Thatcher 1979-1990


Thatcher and the end of the PWC

  • Thatcher was elected in 1979 after calling a vote of no confidence in Jim Callaghan. 
  • She was from a relatively ordinary background, although she had excelled at Oxford and became a lawyer, she was a woman and the son of a greengrocer from Grantham. 
  • She represented a new leader, far removed from the old Conservative establishment characterisd by upper class elder men and their peers. 
  • Thatcher was opposed to the post-war consensus and sought to move Britain towards the New Right - something Heath had tried to do before his famous U-turn in1972. However, it's important to note that those before her tried to do the same... 
  • The post-war consensus had already been undermined by Heath's government who'd adopted similar New Right policies to Thatcher's. Thatcher blamed his subsequent U-turn for Britain's decline by remarking ''you turn if you want to - the lady's not for turning'' at the 1981 party conference. 
  • The Labour government under Wilson and Callaghan had cut government spending in public services in response to the conditions of the IMF loan in 1976. 
  • Jim Callaghan famously proclaimed ''Keynesianism is dead''.

Thatcher supported the Chicago School of Economics whose ideas were based on economist Milton Friedman who coined economic method ''monetarism''. 

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First Few Years

  • The first few years of the Thatcher legacy were off to a slow start. Initially she continued the policies of her predecessors. For example, she gave car company British Leyland subsidies in order to save the company and settled a pay claim with some steel workers in order to end a steel strike. 
  • However, by 1981, she had fully embarked on New Right policies. 
  • Thatcher's cabinet had much fewer Etonian MP's than her predecessors such as Harold Macmillan. 
  • She tended to appoint ministers who supported her views known as ''dries'' such as Norman Tebbit and Nigel Lawson. Those who opposed her were known as ''wets'' - Heathites who made up the majority of her cabinet initially but as she progressed with confidence, they were replaced by ''dries''. 
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Monetarism 1979-84

  • Monetarism, was a solution to the 19% inflation which Thatcher had inherited from the Labour government. 
  • Unlike Keynsianism, monetarism involved large cuts to government spending in order to generate a surplus. Monetarism targeted the money supply in order to reduce inflation. 
  • A recession hit in 1981 and saw a further implementation of monetarist policies. Howe jokingly referred to it as ''the most unpopular budget in history''. 
  • The 1979 budget saw a shift from direct taxation, to indirect taxation. Thatcher reduced income tax for both the poorest and richest bands in society (40% for the rich, 25% for the poor). Thus indirect taxation went up which bore a brunt on the poor. 
  • Unemployment rose since priority was given to lowering inflation. By 1982, unemployment had reached 3 million. 
  • These policies led to a deep fall in industrial output. 
  • It took £4bn out of the economy but by 1983, inflation was at 5%. 
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Supply-side Economics 1985-1990

  • After successfully reducing inflation, Thatcher embarked on developing the free-market with her supply side economics. Supply side economics focused on dealing with the economy through supply rather than demand. 
  • This meant privatisation and deregulation. Thatcher argued that her supply-side economics would created a share owning democracy. 
  • Privatisation, was moving away from the mixed economy and national enterprises associated with Labour. Basically the selling off of key public sector industries such as BT in 1984 and British Gas in 1986 (which became the biggest share offer in history). However, it's arguable that Callaghan began this process by denationalising BP in 1978. 
  • Between 1979 and 1990, the number of share holders tripled from 3 million - 9 million. 
  • In 1988/9 - privatisation generated £7 bn for the Treasury and caused a budget surplus for the first time in decades. 
  • However, it was short lived as many share holders often sold their shares quickly. 
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  • Deregulation freed businesses and enterprises from constraints which would make trade much easier and thus would develop the free market. The loosening of controls on banks and financial markets. 
  • This reduced government intervention in the economy and was central to Thatcherite economic policy. 
  • The Loan Guarantee Scheme aided small business by allowing them to borrow money, between 1981 and 1987 it helped more than 19,000 business and gave out £635 million worth in loans. 
  • The Enterprise Allowance Scheme gave small business a chance to get their feet off the ground and provided them with £40 a week for their first year in the market. 
  • Financial deregulation freed up the City of London from the harsh financial constraints of the Bank of England. In 1986, came the Big Bang with the deregulation of the London Stock exchange which generated £110 bn. 
  • Deregulation propelled Britain into a new financial age and saw the first attempt at economic modernisation since Heath's U-turn. 
  • North Sea oil was also a key element of financial success. It saved Britain from a run on the pound in 1981 and by 1986, it represented 15% of gvt. revenue. 
  • After 1986 the economy grew at a steady rate of 4% per annum. 
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The 1983 Election

