Thatcherism Revisited

Contents

1. Introduction

2. 1979 – 1990: The Thatcher Years
i. The Economics of Thatcherism
ii. The Social Impact of Thatcherism
iii. Summary

3. 1997 – 2007: The New Labour Years
i. The Thatcherite Legacy & Blatcherism
ii. Breaking Away from Thatcherism
iii. Summary

4. 2008 – 2011: The Political Economies of Crisis
i. The Keynesian Renaissance
ii. The Neo-Thatcherite Movement
iii. Summary

5. Conclusion

6. Bibliography
i. Primary Sources
ii. Secondary Works

7. Appendices
i. Inflation Figures
ii. GDP Figures
iii. Unemployment Figures
iv. List of Privatised National Enterprises: 1984 –
v. Income Tax Rates: 1973/4 – 1989/
vi. Corporation Tax Rates: 1971 –
vii. Social Housing Sales: 1980/1 – 2005/
viii. Working Days Lost: 1901 –
ix. National Accounts

Introduction

The 1970s was a decade of economic decline for Britain which was punctuated by social unrest and economic instability. Over the period, no less than twelve quarters were reported by the Office for National Statistics as being of zero or negative growth in terms of gross domestic product^[1] under the governments of Edward Heath, Harold Macmillan and James Callaghan. Failure to effectively control inflation and competently manage the nation’s finances resulted in widespread industrial action that led to, amongst other things, the infamous ‘three day week’^[2] and culminated in the 1978-9 ‘winter of discontent.’^[3]

The civil unrest that created so many problems for the governments of the time very often finds its root causes in the poor economic policies implemented by the governments themselves. Attempts to control spiralling inflation were ineffective and manic highs of GDP growth, such as the 5% recorded in the first quarter of 1973 and 4.3% recorded in the second quarter of 1979 were followed by sharp contractions in GDP growth of over 2%.^[4]

In 1972 the National Union of Mineworkers demanded pay increases to the tune of 45% as they found their wages devalued by annual inflation rates of almost 10% each year. By denying these requests, the mining union picketed at Britain’s largest coke distribution plant in Saltley, Birmingham – a move which resulted in the depot’s closure, bringing the longevity of Britain’s energy supplies into question. As Edward Heath’s government kowtowed to the wage demands of the militant mineworkers, they broke the wage constraints that had formed the backbone of their economic plans.^[5] This defeat at the hands of the unions marked the beginning of an arduous war between governments and unions that would not be halted until 1985.

The following year saw the outbreak of the Yom Kippur War in the Middle East, a nineteen day battle that plunged the rest of the world into an oil crisis. The recently victorious NUM saw their opportunity and, for the second time in as many years, began to strike once more. The cataclysmic effects on Britain being without oil and coal – her two primary sources of energy – Prime Minister Heath found himself enacting the policy that would destroy his government. The supply of electricity and heating was limited to all but essential services for just three days per week in order to preserve what little energy reserves the country had left. In the face of an embarrassing defeat, the Conservative government was destroyed at the 1974 polls.

But the mobilised industrial unions could not be calmed by the party that was created to represent them – inflation continued to soar to eye-watering levels; 16%, 24.2%, 16.5% and 15.8%^[6] over the following years began a wage-price spiral. As inflation soared, so did the wage demands of workers which, in turn, would increase inflation still further in an economically catastrophic self-fulfilling prophecy.^[7]

December 1978 marked the beginning of a notorious series of strikes which came to be named by the media and remembered darkly as the ‘Winter of Discontent.’^[8] One of the more harrowing strikes was made by the grave diggers of Liverpool City Council in which the bodies of the dead remained unburied for two weeks – at one point proposals to bury the dead at sea were somewhat desperately considered.^[9] This proved to be the last straw for much of the British public who looked on as uncollected refuse piled up in the streets and in parks and at the 1979 general election James Callaghan was ousted in favour of Margaret Thatcher. She promised prosperity and to challenge the unchecked powers of industrial unions and their militant leaderships that were seen to be holding the country to ransom and making it “ungovernable”.^[10]

In the eleven years that followed Margaret Thatcher’s election, a new style of conviction politics came to a meteoric rise and although its Iron Lady figurehead was ousted by her own party, the philosophy has been a part of every government that followed. In 2001 Peter Mandelson, a man synonymous with the New Labour movement and close ally of Tony Blair, famously announced that “we are all Thatcherites now;”^[11] a stark reminder of the influence one woman had on modern British politics and of the significance Thatcherism still maintains. The reformation of the Labour party under Tony Blair was reminiscent in many ways of the Thatcher revolution.

This dissertation will investigate what is meant by Thatcherism and whether or not it is the solution to the economic and social problems that face Britain today. The benefits of examining such recent history means that there is an abundance of data available, complete with primary sources to provide relevant information to use within this enquiry and Thatcher’s notoriety as a highly divisive figure in politics means that there is also a wealth of secondary works available to provide further insight.

