Towards a New Consensus (1987-1997) Flashcards
Describe Thatcher’s tax policy 1987-1990
- 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
Describe interest rates and inflation 1987 to 1990
- 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
Describe privatisation 1987 to 1990
- 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
Describe Black Monday
- 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
Describe imports 1987 to 1990
- Non-oil imports were rising
- By 1989, the deficit reached nearly £20 billion, the largest figure on record
Describe the rise of housing 1987 to 1990
- 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
Describe the fall of housing 1987 to 1990
- 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’)
Describe conservative by-election losses 1987 to 1990
- 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
Describe loss of Conservative government members 1987 to 1990
- 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
Describe Thatcher’s opponents within the government
- 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
Describe the introduction of the Poll tax
- 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
Describe political opposition to the poll tax
- 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
Describe the main riot against the Poll tax
- 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
Describe the consequences of opposition to the Poll tax
- 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)
Describe the Education Reform Act
- 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
Describe the limitations of education 1987 to 1990
- 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
Describe student grants 1987 to 1990
- Student grants were frozen with loans offered as an alternative
- Increasing concerns that students from less well off backgrounds would be impeded from applying
Describe the ‘market mechanism’
- 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
Describe NHS funding 1987 to 1990
- 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
Describe changes to the NHS 1987 to 1990
- 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
Describe the Single European Act and the FP changes that followed it
- 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
Describe the Bruges speech
- 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’
Describe the consequences of the Bruges speech
- 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
Describe the expansion of the EEC 1987 to 1990
- 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