How successful were Thatcher's economic and social policies?

Question 1

What had all parties agreed on since 1945?

Answer 1

Unemployment should be kept low by government spending

The importance of nationalised industries

That the government should try to control prices and wages and enter into negotiations with unions

Question 2

What was happening by the late 1960s and 1970s?

Answer 2

Right-wing economists were challenging consensus politics, influencing politicians

Question 3

Who had a major influence on Thatcher?

Answer 3

Her key adviser Keith Joseph

Question 4

What had happened between 1973 and 1979?

Answer 4

Retail prices had doubled

Question 5

What were Thatcher and Joseph convinced of?

Answer 5

That economic recovery depended on conquering inflation

Question 6

What did she believe inflation did/was?

Answer 6

Hit social stability by eroding savings and causing strikes

Made industry overprices

Reduced incentives due to high tax

Fuelled by government spending and lack of control

Question 7

How did she believe inflation could be tackled?

Answer 7

By reducing the amount of money in circulation (monetarism)

Question 8

What was the social problem of inflation?

Answer 8

It was a moral issue as it prevented people from providing for the future in an independent way

Question 9

What was Keith Joseph’s ideology?

Answer 9

Small government intervention, wanting the markets to be allowed to determine wages and prices

In favour of deflation and a reduction in jobs because it would establish the basis for economic growth

Question 10

What happened in June 1979?

Answer 10

Howe reduced the top rate of income tax from 83% to 60%

Reduced the basic rate from 33% to 30%

VAT increased from 8% to 15%

Question 11

What was the impact of the 1979 budget?

Answer 11

Inflation increased by 4.54% in 1980 as the VAT increase pushed up the price of goods

Question 12

What did Howe resort do and what did the 1980 and 1981 budgets do?

Answer 12

Resort to deflationary measures

1980: Cut spending by £575mn, abolished 25% lower rate of income tax, and increased excise duty

1981: £2.5bn reduction in spending costs, tax threshold raised by 18%, and increased net taxes by £4bn

Question 13

What did Howe describe his 1981 budget as?

Answer 13

‘the most unpopular in history’

Question 14

What happened to the rate at which prices rose?

Answer 14

Reduced from 18% in 1980 to 4.5% in 1983

Question 15

What was inflation in 1981?

Answer 15

15%

Question 16

What happened to manufacturing output?

Answer 16

Fell by 14% and many firms went out of business

Question 17

What happened to unemployment?

Answer 17

More than doubled between 1979 and 1983 to over 3mn

Question 18

What did the government not do?

Answer 18

Act to support industries which were facing problems

Question 19

What were interest rates and what was the impact?

Answer 19

17%

Boosted overseas confidence but made conditions difficult for anyone with loans to pay

Question 20

What happened to the pound?

Answer 20

The value of the pound increased which led to the BOP deficit increasing to £24.7bn in 1989

Question 21

What happened in 1981 and what became evident?

Answer 21

In April riots broke out in Brixton and south London

In July riots broke out in Liverpool

The social cost of the tough economic conditions

Question 22

What happened over the next three weeks and what was Thatcher’s reaction?

Answer 22

Further rioting occurred in six other major cities

She was shocked but did not accept that her economic policies were to blame

Question 23

What was GDP growth in 1981 and 1982?

Answer 23

1981: -2%

1982: -1%

Question 24

What was happening by 1982?

Answer 24

Unemployment increased by 117.9% since 1979

Growth rate and productivity (output per hour rose from 2.4% in 1979 to 4.5% in 1982) began to show signs of recovery

Question 25

What was claimed?

Answer 25

That growth was because the government's tough policies were working

Question 26

What happened to businesses?

Answer 26

Weaker businesses were failing, but stronger ones thrived

Question 27

What was the index of industrial production in 1979, 1981, 1987, and 1990?

Answer 27

1979: 86 1981: 80 1987: 96 1990: 102

Question 28

What was Britain becoming?

Answer 28

More competitive

Question 29

What was a significant cause of economic improvement?

Answer 29

The increase in North Sea oil production which had turned Britain into a net exporter of oil by 1980 (production increased from 75mn tonnes in 1980 to 125mn tonnes in 1985)

Question 30

What happened to government expenditure?

Answer 30

It rose by almost 13% between 1979 and 1990 in real terms Expenditure as a percentage of GDP fell from 48% to 39%

Question 31

What was unemployment attributed to?

Answer 31

The reduction of government spending

Question 32

What was the unemployment rate in 1979, 1984, and 1990?

Answer 32

1979: 5.3% 1984: 11.8% 1990: 7.5%

Question 33

What happened after 1983?

Answer 33

The government accelerated the sale of state-owned enterprises and utilities into private hands

Question 34

What did Thatcher believe, argue, and maintain?

Answer 34

That privatisation was fundamental to improving economic performance Argued that the sell-off would raise revenue with which to fund tax cuts and boost investment and enterprise That nationalised industries were inefficient would be better able to raise investment capital once privatised

Question 35

What happened to shareholders?

Answer 35

In 1979 Britain had 3mn private shareholders and by 1990 there were almost 11mn

Question 36

What did she hope?

Answer 36

That the policy would reward people she admired whose small shareholdings would give them a modest stake in the future of capitalism

Question 37

What was the problem?

