Thatcher and the end of consensus 1979–1997 Flashcards
1979 Election
Conservative: 339 seats, 43.9%
Labour: 269 seats, 36.9%
Labour seen to have failed to deal with inflation, unemployment and trade unions (winter of discontent) - in London, South & Midlands 40 seats changed hands - increased middle class that felt resentful about strikes
AND Liberal vote declined; dropped by > 1 mil = seen to have helped keep Callaghan in govt
1983 Election
Conservative: 397 seats, 42.2% votes
Labour: 209 seats, 27.6% vote
Rise in unemployment and economic problems had reduced govt’s popularity
BUT Falklands War victory increased Thatcher personal popularity
Disastrous split of Labour & selection of Michael Foot as leader Nov 1980 (old fashioned views about unilateral nuclear disarmament, nationalisation of industry and increased govt regulation)
LED TO PLIT: modérâtes formed SDP March 1981
Labour manifesto = ‘the longest suicide note in history’
Liberal & SDP Alliance (modern LibDem) split anti-Thatcher vote
1987 Election
Conservative: 376 seats, 43.4% votes
- selling council houses & hares in privatised industries were popular with middle class
- unemployment was falling, pound was strong
- June opinions polls were positive, people believed they were better off & supported
Labour: 229 seats, 31.7% vote
- Neil Kinnock brought party back to centre
- 1.5 mill more votes than 1983 BUT long-winded speeches and less international reputation than Thatcher
- affected by the Alliance who contested every seat (splitting anti-conservative votes)
What is consensus politics?
- Post-1945 Keynesianism
- Labour nationalised industries 1945-51 seen as necessary - coal, gas, electricity, railways
- Govt should try and control prices / wages, & negotiate with trade unions in period of ‘emergency’
- challenged by right-wig economists; Sir Keith Joseph & Thatcher
Thatcher’s View of Inflation
- Retail prices doubled 1973-79
Thatcher saw INFLATION as… - fuelled by govt spending
- direct result of Keynesianism
- hitting social ability by eroding middle class spending
- reducing incentives and enterprise as higher prices led to higher taxation
- only able to be tackled by reducing money in circulation ‘MONETARISM’
Conservative Taxation Policy 1979
- Sir Geoffrey Howe, Chancellor of the Exchequer in June 1979 shifted tax burden from DIRECT to INDIRECT, worsening inflation; VAT increase pushed up price of goods, etc
- Howe as a result resorted to deflationary methods used by previous govts ; 1980-81 budgets CUT govt expenditure, reduced govt BORROWING, and increased TAXES
- 1981 budget called by Howe ‘the most unpopular in history’
Economic Problems under Howe
- manufacturing output fell by 14% = firms went out of business
- unemployment more than doubled 1979-1983 to >3 million
- high interest rate boosted overseas confidence BUT made conditions difficult for anyone with loans to pay
- value of the pound increased which boosted financial sector BUT made exports dearer
BUT rate at which prices rose was reduced 18% - 4.5% 1980-1983 - April 1981 Brixton, South London RIOTS & Liverpool in July (places of high unemployment, poverty & racial tension)…continued over 3 weeks in 6 other locations
- unemployment rose, growth rate recovered by 1982, wage demand and inflation falling
- govt expenditure rose by 13% 1979-90, but was reduced as a percentage of the economy as a whole (many saw this as the main reason fro unemployment)
Thatcher & Privatisation
- she saw it as ‘fundamental to improving Britain;s economic performance’, maintaining that nationalised industries were inefficient under govt control
- argued that sell-off would raise revenue to fund tax cuts and boost investment
- popular with those who bought shares in these new companies (3 mill to 11 mil private shareholders in all of Britain by 1990)
- assets undervalued, so value climbed steeply - encouraged shareholders to sell their allocation quickly usually to big financial operations, so hard-working families Thatcher admired didn’t have as much of a stake in the future of capitalism
> 1979 British Petroleum
> 1984 British Telecommunications
> 1986 British Gas
>1987 British Airways
>1988 British Steel
Tax Cuts & Deregulation under Thatcher
Nigel Lawson, chancellor of the exchequer after Howe, 1983-89…
- continued shifting revenue from direct to indirect
- reduced capital gains and inheritance (led to British incomes being more lightly taxed than anywhere else in Europe)
- Financial Services Act 1986 deregulated the London stock market = revitalised City Of London’s nmoney market by ending Stock Exchange’s monopoly on share dealings
- ‘Lawson’s Boom’ … actually just an ever widening gap between London & traditional rural
Overall Economic Record of Thatcher Government
GOOD
- decreased rate of inflation
- privatisation improved performances, lowered prices & gave more options to consumers
- London stayed at center of global fin Nani also center through dereguation
- more shareholders = more with a stake in the success of the economy
BAD
- arguably economic policies played less of a role than North Sea Oil
- privatised service became profit of big shareholders, less customer focused
- social costs: unemployment up, communities hit by fall of manufacturing
Economic Policies of Thatcher Government
- Monetarism and Inflation
- Taxation Policies (under Howe)
- Privatisation
- Reduced Government Expenditure
- Tax Cuts & Deregulation (under Lawson)
Social Policies of Thatcher’s Government
- The NHS
- Schools
- Universities
- Council House Sales
Thatcher’s Social Policies: NHS
- aimed to make it more efficient by applying business principles to its administration
- hospitals were allowed to become self governing NHS trusts in control of own budgets
- NHS services expected to compete to provide most efficient / cost-effective serve to GPs
- GPs became fun-holders with their own budget to manage
GOOD saw it as much needed Financial discipline
BAD saw it as first stage of privatisation (profit motive over patient care)
Thatcher’s Social Policies: Schools
1986 O levels & CSEs replaced by the GCSE = Thatcher doubtful, convince by Sir Keith Joseph that wouldn’t lead to lower standards / less academically rigorous
1988 introduced national curriculum with regular national testing (some saw as too restrictive, and lack of consistency over how much govt control!)
- state schools given right to opt out of local education authority and become grant-maintained schools with complete control of budget
Thatcher’s Social Policies: Universities
1981 university budgets cut = forced larger intake of students
1988 University Funding Council = ensured education reflected needs of economy (not just research)
No more polytechnics under local authority, under UFC instead
Didn’t abolish grants for students, BUT some staff lost their security of tenure
CONTROVERSIAL: 1985 Oxford refused to grant Thatcher an honorary degree (give 6 x before)
