Thatcher's Governments (1979-90) Impact on Britain (1979-97) PDF

Britain transformed, 1918-97 1.5 What impact did Thatcher's governments (1979-90) have on Britain 1979-97? Key Questions What were the effects of Thatcher’s economic policies? To what extent were state intervention and the public sector ‘ro...

Britain transformed, 1918-97 1.5 What impact did Thatcher's governments (1979-90) have on Britain 1979-97? Key Questions What were the effects of Thatcher’s economic policies? To what extent were state intervention and the public sector ‘rolled back’? How far did political and social division within Britain change 1979-97? What were the effects of Thatcherism on politics and party development? Margaret Thatcher attracts admiration and criticism in equal measure. She was one of the pivotal figures in recent British political history. This chapter focusses on exploring her legacy in Britain, including the impact of her policies on the governments of her successors, John Major and Tony Blair. Most historians agree that the 1980s was a decade of major political, economic and social change in Britain. However, the extent to which Thatcher and her governments were responsible for or capable of bringing about such a radical transformation is a matter of intense historical debate. The chapter is divided into four main topic areas. Each considers the interpretation of historians regarding the extent of Thatcher’s impact on Britain. 1 The effect Thatcher’s economic policies Thatcher’s approach to the economy was radical. Whereas past prime ministers had trusted the state to play a big role in the economy, Thatcher believed that Britain needed to return to the free market. Some historians argue that Thatcher’s free market policies helped reverse Britain’s relative economic policies did little to change Britain’s long-term economic performance. Finally, others view Thatcher’s economic policies as largely negative, fundamentally weakening British industry, and creating an unbalanced economy with radical inequalities of wealth. 2 The extent to which state intervention and the public sector were ‘rolled back’ Another area of debate about the legacy of Thatcherism is the extent to which she ‘rolled back’ the public sector that had grown throughout the twentieth century. Some historians suggest that Thatcher ultimately failed to prevent the state from growing throughout the 1980s and cite the increased cost of welfare and law and order as evidence of this. Another view is that the state intervened less in the economy and in people’s lives than it had done in previous decades and allowed market forces and individualism freedom to determine whether industries succeeded or failed. 3 The extent of political and social division in Britain Thatcher entered office promising to bring harmony and hope. However, some historians argue that by the end of the 1980s there were deeper social divisions than there had been since the Second World War. Riots, industrial conflict, protest movements and controversy over section 28 and AIDs: all of these are indicative of the social divisions which emerged in Britain and came to public attention in the 1980s. The extent to which Thatcher’s policies were the cause of these social divisions is debated by historians. Certainly, statistics suggest that Britain was a less equal society under Thatcher than it had been in the 1970s. Some historians argue that her economic policies were responsible for growing divisions. Others argue that social division was the result of longer-term economic and social changes. 4 The effect of Thatcherism on politics and party development Some historians argue that Thatcherism led to transformation of the Conservative and Labour parties. Clearly, her ability to win three successive general elections demonstrated that her style, ideas and policies struck a chord with a considerable portion of the electorate. Some historians argue that her electoral success shaped the 1 Conservative Party, as well as leading to splits, debate and reform in the Labour Party. Throughout the 1980s and 1990s the Labour Party went through a series of ideological transformations. British politics, which had been highly polarised in the early 1980s, reached a new post-Thatcher consensus. The Labour Party moved from left to the political centre ground. By 1997 the party had embraced many of Thatcher’s key economic principles. Not all historians agree that this transition was due solely to Thatcher’s influence. Some see a shift away from left-wing politics and economics during the 1970s; others believe it began with the publication of Anthony Crosland’s The Future of Socialism in 1956. Evaluating interpretations of history: The job of the historian is to provide judgements about what happened in the past based on research and an assessment of the available evidence. It is inevitable that this process will result in their opinions and beliefs influencing the outcome of their research. Historian’s viewpoints may be slightly biased to a certain degree but the overall judgement made should not be disregarded. Evaluating and comparing a number of interpretations of an event can be just as useful as evaluating different primary sources in order to ascertain the truth. Some historians will clearly state their agenda throughout their work, and others will attempt to remain as neutral as possible. Either way, it is important to note and acknowledge that every interpretation created is informed, whether consciously or unconsciously, by factors including the political, religious, moral or cultural viewpoint of its author. When reading the extracts in this chapter, consider the following:  Is the author actually giving an interpretation or are they simply stating facts?  Is the interpretation based on generalisations or is it backed up by evidence?  Does the historian make clear the methods they have used to arrive at their interpretation?  Does any other interpretation agree with the one given?  Does the historian appear to have a political agenda? An overview of Thatcher’s career  Margaret Thatcher was born in Grantham, Lincolnshire – Father owned two grocery shops and was very active in local politics so also took his daughter along to many meetings he attended.  Margaret was brought up with strong Christian faith = informed a strong set of conservative moral values throughout her life.  Studied Chemistry at Uni of Oxford - Worked as research chemist before training as a barrister  1951 – Married Denis Thatcher, a wealthy business man  Never lost interest in politics – Stood as candidate in the 1950 election – lost the election  1959 – Won the seat of Finchley (in north London) and became Conservative MP  By 1970 she was made Education Secretary – became notorious as ‘Margaret Thatcher, milk snatcher’ for stopping free provision of milk for 7-11 year olds  1975- Became leader of Conservative Party which was then in opposition Political consensus: Broad agreement among major parties on issues such as the economy, welfare and foreign policy, Political commentators today talk of a ‘post-Thatcher consensus’, where the Conservatives, Labour and Liberal Democrats all agree on principles of a market economy, low direct taxation and a smaller role of the state. 2  1st Term in Office, 1979-1983  When Conservatives won the 1979 election she became the first female prime minister.  Once in power her 1st priority was the economy – starting with cutting supply of money in order to reduce inflation – Then aimed to reduce government interference in the economy & use the law to smash the power of trade unions.  Thatcher’s initial economic policies led to 30% decrease  in manufacturing output  1978-83 Unemployment doubling – 3.6 million out of work  Many commentators felt that it was Thatcher’s success against Argentina in the 1982 Falklands War that saw her re-elected in the 1983 general election. - However, issues with the Labour party also played a role in Thatcher’s re-election. 2nd Term in Office, 1983-1987  Thatcher’s 2nd term in office gave her confidence to expand the privatisation of state-owned assets that had cautiously begun before 1983.  She centralised more power in Whitehall at the expense of local authorities and promoted unelected ‘political advisers’ from the world of business to advance her policies.  She took a tough line against a year-long miners’ strike in 1984, against the Provisional IRA throughout the 1980s and against the Soviet Union in the last years of the Cold War.  