Topic 4: Economics/Industrial (1979-87) Flashcards

1
Q

2

Describe monetarism

A
  • Restrict money supply and reduce public expenditure to tame inflation
  • Done through raising interest rates, making cuts and strengthening the pound on the FOREX
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2
Q

4

Describe Thatcher’s supply-side economics

A
  • Low taxation encourage consumption
  • More flexible labour regulations to encourage enterprise
  • Re-organisation from direct to regressive indirect tax
  • taxes on petrol, cigarettes and alcohol went up in almost every single budget from 1979-87
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3
Q

4

Describe Howe’s June 1979 budget

A
  • Income tax: top rate cut from 83% to 60%; lower rate cut from 33% to 30%
  • VAT up from 8% to 15% to finance income tax cuts
  • Public spending reduced by £4bn
  • Interest rates increased from 12% to 14%
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4
Q

4

Describe the effects of 1979 budget

A
  • 1980, serious recession occurred
  • led to rise in public spending as benefit payments increased
  • Unemployment reached 2m (13.2%) - highest in Western Europe
  • 1980 Tory Party Conference, Thatcher indicated she would not reverse policy with aimed dig at Heath (‘U-turn if you want to…’)
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5
Q

3

Describe the economy by 1980

A
  • Inflation stood at 22% in early 1980
  • Mood worsened by Tebbit’s comments for the unemployed to get on their bike and find work
  • Only North sea oil receipts kept balance of payments in reasonable condition

Tebbitt a junior minister at time

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6
Q

6

Describe the terms of 1981 budget

A
  • Many expected governmental reversal, instead they doubled-down
  • Marked monetarist triumph against Keynesian Treasury orthodoxy
  • 20p increase on petrol tax
  • £3.5bn spending cuts
  • Grants to local councils cut
  • No changes to low income tax
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7
Q

5

Describe the effects of the 1981 budget

A
  • Amounted to biggest fiscal squeeze in peacetime
  • expenditure rose due to collosal bill of social security payments stemming from increased unemployment
  • from 1979-81, British GDP fell by 2.5%
  • productive capacity falling more rapidly than ever recorded before
  • return of stagflation
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8
Q

2

Describe the response to the 1981 budget

A
  • Government standing fell to 27% in opinion polls
  • In a famous letter to the Times, 364 economists denounced the government’s economic approach as ruinous
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9
Q

2

Describe the 1982 budget

A
  • £1.3bn tax giveaways
  • condemned by Con MP Ian Gilmour who had advocated £5bn reflation package
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10
Q

2

Describe privatisations in Thatcher’s first term

A
  • Majority of shares in British Aerospace sold in 1981
  • Sale of Amersham International 1982
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11
Q

4

Describe the sale of Amersham International 1982

A
  • Radiochemical Centre, a specialist medical services group
  • Renamed to Amersham International in 1981and sold in 1982
  • First complete privatisation where govt sold 100% of shares
  • $130m paid to government was $38m less than the prevailing market share of the company - set negative precedent
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12
Q

4

Describe the shift in inflation levels (1979-83)

A
  • early 1980 - 22%
  • 1981 - 12%
  • 1982 - 8.8%
  • 1983 - 5%
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13
Q

3

Describe the economic positives of Thatcher’s first term

A
  • Productive capacity would have worsened had the govt continued to support ‘lame duck’ industries of British Leyland and Rolls Royce
  • Delivered on pledge to reduce inflation
  • Monetarism quitely abandoned by 1984 through falling exchange rates and loosening of money supply limits
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14
Q

5

Describe the economic negatives of Thatcher’s first term

A
  • Inflation reduction due to mass unemployment
  • Monetarism destroyed value of privatised companies
  • productive capacity was falling more rapidly than ever recorded
  • 25% of manufacturing capacity lost in 1st term
  • 81 other nations saw GDP rise by 5%; britain’s fell more rapidly than ever before
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15
Q

4

Describe Nigel lawson as CX

A
  • Became chancellor following re-election in 1983
  • Exuded econmic competence
  • Abandoned monetary control and shifted to supply-side focus
  • Urged cuts in public spending though spending increased anyways due to high unemployment
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16
Q

4

Describe the 1987 budget

A
  • £2.6bn tax giveaways
  • Cut standard rate of income tax from 29p to 27p
  • Corporation tax cut fom 29p to 27p
  • Funded through previous increases in VAT which led to £16bn budget surplus, confirming success of supply-side policies
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17
Q

5

Describe Lawson’s privatisation policy (1983-87)

Don’t need to know all firms, but major ones will suffice

A
  • Substantially more privatisation than first term
  • 1984, British Telecom sale cost Government £3m as a result of underpricing and lavish advertising campaign promoting buying shares
  • 1986, British Aerospace, Britoil and British Gas
  • Rolls Royce, British Shipbuilders, British Leyland and British Airports followed
  • Former PM Macmillan likened privatisation to ‘selling off the family silver’
18
Q

3

Describe the sale of British Gas 1986

A
  • Sold for £5.434bn
  • Shares went public with famed ‘Tell Sid’ campaign
  • Allowed ordinary people entry into stock-market sphere - increased sense of stakeholding in society
19
Q

2

Describe the Lawson’s deregulation policy (1983-87)

A
  • Big Bang 1986
  • Proposed relaxation of Sunday Trading laws defeated
20
Q

5

Describe the Big Bang 1986

A
  • Reform of London Stock Exchange
  • Abolished fixed commissions
  • Opened up trading to wider financial institutions, notably foreign banks
  • implemented electronic platform to allow faster computerised dealer networks
  • Replaced archaic ‘open outcry’ whereby traders mulled Exchange Floor
21
Q

