Thatcherism - Ideology, Policies and Relevance Today

GRG23 / VBS Draschestraße 90-92, A-1230 Wien

Unterrichtsjahr 2011/2012

Fachbereichsarbeit in Geographie und Wirtschaftskunde

Verfasser: Leander C. Seidl

Betreuungslehrer: Mag. Christopher Hanacek-Schubert MAS MAIS

Abgabedatum: 17.2.2012

2

Erklärung

Ich erkläre hiermit eidesstattlich, dass ich die vorliegende Arbeit eigenständig und nur unter

Verwendung der angeführten Hilfsmittel verfasst habe.

Wien, am 17. Februar 2012 Leander C. Seidl

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Contents

1. Preamble ...................................................................................................... 4

2. Introduction ................................................................................................. 5

2. 1. Brief Biography and Summary of Margaret Thatcher’s Term in Office .... 5

2.2. The British Economy in the late 1970s and the Winter of Discontent .... 6

2.3. Margaret Thatcher’s Ideology ................................................................ 8

2.3.1. Neoliberalism ................................................................................... 8

2.3.2. Monetarism ..................................................................................... 9

3. Thatcher’s Economic Policy ........................................................................ 11

3.1. Tax and Monetary Policy ........................................................................ 11

3.2. Reform of Social Services and Education ................................................ 13

3.3. Privatisation and Deregulation ............................................................... 17

3.4. Relationship with Unions ........................................................................ 19

4. The Influence of Thatcherism on British Politics in Recent Years................ 21

5. Conclusion ................................................................................................. 23

6. Abstract ..................................................................................................... 25

7. List of Sources ............................................................................................ 27

8. Work Log .................................................................................................... 33

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1. Preamble

When discussing the most influential political leaders of the late 20th century, only few

choose not to mention the former British PM Margaret Thatcher. No matter whether she is

praised as a conservative heroine or regarded as a nemesis by followers of a more socialist

ideology, almost everyone who talks about her has an opinion on the woman that is

frequently referred to as the “Iron Lady”. It is also for that reason that I already had a very

vague general idea of what her policy consisted of. Since I had wanted to find out more

about her for years, the decision of making Thatcherism and its influence on today’s politics

the topic of my FBA was easily made.

Work on this paper has not only given me a lot of knowledge on Thatcherism itself, but also

helped me gain an insight on unique aspects of the British economic and political system. For

example, I did not know about the complex structure behind the British healthcare and

school systems.

Apart from the new things I learned through research on the topic, I also got valuable

insights into the amount of time, effort and determination that is required in order to

complete a pre-scientific paper. Therefore I believe that choosing to write this work was a

highly beneficial experience for me which I will very probably be able to draw upon in the

future. Finally, I would like to thank my supervising teacher, Mag. Christopher Hanacek-

Schubert for his continued support and advice during my work on the FBA, which helped me

to overcome initial difficulties.

I hope that my work makes for an interesting read and I hope that you, the reader, are able

to gain a deeper understanding of Margaret Thatcher’s economic policy, the implications of

it beyond her term and the British economy in general.

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2. Introduction

2. 1. Brief Biography and Summary of Margaret Thatcher’s Term in Office

Margaret Hilda Thatcher, née Roberts was born on October 13, 1925 in Grantham, as the

daughter of a businessman who was engaged in local politics. She was a successful student

during her time in primary and secondary education, allowing her to get into a grammar

school and be accepted at the University of Oxford after graduating. While studying

chemistry at Oxford from 1943 to 1947 she emerged as a strong supporter of conservatism

and after having received her degree, she ran for a seat in parliament in both the general

elections of both 1950 and 1951. While her attempts were unsuccessful, her speeches

earned respect from many conservative politicians and during her campaigns she met her

future husband, Daniel Thatcher. In 1959, Margaret Thatcher finally managed to win a seat

in Parliament and in 1961 she became the undersecretary for pensions and national

insurance. 1 2 3

Between 1964 and 1970, while Labour was in power, Thatcher was part of the shadow

cabinet and once the Conservative Party had won the election of 1970 she became Secretary

of State for Education under PM Edward Heath. It was in this office that she first came to the

attention of the general public when she abolished the practice of free milk at school for all

children below the age of 12. The Heath government was all in all not well received, and the

