Topic Five - The Impact of Thatcher's Governments Flashcards
What is the definition of Thatcherism?
the set of aims that Thatcher sought to achieve during her 11 years as PM
What is reverse Keynesianism?
a move to a free market within British economy
How did Thatcher plan to cut government spending?
- Monetarism to end wasteful government spending
- cut government subsidies towards unprofitable industries to increase competition
How did Thatcher cut taxes?
- income and corporation taxes reduced
- individuals and companies kept more of their own money
How did Thatcher resist bureaucracy?
- made local governments accountable to the public they served
- undemocratic power of trade unions to be broken
- union leaders made responsible to their members
- companies and public utilities removed from government control
- privatisation introduced
How did Thatcher take government off the backs of people?
- maintenance of law and order given priority
- provide greater protection to ordinary citizens
- British independence enhanced
- Britain promoting international justice in the face of communist oppression
- rights of the individual and the family takes precedence over abstract notions of social good
Who did Thatcher base her initial economic policies on?
Friedrich Von Hayek
What is Monetarism?
the basic cause of inflation is in the money supply - governments should restrict the amount of money in circulation and cut expenditure
What were the impacts of Monetarism?
- led to increased inflation (risen to 22% within a year of Thatcher’s premiership)
- led to increased unemployment
- had long-term success
What was inflation in 1978?
11%
what was inflation in 1980?
22%
How did the fight against inflation progress over time?
- previous PMs prioritised unemployment
- Thatcher willing to risk a period of high unemployment to fix inflation
- felt that Monetarism was the best tactic
Outline some points from the 1981 Budget.
- Britain was in recession
- ‘stealth taxes’ - did not increase tax band in accordance with rising inflation so people were paying more tax
- Windfall tax on oil and bank profits
- the budget was heavily opposed
What did unemployment rise to as a result of Thatcher’s economic reforms?
from 1.2 million to 3 million
What did industrial output fall by as a result of Thatcher’s economic reforms?
11%
What did interest rates rise to as a result of Thatcher’s economic reforms?
just under 16%
How did the value of the £ change as a result of Thatcher’s economic reforms? What impact did this have?
- value of £ rose against the $
- negative impact on exports
Where were there riots as a result of Thatcher’s economic reforms?
Bristol and Liverpool
How did regional variations change as a result of Thatcher’s economic reforms?
Increasing North-South divide
How did urban unrest and social tensions change as a result of Thatcher’s economic reforms?
Increased urban unrest and social tensions
What events happened in 1982 that impacted upon the 1983 election?
- inflation and interest rates fell
- Thatcher led Britain to victory in The Falklands War
- Divisions in the Labour Party
How did Labour perform in the 1983 election?
- worst electoral performance since 1918
- far-left manifesto was dubbed the ‘longest suicide note in history’
How many votes did Labour lose in the 1983 election?
lost over 3 millions votes
Was monetarism successful in 1983?
No - it was proving very unpopular - people didn’t understand it
What economic policy did Thatcher move towards by 1983?
Supply Side Economics
What were the policies of Supply Side Economics?
- cuts to income tax
- encourage competition
- limit power of trade unions
- cut welfare payments
Why did supply side economics cut income tax?
to give workers incentive to work harder
Why did supply side economics encourage competition?
to lower prices
Why did supply side economics cut welfare payments?
- to save public money
- to reduce dependency
What was ‘Popular Capitalism’?
gave ordinary people the chance to become shareholders
What was privatisation?
selling publicly owned companies to the private sector
Why did Thatcher employ a policy of privatisation?
- increase competition
- increase incentive to work hard
When was British National Oil Corporation sold to the private sector?
1982
Why did Thatcher privatise the British National Oil Corporation?
the belief that oil was entering a period of long term decline and shares were at their most valuable
What do critics say about the sale of the British National Oil Corporation to the private sector?
complained that Thatcher had squandered a national asset for short term gain
What did deregulation do?
removed financial and legal restriction which was blamed for low productivity and efficiency in many areas of the economy
What were some measures of deregulation?