These stands were very popular with many British people, who saw her as an almost Churchill-like patriot. 3rd Term in Office, 1987-1990  In 1987, her 3rd term in office, Thatcher created history. She was the only prime minister in British history to be elected three times consecutively.  However, even though she was yet again elected, a number of policies in her third term, most notably the introduction of the ‘Poll Tax’ in 1989-90, were very unpopular.  As a result of her unpopularity, she decided to resign in the year 1990, with John Major (Labour Party) becoming her successor. After her Prime Ministerial Career, 1990-  In 1992, Thatcher entered the House of Lords as Baroness Thatcher.  She was occasionally critical of the Conservative leaders who followed her, especially of their pro-European stance.  Although she died in April 2013, many would argue that Thatcherism (describes the conviction politics, economic, social policy, and political style of the British Conservative politician Margaret Thatcher), or at least her belief in the liberating power if the free market, remains the new political consensus in British politics. What were the effects of Thatcher’s economic policies? This chapter examines the effects of Thatcher’s economic policies through the following sections:  The origin and evolution of Thatcher’s views on the economy  The fight against inflation  Privatisation  Deregulation  Taxation and incentives  The fight against trade unions 3 The origin and evolution of Thatcher’s views on the economy  Thatcher’s economic views were based on a mixture of her moral upbringing and the influence of ‘new right’ thinkers such as the works of an Austrian economist Friedrich Hayek.  She herself was more practical than theoretical in bringing about when it came to economic policy.  “Thatcherism stands for sound finance… It stands for honesty, not inflation; it stands for living within your means; it stands for incentives… it stands for the wider and wider spread of ownership of property, of houses, of shares, of savings.” - Definition of Thatcherism in her own words  She wanted to smash the restrictive and, as she saw it , undemocratic practices of the trade unions in order to:  promote individualism  overcome the inefficiencies of state-owned industry  promote growth and investment by cutting red tape and lifting the tax burden on successful business people  fostering a greater sense of public participation in the economy through ownership of shares and property  Before any of this was possible – Thatcher had to tackle the ‘evil’ of inflation to put the economy on a stable path The fight against inflation  While all previous post-war governments had prioritised employment – Thatcher was willing to risk higher unemployment in order to tackle inflation.  Thatcher and her advisers believed that access to money should be cut, in order to reduce inflation. = increasing interest rates  this meant that many companies, in particularly in the manufacturing industry struggled to survive.  1978 – inflation stood at 11%; by 1980 it had doubled to 22%, largely due to spiralling pay demands  Thatcher refused to print money to cover inflation as it punished ‘careful savers’ and ‘rewarded reckless borrowers’.  She was putting her trust in the economic theories of few experts: Chicago based economist Milton Friedman argued that inflation could only be effectively tackled by restricting the amount of money in circulation.  This theory was called Monetarism, it argued that governments should prioritise low inflation and should achieve this by controlling the amount of money in circulation in a nation’s economy.  It was given a prominent role in the 1980s ‘Medium-Term Financial Strategy’, but was never fully understood by Thatcher or the British public.  The key problem being the no one was quite sure how best to measure how much money was in circulation: should this just mean the total value of notes and coins or should it include money in bank accounts?  By 1983, even fans of monetarism such as Chancellor Nigel Lawson began to give up on the idea of setting targets for money supply.  A range of supply-side policies was introduced to replace monetarism; these included cuts to income tax, cuts to welfare payments where possible and a wide range of deregulation. 4  Supply-Side:  An economic theory that argues that governments should encourage production; they should do this by removing regulations and cutting taxes.  This theory went against the ‘demand-side’ post-war consensus, begun under Attlee’s Labour government, which argued governments should tax and spend to create demand.  1980 and 1981 budgets slashed government spending, with especially unpopular cuts made to spending on housing and social security.  These cuts had negative consequences for many people in inner-city areas. There were riots in several cities, with the most severe in Leeds, Birmingham, Liverpool and London.  While these were partly sparked by racial issues, the poverty in those areas heightened tensions.  In 1980 and 1981, manufacturing produced  fell by 14%. By 1982, unemployment had risen to over 3 million  (the highest figure since 1930)  The scale of unemployment benefits payments forced up government spending. Despite this, inflation was reduced to single figures by 1982, and never rose above 9% for the rest of the 1980s. Privatisation 5 Privatisation under Thatcher  Thatcher saw the scale of state-owned companies, the removal of government monopolies and the contracting out (to offer contracts for government-funded work or projects to private companies in order to reduce costs) of services as key parts of her crusade to cure Britain’s economic stagnation (the state of being still, or not moving).  This would cut government expenditure on loss-making industries and cut the number of civil servants by replacing them with private employees.  Privatisation would also strengthen the UK economy by promoting competition and innovation.  The revenue generated by the sale of state assets would also fund a reduction in tax, allowing entrepreneurs to invest more wealth in job-creating ventures.  Lastly, the sales would help to create a wider ownership of shares; ordinary people would have a greater incentive to work harder, knowing that they owned a slice of the company for which they worked.  While there is no doubt that Thatcher was successful in terms of the pace and extent of privatisation, historians are divided over the long-term success of this policy.  Privatisation proceeded slowly at first. Then gathered speed and pace in Thatcher’s 2nd term in office.  Before 1983, British Aerospace, British Sugar and British Petroleum had been sold off.  Yet, it was the sale of the British Telecom in 1984 and of British Gas in 1986 that really saw the launch of what Thatcher came to call ‘popular capitalism’ (The idea that everyone in society should have the opportunity to own property and shares in companies. It aims to create a wider spread of privately owned wealth).  Shares were sold cheaply to ensure a quick sale and wide take-up; between 1979 and 1990, the number of shareowners increased  from 3 million to 11 million.  However, the distribution of these shares was far more uneven than the Conservatives made out in their 1987 election manifesto.  The manifesto spoke of the start of ‘a profound and progressive social transformation - popular capitalism’, only 9% of unskilled male workers owned any shares, compared to half of all professional males.  More damaging to the long-term success of popular capitalism was the rapid sale of most shares for a quick profit to large pension or investment firms: individuals owned 38% of shares in 1975, but only 20% in 1990.  By far the most successful aspect of ‘popular capitalism’ was the sale of council houses: over a million were sold between 1979 and 1988.  The long term impact of privatisation is disputed and it is clear that the process has had more success in certain sectors than in others.  The sum of £19 billion was raised by the sale of state assets. Harold Macmillan (Former Prime Minister) compared this to ‘selling off the family silver’.  This money made from the sale of state assets was used to pay for tax cuts (discussed below).  