1974 elections brought about a new government led by Labour. The next year, Thatcher

decided to challenge Heath’s leadership of the Conservative party, which – to her own

surprise – was successful. She spent four years as leader of the opposition before she

successfully called for a vote of no confidence in the Labour government and won the

ensuing general elections of 1979, entering office as the first female Prime Minister in Britain

on May 4, 1979. She remained in power for more than a decade, winning the elections of

1983 and 1987 until having to resign in 1990.1 2 3

Apart from her economic policy, which will be analysed in the third chapter of this work,

some other noteworthy elements of her time as Prime Minister were her foreign policy and

her refusal to meet the demands of the Irish Republican Army, which led to a hotel she was

staying at being bombed in 1984, killing 5 people but leaving Thatcher unharmed. She was

on friendly terms with US president Ronald Reagan, with whom she shared many economic

ideas – Thatcherism and Reaganomics are often mentioned together – and a dislike for

communist regimes. Her criticism of communism also lead to a soviet newspaper creating

the nickname “Iron Lady”, by which she is still referred to today. 4 Often considered the most

1 http://www.margaretthatcher.org/essential/biography.asp - accessed on February 3, 2012

2 http://www.biography.com/people/margaret-thatcher-9504796 - accessed on February 3, 2012

3 http://en.wikipedia.org/wiki/Margaret_Thatcher - accessed on February 3, 2012

4 http://en.wikipedia.org/wiki/Iron_Lady - accessed on February 3, 2012

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famous part of her foreign policy is her reaction to the invasion of the Falkland Islands by

Argentina's Military Junta in April 1982. When a diplomatic solution failed, she did not

decide to abandon the territories as many experts would have expected, but ordered a

military intervention to retake the islands which was successful by June 1982.5 Because

Britain was still suffering from the effects of a recession and her economic measures were

not well received by many citizens, many analysts argue that without her victory against

Argentine, she would not have been able to win the elections in 1983. Her decision for war

was mostly well received by the public and analysts, with only a few criticising the choice as

being too extreme, as it caused a few hundred deaths on both sides.1 2 3

The end of Thatcher’s time as British PM came during her third term, in November 1990. Her

scepticism against integrating Britain further into the European community, her determined

style of leadership and her refusal to back away from the heavily criticised community

charges were some of the elements that lead to poor poll results for the Conservative Party

and disgruntled many of its members. Her party leadership was challenged by Michael

Heseltine, and while she narrowly won the first vote, a second ballot had to be held. At first

determined to win this ballot, she saw no other choice than to resign the next day,

November 28 1990, when many members of her cabinet renounced their support of her,

stating their belief that she would not be able to win another election. The Conservative

party ended up electing John Major as her successor - who was described by the media as

being the protégé of the resigning PM when he took office - and Margaret Thatcher’s career

as a politician ended with the general elections of 1992, when she did not run again for a

seat in parliament. 1 3 6

2.2. The British Economy in the late 1970s and the Winter of Discontent

The government preceding Thatcher‘s rule was led by the Labour Party under Harold Wilson

from 1974 until 1976, when he stepped down and James Callaghan took over. Callahan

remained PM until a vote of no confidence and the following elections in 1979. During its

rule, the Labour government was faced with problems of the British economy. While in the

early 1970s, the end of the Bretton Woods monetary system combined with a sharp increase

of energy prices led economies all over the world into economic problems or even recession,

this development was especially visible in Britain. Its economy entered a state that was

labelled “Stagflation” – economic growth stagnated while unemployment and inflation were

on the rise. Inflation in Britain reached a peak level in 1975, being as large as 24.2%. Since

the number of people out of work was still going up, as was the budget deficit, the

5 http://www.telegraph.co.uk/news/newstopics/themargaretthatcheryears/1895880/Margaret-Thatcher-and-

the-Falklands.html - accessed on February 3, 2012 6 http://articles.latimes.com/1990-11-28/news/mn-4907_1_john-major - accessed on February 3, 2012

7

government was eventually left with no other choice but to take out a loan of 2.3 billion

pounds from the International Monetary Fund in September 1976. This decision was

particularly difficult to make, since it was the first time that a developed western county

asked the IMF for financial aid. In return, it was demanded of Britain that it deeply cut its

public spending, which led to strong debates within the Labour Party. The measures

however did prove to be successful in reducing inflation, which was down to 8.3% by 1978. 7 8 9 10 11

Meanwhile, as another measure against inflation, the “Social Contract” was introduced in