- credit and exchange controls were abolished
- bus companies were deregulated to encourage competition
- education, health and housing policies
What were some benefits of the privatisation of British Rail?
- improved customer service
- more investment
What were some limitations of the privatisation of British Rail?
- higher fares
- lower punctuality
- increased rail subsidies (financial aid provided by the government)
What did standard single fares increase by as a result of the privatisation of British Rail and why?
up to 208% - try to reduce large numbers of people travelling at peak times
How have rail subsidies increased from 1992 to 2019?
- £2.7 billion in 1992-1993
- £7.4 billion in 2018-2019
When was the Miner’s Strike?
April 1984 - March 1985
Why would Thatcher not subsidise unprofitable industries?
she felt it rewarded the inefficient at the expense of the efficient
Why was the coal industry a problem for the government?
- it was expensive and difficult to mine
By the 1970s how successful were British mines?
they were running at a loss
What was the government’s case in the Miner’s Strike?
- unwilling to put public money into an industry which couldn’t compete in the open market
- inaction by previous governments was delaying the inevitable (things weren’t going to get any better)
What was the miner’s case in the Miner’s Strike?
- The Miner’s Union claimed that with proper investment the coal industry could be established as a long term power source
- argued that the social consequences of mine closures were significant
Where was the coal industry the most significant?
South Wales, Yorkshire, Durham - coal was a way of life
How did the government prepare for a strike?
- Employment Acts introduced
- started to stockpile coal
- drafted emergency plans for importing further stocks
When and why were the Employment Acts introduced and what did they do?
- 1980 and 1982 - introduced in anticipation of a prolonged miner’s strike
- forbade mass picketing
- outlawed ‘closed shop’
- declared industrial actional illegal without a formal ballot
Why was the Strike defeated?
- Arthur Scargill was unpopular
- Few other trade unions supported the strike
- miner’s claimed police brutality was causing the violence of the strike - the broad public perception was that the miner’s were mostly at fault
- Labour opposition didn’t perform well
- Police were successful
- coal was no longer the main source of fuel - didn’t have a massive impact
Who was Arthur Scargill and why was he unpopular?
- NUM leader
- had an abrasive manner
- alienated miners in Nottinghamshire who continued to work throughout the strike
Why did Labour opposition not perform well?
- Neil Kinnoch tried to take a political middle path in relation to the strike which was unpopular with voters
How did the Labour Acts aid the opposition of the miners?
gave the National Coal Board (NCB) leverage against the miners
How were the police successful through the Miner’s Strike of 1984-1985?
- helped strike breakers to get to work
- got coal out across picket lines
What were the impacts of the Miner’s Strike?
- social commentators suggested that the violence reflected increasing lawlessness in Britain
- the violence convinced most people in Britain that industrial action needed to change
- failure of the strike sped up the process of mine closures
- gave Thatcher the confidence to take on other opponents
How was the nation divided over the Miner’s Strike?
- 65% for the government
- 35% for the miners
- reflected the divided society
What did the closure of the mines lead to?
- job losses
- redundancy
- social disruption
- decline of traditional communities
What was the overall success of Monetarism?
- very unsuccessful in short term as it led to high inflation
- inflation rates decreased in the long term
- led to high unemployment
What was the overall success of Supply Side Economics?
- reduced taxes
- deregulation
- implementation of a free market to stimulate economic growth
How many civil servants were there in 1980?
732,000
When did Thatcher abolish the Civil Defence Department and why?
1981 - saw it as a trade union
Who was the Environment Minister and what did he do?
Michael Heseltine - introduced the Management Information System for Minister
By 1997, how many Civil Servants worked across 100 companies?
76%
A less what Civil Service was promoted?
centralised
By 1988 how many Civil Servants had been fired?
