Topic 5: Fall of Thatcher (1987-97)

Question 1

5

List the factors that contributed to the downfall of Thatcher

Answer 1

• Poll tax
• Economic factors
• Failure of social policy
• Party division
• Sucess of Labour

Question 2

4

Describe Black Monday 1987

Answer 2

• Stock market crash on Oct 1987 - wiped off 24% off stock prices
• By end of week, £102bn wiped off City stock values
• Small savers saw funds decimated
• Values had not been recovered by 1990s

Question 3

5

Describe Lawson’s economic policies 1987-89

Answer 3

• Continuation of supply-side tax cuts and privatisation
• Consumer and credit boom exacerbated inflation to 8.3% by June 1989
• Contradicted initial Thatcherite pledge to keep inflation low
• Lawson steeped interest rates to minimum lending rate of 15% by Oct 1989
• Non-oil imports rose steadily 1987-88

Question 4

4

Describe the March 1988 budget

Answer 4

• 60% upper rate income tax rate abolished
• 40% became new upper-limit
• basic rate cut from 27% to 25%
• deficit reached £20bn, easily worst on record

Question 5

4

Describe privatisation 1987-90

Answer 5

• British Steel privatised in 1988
• 1989 Water Act - privatised British water
• Privatisation of water and electricity not met with same enthusiasm
• Thatcher nationlised on philosophical dogma rather than empirical analysis of costs

Question 6

4

Describe the resignation of Lawson

Answer 6

• Divisions over ERM
• Thatcher blamed Lawson for initiating inflationary pressures
• Lawson disgruntled by Thatcher’s reliance on anti-ERM Professor Alan Walters as an advisor on European and monetary policy and refusal to sack him
• Resigned October 1989, replaced by Major

Question 7

3

Describe internal conservative party divisions over the Europe 1987-90

Answer 7

• Lawson and Howe saw ERM as beneficial as stabilising factor to economy
• in 1988, Thatcher spoke against political and economic union for Europe
• By 1989, Thatcher had resigned fact that Britain would have to join ERM after Howe (FS) and Lawson (CX) threatened to resign

Question 8

2

Why was Thatcher opposed to ERM entry

Answer 8

• British inflation was at 3 times that of Germany
• Entry would have entrenched currency depreciation

Question 9

3

Describe the problems with the ‘right to buy’ scheme by 1990

Answer 9

• Feverish speculation meant majority of new house owners were debtors to financial institutions
• Housing bubble burst in 1989
• 2m house owners encountered ‘negative equity’

Question 10

1

What is negative equity?

Answer 10

Market value of house lower than mortgage

Question 11

3

Describe the Education Reform Act 1988

Answer 11

• Biggest shakeup since Butler’s Education Act 1944
• Laid down national curriculum
• Seen as revolt against Lab-controlled LEAs and teachers

Question 12

3

Outline the national curriculum of the Education Reform Act 1988

Answer 12

• Maths, English and Science became core subjects
• RS were compulsory
• Standardised testing (SATs for ages 7, 11, 14; GCSE for 16)

Question 13

2

Outline the budgetary changes of the Education Reform Act 1988

Answer 13

• Control of school budgets transferred from LEAs to school heads
• Schools permitted to opt out of LEA control and become maintained by central-govt grants

Question 14

3

Describe limits to education 1987-90

Answer 14

• UK schools underfunded by international standards
• Criticism from right and left
• Student grants has been frozen in 1984, with loans offered as alternative - concerns over disadvantaging poor

Question 15

3

Describe right-wing criticism of education 1987-90

Answer 15

• Encouraged by Keith Joseph
• Criticised informal teaching style, lacking of discipline
• Thatcher associated problems with comprehensive system

Question 16

3

Describe left-wing criticism of education 1987-90

Answer 16

• Blamed underfunding
• Failure to ensure girls in STEM
• imbalance of private and comprehensive schools

Question 17

5

Describe the problems in healthcare 1980s

Answer 17

• Britain spent less on health than any Western European country and far less than USA
• Nurses, doctors and ancillary staff overworked and underpaid
• Massive rise in prescription charges across 1980s
• Dental services virtually private by 1990
• Doctors were expected to prescribe cheaper non-generic medicines rather than well-known brands

Question 18

4

Describe the ‘market mechanism’ for health

Answer 18

• Announced by Health Sec Ken Clarke in 1989
• Hospitals would have control over own budgets
• Hospitals could contract out of NHS altogether
• Thatcher had previously claimed in 1982 that NHS was safe from privatisation

Question 19

2

Describe the reaction to the ‘market mechanism’

