Thatcherism Notes

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...

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