THATCHER 1979-1987

monetarism e.g 1

public spending cuts in 1980 and 1981 budgets

monetarism e.g 2

income tax cuts: 33% → 25% basic rate, 88% → 50% top rate

monetarism e.g 3

VAT rates increased from 8% → 15%

monetarism

milton friedman: control inflation by restricting money supply (cut gov spending and borrowing).

individuals spend money more efficiently than gov: direct taxation → indirect taxation

impact of monetarism

recession in 1980, initial inflation to 15% fell to 5% in 1983, unemployment: >2 million 1981, 3 million 1983. high public spending on benefits necessary. tension between left-wing councils and gov. spending cuts → rate capping

rate capping

limited money councils could raise in local taxation

Local Government Act 1986

abolished big metropolitan authorities set up by Heath, increased powers of central government at expense of local

looney left

name given by right wing press to left wing local councils promoting liberal and politically correct policies. biggest battle = against greater london council (myths/ridiculous: ban ba ba black sheep, support communism in Cuba). harmed labour

1986 economic shift

shifted from monetarism in 2nd term. policy dropped when Lawson abandoned spending targets. instead favoured supply side economics

denationalisation (privatisation)

selling off of publicly owned industries to the private sector

attractions of privatisation

* anti-socialist
* beliefs that private sector is more efficient than public
* roll back frontiers of the state so less intervening with the economy
* public spendings cuts and financial pressures of local governments = drive to outsource to private sector
* brought in revenue to the government

criticisms of privatisation

* national assets were sold of too cheaply
* job security and pension provision for affected employees got worse

deregulation

removing ‘red tape’ to encourage entrepreneurship and business growth, little government interference

deregulation e.g 1

Loan Guarantee Scheme: easier for small businesses to borrow money

deregulation e.g 2

Enterprise Allowance Scheme: encouraged unemployed to start their own businesses by giving them £40 a week to get it off the ground

financial deregulation

loosening controls on banks and financial markets → boom in investment and financial speculation

financial deregulation e.g

City of London freed from controls of the Bank of England

Big Bang - Oct 1986

deregulated London Stock exchange

* opened way for computer screen trading which replaced ‘old boys network’
* more competition
* foreign banks operate as stockholders

impact of 1986 Big Bang

* London = one of most important financial centres
* nature of dealers and speculators changed - Yuppie image
* fewer controls = bigger risks and more money made
* financial services = GB most important export industries.

view on inflation

inflation was a bigger danger than unemployment to the economy - rejected PWC

control of inflation

raising interest rates. 1979: raised to 17%

inflation 1979-87

initially went up: peak at 22% in 1980. then fell: reached a low of 2.5% in 1986. started to rise in late 1980s = ERM

consequence of low inflation

* high interest rates → difficult for businesses to borrow, increased value of £ making GB exports more expensive
* economy went into recession and many businesses went bankrupt.

view on unemployment

high employment seen as acceptable. impact of monetarist policies were drastic in industrial areas like Midlands, North, central Scotland, South Wales.

‘deindustrialisation of Britain’

* manufacturing output fell by 15% in 2 years
* west midlands: production fell by 1/4
* steel production cut by 30%
* numbers employed in manufacturing fell from 7.1 million to 5 million.

unemployment

1983 → rose to over 3 million (13.5% workforce)

(didn’t fall below 3 million until 1987, still above 2 million by 1990)

long term economic trends and economic realignment

* GB industry failed to compete effectively with foreign competitors
* GB economy was shifting away from manufacturing and heavy industries to service industries

consequences of economic realignment

north-south divide

became more pronounced: heavy industry, based in North, contracted and service industries, based in south, grew.

communities

went into decline: primary industries closing → jobs disappear and local services/shops were hit

urban decay

hit inner city areas

* young people to move away from families to find work
* increased ill-health, depression, use of alcohol/drugs in areas of economic deprivation

riots

series of riots between april and july 1981 in areass with high levels of unemployment and deprivation (Brixton, Handsworth, Toxteth, Chapeltown)

The Scarman Report

identified poverty and race (sus law) as key components in the riots

The ‘sus’ law

gave police permission to stop and search suspected people if they thought they might commit a crime. black people and those from ethnic minorities were unfairly targeted

effect of economic realignment on workers

* workers with traditional skills in heavy industry were outdated as industries modernised/mechanise
* men were hit harder than women by unemployment
* unemployment concentrated in areas hit by decline in traditional industry: Liverpool was 25% unemployed, never fell below 10% in 1980s

Youth employment schemes

created to give employers a subsidy if they employed young people under the scheme (mitigate the effects of economic realignment)

redevelopment projects

Heseltine spearheaded redevelopment projects in the dockland areas of London and Liverpool. The Canary Wharf development on the old West India Docks became the second most important financial district in the country

National Insurance

National Insurance rates were reduced for lower paid jobs to encourage job creation.

