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
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
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
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
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’
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
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
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
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
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
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
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
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
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
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
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
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)
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
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
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
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
# The Extent to which State Intervention & Public sector were rolled back
Social Control
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
# The Extent to which State Intervention & Public sector were rolled back
To what extent did MT 'roll back the power of the state'
* 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
# The Extent of Political and Social Division within Britain
Divisiveness of Policies
* 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
# The Extent of Political and Social Division within Britain
Sale of Council Homes
* 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
# The Extent of Political and Social Division within Britain
Context of the Miners' Strike 1984-1985
* 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
# The Extent of Political and Social Division within Britain
The Miners' Strike 1984-1985
* 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
# The Extent of Political and Social Division within Britain
Enemies Within
* 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
# The Extent of Political and Social Division within Britain
Defeat of the NUM
* 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
# The Extent of Political and Social Division within Britain
Impact of Miners' Strike 1984-1985
* 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
# The Effect of Thatcherism on Politics and Party Development
Poll Tax: Background
* 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
# The Effect of Thatcherism on Politics and Party Development
Poll Tax
* 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
# The Effect of Thatcherism on Politics and Party Development
Effects of Thatcher on Political Parties
* 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
# The Effect of Thatcherism on Politics and Party Development
Conservatives
* 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
# The Effect of Thatcherism on Politics and Party Development
Labour
* 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
# The Effect of Thatcherism on Politics and Party Development
New Labour
* 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
# The Effect of Thatcherism on Politics and Party Development
Social Democrats & Liberals
* 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
# The Effect of Thatcherism on Politics and Party Development
Liberal Democrats
* 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
# The Social and Political Impact of Thatcherism into the 1990s
Politics
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
# The Social and Political Impact of Thatcherism into the 1990s
Disaffection in Politics
* 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
# The Social and Political Impact of Thatcherism into the 1990s
Party Organisation
* 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
# The Social and Political Impact of Thatcherism into the 1990s
Thatcher's Legacy
* 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
# The Social and Political Impact of Thatcherism into the 1990s
Society
* 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
# The Social and Political Impact of Thatcherism into the 1990s
'Victorian Values'
* 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
# The Social and Political Impact of Thatcherism into the 1990s
Lack of Self-Restraint
* 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
# The Social and Political Impact of Thatcherism into the 1990s
Back to Basics
* 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
# The Social and Political Impact of Thatcherism into the 1990s
Thatcher's Overall Successes
* Created enterprise culture
* Moved Politics to the Right
* Made some aspects of government more accountable
51
# The Social and Political Impact of Thatcherism into the 1990s
Thatcher's Overall Failures
* 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
