The Iron Lady, 1979-90

Monetarism - Key Principles

Thatcher influenced by Friedman’s theory, the idea that the best way to control inflation was by curbing the money supply, as well a s limiting gov. spending and borrowing.

Pressure to reverse its monetarist policies, but the 1981 budget extended them further: borrowing decreased, local council grants reduced, benefits frozen.

Government implemented these principles from the offset, inflation had grown to 15% by 1980 and unemployment risen to 2 million.

Despite stagflation, the North Sea Oil saved the country from another BoP crisis.

Monetarism - Taxation

She shifted from direct to indirect taxation, influenced by the belief that people spend their money more efficiently then governments.

By 1988, the top rate of income tax had fall from 83%→40%, VAT increased from 8%→15%, Petrol, Alcohol, and Cigarette taxes increased almost each year.

Supporters of Thatcher (“dries”) argued that reducing direct taxation incentivised wealth creation, stimulating the economy.

Thatcher’s opponents (“wets”) argued raising indirect taxes hit the poor the hardest.

Monetarism - Conflict with Local Councils

Government introduced rate capping, limiting the amount that councils were allowed to tax local residents. In 1985, Sheffield and Liverpool councils refused to set budgets, but under threat of bankruptcy had to back down.

Local government abolished large metropolitan local authorities including the glacier and local accountability was reduced.

Cutting spending led to conflict between government and Labour controlled local councils.

Although she aimed to cut public spending, she never achieved it. Largely because of rising unemployment and the consequent increase in the social security budget.

Privatisation

Central aspect of Thatcher’s economic approach, BP privatised in 1979, and British Aerospace followed in 1980.

Accelerated after 1984 when BT was sold off, and British Gas in 1986. An advertisement campaign encouraged the public to buy shares in the company.

From 1979-90, the number of individuals owning stocks and shares increased from 3 → 9 million.

Driven by the belief that the private sector would deliver services more efficiently than the public sector - competition would encourage innovation and improvements.

Privatisation was also accompanied by outsourcing where private companies were given contracts to delivered by local councils.

Shift away from the post war consensus

Deregulation

Thatcher was keen to remove ‘red tape’ from businesses, encouraging them to trade and grow, promoting wealth creation and entrepreneurship.

The loan guarantee scheme made it easier for small businesses to borrow money. The enterprise allowance scheme gave the unemployed £40 a week for up to a year to help them set up new firms.

Financial deregulation restricted the control of the Bank of England over the city of London.

London stock exchange was deregulated by the big ban of 1986, introducing computer screen trading and free competition and allowing foreign banks to act as stockbrokers.

This helped London cement its position as a world finance centre, competing with Wall street and making financial servitudes a key UK export industry. ‘Yuppie financiers’ were able to take bigger risk and become increasingly more wealthy.

Controlling Inflation

Unlike consensus politicians who had prioritised full employment over price controls, Thatcher believed that inflation was a greater evil than unemployment.

This made it expensive for businesses to borrow and also increased the value of the £, harming exports. As a result both output and demand fell, leading to the collapse of some businesses and growth in unemployment.

Interest rates were raised to 17% in 1979.

Although inflation rose to 22% in 1980, it fell to 2.5% in 1986. However attempt to keep it under control later in the decade led to a further recession. By 1990 inflation had risen again to 11%.

Unemployment

Thatcher believed that unemployment was a price worth paying as it made the UK industry more competitive.

Monetarists policies led to the collapse of industry in parts of the midlands, and national unemployment had reached 3 million - highest total since the war.

However unemployment remained above 3 million until 1987. Mechanisation of industry and the move from manufacturing → service industries meant that many unemployed people were unable to find new roles.

Youth employment schemes - Giving employers subsidies to take on younger workers were introduced. In addition, employer national insurance rates were reduced for lower paid jobs.

Economic Realignment

The move from manufacturing towards service industries was a long term trend, but Thatcher’s government embraces it wholeheartedly.

Areas which had relied on traditional industries such as mining, shipbuilding, and steel manufacturing, found it difficult to adjust. The foundations of many working-class communities were shattered, and the North-South divide increased.

Foreign competition and technological developments were also changing Britain’s economic landscape.