While competition has driven innovation and better customer service in telecoms for example, there was little appreciable difference in the quality of water or gas supply while prices increased faster than inflation to the benefit of shareholders and chief executives with huge salaries. Privatisation after Thatcher:  Privatisation of British Rail between 1994 and 1997 (which even Thatcher felt was a ‘privatisation too far’) led to a highly confused situation where the government continued to subsidise private firms that operate the trains; government spending on trains has doubled  since 1994, while most commuters would agree that the service has not improved. 6  The launch of the Private Finance Initiative under Thatcher’s successor, John Major in 1992 led to an increase  in privatisation after Thatcher’s departure in 1990.  Public-private partnerships (a collaboration between a public sector body and a private company or companies to provide a government service or launch a private enterprise. The private company usually provides a lot of financial, technical and managerial help in the short term, funded by the state in the long term) were designed to inject private funding and expertise into traditionally state-run concerns such as hospitals and schools.  While the initiative led to the construction of some impressive buildings, it became clear that by 1997, the future generation of taxpayers would have to pay a huge amount of money to the private firms who put in the initial investment. Deregulation  Thatcher was keen to remove the rules and regulations that she believed stifled innovation and competitiveness.  The first example of this was the removal of exchange controls in October 1979: before 1979, there were limits to how many pounds’ people could convert into foreign currencies and spend abroad.  The end of this restriction fuelled greater overseas investment (which returned profits to Britain), but also led to a huge increase in consumer spending on foreign goods, which drained wealth from Britain.  The most significant example of deregulation was the ‘Big Bang’ of October 1986.  This relaxed the rules on the ownership and trading operation of banks, resulting in the massive growth in financial services.  The City of London rapidly grew to become one of the major financial centres of the world as financial institutions took advantage of the more relaxed rules to offer riskier financial products (schemes and services that help consumers manage and use money. Everyday examples include, bank accounts, credit cards and life insurance, while more exotic examples include complex and risky investment portfolios) that returned huge profits.  In the longer term, deregulation enabled unscrupulous individuals to make a lot of money in an unsustainable (and even illegal) fashion; this culture, not tackled by New Labour after 1997, was a major contributor to the financial crises of 2008.  British people became more used to borrowing to pay for consumer goods. The ‘Big Bang’ meant that a great deal of government regulation on the financial industry was scrapped; this modernised the stock market and allowed banks to take more risks with their lending and investments. This had a number of effects on private individuals:  Unregulated finance led to the rise in private household debt, which stood at £16 billion in 1980 and increased to £47 billion in 1989.  Easier access to mortgages meant that mortgage debt rose from £43 billion to £235 billion.  By 2003, personal debt, including mortgages, stood at £1.3 trillion – by far the highest in Europe.  While banks made huge profits, a 2003 Financial Services Authority report estimated that 6 million families, around 20% of the total, faced problems with debt.  The rise of credit cards also contributed to this problem: The first credit card was launched in June 1966; by 1980, there were 10 million credit cards in Britain, that figure had risen  to 27 million by 1990. In 1986 the Conservative government under Maggie Thatcher introduced a package of new rules relaxing the regulation on the London Stock Exchange. The phrase Big Bang, used in reference to the sudden deregulation of financial markets, effected by Thatcher in 1986. 7  The new legislation:  Scrapped fixed commission rates, arguable making the exchange more competitive in a global market.  Paved the way for integrated investment banks by getting rid of the barrier between stockbrokers and stockjobbers (stockjobbers were firms that acted as an intermediary between brokers)  Abolished rules barring foreign companies from buying City firms – leading to 65 per cent of the City’s workforce having non-British employers in 2011.  And created a modernised and more efficient market by swapping exchange floor trading for screen-based computer trading. While it can be argued that these measures, now known as the ‘Big Bang’, helped give Britain a competitive edge in the global economic market it also allowed for the rise of the integrated investment bank. Many of these banks face a massive conflict of interest since they both advise companies on deals and market financial products to investors. These reforms along with easy credit and the privatisation of public companies by Thatcher’s government led to a huge boom in the UK and established the age of consumerism. Taxation and incentives  Thatcher was known not to believe that taxation should be used to take money from the rich to subside the poor.  She thought this not only led to a lack of incentive to work hard and generate wealth among earners but also bred dependence at the bottom of the social scale.  Her hope was that tax cuts for the wealthy would promote more investment, more growth and therefore more government income, allowing her to cut taxes further.  In the 1980 budget, the top rate of income tax was cut  from 83 to 60%; 1988, it was cut  again to 40%. The cuts in the early 1980s were subsidised by a huge government windfall from the discovery and sale of North Sea oil. The oil had been extracted and sold by a state-owned corporation until Thatcher sold government shares to private investors in 1982.  Chancellor Nigel Lawson was happy to point out that, due to a decline in tax avoidance schemes, the wealthiest 5% of individuals paid as much tax in 1988 as they had done in 1978 when they were taxed at 83%. The basic rate of income tax was also reduced from  33% to 25% and inheritance tax was cut  from 75 to 40%.  However, although income tax fell under Thatcher, the average tax bill rose  by 6% between 1979 and 1990. The reason for this was the growth of indirect taxation (Value Added Tax) and National Insurance payments.  In 1979, VAT was increased  from 8 to 15%, this figure at which it remained until 1991.  Both VAT and National Insurance are regressive (more money is paid as more money is earned, low incomes have to pay more tax as a % of their total income) taxes: they take a higher proportion of income from the poor than the rich.  This shift in the tax burden from direct to indirect taxes has contributed to the growing gap between the richest and poorest in British society since the late 1970s. The fight against the trade unions Trade Union Legislation  Tackling the trade unions was part of Thatcher’s overall economic policy to reduce the influence of socialist institutions, and to promote individualism and popular capitalism; but the conflict was also an inevitable result of her focus on realigning the British economy away from heavy industry and towards financial services. 8  Thatcher had been part of the Heath government that had lost power partly as a result of the 1974 miners’ strike and although she was keen to smash the power of the trade unions, she was prepared to bide her name and avoid the mistakes made by her predecessor.  In her view, trade unions bullied individual workers into joining them, forced them into strike action they often had no wish to take part in and acted irresponsibly with no regard for democratically elected government.  Their power was undermined gradually through a series of Employment Acts:  The 1980 Education Act meant workers did not have to join a union when they joined a particular firm (the so-called ‘closed shop’); it also meant unions could only organise strikes against their direct employers and were not allowed to strike in sympathy with other workers.  The 1982 Education Act meant the unions could be sued for illegal strike action.  