Towards a New Consensus 1987-97 Flashcards
Poll: What was the Poll Tax
aka Community Charge:
A flat tax (unprogressive) on households to replace the rates-based system of council tax.
Poll: Aims of the Poll Tax
Make councils more accountable to their ‘cusomers’ (citizens)
Make it so that not only the homeowner has to pay taxes, but everyone
Spread the burden out as more people would be paying it
Make people boot out their high taxing Labour councillors
Poll: Militant
Militant Tendency had a rebirth in the form of the Anti-Poll Tax Federation as a popular group opposing the regressive tax
Poll: Why did Thatcher’s intransigence hurt her
It was introduced to Scotand in 1989 and was deeply unpopular, but Thatcher refused to U-turn and implemented it in England in 1990
Poll: How many people refused to pay PT in some areas?
Up to 30%, encouraged by SNP
Poll: Battle of Trafalgar Square
March 1990, 300,000 protested against the tax across England, but especially in Trafalgar Square.
Turned into a riot, 5,000 injured
Looting, arson and violence
Militarised police
Why did Nigel Lawson resign
He clashed with MT’s SPAD Alan Walters over the ERM, Lawson supported it but MT listened to her advisor over her Chancellor. Lawson resigned as he felt he wasn’t being treated fairly.
Lawson also disagreed with the Poll Tax but was overruled by Thatcher and the cabinet
Replaced by Chief Sec to the Treasury John Major
Why did Geoffrey Howe resign?
Howe was a Europhile which clashed with Thatcher’s increasing Euroscepticism.
When Thatcher refused to join the ERM despite Howe and Lawson’s urges. He also opposed Poll Tax. Thatcher demoted him to become Deputy PM with John Major replacing him as Foreign Secretary
He resigned in 1990 citing disagreements over Europe and Thatcher’s domineering attitude towards her cabinet
Why did Nick Ridley resign?
He said that giving up sovereignty to Europe would be as bad as giving it up to Hitler, said Europe was a ‘German racket designed to take over Europe’
Forced to step down from the cabinet in 1990.
Poll: How did the Poll Tax lead to Thatcher’s downfall
Annoyed her middle-class base as it increased taxes on them
Battle of Trafalgar Square
By-election hailing in Thatcher’s downfall
1990 Eastebourne by-election
Loss of an ultra-safe seat to Lib Dems
1990 Polls
Labour 20 points ahead in polls
Thatcher’s popuarity lowest in her premiership
1990 Conservative Leadership Election
Michael Heseltine contested Thatcher’s leadership of the party.
MT got more votes than Heseltine, but after 40% of MPs voted against her, her cabinet pressured her to resign
After Thatcher stepped away, Foreign Secretary John Major and Home Secretary Douglas Hurd stood against Heseltine.
MPs didn’t like the flamboyant Heseltine or the uncharismatic Hurd, so picked Major as the only other option.
Thatcher supported Major as a continuation, but during his premiership Major positioned himself as different to MT.
No No No
Thatcher’s response to Jacques Delors raising the issue of further European integration. Led to Howe’s resignation.
1990 inflation rate
10%
John Smith
Kinnock resigned after Labour 4th consecutive loss in 1992.
His Shadow Chancellor John Smith, a right-wing modernised was elected in his place
Served until he died of a heart attack in 1994
Promoted Blair and Brown into shadow great offices of state
Removed the influence of TUs in Labour through One Member One Vote for deciding Labour leaders
Bruges Speech
1988 speech by Thatcher arguing against European federalism
Turning point for Thatcher’s relations with Europe
What reasons did Thatcher have to oppose Europe?
She disagreed with protectionism in an increasingly globalised economy
Feared UK was being scammed even after the 1984 rebate
She believed that centralised economies were failing, as demonstrated by the collapsing Soviet Union
Saw Brussels bureaucracy as inefficient
Personal clashes with Delors and Kohl
Thatcher didn’t really oppose the European project, but after the Single European Act, she thought that any more federalism would be wrong, so clashed with its federalist leader Jacques Delors
Thatcher on Germany
Supported Gorbachev’s views for a united, neutral Germany instead of the West subsuming the East
Scared of Germany dominating Europe
Thatcher didn’t like German Chancellor Helmut Kohl
What was the ERM
Exchange Rate Mechanism
Fixed exchange rate agreement
Thatcher reluctantly joined it in 1990 to help fight double-digit inflation and pegged the sterling to the deutschmark.
Sterling was overvalued, and German reunification only meant this overvaluing would get worse
Examples of the collapse of detente in the 80s
Shooting of the South Korean KAL007 passenger plane by the USSR
Cruise missiles being stationed in Greenham Common
Reagan’s Star Wars initiative
Anthony Meyer
Tory MP who stood against Margaret Thatcher in 1989 due to his pro-European leanings, but lost handily. Displayed divisions in the Tory party over Europe.
Citizen’s Charter
1991 political initiative by John Major to improve public services through regulatory bodies
Established Ofcom, Ofsted, Ofwat, Ofgem etc.
Gulf War
After Saddam Hussein invaded Kuwait, the UK and other Western coalition forces liberated Kuwait in a quick and easy war in 1990-91.
Which Tory unifier left the cabinet under Thatcher?
Willie Whitelaw in 1987 after suffering a stroke
Poll: Increase in number of taxpayers
14m ratepayers -> 38m polltaxpayers
Poll: Who came up with the Poll Tax?
Adam Smith Institute, opposed by most of party
Poll: How much did it cost to collect PT?
2.5x more expensive to collect than the rates-system
What did Thatcher promise when she resigned?
She’d be a good “back seat driver”.
Major turned out to be more independent than Thatcher expected though
How did the polls react to Major’s ascension
Tories overtook Labour as they jumped up around 15 points.
Newspapers supported the new PM
Major’s quote on Europe when he took office
Aimed to see Britain take its place “at the very heart of Europe”
How was the party divided when Major took offce?
Europe had begun to deeply divide the party
Thatcherite loyalists wanted to punish those who had ‘betrayed Maggie’
Should the poll tax be scrapped?
Major instinctively tried to unite these differences
Poll: When did Major scrap the Poll Tax?
Late 1991, it was replaced with Council Tax meaning £1.5bn had been wasted
Recession under Major
Early 90s Recession:
3m unemployed
Mortgages put into negative equity and houses reposessed
Affected homeowning middle-class
11% inflation in 1990
How did unemployment increase in the early 90s?
1.5m in mid-1991 -> 2.6m early-1992
What was the exchange rate between the sterling and the deuschmark set at during the ERM period
£1 = 2.95 deutschmarks
WHEN was Black Wednesday
16 September 1992
WHAT was Black Wednesday
Taking the pound off of the ERM leading to the value of the pound crashing as currency speculators put downwards pressure on the value of the pound by betting against it.
Interest rates were raised from 10 to 12 to 15% on Black Wednesday before Normal Lamont (Chancellor) capitulated and left the ERM
Pound dropped 15% in one day
Bank of England spent large amounts of its reserves trying to prop up sterling
Labour jumped ahead in polls
Outcome of Black Wednesday
Interest rates could be lowered as the pound didn’t need to be propped up
The pound depreciates
Norman Lamont was sacked 8 months later
Poll: SNP’s reaction to poll taxes
SNP encouraged people not to pay their poll tax
When did the SDP and the Liberals merge?
1988
House prices during Lawson Boom
Increase in house prices in the late 80s (up 20% in the year following the 1988 budget)
