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History - Britain > What impact did Thatcher's Governments have on Britain? 1979-1997 > Flashcards

What impact did Thatcher's Governments have on Britain? 1979-1997 Flashcards

1
Q

Thatcher’s Economic Policies in the 1st Term 1979-1983

The Thatcher Governments

A
  • MT swept to power with working majority in 1979 w/ right wing manifesto
  • Wanted to halt economic devline through promotion of free market forces
  • Wanted to reduce unnecessary government interference and bureaucracy in economy
  • Supported ideas of ‘Chicago School’ of economics - inc. monetarism
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2
Q

Thatcher’s Economic Policies in the 1st Term 1979-1983

Monetarism

A
  • Theory that inflation is the greatest economic ill - govs should increase value of money by reducing supply
  • The more valuable money is, the more it can buy, so prices will fall
  • Can be achieved by reducing public spending and increasing rates of interest to deter lending and credit
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3
Q

Thatcher’s Economic Policies in the 1st Term 1979-1983

Impact of Monetarist Policies 1979-1981

A
  • Monetarism applied by raising interest rates & supplying less money
  • Human costs - unemployment, weaker firms that couldn’t afford to borrow went bankrupt
  • Unemployment rose by 1M - social unrest, riots in many cities
  • 1980-1981: GB lost ~25% of manufacturing base
  • MT inconsistent in applying monetarist policies
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4
Q

Thatcher’s Economic Policies in the 1st Term 1979-1983

Thatcher’s Inconsistencies in applying Monetarism

A
  • Accepted recommendations of Clegg Commission appointed by previous Labour gov - awarded 25% pay rise to public sector workers
  • British Leyland given more subsidies
  • Allowed above-inflation pay settlement of 16% to end steel strike
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5
Q

Thatcher’s Economic Policies in the 1st Term 1979-1983

The Imposition of Monetarism 1981

A
  • By 1981, many felt MT’s economic policies were failing
  • Cabinet split into ‘wets and ‘dries’ based on level of support
  • 1980 Cons Party Conference: asserted monetarist policies would continue - ‘You turn if you want to: the lady’s not for turning’
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6
Q

Thatcher’s Economic Policies in the 1st Term 1979-1983

Background

A
  • Chancellor Howe shocked MT in 1981 by showing that public sector borrowing was increasing - £9.25B in 1979 to £14.5B by end of 1981 (target was £8.25)
  • MT appointed economic adviser Alan Walters - urged dficit be cut by £4B by raising tax
  • March 1981 - 350 economists urged gov to abandon monetarism and return to deficit spending, but gov policy was decided
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7
Q

Thatcher’s Economic Policies in the 1st Term 1979-1983

1981 Budget

A
  • Chancellor introduced monetarist Budget in 1981 - cut gov expenditure, increased indirect taxes (price of cigarettes rose from 14p to 80p), took suggested £4B out of economy
  • Controversial at the time and remained so
  • Many had been hoping for cuts in tax to stimulate spending
  • Direct tax didn’t increase - threshold at which people have to pay them (min. wage), which usually rose with inflation, stayed the same
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8
Q

Thatcher’s Economic Policies in the 1st Term 1979-1983

Effects of 1981 Budget

A
  • Critics believed gov would easily be defeated in next election due to continued economic problems
  • In long term, 1981 Budget seemed to work
  • Inflation fell steadily - 21.9% in May 1980 to 5% by DECEMBER 1982
  • GDP began to grow - -0.7% in 1st quarter of 1981 to 1.3% by 2nd quarter of 1982
  • Many believed economy was set to improve - optimism contributed to Thatcher’s triumph in 1983 election
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9
Q

Economic Developments of the 2nd Term 1983-1987

Supply-Side Economics

A

By mid 80s - monetarism less significant, economy stimulated by creating greater demand
Involved policies such as:
* Deregulation
* Extensions of Credit
* Tax reductions
* Decline of union power

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10
Q

Economic Developments of the 2nd Term 1983-1987

Deregulation

A
  • Gov sought to reduce its own role - believed it had led to economic decline
  • Decade saw abolition of credit controls, deregulation of transport (enabled formation of more private transport companies), public institutions taking more financial control
  • Emphasis overwhelmingly on development of free market
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11
Q

Economic Developments of the 2nd Term 1983-1987

Deregulation of the Stock Market

A
  • October 1986 - Chancellor Lawson deregulated Stock Exchange, which had been operated according to complex old customs and conventions
  • London became a centre of world finance - lack of regulation in practices, computers made instant transactions possible
  • Attracted significant numbers of foreign investment banks
  • 1985-1988 # of staff in London from US firm Salomon rose from 150 to 900
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12
Q