The 1984 Trade Union Act meant that a strike had to be approved by a majority of union members in a secret ballot before it was legal. In the same year, Thatcher also built up coal reserves that would enable the government to resist a miners’ strike without resorting to a three- day week as Heath had done. The Miners’ Strike and the Decline of Heavy Industry  In the event, Thatcher was fortunate in her enemy: NUM President Arthur Scargill made several tactical errors that undermined the miners’ strike.  The strike began on 6th March 1984, just as the UK emerged from winter and demanded less energy.  Scargill did not ballot NUM members about strike action, choosing instead to launch the strike with ‘flying pickets’. This caused miners in Nottinghamshire to leave the NUM and set up their own union, which voted to keep the mines open.  Lastly, Scargill lost public sympathy due to what were seen as provocative methods: his public disapproval rating never fell below 79% throughout the year-long strike.  The strike was finally defeated on 3rd March 1985, almost a year to the day after it began, although miners in Kent held out for a further two weeks.  Unions became far more willing to work with government legislation following the defeat of the NUM. The total number of trade union members fell  from 13.5 million in 1979 to under 10 million in 1990; the total number of working days lost to strike action fell  from 10.5 million in 1980-84 to 0.8 million in 1990-94.  The coal industry had become increasingly uncompetitive since the war and pit closures had led to large-scale redundancies since the 1960’s. It is likely that the coal industry would have been scaled back at a slower pace had it not been for the strike.  After the bitter struggle with the miners, a series of Employment Acts in 1988, 1989 and 1990 weakened trade unions further.  After Thatcher’s resignation in 1990, trade union membership fell  again to 6.7 million in 1997.  The removal of government subsidies for struggling older industries also saw a decline in the percentage of the labour force employed in manual labour from  47% in 1974 to 36% in 1991.  The number of miners fell  from 200,000 to 10,000 in the same period.  Many local communities were greatly affected by the end of the major local industry, such as shipbuilding in Sunderland, the steel manufacturing in Sheffield (as depicted in the 1997 film The Full Monty).  The impact of Thatcher’s anti-union legislation and action is a source of emotional disagreement  Critics argue that she caused unnecessary suffering to whole communities who relied on mining and other industries and that not enough was done to encourage other forms of employment in former mining areas. 9 To what extent were state intervention and the public sector ‘rolled back’? This chapter examines state intervention and the public sector ‘rolled back’ through the following sections:  The state Thatcher inherited  The origins of Thatcher’s views on government  The civil service  Local government  The National Health Service  Education  Conclusion The state Thatcher inherited  The post war political consensus favoured state intervention in the economy and a relatively large state apparatus.  Atlee’s government built on the welfare state that had been established earlier in the century by Lloyd George. The NHS, family allowances, council housing and unemployment benefits were all part of this ‘safety net’ designed to act as insurance for British people if they experienced hardship.  In the eyes of many Conservatives under Thatcher’s leadership, a large public sector led to individuals becoming lazy and dependent on the state, as well as the belief that state monopolies of public services led to complacency from an uncompetitive public workforce. The origins of Thatcher’s views on government  Margaret Thatcher had a clear, unshakeable sense of what was right and wrong for Britain. Her strong moral values were rooted in her Methodist upbringing and respect for her father’s hard work, self-reliance, thrift and determination.  As an adult she embraced political views that resonated with her personal experiences: she wanted government to promote the positive moral values from which she had benefited. More than this, she felt that too much state interferences in people’s lives had been the major reason for British decline: the welfare state had become a ‘nanny state’ and turned potentially upright, productive citizens into lazy dependants.  She thought that state ownership of industry crushed innovation, choice and competition, and led to inferior, uncompetitive products that people did not want to buy.  Even worse for her were the high levels of taxation required to pay for large state interference: this drained the wealth of successful individuals who could have used this money for private entrepreneurship. She hated the ‘creeping socialism’ of the post-war consensus and wanted the Conservative party to break out of the centre ground.  A number of key influences shaped Thatcher’s instinctive moral stance into political policies to ‘roll back’ the overbearing state apparatus. More than anyone else, it was ‘New Right’ Conservative Keith Joseph who inspired Thatcher with his brand of free-market liberalism. He introduced her to the ideas of Austrian economist Friedrich von Hayek who, in his, 1944 book The Road to Serfdom, argued that government should provide the conditions of liberty within which individuals can make their own choices, not provide welfare that leads to dependence. Such ideas had been around since the war but had much little impression: too many people associated the free market with the dark days of the Great Depression. Thatcher rose to prominence at exactly the right time for many Conservatives to finally give neo- liberal ideas a chance: by the mid-1970s, government planning and interference seemed responsible for a stagnant economy, high inflation and rising unemployment. 10  The Labour government’s application for an IMF ball-out and, above all, the Winter of Discontent, led a large swathe of the British public to agree that something different had to be tried.  TINA, short for ‘There Is No Alternative’, was frequently used to defend Thatcher’s controversial policies in the early 1980s  Success for Thatcher would have meant leaving Britain with a smaller state bureaucracy, less government interference in people’s lives, less government spending and a cheaper tax bill for the British public. She attempted to achieve this by promoting ‘efficiency’ in administration, privatisation of state-owned assets and ‘contracting out’ of government services. Her track record in government demonstrates success in some areas but failure in others. Historians have disagreed about the balance of success and failure in this area. The civil service  Thatcher has some succession slimming down the civil service. With 732,000 civil servants in 1980, Britain had 3 times as many bureaucrats as comparable nations. Thatcher used business-minded colleagues and advisers brought in from outside government to help her achieve the desired reduction. As Environment Minister (1979-83), Michael Heseltine introduced the Management Information System for Ministers (MINIS). This allowed him to more closely monitor the cost and responsibilities of civil servants. Where inefficiencies were uncovered, job losses followed: one in four workers at the Environment Ministry was sacked in just 3 years. Thatcher abolished the Civil Service Department in 1981. This had existed to supervise and protect its members, but Thatcher saw it as a trade union in all but name.  MINIS was rolled out to other ministries under the Financial Management Initiative. By 1988, 22.5% of civil servants had been sacked, saving an estimated £1 billion The ‘Next Steps’ report that year prompted a less centralized civil service and the rise of more flexible ‘agencies’ that would work with the private sector to deliver services. By 1991, there were 57 such agencies, something that historian Brian Harrison considers ‘the most substantial revolution within the civil service since the 1850s’. By 1997, 76% of civil servants worked in almost 100 different agencies; they remain the key way in which public services are delivered. Examples of these agencies included the Benefits Agency (for the Department of Social Security), the Employment Service Agency (for the Department of Education and Employment) and the Prison service (for the Home Office). The local government  Thatcher not only wanted to slim down local government, but to reduce its independence from central government. The Local Government Act (1985) enabled her to abolish the councils she found to be most troublesome: the Greater London Council and 6 other metropolitan councils were dissolved. Although this represented increased central government interference, she was more concerned by the ‘capture’ of some local councils by ‘irresponsible’ led-wingers who rejected her policies. She cut central government payments (from 60 to 49% of funding) and, following council attempts to plug the funding gap by raising local rates, introduced rate ‘caps’ on 18 councils (Rate Act 1984).  