The first chapter will look specifically at the governments of Margaret Thatcher from 1979 to 1990 and closely examine the intentions and implications of the policies that shaped Thatcherism economically and socially. The second chapter will look at the fallout from the Thatcher years in which John Major struggled to manage the Conservative party amidst a backlash against Thatcherism and how a philosophy born from the Conservatives came to influence the quintessential working man’s party. Finally, this dissertation will look at the thirteen years of Labour governments under Tony Blair and Gordon Brown to examine Thatcherism’s influence upon them and how their desertion of the philosophy’s tenets of small government, controlled public spending and tight economic management came to destroy the public finances.

2. 1979-1990: The Thatcher Years

I. The Economics of Thatcherism

“Economics are the method; the object is to change the heart and soul.”^[12]

The key tenets of Thatcherite economic policy were exemplified by the drive to privatisation, the radical shift to neoclassical economic practices and their effects upon the tax system. This radical shift from the post-war Keynesian consensus only truly came to fruition after the 1979 general election, though it had long been a concern amongst the back benches as early back as the 1950s as a reaction to ‘Buttskellism’ and was strongly supported by prominent Conservatives including Enoch Powell and Iain Macleod.^[13] The perpetuation of high levels of taxation, a growing welfare state and ever-increasing powers of trades unions was found to be alarming amongst the Conservative party rank and file, particularly with the culmination of Edward Heath’s premiership which was eventually defeated in no small part by the National Union of Mineworkers.

This exemplary display of the way in which power had shifted away from the state gave rise to the Right of the party, led by figures such as Keith Joseph, John Biffen and Margaret Thatcher.^[14] The 1975 leadership contest was far from ideologically innocent and was, on reflection, a call not just for a new party leader, but a new approach to governing Britain within the Conservative party.^[15] By 1975 the ideology circulating the Conservative Party that would inform and guide the path of Thatcherism was well-established and only required a leader with the necessary conviction to follow through on these ideas; even Labour Prime Minister James Callaghan had resigned himself to the fact that Keynesianism was no longer plausible and that spending one’s way out of a recession was a fallacy.^[16]

The initial course of economic policy plotted for the Conservative government was not one of strict neoclassicism however; it was the radical new idea of monetarism that was placed firmly on the desk of the then Chancellor of the Exchequer, Geoffrey Howe. As the now infamous story goes: when confronted by a white paper outlining a centrist approach to the economy Mrs. Thatcher produced a copy of The Constitution of Liberty, by monetarism’s key intellectual proponent Friedrich Hayek, slammed it on a desk and said in her trademark stern tone “this is what we believe.”^[17] The desire to control inflation was not a niche one, either. The 1970s had witnessed incredible levels of inflation largely due to the strength of unionised workers and accession to their demands by comparatively work employers, the dreaded wage-price spiral pushed inflation into double figures in many years and was highly damaging to the economy.

The monetarist theory postulated that by controlling the supply of money, mainly through interest rates and exchange rate controls, inflation could be controlled. The results were by no means encouraging, however. Inflation in 1979, 1980 and 1981 was recorded at 13.4%, 18% and 11.9% respectively. Even as it declined to 8.6% and 4.6% in 1982 and 1983,^[18] this was more attributable to the recession of the early 1980s than to monetarist control of interest rates. Eventually it was realised that falling inflation in 1982 and 1983 was occurring even as the money supply was increasing, which was inexplicable by the monetarist theory and after 3 years of pushing these radical new economic ideas and having next to no real results to show for it, monetarism was quietly abandoned in 1983.^[19]

Whilst the monetarist experiment was regarded by many as failure, the extent to which is failed should be judged against the degree to which it was a sometimes unacknowledged success. Whilst it is difficult to argue that the results produced were in any way successful for the economy – between 1980 and 1982 the UK was in recession – it was not a failure of ideas. For where there was a failure of results, monetarism managed to very successfully steer people away from the Keynesian orthodoxy that had gone largely unchallenged since 1945^[20] and it is this shift in the philosophical consensus that has changed British economic policy ever since. Whilst monetarism in itself was not a success, it laid the foundations for the economic revolution that would shape the rest of not only the 1980s, but every government since.