Economic Developments of the 2nd Term 1983-1987

Black Monday

A
  • Warnings about problems of unregulated stock markeys - prices of stocks rose until they were overvalued and then collapse
  • 19 October 1987 - in the wake of falls throughout world markets, value of stocks in London Stock Market fell by £50.6M
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13
Q

Economic Developments of the 2nd Term 1983-1987

Deregulation of Banks and Building Societies

A
  • Before the 1980s, banks had operated financial services and building societies offered mortgages for properties
  • Building Societies Act 1986 - building societies could act as banks, banks could offer mortgages
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14
Q

Economic Developments of the 2nd Term 1983-1987

Development of Technology

A
  • Allowed financial transactions that previously involved laborious clerical processes to be completed instantly
  • 1980 - most personal financial transactions had been in cash
  • 1985-1988: number of cash dispenders doubled while people with access to computers and consoles could being online banking
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15
Q

Economic Developments of the 2nd Term 1983-1987

Lawson Boom

A
  • Economy grew more confident after 1983
  • Due to Greater availability of credit and reduction in taxes
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16
Q

Economic Developments of the 2nd Term 1983-1987

Greater Availability of Credit

A
  • Due to deregulation, credit became more readily available
  • People found it easier to take out loans - mortgages particularly more accessible due to loan banks and lending companies offering them, not just building societies
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17
Q

Economic Developments of the 2nd Term 1983-1987

1988 Budget: Tax cuts

A
  • Tax cuts of £4B - basic rate of income tax cut from 27p to 25p
  • 4/5 highest tax rates cut - nobody paid more than 40%
  • Wealthier people saw 33% tax cuts
  • Tax to small businesses cut
  • Aim was to encourage consumer spending - appeared to succeed and created economic optimism among those in employment who were doing well (‘Loadsamoney’ character - Harry Enfield)
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18
Q

Economic Developments of the 2nd Term 1983-1987

Privatisation

A
  • Intention was to gain revenue for gov from ‘popular capitalism’ - people could own shares in private companies
  • British Airways, Steel, Telecom, Gas sold off - priority given to small-scale private investors
  • Gov raised £7B 1988-89
  • Economy also benefited from production of North Sea gas & oil - revenue approaching 15% of national income by 1985
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19
Q

The Extent to which State Intervention & Public sector were rolled back

Thatcher’s beliefs on excessive state activity

A
  • Stifled self-help and creativity
  • Replaced supportive role of the family with state-run welfare schemes which contributed to dependency - ‘nanny state’
  • Led to economic inefficiency and waste - believed private enterprise always run industry better than the state
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20
Q

The Extent to which State Intervention & Public sector were rolled back

Thatcher’s examples of ‘rolling back the state’

A
  • Privatisation programme - 600K fewer people employed by state
  • Sale of council houses - 500K per year became house owners rather than public sector tenants 1980-1989
  • Ending of prices and incomes policies and their oversight by gov
  • Ending of consultations with unions and employers over economic planning
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21
Q

The Extent to which State Intervention & Public sector were rolled back

Local Government

A
  • Took 28% of public spending and MT felt much of its budget was wasted - particularly in terms of promoting left wing policies
  • A series of Acts reduced powers and budgets of local gov authorities - forced to bid for private sector contracts rather than provide them themselves
  • Greater London Council, responsible for governance of the capital, was abolished - responsibilities devolved to local councils
  • Local gov had powers reduced, but was more closely supervised by central gov
22
Q

The Extent to which State Intervention & Public sector were rolled back

Education

A
  • 1988 Education Reform Act saw introduction of National Curriculum - planned and monitored centrally and assessed using a common format throughout the country
  • This was a response to long-standing concerns about quality of education - marked first gov-prescribed curriculum
  • Attainment and progress could be judged in individual schools against national benchmarks
23
Q

The Extent to which State Intervention & Public sector were rolled back

National Health Service

A
  • MT had no intention of dismantling NHS
  • Gov introduced internal markets - NHS trusts could bid for services such as cleaning and catering that were previously done by NHS staff
  • Led to greater level of bureaucracy to manage it
  • Whole management structure became more complex - 1990: NHS administered by 700 different authorities
24
Q

The Extent to which State Intervention & Public sector were rolled back

Privatised Industries

A
  • Regulated by new layer of ‘watchdogs’ such as Oftel and Ofgas
  • May have made them more accountable, but expanded role of Gov
25
Q

The Extent to which State Intervention & Public sector were rolled back

Social Control

A

MT felt state needed to be strong to:
* Remove obstacles from development of free market - eg. union power
* Protect citizens - gov gave more power to police, Law and Order budget rose by 36% 1979-1989, police deployed on national basis (eg. during miners’ strike)