Local rates were only paid by people who owned or rented property of a certain value; many poorer people did not have to pay them at all. Thatcher hated the fact that some councils could promise ever more generous provision of benefits and services to people who would not have to pay for them. She felt that the capping of local rates was at the heart of what she was trying to accomplish: making people responsible citizens rather than lazy dependents.  Thatcher tried to widen a sense of financial responsibility through the introduction of a ‘Community Charge’ (1989 in Scotland, 1990 in England and Wales). The ‘poll tax’ (as it quickly became known) would be used on individuals rather than the value of property. As the charge was the same for everyone, the poor paid a higher percentage of their income than the rich. This was hugely unpopular and mass protests erupted when the tax was rolled out in 1990. The Conservatives were forced to abandon the tax and introduce a revised council tax linked to property values instead.  Thatcher used the example of innovative Conservative councils, such as Wandsworth in London, to promote greater efficiency through the ‘contracting out’ of council services. This meant that private firms were encouraged to bid for contracts to supply services such as Rubbish collection. By 1985, 11  staff numbers had fallen by one-third in Wandsworth; nationally, the total number of local government employees fell from 2.5 to 2.1 million between 1979 and 1995.  Thatcher used a number of methods to detach individuals from reliance on local government. The measure that had the greatest impact was the Housing Act of 1980. This gave some people the ‘Right to Buy’: it enabled those who had lived in a council house for three or more years to buy their house from the council. The idea was not only to cut council spending on property maintenance, but to promote a sense of pride and responsibility through independent ownership. It was hugely popular reform: 204,000 council houses were brought in 1982-83 alone and home ownership rose from 55 to 63% between 1979 and 1990. While these individuals made substantial personal gains from property price increases, the lack of availability of council houses made it harder and more expensive for councils to house the poorest in society by 1997. The National Health Service  Thatcher would have loved to slash the cost and inefficiency of the NHS in the same way she did with the civil service, breaking up the huge state structure and introducing elements of choice and competition. Her preferred solution to the spiraling cost of the NHS would have been to abolish tax funding entirely and enforce private health insurance. However, while the public did not notice the ‘revolution’ in government bureaucracy, they would certainly have noticed cuts or ‘contracting out’ in healthcare. The vast majority of the British public approved of the NHS’s provision of free, expert care to those in need regardless of wealth or income; for this reason, Thatcher had to tread far more cautiously than she would have instinctively liked. Between 1980 and 1987, spending on the NHS rose by 60%; as a percentage of total government spending, the NHS’s share rose from 12 to 15% between 1979 and 1996.  Her third election victory in 1987 gave Thatcher the confidence to back more radical proposals for NHS reform. The 1989 White Paper ‘Working for Patients’ called for the creation of an ‘internal market’ where health authorities would purchase healthcare services from hospital trusts. These trusts would be run by professional managers rather than doctors to ensure performance targets were hit and waste reduced. The idea was better providers would attract more demand (from GPs) and so success would be rewarded with higher funding. Although the internal market was not introduced until after Thatcher’s fall from power in 1990, the introduction of free-market elements into the NHS was very much in line with her overall aims.  The reforms proved to be highly unpopular with doctors and did not deliver cost casings in the way Thatcher had anticipated; while the overall cost of the NHS rose by almost 25% between 1985 and 1991, the money spend on NHS managers increased from £25.7 million to £383.8 million. By 1996, 34 NHS trusts were in debt; attempts to cut costs impacted upon the quality of care for non- emergency patients (e.g. the loss of 2% of hospital beds between 1990 and 1994). The requirement to ‘meet targets’ led to demoralization among doctors and nurses who felt they spend less time caring for patents in order to satisfy managers without medical training.  Although spending on the NHS rose at a slower rate than under previous governments, Thatcher was unable to roll back government to roll back government provision of healthcare. While numbers of people with private health insurance grew from around 500,000 in 1955 to 6.6 million in 1990, only 1% of manual workers had private cover. The vast majority of the British people continued to depend on the state-provided healthcare that they regarded as the ‘jewel in the crown’ of welfare provision. Education  As with healthcare, the most radical reforms to education came after 1987. Thatcher wanted to raise educational standards and deliver more value for money. She felt that the teaching profession and Local Education Authorities (LEAs) were hostile to the measures required to fulfil these aims; she thought that they were engaged in a conspiracy to protect inadequate teachers and promote ‘soft’, ‘child centered’ learning rather than measurable academic success. Keith Joseph, Education Minister 1981-86, began the process of raising standards and creating a national curriculum by merging the old Certificate of Secondary Education and O-Levels into a single GCSE. He was hugely interested in education and instead on personally approving the new syllabuses before they could be taught in schools. The plans were announced in 1984 and the new courses were fist taught in 1986 and examined in 1988. 12  The 1988 Education Act of his successor, Kenneth Baker, built on Joseph’s legacy by imposing a National Curriculum, compulsory for all apart from private schools, and new methods of assessment at several ‘Key Stages’, including the GCSE exams at the end of Key Stage 4. Exam results formed the basis for league tables, which aimed to empower parents to select better schools for their children and drive up standards. ‘Better’ schools were quickly oversubscribed and, as demand for housing within such schools’ catchment areas increased, poorer families were priced out and their children forced to attend ‘worse’ schools. The Act also allowed schools to become grant-maintained schools, directly funded by central government, this meant head teachers and governors could control budget and spending rather than the LEA. Although this aspect of the Act increased the independence of the 1,200 schools (19% of all secondary schools) that became grant-maintained, the introduction of a National Curriculum meant that, overall, Thatcher’s preferred educational reforms led to an increase in central government interference in this area. Conclusion  Thatcher slimmed down the size of the state where this was politically possible, but failed to cut overall government spending: this made up 43% of the value of all wealth produced in Britain in 1977-78, 47% in 1983-84 and 39% in 1988-89. By 1994, it had risen again to 44%. The total tax bill also rose throughout Thatcher’s time in office, from 38.5% of total wealth produced in 1979 to almost 41% in 1990; the tax on an average person rose from 31 to 37% of their income. How far did political and social change within Britain change, 1979-97? This chapter examines state intervention and the public sector ‘rolled back’ through the following sections:  Political division  