Despite monetarism’s abandonment, controlling inflation remained the key target for the government in promoting economic prosperity. Unemployment was the next casualty of the Thatcherite economic policy machine; it climbed throughout the early 1980s, eventually peaking at 3,212,000, or 11.9% of the workforce, in 1984 – the highest recorded figure in Britain’s post-war history.^[21]

Abbildung in dieser Leseprobe nicht enthalten

Figures show that the pattern of unemployment under Thatcher governments followed a bell-shaped distribution, suggestive of the fact that the high levels of unemployment were the temporary result of a change in the structure of the economy. As the state was reduced in size, many found themselves out of a job, but with fewer public sector workers to employ, a steady stream of revenue being generated of $300 billion per annum^[22] and a climate of falling corporate^[23] and personal tax rates,^[24] the private sector was able to absorb the growing pool of available labour. In essence, the graph of unemployment in the UK between 1979 and 1990 is a visual representation of how the configuration of the British economy changed from being highly state-oriented to more enterprise-oriented. The archetypal Keynesian pursuit of ‘full’ employment required the state to employ many of those who were unemployed at the price of high levels of taxation.^[25] In reality the private sector did just as well if given the economic liberty to do so: and this is the very essence of Thatcherism.

Privatisation came to be the darling of Thatcherite policy^[26] and it was not limited to just state owned enterprises; the sale of council housing came to be a forgotten master stroke in the process of reducing the state’s economic interests that raised a further £18 billion.^[27] The success of privatisation can be contributed to a number of factors, the most common of which being the sale proceeds and the reduced role that the government was obliged to play as an economic actor. But the enormous take up on equity offerings from people who had never owned such assets before also played a part in the privatisation regime’s success; former employees of state enterprises were no longer just part of the workforce, but they were now shareholders too. If socialism is the state ownership of the means of production, capitalism then was the people’s ownership of those means. Over 90% of the workers employed by privatised state businesses seized the opportunity to take a stake in their employer.^[28] The process of shrinking the state came to be a profitable one, raising over £29 billion from the sale of nationalised industries^[29] and removing the dependence of almost 900,000 workers from the state^[30] in the 1980s alone.

Beginning in 1983 with the sale of first British Petroleum and then Cable & Wireless the privatisation revolution began. By 1990 no less than 42 major British commercial interests in a wide variety of sectors had seen initial public offerings of their shares; firms like British Gas, British Telecom, Rolls Royce, British Airports Authority and Anglian Water were no longer nationalised interests.^[31] The enormous success of the policy led it to be emulated by governments all over the world; in Australia, Latin America, Eastern Europe and South-East Asia.^[32]

The movement of privatisation finds a shining example in the sale of British Telecom in 1984 which was sold as the largest company ever floated on the stock market.^[33] The British Telecommunications Act 1981 had already put an end to the state monopoly on telecommunications by forcing BT to allow competitors to use their capacity.^[34] In 1984 the Telecommunications Act paved the way for the sale of 50.2% of the government’s shares in BT.^[35] Despite fears that such frivolous floatation into the private sector would mean that shareholders would take preference over consumers, many consumers actually found that the cost of the newly privatised products and services fell whilst their quality simultaneously improved. It becomes difficult to argue that under continued state ownership innovation and development of new technology would have occurred at the rate it has done without any market competition. Not only has BT’s aggressive move into new markets for broadband internet and replacing ageing infrastructure with state-of-the-art fibre optics seen the company’s earnings per share increase, but the cost of broadband has fallen.^[36] Consumers once faced with the choice of a phone line with BT or no means of telephone communication at all are now able to compare and choose the service provider which best meets their financial and utility needs thanks to market liberation that has allowed competition to flourish.

The privatisation of the water and sewerage industries in Britain also brought successes which did not occur under state ownership. Despite the successes of the many privatisations that came before it in 1989, it faced a lot more criticism than any floatation up to that point. This was in part due to the fact that water and sewerage were regarded not corporate enterprises in the same way as British Gas, Rolls Royce or British Airways but more as public services that should be provided by the state. This raised concerns about the possibility of social exclusion and jeopardising public health should consumers be cut off.^[37] Regardless, the public sale went ahead and the results spoke for themselves. Research conducted by the World Bank showed that investment into infrastructure of water and sewerage systems totalled £17 billion in the first six years after privatisation, compared to £9.3 billion in the last six years of state ownership.^[38] Indeed, these increased levels of investment raised the standard of Britain’s drinking water to meet those of Europe’s for quality and safety, which would likely have not happened anywhere near as quickly, if at all, under continued state ownership.^[39]

The drive toward a new style of economic management brought with it radical reforms to the tax system in the UK. The Thatcherite philosophy promoted one of entrepreneurial spirit over ‘welfarism,’ which was perceived by Conservative critics as “providing a sofa rather than a springboard.”^[40] One of the key ways in which to directly free people and foster entrepreneurial spirit is to lower the levels of taxation to which they are liable and increase the amount of their earnings which they keep for themselves. In 1979 there were no fewer than 11 brackets of income tax ranging from 34% up to 83%;^[41] some even faced marginal rates of income tax rates as high as 98%.^[42] These punitive levels of taxation were at polar odds with enterprise culture Margaret Thatcher’s governments set out to nurture. By the 1989-90 budget, income tax rates had been reformed into the form that we are familiar with today; two brackets of income tax at 25% and 40%.^[43] In keeping with this trend of falling levels of personal taxation, corporate tax rates also plummeted in the 11 years of Thatcherite government from 52% in 1979 to 34% in 1990 as the threshold of corporate tax exemption rose from £130,000 to £1,000,000^[44] – an increase of 402% over inflation over those years.^[45]