4

Describe the positives of economy by 1987

A
  • Easy credit availability drove up household consumption boom, especially in South
  • Average earning rose consistently above inflation throughout in the 1980s (reached peak 4.5% difference in 1986), especially in service-sector
  • Average annual growth rate of 4%
  • Inflation continued to fall
22
Q

6

Describe the negatives of economy by 1987

A
  • In 1983, balance of trade in manfactured goods went negative for first time
  • by 1985, the poorest 20% held only 5% of national wealth
  • Unemployment reached 3.3m in April 1985
  • House prices appreciated higher than annual incomes, accentuating regional inequality
  • Economic growth was in part due to worlwide expansion of trade
  • Skills shortages in tight labour markets had pushed up wages
23
Q

3

List the points you could consider in an essay on whether there was an economic miracle 1979-97

A
  • Growth and productivity (tax cuts, supply-side policies, consumption boom, inflation, GDP)
  • Structure of economy (privatisation, Big Bang, balance of payments)
  • Industrial factors (trade union legislation, strikes)
24
Q

5

Describe the Employment Act 1980

A
  • ‘flying pickets’ made illegal - strikers travelling nation to prevent entry to work
  • Restrictions on closed shops
  • Restricted legal immunity for sympathy strikes
  • Introduced ballot requirements prior to strike - Scargill would disobey
  • Removed provisions of Employment Protection Act 1975 which obligated employers to reinstate employees after maternity leave, claiming it damaged small businesses
25
Q

3

Describe the Employment Act 1982

A
  • Challenged immunity unions had received from financial charges incurred during strike
  • Had been a privilege dating back to 1906
  • Several Unions fined this way e.g. National Graphical Association
26
Q

4

Describe the effects of the Employment Act 1980 and 1982

A
  • 4.2m days lost to striking in 1981 compared to average of 13m in 1970s
  • Union membership had fallen from 13m in 1980 to 10m in 1983
  • Union members unwilling to risk strike action in ballots for fear of unemployment
  • Unions wary of running up huge fines in court
27
Q

2

Describe limits to the Employment Act 1980 and 1982

A
  • Arguably recession and resulting unemployment had driven down union membership and strikes rather than legislation
  • Economic shift to service-sector further eroded powers of union
28
Q

3

Describe the terms of the Trade Union Act 1984

A
  • Thatcher used huge majority to pass contentious legislation
  • Required unions to select new general secretary every 5 years
  • Required unions to ballot members on retention of their political funds
29
Q

2

Describe the effects of the Trade Union Act 1984

A
  • Intended to damage Labour funding, though majority of unions continued to support them
  • Conservatives continued to benefit from individual and corporate funding
30
Q

3

Describe the background to the Miners strike (1984-85)

A
  • 1984, NCB faced strike by NUM
  • Clash bewteen abrasive style of marxist Scargill (leader of NUM) and Thatcher-installed Ian Macgregor (NCB Chairman)
  • Macgregor had been tasked with overseeing the closure of uneconomic pits
31
Q

6

Describe Government preparation for the Miners’ Strike (1984-85)

A
  • Ensured coal supplies were well stocked, aided by low demand and cheap market price
  • Pits now only supplied 1/5th of nation’s energy supply, far behind oil
  • Protected power networks with aid of European nations
  • Police powers increased in anticipation, especially over ‘flying picket’ control
  • Imposition of roadblocks to prevent the travel of striking miners to picket lines
  • Prevented repeat of strikes under Heath
32
Q

4

Describe the UDM split in miners’ strike (1984-85)

A
  • Scargill failed to ballot members
  • Properous Nottinghamshire coalfields broke away to form UDM to continue work
  • UDM criticised Scargill for using strike to advance his hard-left politics to the detriment of miners
  • Supplied coal for entire nation, permitting government victory

UDM - Union of Democratic Miners

33
Q

4

Describe the end of the miners’ strike (1984-85)

A
  • Strike lasted almost a year, demonstrating deep illusionment within mining communities
  • Entire families had depended on charitable handouts
  • Scargill determined to reject compromise but could not sustain support as miners’ drifted back to work
  • Ended in March 1985
34
Q

1

By what margin did the NUM vote to end the 1984/85 miner’s strike by?

A

98-91

35
Q

3

Describe the political impact of the miners’ strike (1984-85)

A
  • Kinnock distanced Labour from the revolutionary ideals of Scargill and the NUM
  • Thatcher proved that she could protect public against mass industrial action unlike predecessors
  • Capitalised on this success in 1987 election
36
Q

4

Describe the industrial impact of the miners’ strike (1984-85)

A
  • Decimation of mining industry accelerated due to weakness of unions post-strike
  • By 1989, less than 5k miners in Wales (formely 250k)
  • Even UDM collieries closed encouraging bitter resentment
  • Militant Kent coalfields closed entirely
37
Q

3

Describe Battle of Orgeave

A
  • June 1984, Rotherham
  • Attended by 5k miners
  • Violence led to injuries of 51 miners and 72 police
38
Q

3

Describe the death of David Wilkie

A
  • Welsh taxi driver
  • Attempted to take 2 scabs to work
  • November 1984, killed when concrete slab dropped on his car
39
Q

2

Describe the involvement of women in the 1984-85 miner’s strike

A
  • National Women Against Pit Closures rally held in August 1984
  • They presented a petition to the Queen
40
Q

2

Describe shifts in employment 1979-87

A
  • Technological advances and recession 1980-82 had reduced demand for unskilled and semi-skilled labour
  • between 1978-85, the number of semi-skilled/unskilled jobs reduced by 1m