As a result, many inner city areas fell into decay, there was a rise in ill health, depression, alcoholism and drug use, including among young people who no longer had a clear path into work. Many moved away from these areas

Thatcher’s Foreign Policy aims

Restore British prestige and global influence

Defend national sovereignty

Promote anti-communism and strong defence

Strengthen it’s ties with USA

Maintain Britain as a global power despite decline

The special relationship with the USA

Aims - Reassert Britain’s global role through alliances with the US, oppose communism and soviet expansion, maintain Britain’s nuclear deterrent.

Reagan & Thatcher - Very close personal and ideological relationship. Shared beliefs on Free market, Strong defence, Anti-Communism.

Key Policies/Events - Trident Nuclear Missile System (1982), Reliance on US Tech, US cruise missiles at RAF Greenham Common (1981), NATO response to soviets, Support US Foreign Policy

Evaluation - Strengthened Britain’s global influence, made Britain dependant on the US, Domestic Opposition

The Cold War and Soviet Union

Early Approach, 1979-84 - Strongly anti-Soviet, Supported NATO’s dual track strategy, Increased defence spending

Thatcher & Gorbachev - “We can do business together”, Acted as a bridge between US and USSR, Supported arms reduction talks and de-escalation of tensions.

Glasnost (openness) and Perestroika (loosened gov. control over business + industry)

Key Outcomes - INF Treaty 1987, Reduced CW tensions, Enhanced Thatcher’s international reputation

INF Treaty 1987

Intermediate-Range Nuclear Forces Treaty

Both US and USSR permanently eliminate all land-based ballistic and cruise missiles with ranges of 500-5,500 km.

The Falklands War 1982

Causes - Argentine Invasion of British territory The Falklands Islands, Junta believed Britain wouldn’t respond, Thatcher’s popularity was low pre-war

Thatcher’s Response - Immediately dispatched a task force, Refused negotiations till Islands returned to British control, Argentine Cruiser Belgrano sank by submarine HMS Conqueror. War lasted 10 weeks

Outcomes - British Victory, Strengthened Thatcher politically (especially after her visit to the capital Port Stanley), Reinforced British defence of British interests.

Consequences - Increased defence spending, Boosted national pride, Cemented Thatcher’s ‘Iron Lady’ image

Despite being a major foreign policy success, it was expensive and many lives were lost. Critics argue war could’ve been avoided.

Thatcher’s relationship with Europe

1985 Tax Rebate - Complex calculation which equated to a reduction in approx. 66% of UK net contribution as the UK despite being one of the poorest EEC nations was one of its largest contributors.

Francois Mitterrand - French President from 1981-85 as a member of the Socialist Party. Was Anti-Tax rebate and increased UK Euroscepticism.

The Channel Tunnel - Treaty of Canterbury 1986 between Thatcher and Mitterrand introduced an underwater train that connected England with France.

1986 Single European Act (SEA) - Amended treaties establishing European cooperation and a single market. Thatcher supported it due to it being a ‘Free Market’ but later regretted it due to it handing more power to the European Commission.

The Westland Affair - A dispute between Thatcher and Heseltine (Sec. State of Defence) in 1985-86 over who the UK should merge the Westland Helicopter company with.

1988 Bruges Speech - Speech Thatcher gave to call for reforms to the Common Agricultural Policy, whilst opposing a ‘federal Europe’ as it would take power from its members.

The 1985-86 Westland Affair

A public cabinet dispute between PM Margaret Thatcher and Sec. of State for Defence Michael Heseltine over the future of British company Westland Helicopters.

Heseltine wanted to merge with European companies to strengthen Anglo-European relations and show British interest in Europe.

Thatcher wanted to merge with US company Sikorsky, strengthening Anglo-Atlantic relations.

Thatcher merged Westland with Sikorsky so Heseltine resigned in protest leaving an undermining reputation on her government.

Commonwealth and South Africa

Thatcher neglected the Commonwealth favouring deals with Reagan and Gorbachev over Commonwealth Summits.

South Africa: (1985-89)

Policy - “Constructive engagement” - private diplomacy over public pressure

Key Stance - Commonwealth sanctions to pressure South Africa to end racial segregation and majority-rule denial. Britain felt they wouldn’t work and would harm trade interests so were against it.