The simplification and reform of the tax system in the UK combined with falling rates of taxation had a profound effect on the British economy not only domestically, but also internationally. During the 1980s approximately 900 new firms emerged every week – testament to how the social norms of Britons were changing under Thatcherite influence.^[46] Internationally, Britain’s economic image improved enormously; in 1980 Britain was ranked fifteenth of the twenty-two OECD countries in terms of ‘economic freedom’ and ‘entrepreneurial welcome.’ By 1999, thanks in no small part to the major tax reforms and enduring effects of Thatcherite policy, Britain was at the very top of these rankings^[47] and the City of London has become the largest financial centre in the world.^[48]

II. The Social Impact of Thatcherism

“I came to office with one deliberate intent: to change Britain from a dependent to a self-reliant society.”^[49]

Thatcher was set on the mantra of self-sufficiency rather than dependency and her vision of enterprise culture was fundamentally at odds with welfarism;^[50] Thatcherism aims to free people to be able to achieve their best – give them the freedom and means to reap rewards, rather than simply hand them rewards in the form of a welfare cheque.^[51]

Falling levels of taxation from 1979 through to 1990 were coupled with higher taxable thresholds meaning that as individuals’ incomes increased, their income increases were more resistant to higher levels of income tax. The immediately noticeable impact of this being that it became more financially rewarding to work harder as increased income would be taxed less punitively. The abolition of higher rates of taxation that had seen marginal tax rates of up to 98% on some in the 1960s and 1970s were eventually abolished as well, giving the wealthiest more opportunities to create wealth through hiring larger workforces. Combined with falling levels of corporate tax, the effects of this policy appear to have worked as unemployment levels fell throughout the latter half of the 1980s.^[52]

Perhaps the most enduring success of Thatcherite social policy was part of the privatisation process; the conscious shift of power from local government to individuals in the form of the Right to Buy gave hundreds of thousands of people the ability to purchase their council owned homes at a heavily discounted rate. Previously, the sale of government owned housing was dictated by the Right to Sell, which meant that local governments had full autonomy with regards to whom they sold public housing and at what price. The culmination of Thatcherism’s drive to centralise government and put power in the hands of consumers resulted in a change of policy in 1980 which gave council tenants the legal right to purchase the property in which they lived.^[53]

This legislation not only redefined the rights of council tenants but also set out rates of discount that were to be applied for each property purchase on a sliding scale determined by the duration of tenancy. After three years of tenancy, prospective buyers were entitled to the base discount rate of 33% which would rise by 1% for every additional year of tenancy to maximum discount of 50% (70% for flats) or £25,000. These discounts continued to rise throughout the 1980s in new pieces of legislation designed to increase the accessibility of house ownership to those who found it most difficult to get on the property ladder.^{[54] [55] [56]} Opposition to the Right to Buy was fierce from the Labour Party, with some councils advising constituents against the risky nature of property purchase and refusing to advertise the schemes. In 1980 the average house price in London was £30,968; in 2005 this had risen to £282,584, suggesting opposition was motivated by politics rather than sound economic judgements.^[57] The Labour Party was eventually forced to drop their opposition to the Right to Buy policies in 1983 when their overwhelming popularity would make campaigning against them electorally suicidal.^[58]

The primary social drive behind the privatisation of social housing was to create a means toward a more equitable distribution of wealth amongst the working class, who benefitted most from the policy direction.^[59] Property price appreciation in some areas of the country has been nothing short of spectacular, though this was not necessarily the intent of the policy, moreover it was to provide individuals with a definite article of wealth which could be used as collateral or sold at a later date to facilitate social mobility around the country; the sale of council housing was a way in which the aspirations instilled by Thatcher’s enterprise culture could be realised.^[60] There were unintended benefits to the policies too; when tenants became homeowners in the vast quantities which they did from 1980 onwards,^[61] the quality of council housing estates began to rise. When people owned their properties instead of holding tenancy there was an incentive to improve them and maintain them to a high standard financially,^[62] which improved problem estates in the inner cities and urban peripheries.^[63]

Right to Buy stands out not only as a shining success of Thatcherite social policy, but also of economic policy. The social dimension of the policy has undoubtedly affected many hundreds of thousands of lives positively, but the underlying economics of it made the policy a reality in the first place. The capital raised from the sales of this single asset class was phenomenal, even at the heavily discounted rates at which housing was sold to tenants and the revenues generated from the sales allowed the Thatcher governments to gradually reduce personal taxation in keeping with their message of enterprise culture; something they may not otherwise have been able to afford.^[64] The disposal of these assets which were run at cost to the government also fitted neatly with the government’s desire to “[roll] back the frontiers of the state in Britain,”^[65] and the rates of discount offered to council tenants served to increase the speed at which these assets could be disposed of. By the time Margaret Thatcher had left office over 970,000 social houses had been bought by their tenants in England alone^[66] and whilst the state had accounted for one third of the total houses in the UK in 1980, by 1991 it accounted for less than one quarter of them.^[67] Denying the success of the Right to Buy is very difficult on many counts.