Answer 19

• BMA denounced govt policy
• 1989 Vale of Glamorgan elec - Labour won on back of local GP campaign against health plans

Question 20

3

Describe Thatcher’s policy on quanqos

Answer 20

• Promised to abolish quangos in 1979
• Yet privatisation of utilities required new regulatory bodies to prevent unchecked monopolies
• e.g. OFTEL (Office of Telecommunications)

Question 21

5

Describe the poll tax (community charge)

Answer 21

• Intended to replace domestic rates based on property values to fund local govt
• Flat charges for services set by local goverment
• All would pay, not just homeowner
• Introduced in Scotland in 1989
• Enacted in England/Wales April 1990

Question 22

3

Describe the problems with the poll tax

Answer 22

• Had been widespread non-payment in Scotland
• 30% non-payment in England and Wales
• Would impose huge burden on WC families - many of whom had backed Thatcher in previous elections

Question 23

4

Describe the reaction to the poll tax

Answer 23

• Immense protests, many of them violent
• Opposed vigorously by Lab, Alliance, nationalist parties (latter encouraging non-payment)
• Militant Tendency set up anti-Poll Tax Federation in Nov 1989
• Heath criticsed policy

Question 24

1

Describe a limit to poll tax opposition

Answer 24

• Labour restricted opp to parliamentary pressure and peaceful protest

Question 25

5

Describe the 30 March 1990 London riot

Answer 25

• Weekend before poll tax came into operation
• 250k attended protest in Trafalgar Square
• extensive looting
• 5k injured inlcuding police, bystanders
• over 300 arrests

Question 26

2

Describe the political impact of the poll tax

Answer 26

• Poll tax plummeted Thatcher’s popularity to level unseen since 1980-81 - electoral liability
• Replaced by property-based Council Tax in 1993

Question 27

3

Outline the loss of Thatcher loyalists by 1990

Answer 27

• Most loyal colleague Whitelaw retired in Jan 1988
• Leon Brittan had left to take up lucrative VP of European Commission post in Bruseels
• Rising star and loyalist Edwina Currie forced to resign over salmonella-in-eggs crisis in 1988

Question 28

3

Describe Conservative Party division 1987-90

Answer 28

• Centralised leadership, becoming increasingly isolated over wider PLP
• Debates over Europe with Howe and Lawson
• Early Thatcherite John Biffen criticised her dogmatic style

Question 29

5

Describe the increasing threat Labour posed to Thatcher by 1990

Answer 29

• Much of Tory electoral strength derived from lack of effective opp - this had changed by 1989
• Decline of Alliance/Lib Dems
• Kinnock had reorganised party, gained NEC controls and shifted policies closer to centre-ground
• Labour led every poll from June 1989 until Thatcher resignation (perhaps signalling Lab support was temporary!)
• 1989 European Elections

Question 30

2

Describe the 1989 European Elections

Answer 30

• Lab 45 seats, Con 32
• 1st defeat for Thatcher in 10 years

Question 31

3

Describe the loss of public support of Thatcher by 1990

Answer 31

• Comparisons with frequent reshuffles and high interest rates of end of Macmillan’s premiership
• Those concerned about environmental issues found more natural support in Lab/LD camps
• Concerns consumption and wealth creation worsened inequality

Question 32

5

Describe internal Conservative party divisions over Europe 1987-90 (excluding ERM)

Answer 32

• EEC policy division greatest source of weakness
• Bruges Speech 1988
• 1989 leadership challenge
• ‘No, no, no’ speech
• Antagonistic approach led to dramatic resignation of Howe who lambasted Thatcher in October 1990 resignation speech

Question 33

2

Describe the 1989 Conservative leadership challenge

Answer 33

• Pro-EEC Anthony Meyer challenged - ‘stalking horse’
• won support of 33 MPs

Question 34

3

Describe the ‘No, no, no’ speech

Answer 34

• Denounced Delors’ european integration policies announced in Oct 1990
• Roused up eurosceptics in HoC
• Yet weakened authority in cabinet

Question 35

4

Describe the 1st round of the Conservative leadership election 1990

Answer 35

• Triggered by Howe resignation
• Heseltine challenged Thatcher for leadership
• Thatcher won 1st round, yet fell short of 15% lead over runner-up needed to win ouright
• Initially declared she would fight on

Question 36

3

Describe the 2nd round of the Conservative leadership election 1990

Answer 36

• Series of cabinet ministers urged her to resign - withdrew from contest
• Second ballot won by Thatcher-backed Major who had not entered in 1st round
• Concerns Heseltine elevation would entrench divisions