The catastrophes of Margaret Thatcher:
- Thatcher was responsible for two recessions that were driven by ideology and deliberate policies. Although inflation needed controlling in 1980, the government deflated the economy too much – chasing money supply targets which were unreliable. The cost was poverty, suffering, unemployment and social disorder, which was avoidable.
- The 1980s saw a return of mass unemployment – such high levels had not been seen since the Great Depression of the 1930s.
- Thatcher instigated a series of “free market” decisions that deregulated government control of the processing of animal feed, and thereby allowed the spread of bovine spongiform encephalopathy (BSE), known as “Mad Cow” disease. The government had been made aware of the risks to public health. It is certain that the Thatcher government, in the face of the serious threat of infection, did not take the necessary public health measures to protect food and feed supplies. In fact, the Agriculture and Health Ministry policies of deregulation and privatisation, implemented during the Thatcher years and continued under Prime Minister John Major, served to spread BSE.
- Widening of the north/south divide and regional inequality. Unemployment particularly affected former industrial areas; the government were disinclined to deal with problems of structural unemployment, preferring to blame the unemployed for unemployment.
- Privatisation, which involved selling off our state assets at an undervalued price. Those who could afford to buy shares saw immediate gains. This was missed opportunity to use the nations resources to invest in infrastructure, public services and the future.
- A massive rise in inequality and poverty during the 1980s.
- Thatcher savagely undermined the power and influence of the trade unions, at the cost of alienating many working class because of the vicious nature of her conflict.
- The government deliberately allowed a boom and bust which caused an unnecessary and painful recession in 1991. For all of Lamont and Thatcher’s claims to see the importance of keeping inflation low – it was at the cost of a deep recession and unemployment rising to over 3 million. It was ironic that the government made such a mistake in allowing an inflationary bubble in the late 1980s. Part of the reason is that really felt they had created a supply side miracle – which of course hadn’t actually occurred.
- The rise in home-ownership was good for those who could afford to buy, but it served to increase wealth inequality in the UK. The supply of council homes is limited because many had been sold off by Thatcher.
- Thatcher’s Financial deregulation of the 1980s laid the framework for credit bubble of 2000s and subsequent credit crisis. For example, privatised building societies like Northern Rock, and Bradford & Bingley pursued risky growth strategies which eventually needed government bailouts in the aftermath of the 2008 recession.
- Thatcher made no attempt to deal with environmental issues during a decade of increased concerns over global warming, pollution and environmental degradation.
A summary of Thatcher’s Economic policies:
- Minarchism – a belief in free markets over government intervention, pursuing policies of privatisation and deregulation, for example.
- Pursuit of the supply side policies to increase “efficiency and productivity”.
- Reducing power of the trades unions and increased labour market “flexibility”
- Financial deregulation, e.g. building societies becoming profit making banks.
- Reducing higher rates of marginal income tax to increase ‘incentives to work.’
- Ending state subsidies for major manufacturing companies.
- Encouraging home ownership and share ownership.
- Targeting money supply and monetarist policies to reduce inflation of late 1979. Monetarism was effectively abandoned by 1984…
- Lowering direct taxes on income and increasing indirect taxes.
Her aims when she took Office:
- Reduce inflation which was running at over 20% in 1979
- Reduce the budget deficit.
- Increase the “efficiency” of the economy
- Reduce the power of the Unions.
- Thatcher also became the face of the ideological movement opposing the welfare state and Keynesian economics.
Thatcher introduced cash limits on public spending, and reduced expenditure on public services such as education and housing.
Her cuts in higher education spending resulted in her being the first Oxford-educated post-war Prime Minister not to be awarded an honorary doctorate by the University of Oxford, after a 738 to 319 vote of the governing assembly and a student petition.
More than £29 billion was raised from the sale of nationalised industries, and another £18 billion from the sale of council houses. That money was not re-invested in any way that benefited the public.
In a interview in Woman’s Own magazine in September 1987. Thatcher said:
“I think we have gone through a period when too many children and people have been given to understand “I have a problem, it is the Government’s job to cope with it!” or “I have a problem, I will go and get a grant to cope with it!” “I am homeless, the Government must house me!” and so they are casting their problems on society and who is society? There is no such thing!
There are individual men and women and there are families and no government can do anything except through people and people look to themselves first. It is our duty to look after ourselves and then also to help look after our neighbour and life is a reciprocal business and people have got the entitlements too much in mind without the obligations. The culture of dependency, which had done such damage to Britain.”
Thatcher was very divisive, and promoted a commercialised, power-dressed version of competitive individualism and an Ayn Rand spirited greed and selfishness, her stance on immigration was part of a rising racist public discourse, which Professor Martin Barker has called “new racism.”