Economic policy providing a means to improve social policy did not stop at the privatisation of council houses, however. Between 1979 and 1989 share ownership in the UK tripled from three to nine million, the basic rate of income tax was cut from 33% to 25% and net average earnings rose by over 22% in the same period.^[68] Inflation-adjusted GDP increased by 128% between 1979 and 1989, more than any other decade in the post-war period.^[69] For the majority of Britons, Thatcher gave them the means of liberty to succeed economically and socially.

Undoubtedly, there were losers in the Thatcher revolution, the most notable of which being the mining industry. Though the loss of the British mining industry is often lamented as Margaret Thatcher’s fault, an objective examination of the events that triggered the collapse of the mining industry refutes such claims. The strike action called by the National Union of Mineworkers lasted for 356 days in 1984 and 1985 and forced costs of £7 billion upon the government in policing and energy importation.^[70] Over 33.5 million working days were lost during the strike, a figure rivalled only by the Winter of Discontent in 1978/9 (around 30 million) and the General Strike of 1926 (162 million).^[71] By choosing a militant, communist leader in Arthur Scargill, the mineworkers sealed their own fates by picking a fight that they could not possibly have won. The public support that the mineworkers may have rallied in 1984 was almost non-existent by the time the strike was called to an end;^[72] Thatcherite Britain would no longer tolerate the inefficient, overpaid and undercapitalised public sector industries that had held the country to ransom in the 1970s. The far-Left leadership of the National Union of Mineworkers effectively cut their members’ and their own throats by becoming something of a political anachronism in modern polity; even the arbiter of communism – the Union of Soviet Socialist Republics – was crumbling in the early 1980s.

The Miners’ Strike goes some way to explain the peaking of unemployment levels between 1984 and 1985, though there are many other factors. Ultimately, the strike was a battle of wills and economics; Scargill had proved his potency in 1974 by eliminating the Conservative government of Edward Heath and securing regular pay rises throughout the 1970s. Margaret Thatcher was determined not to be brought down by the unions and their wage demands had gradually made the manufacturing industries inefficient and overly expensive to run at a time when the private sector internationally could provide the same goods for lower prices. The brazen strike action by the National Union of Mineworkers also led to legislation that curbed the power of unions and forced them to be more democratic, moves that would intentionally make strikes more difficult and secondary picketing illegal. Whilst a great many of those employed in the manufacturing sector ended up net losers under Thatcher the lion’s share of the blame rests squarely upon their own threshold. By demonstrating their militancy and at the same time exposing the industrial sector’s inefficiencies they not only reduced the incentives for the governments to continue running them at such a large scale but also reduced their desirability to the private sector as a possible investment if they had been floated in the same way as British Telecom or British Gas.

Income inequality was perceived as a major chink in the Thatcher governments’ armour and came to be an area on which they were repeatedly attacked by critics for allowing the gap between richest and poorest in Britain to grow. Empirical research using all manner of measures of income inequality from the Gini coefficient to the Lorenz curve all agree that under the Conservative governments from 1979 to 1990 income inequality did increase,^[73] however the data also acknowledges that real incomes increased for all too. This is where interpretation of a normative concept such as inequality becomes difficult to quantify in importance; the line of thinking taken by critics of Thatcherite policy argued that the poorest in society had a smaller share of national income by the end of the 1980s than they had at the end of the 1970s. The counter argument to this, orated by Mrs Thatcher in her final Commons speech, was that:

“People on all income levels of income are better off than they were in 1979… [They] would rather that the poor were poorer, provided that the rich were less rich… So long as the gap is smaller, they would rather have the poor poorer. One does not create wealth and opportunity that way.”^[74]

Both sides of the income inequality argument have valid points and it is very difficult to say that either is correct or incorrect as a value judgement is involved. However, there are some contextual points that serve to clarify why income inequality increased and why its increment was not a failure of Thatcherism or the Thatcher governments. First and foremost is the transformation that Britain underwent between the end of the 1970s and the end of the 1980s. In the 1970s there was talk of ‘The British Disease,’^[75] how Britain was ‘ungovernable,’^[76] and ‘the sick man of Europe.’^[77] Inflation was rampant,^[78] the country was held to ransom by industrial action^[79] and even Ugandan dictator Idi Amin taunted Britain, declaring his willingness to send them international aid in the form of bananas.^[80]

Secondly, the demographic and economic make up of each decile examined by income distribution data is not disclosed; if the bottom deciles of income are comprised mainly of net tax consumers (i.e. those whose incomes are comprised entirely or mainly from welfare payments) then the income inequality is neither surprising or as much of an issue as is claimed. If this is the case and given that unemployment rose to three million in the mid-1980s, it is unsurprising that income inequality grew as fewer people were classed as economically active and thus in receipt of wages or salaries, which will increase over time. Because the constitution of each decile is not disclosed, only a largely superficial statistical analysis is possible insofar as the meaning behind the figures is lost.

