13 - The First Thatcher Government 1979-1983 PDF

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Lecture notes for British Political History Week 13...

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The First Thatcher Government 1979-1983 Rise of the New Right 1970s Friedrich von Hayek’s Road to Serfdom: an attack of state socialism Government was the problem. Milton Friedman’s monetarist theories, the idea that you could control inflation by controlling money supply. Keith Joseph & Enoch Powell powerful advocates of free market approach. First female PM in UK? Defeated Heath in 1975 leadership contest. Became PM in 1979. Thatcher’s reaction in an interview in The Times, 1971 (as the only woman in Edward Heath’s Cabinet): ‘No, there will never be a woman Prime Minister in my lifetime – the male population is too prejudiced’ (The Times 1971, cited in Sandbrook 2010: 369) Thatcherism ● Free markets ● Strong state ● Sound money ○ Save a little money for a rainy day and support the police ● Ideas not her own ● Hugely contradictory views ○ In favour of free markets yet right to buy campaign was a subsidiary for first time buyers. When did the post war consensus end? Callaghan: mid-1970s cut public expenditure Thatcher: A move to right the wrongs from Edward Heath’s government. Personal animosity between Heath and Thatcher Main players Geoffrey Howe - Chancellor 79-83 Lord Carrington - Foreign Secretary 79-82 Willie Whitelaw - Home Secretary 79-83 Francis Pym - Foreign Secretary 82-83 Retention of the ‘Wets’ in Cabinet Incoming Prime Ministers cannot always mould the Cabinet to their liking Thatcher retained many former ‘Heathites’ (supporters of Edward Heath) like Michael Heseltine (Environment) and James Prior (Employment) ‘Wets’: ‘One Nation’ Conservatives worried about social cohesion when unemployment rose Thatcher (1993: 28) believed that appointing a more radical, Thatcherite figure to reform the trade unions might have ‘provoked a challenge we were not yet ready to face’

Cautious Trade Union Reform ● 1979-1981: James Prior, Secretary of State for Employment banned secondary picketing (‘flying pickets’) ● 1981-1983: Norman Tebbit, Secretary of State for Employment (pictured right): ended unions’ immunity for damages if engaged in illegal strikes ● But held off from imposing mandatory strike ballots (came later in second term); never any ban on strikes in public sector ● Desire to avoid the mistakes of Heath, whose industrial reforms had been too ambitious Early Caution Large pay increases for teachers and nurses Large government subsidies for British Steel and British Leyland, both nationalised companies Thatcher backed off from an early coal dispute which she knew she couldn’t win. Thatcher initially disliked the word, preferring ‘denationalisation’ and ‘popular capitalism’ She worried that giving oil, rail, coal back to the private sector would frighten the nation, and risked being seen as unpatriotic She opposed the early privatisation of British Telecom, fearing a private monopoly In the first Thatcher term, only a few shares were sold in British Petroleum, Cable and Wireless and British Aerospace The only radical was Nigel Lawson, Energy Secretary 1981-1983 While Thatcher fretted about selling off Britoil, Lawson persuaded her to keep a ‘golden share’ while selling off the rest. Very few ‘Dries’ Few hard Thatcherites. There was always a minority in Cabinet. Thatcherites dominated economic portfolios 1979 Budget Geoffrey Howe (Chancellor of Exchequer – pictured right) Cut the basic rate of income tax from 33% to 30% Cut the top rate of income tax from 83% to 60% Increased Value Added Tax (VAT) from 7.5% to 15% Shift from direct taxation to indirect taxation When talking about the Tories as a tax cutting party we have to study what taxes they are cutting.eg. increasing VAT Implementing Monetarism Cutting public expenditure in the middle of a recession was a direct challenge to the Keynesian post-war consensus, which was to increase spending in a recession when faced with high levels of unemployment (2m).

Howe did the opposite of Heath in 1972 (seen as ‘the Great Error’) and cut public expenditure in 1980 and 1981. 364 economists wrote to The Times in protest. Fears of a 1930s-style recession. Collapse in Traditional Industries with rapidly rising unemployment. There were riots in Brixton, Toxteth and Moss Side. A necessary ‘shake out’ (?) with a great social cost. Mrs Thatcher, October 1980 Party Conference: ‘You turn if you want to; the Lady’s not for turning’ (Oct ’80) - Authored by Ronnie Millar, taught her to speak and emerged as a powerful speech giver. She would also give her own personal input.

Public Expenditure Date: Jan 1981 Background: insufficient Cabinet progress on public spending cuts Briefing paper from one of her ministers Mrs T’s handwritten comments to her Private Secretary for Economic Affairs, Tim Lancaster

Tebbit ‘Get on Yer Bike!’ After the Handsworth and Brixton riots of 1981: ‘I grew up in the 1930s with an unemployed father. He didn’t riot. He got on his bike and looked for work, and kept looking till he found it.’ 1981 The Lowest Point Unemployment hit 3 million New Social Democratic Party (SDP) won by-elections, headed by Roy Jenkins Conservatives on 23% 23 July 1981: the ‘Wets’ in the Cabinet openly dissented against Thatcher’s economic policy Journalists took bets on when Thatcher would go and who would replace her. Only the shielding role of Willie Whitelaw, her Deputy Prime Minister, saved Mrs Thatcher. He could have intervened on the side of the Heathites but decided to support Thatcher The Purge of the ‘Wets’ Sacked Norman St John Stevas at end of 1980 (Leader of the House of Commons) Sept 1981: Thatcher sacked Ian Gilmour (Lord Privy Seal) Shifted James Prior to Northern Ireland, replacing him with Norman Tebbit But majority of Cabinet still ‘Wets’

The Right To Buy

Giving council tenants the right to buy their own home (for roughly £8,000) Created a group of loyal Thatcher votes in the lower middle class who were forever grateful to her for buying their houses at a discount But it drastically reduced the stock of social housing so origins of housing crisis rests with Mrs Thatcher. Lack of Radicalism? Central Policy Review Staff (CPRS) report urge radical reforms to health, education, public spending. U-turns on education vouchers (Keith Joseph, Education Secretary) and no major reform of the National Health Service. Due to high levels of unemployment, overall public spending rose: 1979: 41% of GDP 1983: 44% of GDP North Sea Oil revenues were wasted on welfare payments Paradox of Thatcherism – a philosophy designed to decrease individual's’ dependency on the state actually increased it. Origins of Brexit lie in the ‘gutting’ of the North. Whole communities were left for years without help or hope. Foreign Policy 1979-83 Entirely reliant on Peter Carrington, Foreign Secretary 1979-1982 Independence for Zimbabwe (Rhodesia) (1980) against her instincts – the Queen, Carrington and ‘Sonny’ Ramphal, Secretary General of the Commonwealth ganged up on her. She would argue, sign and then regret (independence of Zimbabwe, Anglo-Irish agreement, EEC Single market) Luck ? At her lowest ebb, Thatcher was able to show strong leadership over Falklands War (1982) Divided Opposition – formation of the break-away Social Democratic Party (SDP) in 1981 Labour’s Radical 1983 Manifesto: ‘Longest suicide note in history’ (Sir Gerald Kaufman)...