Thatcher left Britain a divided, sparser, unequal, meaner, worse and more dysfunctional society than when she took Office; in contrast Blair made life better for most working people in Britain. The economic consequences of Thatcher were pain, pain and more pain. Having endured years of misery through Thatcher’s attempts at driving inflation out of the national economy (Norman Lamont said: “if it’s not hurting it’s not working” ) we are now going through more Tory economic sadism – austerity. More pain, pain and pain, but never for the elite: for them, regardless of how the Tories thrash and trash the economy for the majority, for the very wealthy, it’s always gain gain and more gain.
The New Labour interlude.
The “mess” that Thatcher left is verified by several longitudinal studies. Dr. Alex Scott-Samuel and colleagues from the Universities of Durham, West of Scotland, Glasgow and Edinburgh, sourced data from over 70 existing research papers, which concludes that as a result of unnecessary unemployment, welfare cuts and damaging housing policies, the former prime minister’s legacy “includes the unnecessary and unjust premature death of many British citizens, together with a substantial and continuing burden of suffering and loss of well-being.”
The article also cites evidence including the substantial increase in income inequality under Thatcher – the richest 0.01% of society had 28 times the mean national average income in 1978 but 70 times the average in 1990, and the rise in UK poverty rates from 6.7% in 1975 to 12% in 1985.
It concludes that: “Thatcher’s governments wilfully engineered an economic catastrophe across large parts of Britain” by dismantling traditional industries such as coal and steel in order to undermine the power of working class organisations, such as unions.
This ultimately fed through into growing regional disparities in health standards and life expectancy, as well as greatly increased inequalities between the richest and poorest in society.”
Blair established the social exclusion unit inside No 10. “Social exclusion” signified not just poverty, but its myriad causes and symptoms, with 18 task forces examining education, babies’ development, debt, addiction, mental health, housing and much more. Policies followed and so did improvements. John Prescott’s department published an annual Opportunities for All report that monitored these social targets: 48 out of 59 indicators improved.
The myth that Blairism was a continuation of Thatcherism is highly misleading, and comes most often, though not exclusively from the neo-militant left, as part of their unique brand of (very lazy) political commentary and elitist “socialism”. It’s true to say that Blair was a neoliberal. However, he also advocted a strong social safety net to ensure people were protected against the worst ravages of market economics.
Though Blair did admittedly accept the idea of “market efficiency” as ideologically neutral, he formulated policies directly to benefit trade unions – such as union learning, and rights to recognition; and these were the result of the coalition/social nature of the Labour Party. Blair also had a distinct social agenda, which was both ideologically and practically progressive.
This is why the current government are so busy trying to repeal many of Blair’s policies – such as the Human Rights Act, the Equality Act, Every Child Matters, along with the effective measures of childhood poverty that the Blair administration established. Had Blair been a fully fledged Thatcherite, as is often claimed, it’s highly improbable that Cameron’s conservatives would object to any of his policies. But they do.
A criticism that is often levelled at Blair is the that he “started” the privatisation process of the NHS, now happening under Cameron’s government. However, there is a very distinct difference between Labour using PFI, previously introduced by John Major, in the context of using private borrowing to expand and improve public services, with the Tory policy of privatising to disrupt and curtail public services.
Furthermore, much of the social spending committed during the Blair years did deliver real benefits: comparing 2010 with 1997 saw 41000 more teachers and 120000 more teaching assistants, 80000 more nurses and 44000 more doctors, and 4.5 million families received tax credits of an average £65 per week, for example.
New Labour, for all its faults was actually ideologically founded on the idea and intention of creating a fairer, more harmonious society through an empowering partner state that provides conditions for individuals to thrive and to benefit from good choices. For all its weaknesses, it is a distinctly different agenda from Thatcher’s ideology of regarding the state as inherently problematic, and that individuals needed to be liberated from its influence.
Thatcher would certainly not have been willing to sit down with Gerry Adams and Martin McGuinness to negotiate peace in Northern Ireland. And as the architect of section 28, she would definitely not have equalised the age of consent or introduced civil partnerships.
The proceeds of the economic growth of the 1990s and early 2000s would not have been invested in rebuilding the Nation’s public services, about which the Thatcher governments had precious little to say. Having seen poverty double during her time in office, Thatcher would undoubtedly not have pledged to eradicate it.
In 2003, Conservatives voted with the Government to send British troops into military action in Iraq, the Conservative votes carried the motion authorising conflict, since 139 Labour MPs rebelled against their party’s whip.