III. Summary

The economic policies pursued by Thatcherism were, by and large, not only revolutionary but very successful. Privatisation of state assets became a masterstroke, not by design but by implementation and the long-term results of reducing the state’s activity in the economy have been increased efficiency, increased profitability, increased competition and a much improved position for consumers. The revenues generated by privatisation allowed the government to progressively reduce individuals’ tax liabilities and marginal tax rates in exchange for shifting tax revenues into a more consumer-based model – taxes on consumption (i.e. VAT) rather than employment (i.e. income tax) and production (i.e. corporation tax) that have proven to be more conducive to economic growth.

The broad successes of Thatcherite economic policy meant that to a large extent Thatcherite social policy was successful, insofar as the latter was formed around the nucleus of the former on a great many occasions. The extension of privatisation from corporate entities to social housing put home ownership within reach of hundreds of thousands of the working class to whom it would otherwise have not been a reality. The falling rates of taxation and increased thresholds of taxation also meant that more people benefitted from having more disposable income in their pockets, triggering a boom in consumerism.

Thatcher is often quoted as claiming “there is no such thing as society,” a quote taken out of context. The full interview given explains the philosophy behind Thatcherite social policy;

“There are individual men and women, and there are families. And no government can do anything except through people, and people must look to themselves first. It’s our duty to look after ourselves and then, also to look after our neighbour. People have got the entitlements too much in mind, without the obligations.”^[81]

In short, Thatcher took her cues from the writings of Friedrich Hayek.^[82] Government’s role in social policy is to free individuals and families to succeed and look after themselves and their neighbours, not redistribute income and wealth ruthlessly, as it was perceived welfarism had done.

The period of Thatcherite government from 1979 to 1990 should be judged in a historical context. Britain entered a seemingly terminal decline in the 1970s in which economic instability and social discontent ravaged not only the nation, but the state; in this respect Thatcherism was the medicine that combatted the ‘British disease,’ and put ‘the sick man of Europe’ on the road to recovery. Like any cancer patient, chemotherapy will first make the patient worse before making them better; recession^[83] and rising unemployment^[84] in the early 1980s marked the beginning of the treatment, but as GDP and employment began to rise in the mid-to-late-1980s it was clear that the treatment was beginning to work. Retrospectively, Thatcherism’s success was also the success of Britain; by redressing the balance of power between unions and the state, centralising and cutting the size of the state and driving the economy into being powered more by the efficiency and profitability of the private sector, Thatcherism is the philosophy for which Britain’s growth and development in every decade since owes itself.

[...]

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^[1] See: Appendix II: GDP Figures.

^[2] The National Archives. British Economics and Trade Union Politics 1973-1974. URL: http://www.nationalarchives.gov.uk/releases/2005/nyo/politics.htm. Accessed January 23rd 2011.

^[3] Dorfman, GA. British Trade Unionism Against the Trades Union Congress, p.59. (Hong Kong: Hoover Press, 1983).

^[4] See: Appendix II: GDP Figures.

^[5] Kellaway, R. ‘Re-examining the Battle of Saltley Gate: interpretations of leadership, violence and legacy,’ Undergraduate Dissertation, Bristol University. 2010.

^[6] O’Donoghue, J. ‘Consumer Price Inflation Since 1750,’ Economic Trends. No. 604, pp 38-46. March 2004.

^[7] Cohen, N. ‘Britons’ inflation expectations up sharply,’ Financial Times. June 9th 2010. URL: http://www.ft.com/cms/s/0/21bd2342-73a8-11df-bc73-00144feabdc0.html#axzz1EotbtQPX. Accessed: December 27th 2010.

^[8] BBC News. ‘Crisis, What Crisis?’ September 12th 2000. URL: http://news.bbc.co.uk/1/hi/uk_politics/921524.stm. Accessed: December 27th 2010.

^[9] Andrew Marr’s History of Modern Britain, 2007. Episode 4, Revolution!. TV, BBC One. June 12th.

^[10] Morris, S. ‘Is it accurate to describe the 1970s as a decade of crisis? If so, what were the causes?’ University of Cambridge. [no date].

^[11] Tempest, M. ‘Mandelson: we are all Thatcherites now,’ The Guardian. June 10th 2002. URL: http://www.guardian.co.uk/politics/2002/jun/10/labour.uk1. Accessed: December 27th 2010.