In public - Thatcher and Conservatives called the ANC “Terrorists” and refused to negotiate with them.

In private - Thatcher urged de Klerk to release Mandela (1989) and authorised back-channel contacts with South African political parties.

Despite being criticised for protecting British economic interests over opposing apartheid, but credited by de Klerk for understanding the situations complexity.

Foreign Policy - Overall

Assertive & Ideological, but successful in restoring British confidence.

Most Successful - Falklands (1982), US Relationship, Cold War diplomacy (INF 1987)

Most Controversial - Europe (Westland 1985-86), South Africa (1985-89), Nuclear Weapons (Greenham 1981).

Sale of Council Houses

Thatcher aimed to turn Britain into a property owning democracy.

Tenants received a 30%-50% discount on council house prices.

By 1988, around 2 million people had taken advantage of the scheme - led labour to drop their original opposition to it.

The scheme however had less of an impact on deprived areas, massive decline in social housing, long term housing shortages, and homelessness. Major cause of the modern-day housing crisis.

Environmental Pressure Groups

The environmental movement grew in size in the 1980s partly in response to a number of environmental disasters:

• Bhopal Gas Leak in 1984 - Killed up to 8000

• Chernobyl Nuclear Accident in 1986 - radioactive particles into the atmosphere

The discovery of the hole in the ozone layer caused by the effects of the damage to freshwater lakes by acid rain, also increased support for environmental campaigners.

Industrial Disputes

Thatcher’s economic reforms were unpopular with many TUs, some became more militant (COHSE, NUPE) whilst the NUT went on strike.

Other groups who weren’t related to industrial unrest carried out lengthy actions over working conditions (Teachers Unions)

Some employers attempted to ban unions, or to reduce their influence in the workplace. ‘Print Unions’ by Rupert Murdoch attempted to block distribution of the Sunday Times.

Legislation increasing industrial unrest

Employment Act 1980 - Secondary Picketing made illegal

Employment Act 1982 - Further outlawed secondary action, restricted union-only labour clauses in contracts, and raised compensation limits for employees unfairly dismissed due to closed shops.

Trade Union Act 1984 - Increased pressure to hold Ballots before Strikes

Wages Act 1986 - Abolished statutory wage prtoections (u21s) and Dismantled “Truck” protections allowing non-cash payment methods.

Employment Act 1988 - Allowed members to seek court injunctions against unballoted strikes and gave individuals the right to ignore union strike calls without facing disciplinary action.

Employment Act 1990 - Effectively made "closed shops" (workplaces where all employees must join a union) entirely unlawful

Societal opposition to Thatcher

Education, Arts, Media:

• Oxford University voted against giving Thatcher an honorary degree - given to every other Oxford-educated post-war PM, because of public spending cuts to higher education.

• The artistic establishment tended to be anti-Thatcher, due to public spending cuts - Satire of her in plays and TV shows.

The Church:

• CofE published ‘Faith in the City’ report, 1985. - Called for more gov. intervention in deprived areas with criticism of Thatcherite policies.

The Greenham Women, 1981

Following on from the legacy of the suffragettes and began with 36 women waling 12 miles from Cardiff to RAF Greenham Common.

Goal was to demand the removal of the US destructive missiles, grew to 35,000 by the time they reached the base.

Formed a human chain and encircled the base. Police arrested, beat, jailed, or forcibly removed the crowd.

Was one of the largest demonstrations since the 1960s and the missiles were removed in 1994.

Fashion Culture

“More is More” philosophy with people using it as tool for self-expression and an influence for pop culture.

“Power Dressing” with Shoulder Pads, Athletic Wear, Bold Colours, and Oversized Silhouettes.

Way of expression in a time of oppression.

Youth Culture

Led music scenes with genres including:

• New Romantics - Duran Duran, Spandau Ballet

• Post/New Wave Punk - The Cure, Joy Division

• Two Tone + Ska Revival - The Specials, Madness

• Acid House + Rave

Protested against unemployment, racism, and nuclear weapons

Youth-driven content dominated music, tv, and magazines

Youth had more to choose from with consumerism creating a new market with global cultural influence.

Lifestyle in the 1980s

Thatcherism increased individualism and consumerism which created an unequal society, success = possessions

‘Right to Buy’ Scheme (1980) - increased homeownership, number of working mothers, and dual-income households.