Social division Political division Regional divisions  Apart from her impact on the Conservative and Labour party, Thatcher had some important effects on the nature of British politics more generally. In most cases these are far from what she would have like and must be considered as unintended consequences of her time in power. The first division that she helped to accelerate was regional; the Conservatives did far better in the south and east of England and lost support in the north of England, Scotland and Wales. While the Conservatives had won 21 out of 71 available Scottish seats in 1979, this had fallen to 10 by 1987; in 1997, the party was wiped out in Scotland. Scottish and Welsh nationalism gained a boost from the local reaction against the decline of their traditional industries. This movement accelerated with devolution (a process where some decision-making authority is given over from central government to the Scottish Parliament, the Welsh and Northern Irish Assembles, and the Greater London Authority) under New Labour, something to which Thatcher was opposed. Special advisers and career politicians  Thatcher accelerated an earlier trend to use outside advisers rather than career civil servants for policy advice. This continued in the post-Thatcher Conservative governments and especially under New Labour. Some political analysts have linked the fall in voter turn-out to a perception that the votes cast will not change the nature of government. The share of votes for the two main parties also fell. A political divide can be said to have opened up between the career politicians in London and the rest of the country. The number of MPs with a university degree rose from 40% in the period 1918-45 to 75% in 2010. The fraction of Labour MP’s from a manual worker background was around one-third in 1945, declining to one in then in 2010. The number of MPs from all parties who come from a legal background had also declined since 1979, with more than 70 falling into this category in 1974, diminishing to less than 30 in 1997 (although the number increased significantly at the 2010 election).  Perhaps the most significant statistic is that the number of MPs who have previously worked for political organizations or for politicians increased from 3% in 1979 to 14% in 2010. The Conservative 13  Party in the Thatcher years changed the rules of political organization and other parties had to change their approach in order to succeed. Divisions between left and right  The Thatcher years had a profound effect on party development, as discussed in the final section below, but a more general ideological battle was also initiated, which redefined what right- and left- wing meant. Despite Tony Blair adopting many Thatcherite ideas in his attempt to establish a ‘third way’ in politics between neo-liberal economics and socialism, the battle for the center ground (the space in the political spectrum that is accepted as neither left-nor right-wing) shifted right and has broadly stayed the same ever since.  The post-war consensus (1945-79) was founded on moderate socialist principles. Policies associated with Attlee’s Labour government, such as the NHS, state intervention in the economy, progressive taxation and a welfare state, were all accepted by the Conservative governments in power between 1951 and 1964. Both Wilson (Labour) and Heath (Conservative), the titans of British politics in the 1960s and 1970s, were essentially pro-European centrist (a person who holds moderate political views) politicians who agreed with many of these principles. With the advent of Thatcherism, many Conservative politicians inevitably lurched to the right, towards free markets and away from state planning, towards traditional family values and away from a liberal attitude towards social reform. The center ground shifted right as the Labour Party and, to an extent, the Liberal Democrats adopted Thatcherite policies, particularly on the economy.  With a changing center ground, more radical left-wing ideas that'd once been current in the relative mainstream, such as those prompted by Michael Foot as Labour leader in the 1983 general election campaign, were now seen as unusual and did not garner much support in the 1990s. Divisions between local and national government  As part of Thatcher’s objective to reduce the size of government and roll back the state, the power of local government was reduced. Since Thatcher’s resignation in 1996, local government has continued its decline. After its election victory in 1997, Labour continued to cap local spending and allowed local government to raise only 30% of its own funding.  Thatcher’s distaste for the left meant that Labour-controlled councils were an inevitable target for local government cuts, and many northern councils controlled by Labour saw themselves as warriors adjacent Thatcher’s government in the 1980s. Economic powers taken away from local councils in Merseyside and London was replaced by the introduction of development corporations, headed by central government. This style of urban regeneration directed by national government has been influential ever since, and the re-development projects in London and Liverpool are now seen as effective.  Thatcher’s government also moved to abolish the 6 metropolitan county councils and the Greater London Council (GLC) in 1986. The GLC leader, Ken Livingstone, who was a major figure on the left of the Labour Party, came to embody everything that Thatcher disliked about local government. Social division The gap between rich and poor  Thatcher is often criticized for widening the gap between the richest and poorest sections of British society. A whole host of social problems, from mental illness to obesity, can be directly linked to this gap in wealth and income. A number of Thatcher’s policies benefited the wealthy and discriminated against the poor. Regressive taxes took a far highest percentage of the income of the poor for the state. Privatisation benefited the more financially astute middle and upper classes more than the working classes. Policies aimed at cutting inflation not only cut spending on the poor but fueled unemployment predominantly among manufacturing workers. Other effects of the Thatcher years that increased social divisions include the following:  Uneven benefits from cuts in income tax. In 1989 the bottom 10% of earners paid £400 million less in income tax than they did in 1979, whereas the top 10% of earners paid £9.3 billion less in income tax.  In 1974, those in the top 10% received 25% of all post-tax income. In 1997, this had increased to 35.2% 14   By reducing welfare payments, Supplementary Benefit (later called Income Support) was equivalent to 53% of average earnings in 1987, down from 61% in 1978.  The proportion of pensioners living below the poverty line increased from 13% to 43%  Cuts to housing benefit  While the income of the richest 10% increased by 61% between 1979 and 1992, the poorest 10% saw a reduction of 18% in the same period. While the former group held 20.6% respectively. A 2010 government report found that the income of top earners increased from 3 times that of low earners in the late 1970s to 4 times that of low earners in the early 1990s; this income gap has continued to widen since the 1990s. The middle classes became increasingly divided over Thatcher: although they benefitted from rising incomes, many objected to her attack on the public sector. 55% of middle-class people voted Conservative in 1987 - fewer than at any time since 1918. Regional divisions  Regional divisions in wealth also increased under Thatcher. London and the south-east got richer and became more productive than the north-east and north-west, where productively actually declined. Political commentators and historians often point out the north-south divide that was created as a result of Thatcher’s policies. Thatcher did try to address this problem through ‘enterprise zones’: these were deprived areas where private firms received government funds to move in and generate growth. This did lead to some impressive urban renewal projects, such as the Albert Docks in Liverpool and the waterfront in Newcastle, but had limited wider success.  