  • Initially, in her first term Thatcher had been extremely unpopular, many disliked her strong right wing policies but had only voted for her in hope of things improving after the Winter of Discontent. 
  • However by 1983, her popularity rating had soared from 29%-54% and she won the 1983 election with a majority of 144. 
  • An important reason for this was the so-called Falklands factor - a significant triumph which was supported by the majority of British people. They now trusted Thatcher as they could see she was a competent leader. Furthermore, the Conservative election campaign was conducted by Saatchi and Saatchi and focused on the failures of the Labour campaign which the Tories compared to the Communist Manifesto. 
  • Additionally, Thatcher was aided by the SDP split. Labour's new leader Michael Foot and his left wing policies provoked the right of the party to go and form their own - they were known as the 'Gang of Four'' (Shirley Williams, Roy Jenkins, David Owen and Bill Rodgers. The SDP party formed an Alliance with the Liberals which further contributed to Thatcher's success and Labour's downfall. 
  • Michael Foot was responsible for Labour's downfall during this time. He was elected as leader in 1979 over Denis Healey. He had poor communication skills with the media and he was likened to Worzel Gummidge by the tabloids, moreover, being painted as a ''scarecrow'' by satirical programme ''Spitting Image''. He was very left wing and consequently, the party adopted his more radical policies which seemed largely irrelevant to many voters; unilateral nuclear disarmament, withdrawal from the EU and a greater nationalisation of industry. In the 1983 election, Labour lost a total of 3 million votes, their share of the vote falling by 10%. The Labour party was to lose further elections in 1987 and 1992. Gerald Kaufman (Labour MP) referred to the manifesto as ''the longest suicide note in history''
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The Miners' Strike 1984

  • Thatcher took a radical stance against trade unions during her time as PM. While initially she'd funded some which were in trouble such as British Leyland, after 1983, she became more radical against unions. 
  • Thatcher intended to cut 75,000 jobs over 5 years by closing unprofitable coal mines in the North of England. Thatcher appointed Ian McGregor to do so (NCB).
  • Arthur Scargill, leader of the NUM (a left wing radical) deemed Thatcher's closure of mines as unnecessary and immoral since the majority of men in the North worked in manual labour. 
  • The 1982 Employment Act reduced union powers by banning flying pickets and closed shop. Strikes had to be voted by an official ballot (which the 1984 strike was not). 
  • In a bid to prevent Thatcher closing pits, Scargill called an unofficial national strike in the spring of 1984. 
  • The government had stockpiled coal however, in anticipation of a strike. Only 1/5 of Britain's energy needs now came from coal. Scargill had picked a poor time to strike since the spring proved little demand for coal and the strike was not completely legitamised since areas such as Nottingham didn't participate.
  • The Battle of Orgreave became one of the most famous battles in British history. Police manipulated footage and statements at the Battle of Orgreave, wrongly arresting miners and brutally attacking them. They later had to pay the miners £425,000 in compensation. 
  • In Jan 1985, the strike was callled off and miners slowly returned to work. Thatcher had defeated the power that unions had over Britain.
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1980's Society

  • One of the most popular Thatcher measures was the sale of council houses in 1980 (Housing Act). The idea was that individual people would feel like they had more of a stake in the economy and owning their own homes was a valued privilege and lessened the divide between the upper and lower classes. The sale of council houses generated £18 billion for the Treasury and 1.24 million homes were sold. Despite selling over 1 million homes, 1 million were still homeless. House prices rose by 14.6% by the end of the 1980's which would become a problem in Major's government. 
  • Sect. 28 of the Local Gvt. Act 1988 restricted schools and local authorities from promoting homosexuality. Thatcher famously remarked that gay people did not have the right to be gay. 
  • She increased spending on the NHS from £8bn-£21bn and expanded benefits for disabled elderly and single mothers. 
  • Thatcher was known for her cuts to social spending and relied on private businesses to provide what would have been public services. 
  • However, the cost of basic drugs rose at 5x inflation.
  • Unmarried couples and families who'd recently taken out a mortgage were given tax relief. 
  • There were many technological advances during the 80's with banking switching from the old style to a new computerised system. Yuppies were widely recognised. 
  • However, there was a large north/south divide especially over the miners strike which became a huge part of society. Most technological advances happened along the M4 corridor while the north remained largely industrial. 
  • However, there was also an increase in social mobility as many moved towards white collar jobs. 
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Women and Environmentalism

  • During the heat of the Cold War, saw many protests in Britain against the possession of nuclear weapons. Moreover, many could see the damaged they were doing to the planet and the thinning of the ozone layer. The majority of environmental protests were over the concern of nuclear weapons. 
  • The anti nuclear wepaons movements took on a new urgency in the late 1970s with the deployment of US Cruise missiles to the UK. In 1981, protest marchers decided to make a permanent camp outside RAF base Greenham Common where the missiles would be sited. 
  • In 1982, the protest became an all women's effort and is widely associated with the second wave feminism of the 1980s. When their camp was demolished in 1984, they rebuilt it. Even after the Cruise missiles were removed in 1991, they continued to protest against Trident until the early 20th century. 
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The Troubles in Northern Ireland