1975, an informal agreement between the government and the British trade unions which

should limit new wage settlements to once a year in order to allow for a safer planning of

budgets.12 The unions tolerated this agreement, realising the problematic state of Britain’s

economy and when inflation numbers got better in 1977, the Chancellor of the Exchequer

Denis Healey announced that in the following year, collective bargaining would return in its

traditional form. However, in the summer of 1978, Healey went back on this announcement

and set a guideline that limited pay increases to 5% for the next year.12

The unions were outraged by this change in policy, and began a series of strikes known as

the “Winter of Discontent” that lasted until February 1979. Among those laying down work

were truck drivers, waste collectors, gravediggers and ancillary workers of the National

Health Service. These strikes led to chaotic circumstances in parts of Britain, waste piling up

in some cities and patients being unable to enter hospitals due to protests being held in

front of them. The result was a strong loss of support for the Labour Party, being one of the

main reasons why it lost to Thatcher’s Conservatives in the following election.13 14 15

By the time Thatcher was sworn into office, inflation had risen to 13.4% again, the unions

had demonstrated their power over the government and the way many sectors of the British

industry worked was considered inefficient by Thatcher and her followers, which set the

stage for parts of the economic programme she implemented.16 17

7 http://www.nationalarchives.gov.uk/cabinetpapers/themes/sterling-devalued-imf-loan.htm - accessed on

February 10, 2012 8 http://www.bbc.co.uk/history/british/timeline/present_timeline_noflash.shtml - accessed on February 10,

2012 9 http://news.bbc.co.uk/2/hi/uk_news/politics/4553464.stm - accessed on February 10, 2012

10 http://en.wikipedia.org/wiki/Stagflation - accessed on February 10, 2012

11 http://safalra.com/other/historical-uk-inflation-price-conversion/ - accessed on February 10, 2012

12 http://en.wikipedia.org/wiki/Social_Contract_%28Britain%29 - accessed on February 10, 2012

13 http://news.bbc.co.uk/onthisday/hi/dates/stories/january/22/newsid_2506000/2506715.stm - accessed on

February 10, 2012 14

http://econ.economicshelp.org/2010/02/economy-of-1970s.html - - accessed on February 10, 2012 15

http://news.bbc.co.uk/2/hi/3067563.stm - accessed on February 10, 2012 16

http://safalra.com/other/historical-uk-inflation-price-conversion - accessed on February 10, 2012 17

http://www.economicshelp.org/2010/02/thatcher-revolution-1980s.html - accessed on February 10, 2012

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2.3. Margaret Thatcher’s Ideology

2.3.1. Neoliberalism

Margaret Thatcher’s policy today is often described as being neoliberal, and for some,

neoliberalism and Thatcherism can in fact be seen as synonyms.18 There are many different

definitions of what neoliberalism constitutes, varying from continent to continent and

according to the general perspective of the analyst.19 Most economists however, agree that

neoliberalism, in the form that is present in Europe and North America, originated from

traditional Liberalism, which became a common school of thought in Europe around the end

of the 18th century, promoting less interference of the state in the individual`s decisions and

aiming towards a state in which decisions are made not in order to follow a certain goal, but

solely as consequences of the processes that occur.19 20 Today, the term “Liberalism”, like

neoliberalism, is used in a multitude of ways, with the existence of political liberalism, which

is frequently used analogous to the word progressive in the USA, and economic liberalism on

which neoliberalism is based.21

The term neoliberalism was first introduced in the 1930s and was defined in great detail

after the Second World War by the Austrian economist Friedrich August von Hayek. He

follows the Liberal assumption that the order of the economy is only a consequence of

spontaneous processes and comes to the conclusion that the economy works best when it

does not follow a set plan or regulations given by the government.22 The main goal of

neoliberalism is therefore to reduce and finally abolish any state involvement and regulation

of the free market, which is supposed to lead to an economy that by means of more

competition and flexibility achieves higher profits and efficiency. Because it is very

dependent on market demands, the economy should be able to regulate itself, with as little

legislation by the state as possible.23 Neoliberalism is often contrasted with the economic

beliefs that were first postulated to a broad audience by John Maynard Keynes. The

followers of his ideology strongly support the government taking an active part in the

economy, believing that when the public sector invests money in new projects in times of

recession, the economy is more likely to recover.24

With Thatcher in Great Britain and Ronald Reagan in the USA being the leaders who first

introduced a neoliberal agenda, it has been one of the main ideologies in global economics 18