Answer 37

The government tended to undervalue the assets of each industry being privatised, and the value of the shares usually climbed steeply immediately after issue

Question 38

What did this encourage?

Answer 38

Many shareholders to sell their allocation quickly at a profit, usually to big financial operations

Question 39

What was privatised in 1979, 1986, and 1989?

Answer 39

1979: British Petroleum 1986: British gas 1988: Water utilities

Question 40

What did Nigel Lawson continue?

Answer 40

Howe's policy of shifting revenue from direct to indirect taxes, reducing further both the top and basic rates of income tax

Question 41

What did Lawson do in the 1984 budget?

Answer 41

Reduced corporation tax from 52% to 50% Increased excise duty on alcohol and cigarettes (2p on a pint of beer) Extended VAT

Question 42

What happened to capital gains tax?

Answer 42

Howe got rid of bands, changing it to a universal rate of 30% in 1980 Lawson aligned the rates with those of income tax in 1988, leading to the UK having one of the highest rates of CGT in the world (40%)

Question 43

What did the Financial Services Act of 1988 do?

Answer 43

Deregulated the London stock market in the so-called 'Big Bang'

Question 44

What did the Financial Services Act do?

Answer 44

Revitalised the City of London's money market by ending the Stock Exchange's monopoly on share dealing

Question 45

What did the Chancellor's policies produce?

Answer 45

'Lawson boom' Unemployment fell to 1.6mn in 1989

Question 46

What did it seem like?

Answer 46

That the wealth gap had widened

Question 47

What have Thatcher's supporters argued?

Answer 47

Succeeded in reducing inflation Privatisation improved performance and lowered prices Deregulation allowed London to remain at the centre of a global financial market

Question 48

What do critics of her policies maintain?

Answer 48

Economic success came from the bonanza of North Sea oil Privatised services were run for the profits of shareholders Deregulation encouraged selfishness Social cost of the policies outweighed the benefits

Question 49

What did a cartoon from the Guardian in 1981 show and say?

Answer 49

Hare (inflation) and tortoise race (policies) 'look champ, I know what I'm doing. In a few years, he'll slow down and take a nap'

Question 50

What were government reforms aimed at?

Answer 50

Making the NHS more efficient by applying business principles to its administration

Question 51

What were the business principles?

Answer 51

Hospitals became NHS trusts in control of their own budgets NHS services were expected to compete with one another to provide the most efficient service GPs became fund-holders

Question 52

What did government supporters argue?

Answer 52

That these changes injected some much needed financial discipline into the NHS

Question 53

What did its critics argue?

Answer 53

It was the first stage in the privatisation of the NHS, in which the profit motive would take priority over patient care

Question 54

What had been a concern for some time and what was the feeling?

Answer 54

The quality of Britain's secondary school education That Britain was lagging behind other countries and that teachers were not being subject to the quality control common in other jobs

Question 55

What happened in 1986?

Answer 55

The GCSE replaced O Levels (more academic) and CSEs (didn't lead easily to further training/education)

Question 56

What happened in 1988?

Answer 56

The government introduced a national curriculum State schools were given the right to opt out of control by their local education authority

Question 57

What were the concerns?

Answer 57

That GCSEs weren't academically rigorous enough Testing was too frequent and the national curriculum made teaching too restrictive

Question 58

What happened in 1981?

Answer 58

Government imposed a 15% cut on HE

Question 59

What happened in 1988?

Answer 59

A University Funding Council was created to ensure that university education reflected the needs of the economy

Question 60

What happened to the university staff?

Answer 60

Some lost their security of tenure

Question 61

What did the government remove?

Answer 61

The polytechnics from local authority control and brought them under the control of the Universities Funding Council

Question 62

What did the government not do?

Answer 62

Abolish grants for young people to attend places of higher education

Question 63

What were the changes?

Answer 63

Controversial, with Oxford refusing to grant Thatcher an honorary degree

Question 64

What did Thatcher want to do?

Answer 64

Create a 'property-owning democracy' to reward those who shared the values she admired by enabling them to own their own homes

Question 65

What did she believe?

Answer 65

That owning property gave people a stake in their communities and made them less likely to support socialism

Question 66

What does this explain?

Answer 66

Why one of her government's first actions was to allow long-term council tenants the right to buy their houses

Question 67

What did she insist on to encourage home ownership?

Answer 67

That home owners should continue to get tax relief on their mortgages

Question 68

What happened during her premiership and to property ownership?

Answer 68

The amount of government money spent on subsidising mortgages doubled and property ownership increased by 12%

Question 69

What was inflation in 1980, 1984, and 1987?

Answer 69

1980: 16.4% 1984: 4.3% 1987: 3.3%

Question 70

What was the unemployment rate in 1982, 1987, and 1990?

Answer 70

1982: 13% 1987: 10.5% 1990: 6%

Question 71

What was GDP growth in 1984, 1987, and 1990?

Answer 71

1984: 2.3% 1987: 5.4% 1990: 0.7%

Question 72

What were house prices rising by in the late 1980s?

Answer 72

30%

Question 73

By the late 1980s, what happened to BOP?

Answer 73

Grew to a deficit of over 4% of GDP