#4390 - Thatcherism Notes - 20th Century British Politics

BRITISH POLITICS AND GOVERNMENT SINCE 1900

THE CONSERVATIVE GOVERNMENTS 1970-74, 1979-1997

What was new about ‘Thatcherism’?

Jacson, Ben & Robert Saunders (eds) Making Thatcher’s Britain (2012): all chapters are useful, but introduction and chs. 1-3 and 12 are essential.

Thatcherism: An Historical Perspective: E.H.H. Green

- Privatisation as policy did not appear in the Conservative election manifesto of 1979, and was not part of the Party’s agenda during the 1970s.

- Thatcherism’s origins were post-1975, perhaps post-1979, and were simply the actions of her governments.

- Between 1975 and 1979 Thacher worked with the right-wing Conservative MP Keith Joseph on a number of speeches which outlined policy objectives later adopted.

- Thacher’s election was a response to the failures of Heath.

- Political economy can be viewed as a product of the high inflation, high unemployment, low growth environment of the 1970s; the international re-birth of monetarist, free-market economics contributed to the intellectual thought behind it.

- ‘Rolling back the State’ and replacing the mixed economy with a private sector dominated one.

- Lowering of personal taxation, widening of property ownership, cutting back of the welfare state.

- Trade union activity was curbed and low inflation rather than full employment was targeted.

- Thatcherism could be interpreted as an attempt to undo the reforms of the Attlee government, something many Conservatives wished that the 1951-1964 governments had achieved.

- The universality element of the Beveridge Report was challenged immediately by the Conservatives, and continued to be questioned by some within the Party.

- The ‘middle-class’ revolt in the 1950s and early 1960s was driven by: inflation, trade union agitation, high taxation, and the unwillingness of the Conservative Party to reform in response to these concerns.

- Macmillan had desired to legislate against trade union practices, including picketing, strike action, and closed shops, but found the task too challenging.

- Powell had been vociferously espousing liberal market ideas in the 1960s.

- Legal reform of trade-union law became a feature of Conservative policy after the 1968 publication of the Party’s A Fair Deal for Work paper.

- The Policy Group on the Nationalised Industries, chaired by Nicholas Ridley, suggested large-scale de-nationalisation. Heath was unenthusiastic about these proposals.

- Heath’s government, post-1970, engaged in some reform of economic management systems. The Industrial Reorganisation Corporation was abolished, seven of the regional EDCs were scrapped, and the Prices and Incomes board was wound up.

- His government also pushed through a cut in personal and corporation tax.

- ‘From the very outset Conservative voices had been raised against the post-war settlement’¹.

- The Party’s reaction was delayed for fear of a repetition of the 1945 defeat.

The Thatcher Era and its Legacy: P. Riddell

- Was Thatcherism an ideology or ad hoc policy introduction?

- The IMF rescue in 1976 presaged a turning point in macroeconomic policy.

- GDP grew by 27% between 1981 and 1988.

- Manufacturing as a percentage of GDP fell from around a third to a quarter of output.

- Inflation peaked at 21.9% in August 1980, before falling back into single digits by 1982 and remained in a 4-6% range for the remainder of the 1980s².

- Real disposable income rose at a rate of between 2% and 4% pa during the decade. However, the savings ratio fell markedly over the same period.

- Unemployment peaked at 3.13 million in July 1986, before falling to under 2 million by the spring on 1989.

- The PSBR fell from a peak of 5.7% of GDP in 1980-81 to -2.8% of GDP in 1989-90. Public spending as a proportion of GDP fell from 46.8% in 1982-3 to less than 40% in the late 1980s³.

- In 1979 the government shifted the burden of taxation away from direct and towards indirect tax. Corporation tax receipts grew markedly over the period, a reflection of Britain’s strong economic growth.

- Civil service numbers were cut by a fifth in the years to 1988.

- At its peak in 1984 oil accounted for c16% of total exports. The current account surplus peaked at 6.7 billion in 1981, declining gradually thereafter.

- ‘There is no suggestion that the Government…deliberately planned an economic shock to produce the squeeze on industry and rise in unemployment’⁴. There is a view that a shock was necessary to force industry to end over-manning and improve efficiency.

- Whilst UK labour productivity rose considerably between 1970 and 1987, it still remained behind other industrialised nations.