http://aussieinnovation.com/content/how-neoliberal-was-margaret-thatcher - accessed on February 6, 2012 19

http://web.inter.nl.net/users/Paul.Treanor/neoliberalism.html - accessed on February 6, 2012 20

http://en.wikipedia.org/wiki/Liberalism#French_Revolution - accessed on February 6, 2012 21

http://www.globalissues.org/article/39/a-primer-on-neoliberalism#PoliticalversusEconomicLiberalism - accessed on February 6, 2012 22

http://www.khbrodbeck.homepage.t-online.de/neolib.htm - accessed on February 6, 2012 23

http://www.globalissues.org/article/39/a-primer-on-neoliberalism#Neoliberalismis - accessed on February 6, 2012 24

http://www.wisegeek.com/what-is-keynesian-economics.htm

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ever since. Elizabeth Martinez and Arnoldo Garcia, activists for the NGO “National Network

for Immigrant and Refugee Rights”, believe among many other critics that the benefits of

neoliberal reforms only arrive at companies and members of the upper class, while workers

suffer from great disadvantages. They argue that companies have less legal requirements to

fulfill certain standards regarding the treatment of their employees and that less state

involvement will also lead to a reduction of public social services. While the latter would in

itself not be a great problem for individuals with sufficient wealth, members of the working

class would be faced with great difficulties.25 Other critics also see neoliberalism, with its

belief in a self-regulating economy, as one of the causes for the financial crisis that started in

2007. As the journalist Anup Shah mentions in an article, even Alan Greenspan, former head

of the US Federal Reserve, who was known to be a supporter of neoliberal ideology,

admitted that he “found a flaw in the model that I [Greenspan] perceived is the critical

functioning structure that defines how the world works, so to speak.”26

2.3.2. Monetarism

Another key part of Thatcher’s economic policy was her belief in monetarism. The main

proposition of Monetarism, which to a great extent was shaped by the American economist

Milton Friedman, is that money supply is the main factor in determining the national output

in the short term and the level of inflation in the long term. He comes to this conclusion by

interpreting the equation of exchange - which is considered valid by most economists,

regardless of their stance on monetarism – in a way that assumes that the amount of times

money changes hands per year is almost the same every year. Through this assumption,

which is doubted by critics of monetarism, especially those who rather believe in a

Keynesian approach, monetarists believe that money supply will either change the price

level or the amount of goods produced each year. Therefore, monetarists argue that

controlling the amount of new money printed by a government should be its main tool to

ensure a stable economy, rather than using fiscal policies. This stance is also caused by the

fact that monetarism, similar to neoliberalism, aims towards a free market with as little

government involvement as possible, since its followers fear that government intervention is

more likely to worsen the state of the economy.27 28 29

According to Friedman’s theory, the ideal monetary policy is having the rate of money supply

steadily rise each year, since this will lead to steady economic growth and prevent high

25

http://corpwatch.org/article.php?id=376 - accessed on February 6, 2012 26

http://www.globalissues.org/article/39/a-primer-on-neoliberalism#GoingbustTheGlobalFinancialCrisisShakesConfidence - accessed on February 6, 2012 27

http://www.econweb.com/MacroWelcome/monetarism/notes.html - accessed on February 9, 2012 28

http://www.investopedia.com/terms/m/monetarism.asp#axzz1lv65TBRl - accessed on February 9, 2012 29

http://www.britannica.com/EBchecked/topic/389146/monetarism - accessed on February 9, 2012

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inflation. However, this interpretation of monetarism proved to be less successful than

expected during the early 1980s when it was most popular, and the direct link between

monetary supply and economic growth rates is doubted by many economists today. 30

30

http://www.investopedia.com/terms/m/monetarism.asp#axzz1lv65TBRl - accessed on February 6, 2012

11

3. Thatcher’s Economic Policy

3.1. Tax and Monetary Policy

Margaret Thatcher’s time as Prime Minister is frequently associated with remembered for

massive tax cuts. However, as economist Bruce Bartlett points out in an article for the New

York Times, this is actually not the case, as for the first seven years of Thatcher’s

government, the total amount of taxes as a percentage of the GDP actually rose, only

declining in the final years of her leadership and still being higher when she left office than

at the time of her inauguration.31 Thatcher’s changes to the tax system show characteristics

of her neoliberal ideology: she believed in the reduction of direct taxes, such as the

progressive income tax, since they, in her opinion, reduce people’s incentive to work harder,

while supporting an increase of indirect taxes like the VAT and other consumption taxes.32

