and monetary policy and refusal to sack him
- Resigned October 1989, replaced by Major
3
Describe internal conservative party divisions over the Europe 1987-90
- Lawson and Howe saw ERM as beneficial as stabilising factor to economy
- in 1988, Thatcher spoke against political and economic union for Europe
- By 1989, Thatcher had resigned fact that Britain would have to join ERM after Howe (FS) and Lawson (CX) threatened to resign
2
Why was Thatcher opposed to ERM entry
- British inflation was at 3 times that of Germany
- Entry would have entrenched currency depreciation
3
Describe the problems with the ‘right to buy’ scheme by 1990
- Feverish speculation meant majority of new house owners were debtors to financial institutions
- Housing bubble burst in 1989
- 2m house owners encountered ‘negative equity’
1
What is negative equity?
Market value of house lower than mortgage
3
Describe the Education Reform Act 1988
- Biggest shakeup since Butler’s Education Act 1944
- Laid down national curriculum
- Seen as revolt against Lab-controlled LEAs and teachers
3
Outline the national curriculum of the Education Reform Act 1988
- Maths, English and Science became core subjects
- RS were compulsory
- Standardised testing (SATs for ages 7, 11, 14; GCSE for 16)
2
Outline the budgetary changes of the Education Reform Act 1988
- Control of school budgets transferred from LEAs to school heads
- Schools permitted to opt out of LEA control and become maintained by central-govt grants
3
Describe limits to education 1987-90
- UK schools underfunded by international standards
- Criticism from right and left
- Student grants has been frozen in 1984, with loans offered as alternative - concerns over disadvantaging poor
3
Describe right-wing criticism of education 1987-90
- Encouraged by Keith Joseph
- Criticised informal teaching style, lacking of discipline
- Thatcher associated problems with comprehensive system
3
Describe left-wing criticism of education 1987-90
- Blamed underfunding
- Failure to ensure girls in STEM
- imbalance of private and comprehensive schools
5
Describe the problems in healthcare 1980s
- Britain spent less on health than any Western European country and far less than USA
- Nurses, doctors and ancillary staff overworked and underpaid
- Massive rise in prescription charges across 1980s
- Dental services virtually private by 1990
- Doctors were expected to prescribe cheaper non-generic medicines rather than well-known brands
4
Describe the ‘market mechanism’ for health
- Announced by Health Sec Ken Clarke in 1989
- Hospitals would have control over own budgets
- Hospitals could contract out of NHS altogether
- Thatcher had previously claimed in 1982 that NHS was safe from privatisation
2
Describe the reaction to the ‘market mechanism’
- BMA denounced govt policy
- 1989 Vale of Glamorgan elec - Labour won on back of local GP campaign against health plans
3
Describe Thatcher’s policy on quanqos
- Promised to abolish quangos in 1979
- Yet privatisation of utilities required new regulatory bodies to prevent unchecked monopolies
- e.g. OFTEL (Office of Telecommunications)
5
Describe the poll tax (community charge)
- Intended to replace domestic rates based on property values to fund local govt
- Flat charges for services set by local goverment
- All would pay, not just homeowner
- Introduced in Scotland in 1989
- Enacted in England/Wales April 1990
3
Describe the problems with the poll tax
- Had been widespread non-payment in Scotland
- 30% non-payment in England and Wales
- Would impose huge burden on WC families - many of whom had backed Thatcher in previous elections
4
Describe the reaction to the poll tax
- Immense protests, many of them violent
- Opposed vigorously by Lab, Alliance, nationalist parties (latter encouraging non-payment)
- Militant Tendency set up anti-Poll Tax Federation in Nov 1989
- Heath criticsed policy
1
Describe a limit to poll tax opposition
- Labour restricted opp to parliamentary pressure and peaceful protest
5
Describe the 30 March 1990 London riot
- Weekend before poll tax came into operation
- 250k attended protest in Trafalgar Square
- extensive looting
- 5k injured inlcuding police, bystanders
- over 300 arrests
2
Describe the political impact of the poll tax
- Poll tax plummeted Thatcher’s popularity to level unseen since 1980-81 - electoral liability
- Replaced by property-based Council Tax in 1993
3
Outline the loss of Thatcher loyalists by 1990
- Most loyal colleague Whitelaw retired in Jan 1988
- Leon Brittan had left to take up lucrative VP of European Commission post in Bruseels
- Rising star and loyalist Edwina Currie forced to resign over salmonella-in-eggs crisis in 1988
3
Describe Conservative Party division 1987-90
- Centralised leadership, becoming increasingly isolated over wider PLP
- Debates over Europe with Howe and Lawson
- Early Thatcherite John Biffen criticised her dogmatic style
5
Describe the increasing threat Labour posed to Thatcher by 1990
- Much of Tory electoral strength derived from lack of effective opp - this had changed by 1989
- Decline of Alliance/Lib Dems
- Kinnock had reorganised party, gained NEC controls and shifted policies closer to centre-ground
- Labour led every poll from June 1989 until Thatcher resignation (perhaps signalling Lab support was temporary!)
- 1989 European Elections
2
Describe the 1989 European Elections
- Lab 45 seats, Con 32
- 1st defeat for Thatcher in 10 years
3
Describe the loss of public support of Thatcher by 1990
- Comparisons with frequent reshuffles and high interest rates of end of Macmillan’s premiership
- Those concerned about environmental issues found more natural support in Lab/LD camps
- Concerns consumption and wealth creation worsened inequality
5
Describe internal Conservative party divisions over Europe 1987-90 (excluding ERM)
- EEC policy division greatest source of weakness
- Bruges Speech 1988
- 1989 leadership challenge
- ‘No, no, no’ speech
- Antagonistic approach led to dramatic resignation of Howe who lambasted Thatcher in October 1990 resignation speech
2
Describe the 1989 Conservative leadership challenge
- Pro-EEC Anthony Meyer challenged - ‘stalking horse’
- won support of 33 MPs
3
Describe the ‘No, no, no’ speech
- Denounced Delors’ european integration policies announced in Oct 1990
- Roused up eurosceptics in HoC
- Yet weakened authority in cabinet
4
Describe the 1st round of the Conservative leadership election 1990
- Triggered by Howe resignation
- Heseltine challenged Thatcher for leadership
- Thatcher won 1st round, yet fell short of 15% lead over runner-up needed to win ouright
- Initially declared she would fight on
3
Describe the 2nd round of the Conservative leadership election 1990
- Series of cabinet ministers urged her to resign - withdrew from contest
- Second ballot won by Thatcher-backed Major who had not entered in 1st round
- Concerns Heseltine elevation would entrench divisions
