Towards a New Consensus (1987-1997) Flashcards
1
Q
Describe Thatcher’s tax policy 1987-1990
A
- Supply-side policy of tax cutting
- March 1988 budget, reduced the rate of income tax a further 40% for the rich and 25% for all other income taxpayers
2
Q
Describe interest rates and inflation 1987 to 1990
A
- Consumer credit and public spending increase fuelled inflation
- Lawson introduced successive increases in interest rates, to reach a minimum lending rate of 15% by October 1989
- Inflation was at 8.3% by June 1989
3
Q
Describe privatisation 1987 to 1990
A
- The privatisation agenda was renewed in earnest
- This time involved British steel, water and electricity
- Privatisation was relatively popular but this did not extend to the privatisation of electricity and water supply
- Some felt Thatcher was now denationalising out of principle rather than for economic gains
Quangos:
* Thatcher’s promise in 1979 had been to demolish ‘Quangos’ (bodies regulating private industry)
* Privatisation actually led to more quangos for each the major industries e.g OFTEL, OFGAS, OFWAT
4
Q
Describe Black Monday
A
- Stock market crash in October 1987
- 24% off stock prices
- £50 billion wiped off City stock values and by the end of the week the loss was nearly £102 billion
- Thousands lost savings
- Values were not recovered even into the 90’s
5
Q
Describe imports 1987 to 1990
A
- Non-oil imports were rising
- By 1989, the deficit reached nearly £20 billion, the largest figure on record
6
Q
Describe the rise of housing 1987 to 1990
A
- From 1979, Thatcher had promoted a ‘property owning democracy’ (e.g Right to Buy scheme and tax relief on mortgage interest)
- House prices shot up
- Home ownership increased from 54% to 65% of the population, but many went into debt
7
Q
Describe the fall of housing 1987 to 1990
A
- In 1989, the housing market collapsed
- Interest rates soared
- House prices slumped and 2 million found themselves with houses worth less than they had borrowed to buy them (‘negative equity’)
8
Q
Describe conservative by-election losses 1987 to 1990
A
- May 1989, the Conservatives were heavily defeated in the Glamorgan by-election
- It was widely believed that campaigning by local GP’s against government health plans were responsible
- Further by-election defeats followed
9
Q
Describe loss of Conservative government members 1987 to 1990
A
- Thatcher lost loyal colleague Willie Whitelaw due to ill health
- Norman Tebbit had fallen out with Thatcher and left government for the backbenches
- Leon Brittan had left for a job in Brussels
- Edwina Currie was forced to resign over the salmonella in eggs crisis
10
Q
Describe Thatcher’s opponents within the government
A
- By 1989, Thatcher was at odd with several colleagues
- Nigel Lawson quarrelled with her constantly
- Geoffrey Howe at the Foreign Office disagreed with her over foreign affairs and Europe
- John Biffen publicly criticised her abrasive style
- There was doubt throughout the Conservative party that Thatcher could win the next election
11
Q
Describe the introduction of the Poll tax
A
- Intended to replace the system of local rates, based on property values, with a flat charge for services set by local gov
- New poll tax meant everybody had to pay, not just householders
- Poll tax introduced in Scotland in 1989 and a year later into England and Wales
- Poll tax came into force in April 1990 and there were huge riots, many of them violent
12
Q
Describe political opposition to the poll tax
A
- It was strongly opposed by Labour, the Alliance and the nationalist parties
- The nationalists and far left urged supporters not to pay
- Labour confined its opposition to parliamentary pressure and peaceful protests
- November 1989, Militant Tendency had set up the Anti Poll-Tax Federation
13
Q
Describe the main riot against the Poll tax
A
- 30th March 1990
- The weekend before the charge was to come into operation
- 250,000 people protest in Trafalgar Square
- 5,000 people were injured including rioters, police and bystanders
- Over 300 arrests were made
14
Q
Describe the consequences of opposition to the Poll tax
A
- Edward Heath and other leading Tory’s voiced their opposition
- Some local Tory councillors resigned from the party
- Labour registered some by-election successes
- The poll tax was withdrawn in 1991
- It was replaced by a new council tax, based on property values and the assumption that each home had two adults (25% reduction for single adult occupancy)
15
Q
Describe the Education Reform Act
A
- 1988
Laid down the national curriculum:
* All children must take maths, english and science as core subjects
* Religious studies were compulsory
- Testing of all pupils at ages 7, 11, 14 and 16 was introduced
- Changes to control and budgeting of schools
16
Q
Describe the limitations of education 1987 to 1990
A
- By international standards, school were still underfunded
Conservative critics:
* Discipline in schools had broken down
* Poor teacher training
* Lack of testing
Left-wing critics:
Underfunding, the problems of immigrant children, the failure to ensure that more girls took science, the imbalance between state and independent schools
17
Q
Describe student grants 1987 to 1990
A
- Student grants were frozen with loans offered as an alternative
- Increasing concerns that students from less well off backgrounds would be impeded from applying
18
Q
Describe the ‘market mechanism’
A
- 1989, Kenneth Clarke (Minister for Health) proposed ‘market mechanism’
- Doctors could have control over their own budgets
- Hospitals could contract out of the NHS altogether