The earliest tax reforms, made in her very first year as Prime Minister, therefore reduced the

maximum rate of the personal income tax from 83% to 60% and its base rate from 33% to

30%, meanwhile increasing the value-added tax from 8% to 15% as well as the motor fuel tax

and the national insurance contributions that were mandatory for every British Citizen.32 This

lead to critique that continued throughout her term in office, which said that through her

changes to the taxation system, she shifted the burden from the rich towards the middle

class and poor, who were mainly affected by the increase of indirect taxes.33 Thatcher

nonetheless continued this policy, increasing both direct income taxes and indirect

consumption taxes in 1981 in order to fight the country’s deficit and steer against rising

inflation numbers. The level of indirect taxes was kept high throughout the 1980s while the

government returned to its policy of cuts on income taxes in the following years. In the

budget of 1988, the highest rate of the income tax was lowered to 40%, the basic rate was

set to 25%.33 34 35

One of Margaret Thatcher’s most frequently debated changes to British tax law was the

introduction of the community charge in the years 1988 to 1990. This tax was introduced in

order to partially fund the services provided by local governments and replaced the system

of rates. Rates were collected from every homeowner and were based on the value of their

property, and since it had been in effect in a similar form since the 17th century and required

regular revaluation of properties which in turn led to much administrative work, it was

31

http://economix.blogs.nytimes.com/2011/07/05/the-legend-of-margaret-thatcher/ - accessed on February 8, 2012 32

http://www.zum.de/whkmla/sp/changhyun/ThatcherPolicies4.html - accessed on February 8, 2012 33

http://en.wikipedia.org/wiki/History_of_taxation_in_the_United_Kingdom#20th_century - accessed on February 8, 2012 34

http://www.margaretthatcher.org/document/111449 - accessed on February 8, 2012 35

http://www.politics.co.uk/reference/income-tax - accessed on February 8, 2012

12

considered outdated by Thatcher.36 37 The new community charge, which is often referred to

as “poll tax” was no longer based on the value of each property, instead using a flat-tax

model according to which every citizen had to pay the amount set by the regional authority.

The only exceptions were students and the unemployed, who had to pay 20% of the set tax.

Not only did the introduction of the community charge lead to new administrative problems

since the records of who lived in which household were disorganized in many parts of Britain

but they also led to mass protests throughout Britain, since many parts of the public saw the

new tax as yet another shift of financial burdens from richer citizens, who had to pay higher

charges under the system of rates due to the larger value of their property, to the average

people, who often had to pay significantly larger amounts into the poll tax regime.37 38

Protests demanding to bring back the old system were held all over Britain in 1990 and

finally culminated in the violent protests at London’s Trafalgar Square on March 31 that are

today known as the Poll Tax Riots and led to more than a hundred people being injured and

many more being arrested. Thatcher still remained stern on introducing the community

charge, in spite of critique arising even from her own party, and this determination to bring

about a reform that is that unpopular is often cited as one of the reasons leading to the

challenge of her leadership of the conservative party followed by her resignation in

November of the same year.38 39 The practice of community charges did not stay in place for

a long time; it was replaced under her successor John Major in 1993 by the council tax, a

system similar to rates, based on the value of residential property.40 41

Thatcher’s policy on the supply of money and interest rates was marked by the fight against

inflation during the first years in office. Following her monetarist ideology (see chapter

2.3.2.), she mainly tried to reduce it by setting fixed goals for the amount of new money

printed while also increasing the interest rates in Britain. While these measures were

successful in reducing inflation, some critics believe that they impeded the growth of the

economy and eventually led to the recession that hit Britain from 1980 to 1982. During her

later years in office, the Prime Minister came to the conclusion that monetary targets were

becoming harder to achieve in the increasingly deregulated economy of Great Britain and

replaced it with a new policy of exchange rate targets. This move was again criticised by

some economists who believed that setting the goal of three D-Mark for one pound was the

main cause that inflation numbers began to rise again in the second half of the 1980s.42 43 44