26
Q

The Extent to which State Intervention & Public sector were rolled back

To what extent did MT ‘roll back the power of the state’

A
  • Gov was too concerned with control in order to ‘roll back’ in terms of intervevntion and public sector
  • Reduced powers of those aspects of state which it disagreed with
  • Extended state to offer greater accountability and provide wherewithal for free market to operate - albeit under state supervision
27
Q

The Extent of Political and Social Division within Britain

Divisiveness of Policies

A
  • Contemporary politicians, and many later historians believed that MT’s gov generally had a divisive impact on society
  • Many groups benefitted and others became hostile and alienated
28
Q

The Extent of Political and Social Division within Britain

Sale of Council Homes

A
  • One of the most popular measures of MT’s ‘popular capitalism’
  • Idea was that home owners would have more stake in society
  • Raised £18B as 1.24M homes were sold
  • Downside - shortage of public sector stock as many tenants taking advantage of the scheme could have bought houses on the open market
29
Q

The Extent of Political and Social Division within Britain

Context of the Miners’ Strike 1984-1985

A
  • MT called for closure of unprofitable pits, but this process had started before she had - continuity, not change
  • Issue largely seen in terms of breaking union power
  • National Union of Miners recently electer Arthur Scargill as new president - largely responsible for organising flying pickets in 1972
  • MT appointed Ian McGregor as Chairman of National Coal Board - wanted to modernise industry and shut unprofitable pits (had done similar job as head of British Steel)
30
Q

The Extent of Political and Social Division within Britain

The Miners’ Strike 1984-1985

A
  • Many pit areas were close-knit communities - almost all local men worked in the mines
  • Absence of alternative forms of employment - closure would have devastating effect
  • NUM called for industrial action without formal ballot - leaders feared they would lose ballot
  • Throughout summer of 1984 - violent clashes with police and miners
31
Q

The Extent of Political and Social Division within Britain

Enemies Within

A
  • MT and many of her supporters saw wider agenda among leaders of NUM - believed they were using the strike as a vehicle for socialist revolution
  • Began to speak of ‘enemies within’
  • Felt survival of British democracy and capitalist way of life depended defeating the strike
32
Q

The Extent of Political and Social Division within Britain

Defeat of the NUM

A
  • Employment Acts in the early 80s reduced union power - mass picketing and closed shop now illegal, strikes had to be voted for in ballot
  • Gov was stockpiling coal for emergencies
  • Gov chose time for confrontation - closures in spring and summer when coal demand was lowest, so industrial actions would happen then
  • Gov prepared to use law - police action, courts freezing union assests (illegal strike)
  • Strike wasn’t solid - some areas refused to join, workers drifted back to work to support families
33
Q

The Extent of Political and Social Division within Britain

Impact of Miners’ Strike 1984-1985

A
  • Gov had won notable victory - union power declined
  • There were other struggles - print workers who struck against modernisation in 1986
  • Workers generally had to come to terms with new conditions, largely due to modernisation and technical developments which saw the decline of manual production
34
Q

The Effect of Thatcherism on Politics and Party Development

Poll Tax: Background

A
  • MT believed local councils should be more accountable to electors
  • Felt if all adults contributed equally to local authority taxes, they would be more critical about how money was spent
35
Q

The Effect of Thatcherism on Politics and Party Development

Poll Tax

A
  • A flat rate tax based on individuals rather than an unequal one based on householders
  • Introduced firstly in Scotland to huge opposition - most were paying far more, biggest burden on the poorest, cost 2.5x more to collect
  • Some suggested it cost more to collect than to raise
  • Even more opposition when it spread to rest of UK - significant marches and protests (eg/ Trafalgar Square in 1990), many refused to pay
  • Poll tax outlasted MT - abbandoned in 1991, replaced by council tax similar to old system
36
Q

The Effect of Thatcherism on Politics and Party Development

Effects of Thatcher on Political Parties

A
  • Little doubt that Thatcherism changed political landscape in GB
  • In some ways, politics became more divisive - greater extremes of left and right
  • Growth of ‘hard right’ in Cons which supported free market forces
  • Infiltration of organisations such as Militant Tendency within Labour
37
Q

The Effect of Thatcherism on Politics and Party Development

Conservatives

A
  • MT never wholly trusted by many in Cons leadership - little doubt of her popularity in smaller members, appointed supporters to high office as she gained confidence
  • ‘Wets’, who she was originally forced to appoint to ministerial positions were dismissed or demoted - particularly in areas covering economy (eg. Employment to N. Ireland dpts)
  • One-Party Conservatism (with commitment to welfare) was forgotten
  • Those promoted to high office tended to be self-made men - traditional wealthy leaders with aristocratic connections associated with ‘wets’
  • By late 80s, MT was seen as imperious - party joined ranks to bring about her downfall
38
Q