Leisure increasingly revolved around TV, shopping, sport, and music.

Britain became a consumer-driven society due to increased choice

Values shifted to more individualism, materialism, and entrepreneurship

TV in the 1980s

1982: Channel 4 Launched

1989: Satellite TV increased choice - Sky

New Coverage of Falklands (1982) and Miner Strikes (1984-85) shaped public opinion

Family viewing increased with satire such as ‘Yes Minister’ showing cynicism in UK politics.

Increased voices and representation, especially on Channel 4

‘Blackadder’ (1983-89) shaped attitudes and cultural identity. Reflected the cynicism, intelligence, and irony of 1980s Britain. Encouraging questioning authority, tradition, and historical myths.

The Miners Strike 1984-85 - Background

In 1981, Thatcher was warned by the National Coal Board (NCB) that 23 coal mines would need to close.

Memories of the conflict under Heath remained so Thatcher compromised. Were reductions in coal imports and subsidies to the NCB protected. However in 1984 there remained an economic case for pit closure.

The government had built up huge coal stocks at power station; confident they could rely on North Sea oil.

Chairman of the NCB, Ian Macgregor was keen to press ahead with closures and had government backing now. The NCB announced 20 pits would close in 1984.

The Miners Strike 1984-85 - NUM and UDM

Arthur Scargill, President of the NUM, claimed to have seen a secret plan to close 70 pits. Macgregor denied the claims, but there was plans to close 75 pits in 3 years.

Scargill was popular with many miners, but failed to win full support for a national strike.

Historic regional divisions hampered the NUM. The Nottinghamshire miners formed a breakaway union, the UDM, and attacked Scargill for promoting hard left ideology then supporting the miners.

In return the NUM labelled the UDM ‘traitors’ and ‘Scabs’

The Miners Strike 1984-85 - Reasons for NUM defeat

The police played a key role but controversial role in defeating the strike, they had more experience of riot control, new equipment and better tactics than during the 1970s.

There were accusations from the NUM that police had been politicised, especially after the Battle of Orgreave (1983)

In addition to regional divisions and the UDMs criticisms of Scargill, his refusal to hold a strike ballot alienated the Labour Party leadership and moderate trade unionists.

Easy for the government and conservative-supporting press to portray Scargill as anti-democratic revolutionary. “Mine Fuhrer” headline by The Sun.

The Miners Strike 1984-85 - Significance

Pit closures went ahead: the number of miners fell from 200,000 in 1979 → 60,000 in 1990

The impact of the TU movement as a whole was significant too. The power of the unions was reduced and union membership had fallen by 1/3rd by the end of Thatcher’s time in office.

The unions were unable to prevent significant restructuring other industries, including British Steel, leading to huge job losses.

Thatcher was able to portray herself as a far stronger leader than either Heath or Callaghan, having defeated ‘the enemy within’ in addition to defeating Argentina during the Falklands War (1982).

The Miners Strike 1984-85 - The Battle of Orgreave

Violent clash between striking coal miners and police officers on June 18th 1984 at a British Steel Corporation coking plant in Orgreave, South Yorkshire.

The Poll Tax, 1990 - Background and introduction

Thatcher was keen to reform local government finances, making councils more accountable (and potentially more efficient) by ensuring that there was a greater pool of tax payers.

The previous system was based on property, and therefor only paid by home owners

Thatcher’s solution, the community charge was hugely unpopular as it would involve everyone paying the same rate, however rich or poor they were

The poll tax was introduced in Scotland in 1989 and only harmed the Conservatives already negative reputation there even further. Despite this, Thatcher was determined to press ahead with its introduction in England and Wales - 1990

Anti-poll tax unions were set up, encouraging non-payment, in some areas 30% of people refused to pay. It was impossible for courts to enforce the tax.

The Poll Tax, 1990 - Aftermath

In March 1990, an anti-poll tax demonstration in Trafalgar Square was attended by 200k people.

It soon became a riot with around 5000 demonstrators, police officers, and bystanders injured. Around 3000 were arrested, it appeared for a few hours the police lost control.

The violence included cars being overturned and set on fire, shop windows were smashed, and there were many incidences of looting

In the aftermath, there were further allegations of police politicisation. The poll tax also added to the perception that Thatcher was now increasingly out of touch with the public.