22.5% - agencies begun to work with the private sector to deliver services
How much money did firing the Civil Servants save?
£1 billion
What act allowed Thatcher to abolish troublesome councils?
Local Government Act 1985
How did Thatcher change funding to Local Governments?
She cut it
What act introduced ‘Right to Buy’ and aimed at stopping reliance on local government?
1980 Housing Act
How many council houses were bought between 1982 and 1983 - what impact did this have?
204,000 - made it harder for the council to house the poorest in society
Why was the Poll Tax unfair?
charged the rich and the poor the same
How much did spending on the NHS increase between 1980 and 1987?
60%
Why did Thatcher wish to reduce the cost of the NHS?
introduce increased competition into healthcare
How much did the cost of the NHS rise between 1985 and 1991?
25%
Why did Thatcher have to be careful when reducing the NHS?
it was extremely popular
What impact did Thatcher winning the 1987 election have?
gave her confidence to make more radical reforms
When did the most radical reforms to education come?
After 1987 - standards raised meant better value for money
What were some key reforms introduced to education under Thatcher?
- Key Stages created
- created one single GCSE
- Exam results were published in league tables that allowed parents to pick better school
What were the impacts of the key reforms to education under Thatcher?
- stressed teachers and students
- good schools faced over subscription
What did Thatcher regularly use rather than career civil servants?
Special advisers
Why did the use of special advisers lead to a decrease of voters?
Felt their vote did not matter
MPs with university degrees increased to what?
- 40% in 1945
- 75% in 2010
MPs that had previously worked for political organisation increased to what?
- 3% in 1979
- 14% in 2010
What is Neoliberalism?
- A political approach that favours free-market capitalism, deregulation, and reduction in government spending (austerity)
- Market orientated
Does Neoliberalism focus on freedom or equality?
Freedom
What is socialism?
- Political and economic theory of social organisation that advocates that the means of production, distribution and exchange should be owned or regulated by the community as a whole
- Public ownership orientated
- Focus on reduction of private properties
Does socialism focus on freedom or equality?
Equality
How did Labour’s political standing change under Thatcher?
Shifted more towards socialism in opposition to Thatcher’s far-right policies
How did Labour shift closer to the centre following Thatcher?
Because of Tony Blair’s attempt to adopt some Thatcherite policies
How is the centre of the political spectrum in Britain perceived?
More right-leaning
How were the poor effected by Thatcher’s time as PM?
- regressive taxes took a far higher percentage of income of the poor
- policies aimed at cutting inflation ended up cutting spending on the poor and fuelled unemployment
- manufacturing workers suffered greatly
What did the proportion of pensioners living below the poverty line increase to?
13% to 43%
Between 1979 and 1992, what did the poor see a reduction of?
The poorest ten percent saw a reduction of 18% in this period
How much less money did the rich pay in income tax?
The top ten percent paid £9.3 billion less in income tax
What did the income of the rich increase by between 1979 and 1992?
The richest ten percent saw their income increase by 61% in this period
What did Thatcher reduce as part of her reduction of the National Government?
The size of local governments
What did Thatcher target due to her distaste for the left?
Local councils under Labour control
In 1979 how many Scottish seats did Conservatives win?
21 out of 71
In 1987 how many Scottish seats did Conservatives win?
10
In 1997 how many Scottish seats did Conservatives win?
None
Why did Nationalism in Scotland and Wales increase?
Thatcher’s opposition to traditional industries
How did conservatives’ involvement in consensus politics change under Thatcher?
Thatcher officially removed the conservatives from consensus politics
Was Thatcher popular within the conservative party?
Thatcher was very unpopular – she had many of her own ideas and would act alone without consulting the other party members
Who was selected to take over from Thatcher and why?
John Major – most likely to continue with Thatcher policies such as privatisation and lower taxation
What was Tony Blair like as a PM?
Wanted more social justice than Thatcher had during her time as PM