The number of economically inactive people (particularly men) in former industrial areas continued to increase between 1990 and 1997, and by 2001 one in five men in the former coalfields were unemployed, up from 1 in 10 in 1981. Some areas fared better at job creation than others in the 1990s, with Yorkshire, South Derbyshire and North Warwickshire bouncing back and South Wales struggling. Social divisions in Wales: a case study  Despite some investment in areas that had gone into decline, social divisions were more obvious in former mining towns. South Wales in particular suffered as a result in the decline of the industry. 73,000 people were unemployed in Wales in 1979, rising to 166,000 in 1986. Although there was already a trend in mines closing before Thatcher came to power (the number of those employed in deep mining reduced from 34,000 in 1974 to 28,000 in 1980), just 3,000 people were working in deep mining in Wales by 1990. Across the country as a whole, 90% of the workforce was lost. Social problems were created by this decline, and homelessness and drug use became prevalent in former mining towns: 1,308 drug offences were recorded in Wales in 1990, compare with 605 in 1979.  Despite the social divisions created by the decline in industry, Wales, like the rest of the UK, experienced economic growth in theory areas to the benefit of ordinary people. Spending on the NHS in Wales increased, from just over £500 million in 1979 to £1.5 billion in 1990. GDP per person increased from £7,072 to £20,306 in the same period, and the number of school-leavers seeking further education or training increased from 20 to 47% between 1974 and 1991. What were the effects of Thatcherism on politics and party development? In short, British politics moved to the right during the 1980s and stayed there in the 1990s and beyond. This chapter examines state intervention and the public sector ‘rolled back’ through the following sections:  The Conservative Party  The Labour Party  Other parties The Conservative Party The impact of Thatcher’s approach to politics  The Conservative Party had already begun to change before Thatcher rose to the leadership of the Party in 1975. As a former grammar school boy, Edward Heath had moved the Party away from the 15  donation of elite aristocrats such as Macmillan and Douglas-Home. He tried to modernize the Party and to steer it rightwards but ended up returning to the familiar post-war consensus. Heath had promised to implement free-market policies, including no government inference in setting prices and wage rises, and no bailing out of ‘lame duck’ industries in financial trouble. When inflation hit 15% in 1971, Heath was forced to retreat back to the ‘prices and incomes’ policy of the previous prime minister, Harold Wilson, whereby the government kept a close eye on inflation and would step in to limit price and wage rises where necessary. When Rolls Royce and the Upper Clyde shipbuilders came close to collapse, Heath decided to bail them out with public money, a complete reversal of his original policy.  Although Thatcher and other right-wing Conservatives hated Heath’s U-turn, they were careful not to criticize him before 1974 to avoid splitting the party. Once Thatcher became leader she was aware that her neo-liberal views were a minority taste in 1975, fiercely supported by a few think-tanks but given a cool reception by a party that traditionally preferred pragmatism to radical political or economic theory. She was careful not to alienate the more traditional ‘one nation’ Conservatives (whom she referred to as ‘wets’) and enlisted one ‘wet’, the highly William Whitelaw, to help keep them on side (she later said, without a hint of humor, that ‘every prime minister needs a Willie’).  However, her caution had limits: she set out to save Britain from ‘creeping socialism’ and needed the Conservative to take the fight to Labour rather than continue to court consensus. By 1976, she was a ready claiming to have ‘changed everything’ about the Conservative Party. She saw herself as a ‘conviction politician’, a champion of ‘middle-class values’ and wanted to inject some vigor and self- belief into the Conservative. A month before the May 1979 general election, she roused the Party faithful by saying, ‘the Old Testament Prophets did not say “Brothers, I want a consensus”. They said: “This is my faith, this is what I passionately believe. If you believe it too, then come with me”. Her faith, as outlined above, was founded on free-market liberalism coupled with a strong sense of patriotism. She rapidly promoted ‘dries’, men like Norman Tebbit and Nigel Lawson, who loyally shared her faith and, especially after 1983, began to shuffle ‘wets’ like Ian Gilmour and Francis Pam out of her cabinet.  Thatcher was careful not to ignore Conservative backbenchers (of which Heath had been guilty) or the rank-and-file party members; indeed, on occasions where she faced opposition from her cabinet or the parliamentary party, she was adept at seeking out and securing wider support for her course of action. She used her press secretary, Sir Bernard Ingham, to lack information to newspapers that would damage the reputation of minister who opposed her. Thatcher loved party conferences and saw them as a valuable annual opportunity to real affirm her strong connection to the views of ordinary members. Some commentators saw her performances, followed by long standing ovations, as symptomatic of the growing Americanization of British politics. New innovations and changing party make-up  One American innovation that was swiftly adopted by the Conservatives was the use of computers to target and contact potential voters in marginal constituencies. Party Chairman Cecil Parkinson organized a direct mail campaign that reached 500,000 voters before the 1983 general election. The social make-up of the Conservative Party changed more rapidly under Thatcher than in the years before 1979. Although most MPs still went to university, the party became less ‘posh’. The proportion of MPs educated at public schools dropped from 75 to 66% between 1974 and 1987. There were more self-made businessmen and fewer men of inherited wealth, more Thatcherites and fewer ‘one nation’ Conservatives. This trend persisted into the 1990s and beyond.  Men have been the clear focus of the paragraph above and with good reason: Thatcher is fairly accused of doing little to advance women in politics. During her time as prime minister, the number of female MPs only increased from 19 to 41 (and of these only 8 and 17 respectively were Conservative MPs). She believed that merit alone should lead to a successful political career and was opposed to any form of positive discrimination in favour of women  Thatcher’s determination to drive forward with policies she believed to be right ultimately led to her downfall in November 1990. By then, she had alienated a long list of Conservatives, ‘big beasts’ who were unhappy at being ignored or even rebuked in cabinet. Two of the most senior to be ‘handbagged’ were Chancellor Nigel Lawson, who resigned in October 1989 when Thatcher refused to consider linking the value of the pound to the value of the Deutshmark, and Deputy Prime Minister Geoffrey Howe, who resigned in November 1990 over her resistance to further integration with the European Economic Community. 16 The Conservatives after Thatcher  These resignations, together with the unpopularity of the Poll Tac, led to a revolt against thatcher by a cabinet that feared she would lose them the next election. Thatcher approved of her successor, John Major because she thought him the most likely of the potential candidates to maintain her legacy. Major’s government continued with many of Thatcher’s policies, including:  the privatization of British Rail in 1994-97  the extension of trade union legislation with the passing of the Trade Union and Labour Relations (Consolidation) Act of 1992  a commitment to lower direct taxation: the basic income tax was reduced from 25% to 23% in 1997  a preference for indirect taxation, demonstrated when Major’s Chancellor, Norman Lamont, increased VAT from 15% to 17.5% in 1991. The Conservative Party’s continued commitment to indirect taxation was demonstrated again when Chancellor George Osborne raised it again to 20% in 2010  While Major did maintain privatization and low taxation, Thatcher was bitterly disappointed by his moved to promote closer European integration. Rows within the party over Europe, and regular reports of ‘sleaze’ among leading Conservatives, contributed to a disastrous defeat in the 1997 general election: they gained only 165 seats compared to Labour’s 419. Some commentators saw this result as not only s reaction to party problems but also to a more general rejection of Thatcher’s legacy. Overall though, the majority of the Party had been converted to Thatcherism, and this commitment to her ideology was made clear when William Hague, who idolized Thatcher as a teenager, became leader in 1997. The Labour Party Why did the Labour Party need to change?  