- Thatcher had claimed in 1982 that the NHS was ‘safe’ with her but many were not convinced
19
Q
Describe NHS funding 1987 to 1990
A
- Britain spent less on health than any western European country and the US
- Many hospitals were shabby with inadequate equipment
- Nurses, doctors and other staff felt underpaid, undervalued and overworked
- The BMA denounced government policy and won public support
20
Q
Describe changes to the NHS 1987 to 1990
A
- Massive rise in prescription charges over the 80s
- Dental services were virtually private by 1990
- Doctors were expected to prescribe cheaper non-generic medicines rather than well known brands
21
Q
Describe the Single European Act and the FP changes that followed it
A
- 1986, Thatcher had signed the Single European Act
- This appeared pretty pro-European but Thatcher later became less positive to Europe
- Thatcher later claimed she hadn’t understood had the SEA would affect Britain’s relationship with Europe
- To counter the direction Thatcher feared the EEC was moving in she made a speech in Bruges in 1988 to set out her vision of the future of Europe
22
Q
Describe the Bruges speech
A
- September 1988
- Defended her ‘New Right’ viewpoint which coupled national sovereignty with free market economics
- ‘We have not… rolled back the frontiers of the state in Britain only to see them… reimposed by a European super-state’
23
Q
Describe the consequences of the Bruges speech
A
- It was difficult to see how Thatcher’s vision of a single market could become a reality without an increase in European institutions to manage it
- European reaction to her speech was hostile
- In Britain, the Bruges speech inspired the several MPs to form the Bruge Group to focus opposition to any European federal state
24
Q
Describe the expansion of the EEC 1987 to 1990
A
- Thatcher was in favour of expanding the EEC to include the new states in Eastern Europe
- She wanted to expand free trade and ensure that communism was truly defeated
- It was also partly to weaken the power of the European Commission in Brussels
25
Q
Describe the Delors report
A
- Delors led a study on a single monetary system, published 1989
A 3 stage route was proposed for the Economic and Monetary Union:
* It involved membership of the ERM, currency alignment, and finally establishment of a single currency and a central European Bank
* A currency union could lead on to a common budgetary policy which could affect each member’s economic and social policies
26
Q
Describe the British response to the Delors report
A
- Thatcher believed the pound sterling was a symbol of national sovereignty and made her opposition to the EMU clear
- Nigel Lawson quickly put forward an alternative scheme for competing currencies throughout Europe but was discredited as trying to steal the initiative from Delors
27
Q
Describe the Social Charter and its impact
A
- The Social Charter laid down minimal conditions for education, employment and social security
- It was feared it would lead to further interventionism and threaten British competitiveness
- Thatcher strongly opposed it
- Delors then spoke at the TUC Conference, receiving a standing ovation for outlining plans to protect workers rights
- Labour and the trade unions moved back to favouring the EC
28
Q
Describe the political problems for Thatcher with regards to the EEC
A
- Labour easily won most seats in the 1989 elections to the European parliament
- Howe and Lawson insisted on a commitment to joining the ERM, threatening resignation if Thatcher did not agree
- Thatcher appeared to agree to stage one and delayed stages 2 and 3 and refused to accept the Social Charter
- Howe and Lawson resigned
29
Q
Describe the impact of the reunification of Germany on the EC
A
- Thatcher upset the Germans through lack of interest in reunification
- Comments by Nicholas Ridley that the ERM was a German attempt to take over the whole of Europe were badly received and he was forced to resign
- France saw the EC as a way to control Germany while Britain saw the EC as a means by which Germany could take control
- Reunification was supported by the US so the British position had to be reassessed
- The Tory party became even more divided
30
Q
Describe British entry to the ERM
A
- Britain finally joined the ERM in 1990, under the influence of the new Chancellor, John Major
- France and Germany set 1994 as the date for stage 2 of the Delors Plan
- Speeches by Thatcher undermined her chancellor and led the French and Germans to believe she wanted to destroy the ERM
31
Q
Describe the rise of Labour 1987 to 1990
A
- Kinnock had firmly established Labour leadership (he gained control of the National Executive and defeated Tony Benn in a leadership challenge)
- Labour accepted the mixed economy, moved away from the far left and unilateralism, was warmth to Europe and wanted union controls and stronger law and order
- In 1989 Labour led strongly in opinion polls
- In the European elections Labour won 45 seats to the Tories 32, the first defeat for Thatcher in 10 years
32
Q
Describe public opinion of Thatcherism 1987 to 1990
A
- Comparisons were drawn with Macmillan’s government in the 1960s - frequent Cabinet reshuffles, acute balance of payments difficulties, a shaky pound and high interest rates
- Environment issues (land conservation, acid rain and the greenhouse effect) were largely ignored by the Tories
- Consumption and wealth creation did not always work well with quality of life
33
Q
Describe the final fall of Thatcher
A