^[12] Thatcher, M. Interview with Ronald Butt. The Sunday Times. (May 3rd 1981).

^[13] Green, E.H.H. ‘Thatcherism: An Historical Perspective.’ Transactions of the Royal Historical Society, Vol. 9 (1999), p.25.

^[14] Shankardass, R. ‘Ten years of Thatcherism in Historical Perspective: Conservatism in Britain.’ Economic and Political Weekly, Vol. 24, No. 51/52, p. 2849 (December 1989).

^[15] Gamble, A. ‘Privatization, Thatcherism and the British State,’ Journal of Law and Society, Vol. 16, No. 1, p.3 (Spring, 1988).

^[16] Worcester, K. ‘Ten Years of Thatcherism,’ World Policy Journal, Vol. 6, No. 2, p.302 (Spring 1989).

^[17] Ranelagh, J. Thatcher’s People: An Insider’s Account of the Politics, the Power and the Personalities, p.ix. (London: HarperCollins, 1991).

^[18] See: Appendix I: Inflation.

^[19] Arestis, P. ‘The UK Monetarist Experiment.’ Journal of Public Policy, Vol. 4, No. 1, p.39 (1984).

^[20] Ibid.

^[21] See: Appendix III: Unemployment Figures.

^[22] Pirie, M. ‘Privatization.’ The Concise Encyclopedia of Economics, Library of Economics and Liberty, 1993, URL: http://www.econlib.org/library/Enc1/Privatization.html. Accessed: January 24th 2011.

^[23] See: Appendix V: Corporation Tax Rates: 1971 – 2009.

^[24] See: Appendix V: Income Tax Rates: 1973/4 – 1989/90.

^[25] Green, E.H.H. ‘Thatcherism: An Historical Perspective.’ Transactions of the Royal Historical Society, Sixth Series, Vol. 9, p.25. (1999).

^[26] Gamble, A. ‘Privatization, Thatcherism and the British State.’ Journal of Law and Society, Vol. 16, No. 1, p. 7 (Spring 1988).

^[27] Marr, A. A History of Modern Britain, p.428. (London: Pan Macmillan, 2007).

^[28] Pirie, M. ‘Privatization.’ The Concise Encyclopedia of Economics. Library of Economics and Liberty, 1993. URL: http://www.econlib.org/library/Enc1/Privatization.html. Accessed: January 24th 2011.

^[29] Marr, A. A History of Modern Britain, p.428. (London: Pan Macmillan, 2007).

^[30] Foreman-Peck, J. ‘How Privatisation has Changed Britain,’ BBC News. December 3rd 2004. URL: http://news.bbc.co.uk/1/hi/business/4061613.stm. Accessed: January 28th 2011.

^[31] See: Appendix IV: List of Privatised National Enterprises: 1984 – 1997.

^[32] Jenkins, S. ‘Thatcher’s Legacy.’ Political Studies Review, Vol. 5, p. 165 (2007).

^[33] Pirie, M. ‘Privatization.’ The Concise Encyclopedia of Economics, Library of Economics and Liberty, 1993, URL: http://www.econlib.org/library/Enc1/Privatization.html. Accessed: January 24th 2011.

^[34] British Telecommunications Act 1981

^[35] British Telecom. ‘Privatisation.’ Archives Information, Issue 2, pp. 2-3. (November 2006). URL: http://www.btplc.com/Thegroup/BTsHistory/Privatisationinfosheetissue2.pdf. Accessed: January 27th 2011.

^[36] Foreman-Peck, J. ‘How Privatisation has Changed Britain,’ BBC News. December 3rd 2004. URL: http://news.bbc.co.uk/1/hi/business/4061613.stm. Accessed: January 28th 2011.

^[37] Lobina, E et al. ‘UK Water Privatisation – A Briefing.’ Public Services International Research Unit, pp. 16 – 18 (London: PSIRU, February 2001).

^[38] van den Berg, C. ‘Water Privatisation and Regulation in England and Wales.’ Public Policy for the Private Sector, No. 115, p. 2 (May 1997).

^[39] Pirie, M. ‘Privatization.’ The Concise Encyclopedia of Economics. Library of Economics and Liberty, 1993. URL: http://www.econlib.org/library/Enc1/Privatization.html. Accessed: January 24th 2011.

^[40] Green, E.H.H. ‘Thatcherism: An Historical Perspective.’ Transactions of the Royal Historical Society, Sixth Series, Vol. 9, p.23. (1999).

^[41] See: Appendix V: Income Tax Rates: 1973/4 – 1989/90.

^[42] Pirie, M. ‘Privatization.’ The Concise Encyclopedia of Economics. Library of Economics and Liberty, 1993. URL: http://www.econlib.org/library/Enc1/Privatization.html. Accessed: January 24th 2011.