The Effect of Thatcherism on Politics and Party Development

Labour

A
  • Moved to the right - inkeeping with direction in which all politics was moving
  • Under Neil Kinnock (leader wince October 1983) - expelled left-wing groups (eg. Militant Tendency), editched many left-wing policies (eg. unilateral nuclear disarmament)
  • This process was accelerated by appointment of Tony Blair as leader
39
Q

The Effect of Thatcherism on Politics and Party Development

New Labour

A
  • Labour Party refocused in mid-1990s - appealed to MC and business-orientated voters
  • Ditched Clause 4 - policy which advocated nationalisation
  • 2002 Peter Mandelson (important thinker within Labour) - ‘We’re all Thatcherites now’
40
Q

The Effect of Thatcherism on Politics and Party Development

Social Democrats & Liberals

A
  • Social Democrats formed in 1981 - largely by members of Labour who disliked its left-wing agenda
  • Enjoyed initial success - failed during 80s to make major impact in terms of MP numbers
  • 1988 - merged with Liberals to form Social and Liberal Democrats
  • 1989 - changed name to Liberal Democrats
41
Q

The Effect of Thatcherism on Politics and Party Development

Liberal Democrats

A
  • Accepted mixed economy and privatisation policies
  • Battles as to the extent to which the two parties should accept these - lead to costly splits and defections to either of the main parties
42
Q

The Social and Political Impact of Thatcherism into the 1990s

Politics

A

Main parties moved closer together - new consensus over promoting free market & limiting gov interference in economy
Not all Thatcherite policies were continued by Major
* More was spent on healthcare and education
* Britain signed 1992 Maastricht Treaty - developing closer ties within EEC
* Unpopular poll tax withdrawn - replaced with council tax according to 8 bands of property value

43
Q

The Social and Political Impact of Thatcherism into the 1990s

Disaffection in Politics

A
  • Surveys in 1980s showed 4x increase in # of people who had been on demonstrations
  • 1991: 33% of those surveyed felt the British political system worked well - fallen from over 50% in 1973 Kilbrandon Report
44
Q

The Social and Political Impact of Thatcherism into the 1990s

Party Organisation

A
  • Post-Thatcher years saw both Labour & Cons increasingly directed from centre with attempts to exert more control over MPs
  • Particularly problematic for Major’s gov
45
Q

The Social and Political Impact of Thatcherism into the 1990s

Thatcher’s Legacy

A
  • Many Cons felt that Major had betrayed MT - faced major opposition from the party and his own cabinet ( particulalry over support for closer ties with EU)
  • Issue over terms of membership of EU and impact on national sovereignty - severely damaging split within Cons, contributed to overwhelming defeat in 1997 GE
46
Q

The Social and Political Impact of Thatcherism into the 1990s

Society

A
  • Divisive effect - particularly between those who did well and those who suffered
  • Many argue effects of MT’s policies were the outcomes furthest removed from what she had hoped
47
Q

The Social and Political Impact of Thatcherism into the 1990s

‘Victorian Values’

A
  • MT envisaged society in which enterprise culture thrived but people acted responsibly, helped each other in times of need
  • ‘Traditional family values’ and support systems were at the fore
  • Critics argue enterprise culture generated atmosphere of selfishness, greed, lack of self restraint
  • More voluntary work & charitable giving - 1985 Live Aid concert raised £5M for famine
48
Q

The Social and Political Impact of Thatcherism into the 1990s

Lack of Self-Restraint

A
  • Family ties fragmented - divorce numbers grew by 20% 1981-1993, # of children born out of wedlock trebled 1979-1991
  • Crime rates rose significantly - drug trafficking doubled 1981-1988, # of reported rapes trebled
49
Q

The Social and Political Impact of Thatcherism into the 1990s

Back to Basics

A
  • Emphasis on Victorian Values resonated in theory, if not in practice
  • Major spoke of ‘Back to Basics’ in terms of self-discipline and responsibility
  • Ideas came to little - scandals within his own gov
  • Emphasised tension between greater freedoms within Thatcherism and self-restraint
50
Q

The Social and Political Impact of Thatcherism into the 1990s

Thatcher’s Overall Successes

A
  • Created enterprise culture
  • Moved Politics to the Right
  • Made some aspects of government more accountable
51
Q

The Social and Political Impact of Thatcherism into the 1990s

Thatcher’s Overall Failures

A
  • Promoting economic ideas such as monetarism, which would have created more responsible and controlled economic behaviour
  • Reforming public services
  • Rolling Back the State
  • Healing divisions within society

History - Britain (5 decks)

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