- Europe was an embarrassing weakness and Howe performed a dramatic resignation with a speech, fiercely attacking Thatcher in the House of Commons
- Anthony Meyer agreed to be a ‘stalking horse’ (a weak contender who forces an election in the expectation of a stronger candidate then joining in)
- 33MPs voted for him, 24 abstained
- Michael Heseltine challenged for leadership
- Thatcher won the first ballot but by only 52 votes so she accepted the MPs loss of confidence and resigned
- The second ballot was won by John Major
34
Q
Summarise the economy 1990 to 1997
A
- Taxation levels were higher than they had been in the 1970’s
- Britain’s long term economic decline relative to other nations did not stop
35
Q
Describe the impact of joining the ERM on the British economy
A
- The ERM required Britain to maintain a fixed rate of exchange (2.95 German Marks to the pound)
- By September 1992, the British currency was under strain and they needed to devalue or face even further decrease in output and employment
36
Q
Describe Black Wednesday
A
- 16th September 1993
- At 7pm, Lamont announced the decision to leave the ERM live on television
- The value of the sterling was down 20%
- £5 billion had been wasted trying to stay in the ERM
- Interest rates increased dramatically
- Government credibility was lost
37
Q
Describe the economic consequences of leaving the ERM
A
- Exchange rates and unemployment down
- The housing market began to pick up
- The US economy was coming out of recession, helping to expand world trade
- The economy was benefiting from the financial deregulation and flexible working practices that the Conservatives had introduced in 1979
- In comparison, the German economy was struggling with the cost of unification and sluggish growth rates compared with Britain
38
Q
Describe the political consequences of leaving the ERM
A
- The Conservatives were no longer trusted with the economy
- Steep drop of support for the Conservatives in the opinion polls
- Major’s personal authority was badly weakened
- Labour party shot ahead in the polls
- Major himself saw Black Monday as ‘the beginning of the end’
39
Q
Describe the resignation of the Chancellor of the Exchequer, Lamont
A
- In 1993, Lamont proposed extending VAT to domestic fuel
- This provoked widespread anger
- Facing increasing lack of popularity, Lamont was forced to resign in May and was replaced by Kenneth Clark
40
Q
Describe the economy by 1997
A
- Most economic indicators were positive
- Unemployment was down
- Productivity was up a little
- Consumer spending went up
- Car ownership increased
- House prices rose and negative equity became much less common
- Business was supportive of government policies
- Yet people were reluctant to give Major’s government credit for this
- The ‘feel-good’ factor was missing
41
Q
Describe Major’s loss of majority
A
- Following withdrawal from the ERM, Major’s government lost every by-election
- In 1995, 1,800 council seats were lost
- Following this, the tories lost their House of Commons majority
- By 1996, Major was forced to rely on support from the Ulster Unionists
42
Q
Describe the decline of coal 1990 to 1997
A
- Demand for coal was still falling
- British coal cost twice as much as importing coal from Australia, USA and Columbia
- The remainder of the industry was sold to the private sector for less than it was worth
- By June 1993, the mining workforce was down to 44,000 - less than half what it had been in 1990
43
Q
Describe the NHS 1990 to 1997
A
- Further reorganised to create an ‘internal market’
- Led to widespread complaints of burgeoning bureaucracy and inequality
- Fund holding GPs in control of their own budget seemed to be able to get a better deal for their patients than non-fund holding colleagues
44
Q
Describe education 1990 to 1997
A
- Reduction of the power of the local education authorities by giving schools powers of management
- Introduction of national testing and performance league tables
- Changes to teacher training
- Introduction of a system of national inspection, under another new quango, OFSTED
- All of this had some opposition within the teaching profession
45
Q
Describe privatisation 1990 to 1997
A
- Continued
- Spending was increased by selling capital assets
- The coal industry was privatised in 1994 and the railways in 1996
- Attempt to privatise the Post Office was abandoned following public opposition
- Introduction of the Private Finance Initiative (PFI)
46
Q
Describe the Private Finance Initiative
A
- Public-private partnerships
- Private companies would fund infrastructure improvements and deliver public services that the State would pay for over the length of the contract
47
Q
Describe the Citizens Charter
A
- Introduced in 1991
- An attempt to give public sector users more power over the quality of services by providing information about the standards they should expect
- For example, in education, there would be more testing and schools would publish results
48
Q
Describe problems with the Citizens Charter
A
- Not all of this was effective
- For example ‘The Cones Hotline’ - a number that motorists could call if motorway lanes were closed without any sign of road works - simply became a meaningless complaint line
49
Q
Describe civil liberties 1990 to 1997
A
- Suffered a sustained attack under Home Secretary Michael Howard
- Restricted rights of free assembly
- Gave the police powers to control raves and travellers
- Abolished the right to silence (protection against self incrimination)
- Obliged the courts to impose fixed sentence for certain crimes (increased prison population)