^[43] See: Appendix V: Income Tax Rates: 1973/4 – 1989/90.

^[44] See: Appendix VI: Corporation Tax Rates: 1971 – 2009.

^[45] (£130,000 at 1990 price levels equates to £248,300 given 91% cumulative inflation over the 1979-90 period as per Appendix I. From this it can be calculated that £1,000,000 is a 402% increase and thus this is the increase above inflation.)

^[46] Dienst, A. ‘To What Extent did Thatcher and Thatcherism Change Britain?’ Undergraduate Essay, Copenhagen Business School (2005).

^[47] Jenkins, S. ‘Thatcher’s Legacy.’ Political Studies Review, Vol. 5, p. 165, (2007).

^[48] Z/Yen Group. ‘The Global Financial Centres Index 8.’ p. 9 (September 2010).

^[49] Thatcher, M. Speech to Small Business Bureau Conference. February 8th 1984.

^[50] Worcester, K. ‘Ten Years of Thatcher.’ World Policy Journal, Vol. 6, No. 2, p. 305 (Spring 1989).

^[51] Shankardass, R.D. ‘Ten Years of Thatcherism in Historical Perspective: Conservatism in Britain.’ Economic and Political Weekly, Vol. 24, No. 51/52, p. 2857 (December 1989).

^[52] See: Appendix III: Unemployment.

^[53] Housing Act 1980.

^[54] Housing and Building Control Act 1984.

^[55] Housing and Planning Act 1986.

^[56] Housing Act 1988.

^[57] Sillars, R. ‘The Development of the Right to Buy and the Sale of Council Houses.’ Economic Affairs, Vol. 27, No. 1, p. 57 (March 2007).

^[58] Ibid, p. 56.

^[59] Forrest, R. ‘Privatization and Housing Under Thatcher.’ Journal of Urban Affairs, Vol. 13, No. 2, p. 210 (1991).

^[60] Ibid, p. 213.

^[61] See: Appendix VII: Social Housing Sales: 1980/1 – 2005/6.

^[62] Sillars, R. ‘The Development of the Right to Buy and the Sale of Council Houses.’ Economic Affairs, Vol. 27, No. 1, p. 57 (March 2007).

^[63] Forrest, R. ‘Privatization and Housing Under Thatcher.’ Journal of Urban Affairs, Vol. 13, No. 2, p. 208 (1991).

^[64] Ibid, p. 214.

^[65] Thatcher, M. Speech to the College of Europe (“The Bruges Speech”). September 20th 1988.

^[66] See: Appendix VII: Social Housing Sales: 1980/1 – 2005/6.

^[67] Forrest, R. ‘Privatization and Housing Under Thatcher.’ Journal of Urban Affairs, Vol. 13, No. 2, p. 202 (1991).

^[68] Worcester, K. ‘Ten Years of Thatcherism.’ World Policy Journal, vol. 6, No. 2, pp. 304-5. (Spring 1989).

^[69] See: Appendix II: Gross Domestic Product.

^[70] Worcester, K. ‘Ten Years of Thatcherism.’ World Policy Journal, vol. 6, No. 2, p. 307. (Spring 1989).

^[71] See: Appendix VIII: Working Days Lost 1901 – 1998.

^[72] Andrew Marr’s History of Modern Britain, 2007. Episode 4, Revolution! TV, BBC One. June 12th.

^[73] Jenkins, S. ‘Income Inequality and Living Standards: Changes in the 1970s and 1980s.’ Fiscal Studies, Vol. 12, No. 1, pp. 21-24 (February 1991).

^[74] HC Deb (1990-91) 181 cc. 439-518

^[75] Andrew Marr’s History of Modern Britain, 2007. Episode 3, Paradise Lost. TV, BBC One. June 5th.

^[76] Morris, S. ‘Is it accurate to describe the 1970s as a decade of crisis? If so, what were the causes?’ University of Cambridge. [no date].

^[77] s.n. ‘Italy: The Real Sick Man of Europe.’ The Economist. May 19th, 2005. URL: http://www.economist.com/node/3987219?story_id=3987219. Accessed: February 15th 2011.

^[78] See: Appendix I: Inflation.

^[79] Phillips, J. ‘Industrial Relations, Historical Contingencies and Political Economy: Britain in the 1960s and 1970s.’ Labour History Review, Vol. 72, No. 3, p. 224 (December 2007).

^[80] Andrew Marr’s History of Modern Britain, 2007. Episode 3, Paradise Lost. TV, BBC One. June 5th.

^[81] Keay, D. Woman’s Own, pp. 8-10 (October 31st 1987).

^[82] Steele, G.R. ‘There is no Such Thing as Society.’ Economic Affairs, Vol. 29, No. 4, p. 85 (December 2009).

^[83] See: Appendix II: Gross Domestic Product.

^[84] See: Appendix III: Unemployment.