  • In 1989, Thatcher's close friend and cabinet minister Airey Neave was assasinated by the IRA. Thatcher refused to step down against terrorism. 
  • Thatcher was a unionist supporter and was unmoved by political prisoners such as Bobby Sands who demanded to granted Special Category Status. 
  • When Sands died in 1981, he was viewed as a political martyr but Thatcher claimed the strikers were unsuccessful because they had not achieved what they wanted (Special Category Status). She became a hate figure in the Republic. 
  • In 1984, the IRA bombed the Grand Hotel in Brighton in an attempt to assasinated Thatcher but she emerged unharmed. 
  • In 1985, Thatcher signed the Anglo-Irish Agreement in Hillsborough after several months of negotiating with the Republic. It promised that Ireland could have some input in Northern Ireland so long as it recognised that NI was a part of the UK. It promised civil rights to all Catholics in NI. 
  • However, it was rejected by most unionists such as the DUP who believed that the Republic had been given too much authority, thus the Troubles continued for the foreseeable future. 
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Foreign Policy

  • Falklands War 1982: A short war against the invasion of Argentine forces on the islands. Represents a move away from the decolonisation of the post-war era. Many initially opposed it and there was controversy when the General Belgrano was sunk outside the military exclusion zone. Nonetheless, Britain was victorious and Thatcher's popularity rating soared prior the the 1983 election. A surge of British patriotism swept the nation. This increased Thatcher's position on the world stage. 
  • Special Relationship: Thatcher and Reagan had a strong personal friendship during their times in office and were influence by WW2 heroes such as Winston Churchill. US policies influenced British ones e.g monetarism. Thatcher preferred American influenced over European influence as demonstrated by the Westlands Affair 1986. In the same year (1986) Thatcher gave America permission to use British air bases in order to bomb Libya. In 1983, the USA invaded Grenada after a Communist coup but this was against the advice of Thatcher. Denis Healey referred to Thatcher as ''Reagan's poodle''. 
  • Cold War: Thatcher is praised as a key figure in ending the Cold War by acting as a mediator between Reagan and Gorbachev. 
  • Europe: Thatcher was not keen on the idea of further integration with Europe (on a social level) as she believed that Britain did not see the benefits. Her persistent campaign to be given a rebate eventually achieved success in 1979 in Dublin. While Thatcher accepted the Single European Act which promoted further integration into Europe, she was reluctant to see them implemented. Her most famous anti-EU speeches were the Bruges speech in 1988 and the ''No, no, no'' speech in 1990. Her stance on the EU saw Geoffrey Howe resign in 1990 - the same year Britain joined the ERM. 
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Thatcher's Downfall

  • Increasingly divided herself away from her cabinet. Geoffrey Howe resigned in 1990 regarding issues over Europe and Nigel Lawson resigned as Chancellor in 1989 because Thatcher regarded her other economic ministers such as Sir Alan Walters as more important. Despite this, Lawson created the 'boom' in 1986 and saw unemployment halved. 
  • Westlands Affair 1986: resignation of Michael Hestletine who became one of her biggest opponents. 
  • Stance on Europe: Thatcher's stance on Europe only promoted Euroscepticism which proved difficult for Major in the signing of the Maastricht Treaty in 1992. 
  • The poll tax was Thatcher's biggest failure. The poll tax replaced the old ''rates'' system (which relied on the value of someone's house) with a same rate tax that everyone, regardless of their income would pay. It was introduced into Scotland in 1989 and the rest of the UK in 1990 despite Thatcher's cabinet dismissing it. It angered the population and very few payed the charges. Thatcher was outsted from her party to be replaced by John Major who later employed Michael Hestletine to get rid of the tax.
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1987 Election

  • Thatcher's defences lay in Britain's growing economy and high taxes. 
  • Neil Kinnock, the new leader of the Labour party had attempted to start reforming the party in order to boost Labour's political credibility. By 1987, he'd already done a lot to boost Labour's political credibility, however, his style was very presidential. The Conservative election campaign was well organised and appealed to voters, thus, Labour suffered another heavy defeat. 
  • The SDP-Liberal Alliance also lost votes after their 1983 success. There were ideological differences between the two-Davids. Additionally, it had only worked in the 1983 election because people didn't see Labour as a viable voting option. Now, Neil Kinnock was a much better leader than Michael Foot and grasped the attention of the people more greatly. 
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