The Troubles, 1979-90 - Key Figures

Reverend Ian Paisley (1926-2014):

• Led the Loyalist opposition to the Catholic civil rights movement in the 1960s and was involved in setting up paramilitary Loyalist organisations.

• Set up the DUP in 1971 - fiercely opposed to any form of power sharing, agreed to the peace process in the 1990s

Bobby Sands (1954-1981):

• Joined the IRA as a teenager in 1972 due to experiences in Belfast due to protestant violence and intimidation.

• Was arrested in 1972 for possession of a firearm and sent to HMP Maze.

• Whilst in prison, took part in Blanket and Dirty protests, along with a Hunger Strike. He sadly died during the Hunger Strike due to complications and became a Catholic Martyr.

Gerry Adams (1948-):

• Became leader of Sinn Fein in 1981

• Was MP for West Belfast in 1983 but refused to attend an ‘English Parliament’.

• Key architect of Sinn Fein’s Twin-Track strategy ‘the armalite and the ballot box’

• Key in the 1990s peace box, and has constantly denied any connections to the IRA.

The Troubles, 1979-90 - Timeline

1979:

• August 27th - Lord Mountbatten killed by an IRA bomb on holiday in Ireland

• 18 British Soldiers killed at Warrenpoint, County Down

1980-81:

• Oct 1980 - First Hunger-strike at HMP Maze, 53 days, no deaths

• March 1st 1981 - 2nd Hunger-strike lead by Bobby Sands

• April 1981 - Sands elected MP in Fermanagh and South Tyrone by-election

• May 5th 1981 - Sands dies after 66 day strike, 10 republicans die before the end of the strike in October 1981

1984 Brighton Bombing:

• October 12th - IRA detonate a bomb at Thatcher’s hotel in Brighton. She survives along with her cabinet and gives speech few hrs later at conservative conference. 5 killed and many (including her husband) injured

1985 Anglo-Irish Agreement:

• November 15th - British + Irish govs. sign an agreement giving RoI an advisory role in NI governance.

• Unionists react with outrage, mass rallies and resignations from parliament.

1986 Ulster Resistance:

• November - Ulster resistance paramilitary group formed by hard-line unionists including DUP leader Paisley in protest to Anglo-Irish Agreement.

1979 Election

Thatcher (Conservatives) v. Callaghan (Labour)

Began after a Vote of No Confidence called by Thatcher on March 28th 1979 which passed by 1 vote (311 - 310) due to Labour’s failing in handling the economy with the Winter of Discontent (1978-79)

Thatcher was able to use the economy as a method of gaining support by pledging to control inflation and TUs using the slogan “Labour isn’t working”

Thatcher won 339 seats with 43.9% of the vote.
Callaghan won 269 seats with 36.9% of the vote.

1983 Election

Thatcher (Conservatives) v. Foot (Labour)

Thatcher used a wave of patriotism after the Falklands success in 1982 and capitalised on Labour’s Left-Wing agenda.

Foot was bad on TV compared to Thatcher and had lost a lot of political support due to the formation of the SDP in 1981 and its SDP-Liberal Alliance in the election meant Foot lost a lot of voters.

Thatcher won 397 seats with 42.4% of the vote.
Foot won 209 seats with 27.6% of the vote.
Steel and Jenkins won 23 seats with 25.4% of the vote.

1987 Election

Thatcher (Conservatives) v. Kinnock (Labour)

Thatcher emphasised defence, growing the economy, and lowering taxes and still had Press backing. Kinnock was trying to bring Labour more central after the left-wing agenda of Foot. SDP weren’t credible

Thatcher won 376 seats with 42.2% of the vote.
Kinnock won 229 seats with 30.8% of the vote.
Steel and Owen won 22 seats with 22.6% of the vote.

Thatcher’s resignation, 1990

Thatcher was forced to step down as PM after the failures of the Poll Tax which she had a significant role in introducing the tax.

The Conservatives were also polling 14% behind Kinnock and Labour in Opinion polls so she resigned for the benefit of her party.

Officially resigned on November 28th 1990 and was a shock to those outside of Britain, with both Kissinger and Gorbachev expressing private consternation.