Iain Duncan Smith led Conservative MPs in demanding a rush to war as early as 2002. I fundamentally disagreed with the war against Iraq, and I protested at the time. But the truth is important and regardless of the subsequent analysis and blame-mongering, and the very strong feelings this particular issue always raises, (and quite properly so,) this was a war that was voted for democratically in Parliament.
I’ll add that the same democratic process secured the prevention of a war on Syria, thanks to Ed Miliband rallying the opposition, to the fury of Cameron. And that’s a line drawn under Blairism.
Ed Miliband’s frequent criticisms of the economic policies of the last 30 years’ in speeches strongly suggests that, in part, he agrees with those who believe that Labour’s election in 1997 did not mark a decisive enough break with what came before. I agree, and was glad to hear Miliband declare the end of New Labour.
However, appreciating the past strengths in addition to the well discussed limitations of New Labour is necessary if we genuinely want to take valuable and balanced lessons from it and move upwards and onwards.
The catastrophe of David Cameron .
It’s worth considering that New Labour had 13 years in which to fulfil what Cameron’s Conservatives have achieved in just 4. And they didn’t. Because it was never New Labour’s aim.
The Welfare “Reform” Act 2012 marked the continuation of a wholesale dismantling of the welfare state. Cameron took up where Thatcher left off. It’s utterly callous and it also steals money from people in work. The unemployed are blamed for unemployment, at a time when Cameron’s Government created a double-dip recession. Thatcher also blamed the unemployed for the unemployment that her policy choices created, but not as viciously as Cameron’s administration has.
Living standards are being driven down deliberately while tax cuts are gifted to the rich. Education is privatised, any remaining pretence of meritocratic principles has been well and truly bludgeoned and our gifted young people are being priced out of university. Local democracy is shackled, Councils (and subsequently, public services,) are turned into a queue of hostages for Eric Pickles’ cuts.
Cameron has said that it is “essential to reduce taxes on employment and wealth creation in order to enhance our economy’s competitiveness.” Definitely déjà vu.
He strongly supports deregulation of the private sector,and promised an immediate deregulation bill upon election. He has also pledged to remove Britain from the European Union’s social chapter and to withdraw unilaterally from certain directives stemming from the European Union. He has said that Britain must not be a “soft touch” and has called for a crackdown on “access to justice.”
Speaking of access to justice, well the Legal Aid Bill has ensured that those hit the very hardest by this Government’s carefully planned and coordinated assault on public services and welfare support have none. This is not a government that would allow the victims of its brutal policies to challenge or seek redress.
When I say planned assault, I mean it started with Thatcher, who was certainly behind radical proposals to end free healthcare and schooling in Britain. We know this from the Central Policy Review Staff (CPRS) Report, that was encouraged and commissioned by Thatcher and Howe in 1982, which shows a radical, politically toxic plan to dismantle the welfare state, to introduce education vouchers, ending the state funding of higher education, to freeze welfare benefits and to introduce an insurance-based health service, ending free health care provision of the NHS. One of the architects of the report was Lord Wasserman, he is now one of Cameron’s advisors.
The Government asserts that its welfare “reform” strategy is aimed at breaking the cycle of “worklessness” and dependency on the welfare system in the UK’s poorest families. Poor Law rhetoric. There’s no such thing as “worklessness”, it’s simply a blame apportioning word, made up by the Tories to hide the fact that they have destroyed the employment market, as they always do.
The “reforms” (cuts) consist of 39 individual changes to welfare payments, eligibility, sanctions and timescales for payment and are intended to save the exchequer around £18 billion. How remarkable that the Department of Work and Pensions claim that such cuts to welfare spending will reduce poverty.
George Osborne’s “plan A” isn’t about economics: it amounts to little more than a rehashed Thatcherite ideological agenda of stripping away public services and welfare, deregulation and labour market “flexibility”, as modelled by the Beecroft report – an assault on the rights of employees, and Labour’s historic equality legislation. The Tory demand for a “nightwatchman state” is both ill-conceived and completely irrelevant to Britain’s economic circumstances. It’s a complete abdication of government responsibility, democratic obligations and duty towards its citizens.
The Coalition have borrowed more in 4 years than labour did in 13 and have NOTHING to show for it except a handful of wealthier millionaires. And the return of absolute poverty.
We know that austerity was intentionally imposed by the Coalition, using a feigned panic over the budget deficit to front an opportunistic vulture capitalist approach to stripping our public assets. With the Coalition in power for 4 years, the deficit has apparently receded in importance.
Tories, the more things change, the more they stay the same.
Nasty, vindictive neofeudalists.
Pictures courtesy of Robert Livingstone