Why did Margert Thatcher dominate between 1979 - 87? Flashcards
May 1979 election?
- Conservatives won by 43-seat majority in general election.
Keynesianism?
- Unemployment should be kept low by government spending.
- Keynes argument –> basis of post-1945 era.
- Nationalised industries needed for coal, gas, electricity and railroads.
What did Thatcher privatise?
- British Aerospace (Feb 1981)
- Jaguar Cars (Aug 1984)
- British Airways (Feb 1987)
- Water utilities (Dec 1989)
The ‘Big bang’ of October 1986?
Before –>
- City of London’s financial markets were subject to a number of regulations –> difficult to compete with foreign banking centres
- Abolition of regulations led to increased amount of trade
Who was Nigel Lawson?
Chancellor of the exchequer from 1983-89
What were Nigel Lawson’s policies? (Lawson’s Boom)
- Continued Howe’s policy to shift revenue from direct to indirect taxes
- Capital gains and inheritance tax reduced so that British incomes more lightly taxed.
- Financial Services Act 1986 deregulated the London stock market in ‘Big Bang’ of Oct 1986.
- Revitalised City of London’s money market –> ending Stock Exchange monomoly on share dealing.
- Increased gaps
Thatcher’s economic record positives:
- Brought down inflation
- Privatisation improved performance, lowered prices and offered consumers more choice.
- Deregulation of City ensured that London remained at centre of a global financial market.
- Extension of shareholding gave many more people a stake in the success of the economy.
Thatcher’s economic record negatives:
- Economic success in 1980s came from bonanza of North Sea Oil
- Too many privatised services and utilities run for profit of a few shareholders and not interests of customers.
- Deregulation in City encouraged ‘get-rich-quick’ attitude with bankers, currency dealers –> contrasted bleak prospects of unemployed and disadvantaged.
- Social cost of policies - pushing up unemployed and destroying communities hit by the fall in manufacturing - outweighed the benefits.
Thatchers views of privatisation:
- ‘fundamental to improving Britain’s economic performance’
Believed that nationalised industries were:
- Inefficient and over-manned
- Would be better able to raise investment capital once released from government control.
Decrease in labour opinion 1979 election?
- 40 seats changed from Labour to Conservatives in London, South and Midlands.
- Labour unable to deal with inflation, unemployment and ‘over-mighty’ trade unions –> winter of discontent.
- Enlarged middle class –> resentful of strikes and union power.
- Rubbish piling in streets 1979 –> due to strikes.
Why did Conservatives win 1979 election?
- Liberal vote –> Liberal vote dropped by over 1 million as voters blamed Liberals for keeping Callaghan in office since 1977.
- Labour vote did not significantly declined
- Labour party maintained traditional support in industrial north, Scotland and Wales –> won 2x conservative votes in these areas.
Financial Times on 1979 elections:
‘this is a very divided country’
Outcome of 1983 election:
- Conservatives won 42.4% of vote (1.5% decrease from 1979)
Why did Conservatives win 1983 vote:
- Falklands War –> sign of Britain’s greater confidence and unity
- Split in Labour –> Labour vote decreased from 36.9% to 27.6% of vote
Split in Labour party in lead up to 1983 election - Extremeists
- Michael Foot became leader Nov 1980
- Lacked assured manner of TV
- Unilateral nuclear disarmament
- Further nationalisation of industry
Seemed old fashioned.
Split in Labour government before 1983 election - moderates?
- Formed Social Democratic Party (SDP) in March 1981 by Owen, Williams, Jenkins and Rodgers
- Alliance between SDP and Liberals became beginning of modern Liberal Democrats. For 1983 and 1987 elections.
- Conservatives gained traditional Labour seats in North –> merged 1988
Falklands War 1982
- April 1982 –> Argentinian dictator Galtieri sent forced to capture Falklands
- 8000 miles from Britain.
Results of 1987 elections:
- Conservatives won 1% more votes (43.4) in 1987 but lost 21 seats.
Why did opinion poll favour Thatcher in June 1987 –> leading her to call an election?
- Gov policies of selling council houses and shares in privatised industries appealed to middle and skilled working-class voters.
- People either better off or believed gov supported desire for wealth and status.
- 1983 and 1987 Conservatives benefitted from left-wing split in vote.
Labour party in 1987?
- New leader Neil Kinnock –> publicly criticised prominent left-wingers and brought party towards centre.
- Won 1.5 million votes more than in 1983 and 20 more seats.
- Kinnock’s style had limited appeal to voters –> long-winded speeches. Thatcher seemed stronger.
What were right-wing economists challenging?
‘consensus politics’ by late 1960s.
What did Thatcher believe about inflation?
- Eroded middle-class savings and caused strikes for higher wages –> causing social instability.
- Made British industry over-priced due to ‘spiral’ of rising prices and wages.
- Reduced incentives and enterprise because higher prices - higher taxation. –> businesses free from tax and restriction as possible in order to thrive.
- Fuelled by gov spending and lack of effective control over money in circulation.
- Result of ‘Keynesianism’ –> abandon principle.
- Tackled by money in circulation (monetarism) –> not by further attempts to control wages and prices by gov.
Sir Keith Joseph and monetarianism:
- Reduce money supply.
Short term: deflation and reduction in jobs.
Long term: economic growth.
Why was inflation a problem for Thatcher?
Retail prices doubled between 1973 and 1979.
Who was in charge of taxation policies?
Chancellor of the Exchequer –> Sir Geoffrey Howe.
Policies implemented June 1979
How did Howe’s policies initially worsen inflation?
- Honoured pay awards made by Callaghan’s gov to some low-paid workers.
- VAT increase pushed up price of goods.
What did Howe do after his tax policies increased inflation:
- Devolutionary measures –> 1980-1 budgets.
- Cut gov expenditure
- Reduced government borrowing
- Increased taxes
How did Howe describe the 1981 budget?
‘the most unpopular in history’
How did Howe’s policies contribute to an economic downturn?
- Manufacturing output fell by 14% and many firms went out of business.
- Unemployment more than doubled between 1979 and 1983 to over 3 million.
- Government did not act to support industries which faced problems.
- Value of the pound increased –> exports dearer –> boosted financial sector.
How did Howe’s economic policies positively impact inflation?
- Rate by which prices rose reduced from 18% in 1980 to 4.5% in 1983.
Why were Thatcher’s economic strategies a problem?
- April 1981 –> riots in Brixton, South London.
- July 1981 –> Toxteth (Liverpool) riots in places of high unemployment, poverty and racial tension.
- Rioting in 6 major cities –> Thatcher did not accept that her economic policies were to blame.
When did Britain’s growth rate and productivity begin to show signs of improvement?
- 1982
But…
- Weaker businesses failed while stronger thrived.
- Wage demands and inflation falling –> more competitive.
Alternative reason for improvement in economic stability?
- North Sea oil production –> turned Britain into net exporter of oil by 1980.
How was it not possible for Thatcher to reduce government expenditure?
- Between 1979 - 90 rose by 13%.
- Reduction in government spending cause high unemployment of mid-1980s.
Thatcher’s result on shareholders in Briatin?
- had 3 million in 1979
- 11 million in 1990
How was Michael Foot’s manifesto described in the 1983 election?
‘The longest suicide note in history’
Financial Services Act (…)
1986
- Deregulated dealing in stocks and shares
- Opened share trading