1985

average weekly household income was £248 in south east, £173 in north/north east

1986

percentage of population that was unemployed was 10,1% in SE and 19.1% in NE

overall economic growth

overall the economy grew, the low rate of growth at the beginning of the 1980s means the average growth rate over the period was 2.2% (similar to competitors and the 1970s)

wets

nickname for Conservatives that were ‘soft and squeamish’ about social consequences of monetarist economic policies

wets in cabinet

* Willie Whitelaw (home sec 1979-83, deputy PM 1979-88)


* Jim Prior (employment 1979-81, NI 1981-84)
* Michael Heseltine (environment 1979-83, defence 1983-86)

dries

conservatives who were firm and uncompromising in their support for monetarism, thatchers supporters

dries in cabinet

* Geoffrey Howe (chancellor 1979-83, foreign secretary 1983-89)


* Keith Joseph (industry 1979-81, education 1981-86)
* Nigel Lawson (treasury 1979-83, chancellor 1983-89)
* Norman Tebbit (employment 1981-83, trade 1983-85 party chairman 1985-7)

wets vs dries

Thatcher ensured key economic posts were held by her supporters. Dries dominated cabinet. Wets like Prior were demoted, Heseltine resigned over policy differences

Labour Party 1979

defeat led to crisis and the party held debates about its future

leadership election 1980

victory of the left wing candidate Michael Foot against centre-Right candidate Denis Healey. Healey won deputy leadership against left wing Tony Benn at Blackpool Party Conference in 1981.

January 1981

Social Democrat Party formed by Labour politicians Roy Jenkins, David Owen, Shirley Williams, Bill Rodgers (Gang of Four)

SDP beliefs

left wing extremists (‘Bennite’ left) had overtain the labour party, wanted to build a cente left middle ground

Nov 1981

Williams won the Crosby by-election, taking it from conservatives

March 1982

Jenkins won Glasgow Hillhead by-election, taking it from conservatives

Feb 1983

Liberal Party won the Bermondsey by-elecion, taking it from Labour, ‘broken mould of two party system’

SDP-Liberal Alliance

the two centre parties formed ‘the Alliance’ and worked together at the 1983 and 1987 general elections. tensions and disagreements between leaders Steel and Owen. Alliance overtook Labour as credible opposition.

labour’s demographic changes

* thatcher appealed to some working class
* labour voters disliked domination of Left and turned to the Alliance
* trade unions not seen as a strength
* Labour seemed to have lost tough with ordinary people

militant tendency

extremist ‘entryist’ organisation that sought to infiltrate the labour party from within. promoted Trotsyite revolutionary socialism

Neil Kinnock

* replaced Foot as labour leader in 1983


* wanted to modernise labour
* changed party’s position on unpopular issues at 1983 election (unilateral nuclear disarmament/EEC withdrawl)
* criticised NUM leader Scargill for not holding a strike ballot in the 1984 miners’ strikes
* defeated hard-Left extremists

general elections of 1983/7

despite being unpopular in the 1980s the Conservatives won landslide majorities

1983 election

* Conservatives → 42.4% of vote, 397 seats
* Labour → 27.6% of vote, 209 seats
* Alliance → 25.4% of vote, 23 seats

1987 election

* Conservatives → 42.2% of vote, 375 seats
* Labour → 30.8% of vote, 229 seats
* Alliance 22.6% of vote, 22 seats

reasons for 1983 election result

* success in Falklands war → patriotism
* press support for conservatives
* Thatcher seen as a strong leader able to make tough decisions
* Foot seen as a weak leader, labour leadership lacked credibility
* unilateral disarmament
* withdrawal from EEC
* split in anti-conservative vote
* the first-past-the-post electoral system
* labour manifesto: ‘longest suicide note in history’, dominated by left-wing promises

reasons for 1987 election result

* press support for conservatives
* labour’s party reputation
* tension within the alliance
* decline of the alliance as labour became more electable
* split in anti-conservative vote
* the first-past-the-post electoral system

The Housing Act 1980

gave tenants the right to buy their council house. council tenants received a discount of 33%-50%

right to buy scheme

to turn GB into a property owning democracy by encouraging tenants to buy them through the right to buy scheme

by 1988

2 million people used the scheme to buy their house

consequences of right to buy

* so popular Labour dropped its opposition to it
* widened divisions in society - more houses sold in affluent area
* long term: shortage of council property and waiting lists for council accommodation got longer
* councils forced to house people in less suitable places like B&Bs

unions

those representing public sector workers (COHSE/NUPE) became more militant and teachers’ unions disputed working conditions in mid 1980s. role of unions were constrained by new laws.

secondary picketing

outlawed in 1980- picketing a location not directly involved in the dispute

unions 1984

put under pressure to hold ballots before strike action was called

Rupert Murdoch

press baron who tried to reduce the power of print unions in 1986 in a bitter/violent dispute. unions failed to prevent the publication or distribution of newspapers, 13 months the strike collapsed.

