Margaret Thatcher Notes

Timeline:

• 1925: born in Grantham, the second child of Alfred and Beatrice Roberts. Strong emphasis on discipline and self-improvement in the household. Dad was a local politician, who later became the mayor of Grantham.

• 1957-63: Macmillan as PM

• 1964-70: Harold Wilson as PM

• 1959: MP for Finchley for 33 years

• 1970-74: Edward Heath as PM

• 1970: became Education Secretary

• 1974: became front-bench spokesman on Treasury matters

• 1974-76: Harold Wilson as PM

• 1976-79: James Callaghan as PM

• May 1979: won first term as PM

• Oct 1989: Nigel Lawson resigned

• Nov 1990: Geoffrey Howe resigned and lost in leadership context to Michael Heseltine

Post-war Conservatives

• many Conservatives, the likes of Harold Macmillan and R. A. Butler (Chancellor) accepted the expansion of govt responsibility in the post-war period

• Macmillan, after winning 1959 election 'the class war is over and we have won it'

• Macmillan accepted the resignation of his entire Treasury team in order to defend the policy of full employment

• Macmillan created the National Economic Development Council (NEDC), a National Incomes Commission (NIC), and applied to join the EEC

• 1960s: focusses on modernisation and increasing productivity, adopting production methods of Fordism. Performance never matched the performance of similar industries elsewhere. The Conservative govt actually gave the first serious attempt at an income policy, establishing the National Incomes Commission.

The long 1970s

• A decade of instability: joining EEC, Scottish and Welsh nationalism, Northern Ireland troubles

• Symbolises the collapse of post-war consensus.

  • James Callaghan in September 1976: 'The cosy world we were told would go on forever, where full employment would be guaranteed by a stroke of the Chancellor’s pen, cutting taxes, deficit spending, that cosy world is gone...We used to think that you could spend your way out of a recession, and increase employment by cutting taxes and boosting Government spending. I tell you in all candour that that option no longer exists, and that in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment.'

• Reassessing 1970s Britain by Lawrence Black, Hugh Pemberton and Pat Thane:

  • It was a myth used for political purpose

  • Economic difficulties in the 1970s were reflection of global conditions, and people's living conditions generally rose

Heath (1970-74)

• Began radical: dismantled many of Labour policies and institutions, including the Prices and Incomes Board, the Industrial Reorganisation Corporation.

• 2.5p cut in the basic rate of income tax, 25% cut in corporate tax

• Before Heath, legislations targeting the power of trade unions, such as A Giant's Strength published by the Inns of Court Society, a group of Conservative barristers, in 1958, were seen as radical and politically infeasible. In Sept 1958 the Minister of Labour (Iain Macleod) concluded that that there is no case at all for legislation aimed at strikes.

  • Heath passed the 1970 Industrial Relations Act. Despite the strong public approval, it was poorly implemented. It was rarely used by either the govt or employers. The no. of days lost to strikes actually increased.

  • Provoked dissatisfaction from the industry, esp the public sector by holding down the wage of public sector workers in order. Suffered a major defeat in 1971 against the miners + collapse of Rolls Royce in 1971, which had to be nationalised + rise of unemployment toward 1 million during 1971 led to a U-turn a year after being in govt

• Rapid entry into the EEC and relative coolness towards the US. He saw other EEC member states as a model for Britain

• U-turn: substantial reflation needed to achieve growth, increased public spending, introduced a statutory income policy when negotiation with the TUC and the CBI broke down—this goes against what their manifesto promised

• British economy grew by 8% until the boom reached its peak in autumn 1973, However, it was then when Egypt and Syria invaded Israel, leading to an oil crisis. The whole of Western Europe was experiencing difficulties, but it hit Britain particularly bad. (1) Britain was experiencing a boom (2) Coal miners had a greater bargaining power in wage bargaining. Demanded a pay rise of more than 70%.

• Economists argued that there was an underlying cause other than oil shock:

  • The boom was running out of steam

  • Other international corporations (like Japanese ones) were competing with British industries.

  • There was a profit squeeze between 1970 and 1973, partly due to union power.

  • The Phillips Curve was breaking down—hypothesis that inflation goes down as unemployment goes up. This was partly due to trade union power too. As union demands higher wages, companies raise prices to pay for that.

• Govt declare 5 states of emergency in the 3.5 years. At the height of the miners' ban imposed a three-day week on industry

Heath decided to call an election before recession hits. However, Labour took office as a minority government (37.2% of vote). Labour was able to gain traction by pointing to issues such as higher prices and Britain entering the ECC (Eurosceptics voted Labour). James Callaghan entered into a coalition with the Liberals and ruled with David Steel.

• inherited a crisis of economic management

  • public sector net borrowing increased. Budget deficit became a serious factor in British politics (1976 IMF Crisis)

• 'Social contract' with trade unions. Trade unions voluntarily agreed to keep wages down in return for influence over various areas of govt policy, particularly pension and social welfare. The voluntary element that unions promised was not really carried out. Inflation was still growing. Chancellor David Healey tightened up the deal in 1975. Trade unions knew that if they did not keep wages down, government would resort to the means of legislations.

  • problem is that government could easily set the limits in public...

Buy the full version of these notes or essay plans and more in our Margaret Thatcher and British Politics 1979-1997 Notes.