- Trade union management:

- The failure of Heath’s Industrial Relations Act led many political commentators to believe that effective reform of trade union law was politically impossible.

- Trade Union Reforms:

- 1980 Act restricted picketing practices and closed shops.

- 1982 Act made unions liable for damages for unlawful industrial action, restricted secondary strike action

- 1984 Act made union executive committees elected by secret ballot

- 1988 Act increased rights of union members to opt out of activities.

- The number of working days lost to strike action was considerably lower during the 1980s than the previous decade.

- TUC affiliated union membership fell from 12.2 million in 1979 to 9.1 million in 1987.

- Enterprise Culture:

- Reforms:

- Income tax rates reduced from 83-40% and 33-25% respectively. Corporation tax cut from 52-35%. Capital gains tax reduced.

- Deregulation of prices, pay, dividends, and foreign exchange. Banking reform. Bureaucratic burden reduced. Enterprise zones created and planning relaxed.

- Competition was promoted and monopolies/cartels were restricted.

- Nationalisation and break-up of industries to promote efficiency.

- Small business initiatives and industrial aid.

- Encouragement of vocational training for 14-18 year olds.

- Privatisation:

- Lawson, 1982, said that ‘no industry should remain under State ownership unless there is a positive and overwhelming case for it so doing.’⁵

- Privatisation was seen as a good in itself, with little regard for wider competition and consumer interests.

- Whilst reducing trade union influence, privatisation also reduced Whitehall’s ability to influence industrial decisions.

- Popular Capitalism:

- Thatcher aimed to create a property-owning democracy, and increase the number of people with a direct stake in the community and independence from government. This took the form of home and share ownership, and the encouragement of personal pensions.

- Eden first advocated a property-owning democracy in 1948, but subsequent Conservative governments only facilitated this in the area of home ownership, notably by maintaining mortgage tax relief.

- Thatcher extended this dramatically with the ‘right to buy’ legislation, offering discounts of up to 50% for purchases by long-term council house tenants.

- Of the extra 3 million people who owned their own homes by the end of 1988, 1 million were the beneficiaries of the sale of public sector housing.

- Property inheritance nearly doubled over the years 1970-1987 from 3.7 to 7.0 billion.

- Irrespective of Conservative legislating, there existed a steady post-war trend towards increased owner occupation, which was subsequently accelerated under Thatcher.

- Keith Joseph, in his 1978 book Equality challenged the social and economic priorities of the post-war era, rejecting an overt role for the State in the redistribution of wealth and arguing that the ‘working of a free economy depends on differentials at every level’⁶.

- Foreign policy/European relationship:

- Thatcher’s personality won her the respect of international leaders, improving, in particular, relations with Reagan in the US and Gorbachev in the USSR.

- Re-invested in the Atlantic alliance over the European Community.

- She never sought withdrawal from the EC, but pressed for a ‘fairer’ deal for Britain.

- Marquand argued in 1987 that the corporatist experiments in the 1960s and 1970s failed not because they went too far, but because they did not go far enough.

- If Lawson’s 1988 assertion that planning and state intervention were an aberration, and that market economy was normal, that Thatcherism can be viewed as a return to status quo in Britain.

- Many of the reforms of the Thatcher years had been fermenting in Tory minds for decades; implementation, not innovation, was Thatcher’s contribution.

- Individual policies were created within a rolling liberal economic agenda.

Thatcher’s Britain: R. Vinen

- Enoch Powell and Thatcherism:

- Many of Thatcher’s ministers, including Howe and Ridley, had been disciples of Powell.

- Powellism was not directly aligned with the aims of Thatcher, and she did not share his desire to withdraw from the EEC and she did seek the strengthening, rather than the circumventing, of the PCP.

- Powell had supported EEC entry on the grounds of improved trading prospects, but came to believe that it would involve significant surrender of British sovereignty, and later opposed it.

- Powell resigned from Macmillan’s government in 1958 over increased public spending. He was an opponent of State economic intervention, including controls of prices, incomes, and exchange. He also opposed nationalisation and argued in favour of monetarism as the sole means of economic balancing⁷.

- Powell and Thatcher disagreed over foreign policy. He opposed an east of Suez military presence, Britain’s nuclear deterrent, and the North Atlantic alliance – the latter two cornerstone policies of the Thatcher government.