By challenging ‘creeping socialism’ so aggressively and so successfully. Thatcher forced the Labour Party to carry out some painful readjustments to make itself electable. It took a disastrous performance in the 1983 general election, when it gained just 28% of the vote, before the lessons started to sink in. Labour had suffered from the decline of their traditional northern industrial heartland before Thatcher came to power; her attack on manufacturing in the early 1980s, and closure of coal mines after 1984, accelerated this erosion of ‘natural’ Labour supporters: working class union members who would naturally gravity towards socialism  At the same time, disillusionment with Labour’s record under Wilson and Callaghan in the 1970s led to the growth of extra-parliamentary Labour activism: demonstrations, protests and, through the trade unions, strikes. The popular impression of a leftward lurch of the Party by the early 1980s and typified by Militant Tendency, a group of extreme left-wingers who gained control of the Liverpool branch of the Party. They were attacked in the right-wing press as the ‘loony left’. Many moderate Labour supporters grew concerned at tis development and switched allegiance to a new centrist party launched in 1981: the Social Democratic Party (SDP). Kinnock’s reforms, 1983-92  The split between Labour and the Social Democrats made it harder for moderates who remained with Labour to tackle the left-wing of the party. Neil Kinnock, who replaced Michael Foot as Party leader in 1983, had to take action against Militant Tendency and unite the party if Labour were ever to regain power. Although he made some impressive speeches against them in 1985, Kinnock was substantially aided in his fight by Thatcher. By capping local rates, disbanding certain local authorities, the privatisation of state industries and limiting trade union power, she undermined the bases of far-left power within the Labour movement. Kink’s modernizing reforms consisted of the following:  Unilateral nuclear disarmament was rejected as Labor Party policy  He moved Labour to a move pro-Europe stance  In 1988, trade unions most the casting vote on the selection of parliamentary candidates  In 1989, the Party dropped its support for union closed-shop practice.  Kinnock stood down after the 1992 Conservative election victory, and was succeeded by John Smith, who was a favourite with MPs and ordinary Labour Party members alike. Smith had little time to 17  build on Kinnock’s reforms, however, before he died prematurely in 1994. His successor, Tony Blair, would complete the turnaround in Labour policy started by Kinnock. Tony Blair and New Labour  When Tony Blair became Labour leader in 1994, he recognized that the Party needed to continue the move away from traditional working-class and trade union support started by Kinnock in order to reach out to the growing number of middle-class voters, the sort who had abandoned the Party in the early 1980s. In 1994, Blair announced that Clause IV of the party constitution, which called for the ‘common ownership of the means of production and exchange’, would be replaced with a less committal statement; the Party formally embraced free-market policies. In the same year, he rebranded the Party ‘New Labour’ to make clear to British voters the different direction it had taken since the mid-1980s. The extent to which New Labour, and its key leaders (such as Tony Blair and Gordon Brown), were the real inheritors of Thatcherism has been disputed by political commentators. While some have emphasized their willingness to work with the free market, others have pointed out how New Labour, rather than worrying about creating dependency, spent billions of pounds on trying to help the poorest in society. The commitment of New Labour to Thatcher’s ideas is summed by the following:  The complete rejection of any commitment to nationalisation  The party would aim to continue Thatcher’s policy of law direct taxation  Big business would be embraced and free markets allowed to flourish  There would be no reversal of the anti-trade union laws passed under Thatcher and Major  Issues of class politics would no longer be the focus of the Party  Despite these Thatcherite objectives, New Labour attempted to promote ‘inclusiveness’ in the following ways:  There was an emphasis on Labour’s commitment to social justice in an attempt to close the gap between rich and poor. The Party aimed to promote an equal distribution of opportunities for everyone, in contrast with the Old Labour commitment to more equal distribution of wealth  The Party was committed to a minimum wage, which is introduced in 1998  There was massive investment in education in order to create equal opportunities Other Parties The SDP and the Liberal Party  With the increasing influence of the far left in the Labour Party in the late 1970s and early 1980s, a number of Labour MP’s broke away to form the new Social Democratic Party in 1981. The leading figures, known as the ‘gang of four’, were Roy Jenkins, David Own, Shirley Williams and William Rodgers. They believed that, in a polarized political climate, with Thatcher representing the right and Foot representing the left, there was a need for a center-left party. Ironically, many of their beliefs would later be satisfied by the creation of New Labour.  The SDP hoped to claim new members from the Labour Party, but also some disaffected Conservatives unhappy with the direction of the party under Thatcher. In order to mount a serious challenge to the status quo, the SDP allied with the Liberal Party for the 1983 election, where the alliance gained 1/4 of the popular votes (but just 23 seats due to the first past the post system). The SDP were unable to capitalize on their early success and formally merged with the Liberals in 1988, to form the Liberal Democrats. Although the Liberal Democrats have always been socially liberal and pro-European, some Thatcherite influence can be seen in the commitment of many of their MPs to free-market principles and low taxation Regional nationalist parties  The realignment of the economy in the Thatcher years hit Wales and Scotland particularly hard. Coal mining was practiced in both regions and heavy industries such as shipbuilding were the backbone of the Scottish economy. The Scottish Nationalist Party (SNP) was founded in 1934 and called for greater powers (and later full independence) to be given to Scotland. They performed badly at the 1979, 1983 and 1987 elections but when Thatcher’s government decided to use Scotland to trial the Poll Tax before introducing it in other parts of the UK, existing anti-Thatcher feeling reached a new 18  peak The Thatcher government was seen as anti-Scottish and although an SNP breakthrough did not materialize until the 2015 general election, they began to make inroads that would result in Scotland voting for devotion and its own parliament in 1997.  The Welsh Nationalist Party, Plaid Cymru, was formed in 1925 and, like the SNP, is generally seen to be on the left of the political spectrum. With increasing dissatisfaction with Thatcher policies, the Conservative Party went into decline I'm the late 1980s. This decline helped Labour more than any other party, but Plaid Cymru were able to secure a referendum under New Labour that created the Welsh Assembly. Key Question Topics The origin and evolution of Thatcher’s views on the economy What were the The fight against inflation effects of Thatcher’s Privatisation economic Taxation and incentives policies? The fight against the trade unions The state Thatcher inherited The origins of Thatcher’s views on government To what extent were state The civil service intervention and Local government the public sector ‘rolled back’? The National Health Service Education How far did Political division political and social division within Britain Social division change 1979-97? What were the The Conservative Party effects of Thatcherism on The Labour Party politics and party Other parties development? 19