1981

national coal board announced 23 pits needed to close, the gov reduced imported coal and gave the coal industry subsidies to avoid an industrial dispute (avoid 1973/4 strike rerun)

north sea oil

1984: stocks of coal were built up and north sea oil meant the UK was less dependent on imported oil - no energy crisis

1984

Ian McGregor/NCB announced the need to close 20 pits

secret closures

Arthur Scargill claimed he saw a secret plan to close 70 pits, this was rejected. cabinet papers released in 2014 show the strategy to close 75 pits over 3 years

Union of Democratic Mineworkers (UDM)

nottinghamshire miners formed a breakaway union not supporting the strike. accused Scargill of caring more about hard left politics than the miners

Arthur Scargill

the president of the National Union of Mineworkers (NUM), was charismatic but refused to hold a strike ballot and failed to overcome historic regional divisions among miners.

1979-1990

numbers employed by coal industry fell from 200,000 to 60,000

By 1990

total union membership had dropped by a third (power of unions reduced)

Battle of Orgreave

June 1984: 5000 miners tried to stop coal being brought in; more than 50 picketers and 70 police were injured; allegations of police brutality. immediate outcome was defeat for the NUM

police in strikes

gov accused of politicising the police - used to defeat miners not protectors of law

miners’ strike 1984-5

* miners went on strike to stop the pit closures
* long/bitter. some public sympathy
* scargill alienated moderates and didn’t get support from labour
* thatcher demonised scargill as a dangerous revolutionary
* more workers gradually returned to work
* strike officially ended March 1985

thatcher’s reaction to strikes

used the strike to demonstrate her authority and compare her leadership favourably to PMs like Heath/Callaghan

poll tax

thatcher’s final attempt to reform local government finances. introduced in Scotland 1989 and England/Wales 1990

poll tax aim 1

to make local government finances fairer: only homeowners had paid Rates, whereas the poll tax would be paid by all electors

poll tax aim 2

to make local government more accountable: as all electors would contribute, the link between electors and local gov would be stronger

poll tax aim 3

local gov would be forced to spend responsibly and be more efficient in order to attract votes

criticisms of poll tax

most people’s bills would go up, difficult to justify why a poor pensioner would pay the same as a millionaire

anti-poll tax unions

urging people not to pay. some areas 30% refused to pay

March 1990

anti-poll tax demonstration in Trafalgar Square: 200,000 people, turned into a riot. 5000 people injured and looting. 300 arrested

extra-parliamentary opposition

opposition parties were weak so people unhappy with Thatcher’s policies voiced disagreement in other ways

opposition to cuts in funding of higher education

oxford university voted against awarding Thatcher an honorary degree

education/arts

opposed cuts in funding of arts and opposed Thatcherite economic/social policies

playwrights (EPO)

Caryl Churchill and David Hare wrote plays satirising Thatcherism

Red Wedge

a collective of popular musicians like Billy Bragg and Paul Weller who campaigned against Thatcher, joined by ‘alternative’ comedians like Alexi Sayle

boys from the blackstuff

TV programme which showed social consequences of Thatcherite policies

Church’s concern on impact of Thatcherite policies on society

* Faith in the City 1985: Church report calling on the gov to do more to help deprived communities
* Speeches and comments from individual bishops (David Jenkins Durham) openly criticised Thatcherite policies

pressure groups

* shelter campaigned against rising levels of homelessness
* age concern campaigned against pensioner poverty
* CND continued to attract support and encouraged by Thatcher’s backing for deterrence and the arms race against the USSR in the New Cold War

September 1981

* women protesters camped outside Greenham Common base to protest against Cruise missiles being placed there
* remained until 2000
* focal point for feminism and pacifism

April 1983

Cruise missiles due to arrive - 70,000 person 14 mile human chain of protest

concern about environmental issues

* disasters such as Bhopal gas leak in India 1984 and Chernobyl nuclear accident in USSR 1986
* growing scientific evidence about impact of pollution like CFCs and acid rain (limestone buildings/1985 discovery of Antarctic ozone hole)