36

http://en.wikipedia.org/wiki/Rates_%28tax%29#United_Kingdom - accessed on February 8, 2012 37

http://news.bbc.co.uk/onthisday/hi/dates/stories/august/14/newsid_2495000/2495911.stm - accessed on February 8, 2012 38

http://en.wikipedia.org/wiki/Community_Charge - accessed on February 8, 2012 39

http://news.bbc.co.uk/2/hi/uk_news/magazine/8593158.stm - accessed on February 8, 2012 40

http://www.adviceguide.org.uk/index/your_money/tax_index_ew/council_tax.htm - accessed on February 8, 2012 41

http://en.wikipedia.org/wiki/Council_Tax - accessed on February 8, 2012 42

http://www.bized.co.uk/current/mind/2003_4/170504.htm - accessed on February 8, 2012 43

http://econ.economicshelp.org/2010/02/thatcher-revolution-1980s.html - accessed on February 8, 2012

13

3.2. Reform of Social Services and Education

Under Margaret Thatcher, several changes were made to the British Health, Education and

Pension systems. These reforms did not lead to a total change of the way these services

were provided, with all of these services still being chiefly provided by the state itself, but

they did lead to some alterations.45

The National Health Service, commonly abbreviated NHS, was for example restructured

gradually in order to increase the amount of private health services, to introduce elements

of internal competition and increase the NHS’ efficiency. The National Health Service has

been providing healthcare for all British citizens since 1948, with the majority of services

being free of charge, the exception being certain medications, eye treatments and dental

services that are still comparatively cheap. 46 47 One noteworthy difference between the

British public healthcare system and those present in many other European countries,

Austria being one of them, is that it is not funded by social security, but entirely through

taxes.48 49

The reforms were deemed necessary because the way the system was managed was often

criticised, most famously in a report by Roy Griffiths to Parliament in 1984, and because the

amount of money spent to keep up these services was constantly increasing ever since the

establishment of the NHS due to higher costs and demands of the public for more advanced

treatments.50 51 While the first reforms only led to a small increase of privately funded

treatments and did not have any immediate effects on the health system as such, the

measures taken after Griffith’s report was released caused some uproar from doctors and

nurses.50 They led to the replacement of “consensus management” by the newly introduced

practice of “general management”. While “consensus management” meant that decisions

were made by a group that included both members of the medical staff and the

administrative staff, “general management” put one person solely in charge of making

important decisions in a certain hospital or district. This change stirred up fear among some

member of the British medical staff, who feared that they would now be overruled by

44

http://en.wikipedia.org/wiki/Nigel_Lawson#In_government - accessed on February 8, 2012 45

http://politics.beasts.org/scripts/celebrity?celebid=546327666 - accessed on February 8, 2012 46

http://en.wikipedia.org/wiki/National_Health_Service_%28England%29 - accessed on February 8, 2012 47

http://www.nhs.uk/NHSEngland/thenhs/about/Pages/overview.aspx - accessed on February 8, 2012 48

http://www.springermedizin.at/artikel/1738-grossbritannien-holt-im-gesundheitswesen-auf - accessed on February 8, 2012 49

http://www.europarl.europa.eu/workingpapers/saco/pdf/101_en.pdf - accessed on February 8, 2012 50

http://www.hsj.co.uk/resource-centre/best-practice/the-griffiths-report-25-years-on/5001481.article - accessed on February 8, 2012 51

http://www.healthp.org/node/71 - accessed on February 8, 2012

14

managers coming from the private sector with expertise on cost-effectiveness but no

experience in health matters.50

The second important change to the British Healthcare system implemented under Thatcher

was the introduction of an internal market within the NHS, which was put into effect with

the National Health Service and Community Care Act of 1990.52 53 Following its introduction,

the regional health authorities were no longer in charge of directly providing health services

themselves, but had to assess which health services were needed in their respective areas

and negotiate with the local health providers such as hospitals, who were now competing

with each other to get contracted by their regional authorities. To be eligible to offer health

services under the reformed NHS system, health organisations were transformed into so

called “NHS trusts”, enabling them to act more independently, but also making them reliant

on getting enough contracts to stay financially afloat.54 55

Like most of her reforms, Thatcher’s changes of the British health system are viewed with

mixed opinions today, some praising them as a measure to cut the rising costs of the system

while potentially increasing the quality of service for the patients thanks to the introduction

of competition. Critics of her health policy believe that it created regional differences in the

quality of healthcare and that it contradicted the principle of providing the same level of free

healthcare to every British citizen on which the NHS was originally introduced and some of

the changes she introduced were later reverted by the government of New Labour PM Tony

Blair. 53 55 56

Margaret Thatcher’s alterations of the pension system were also aimed at reducing the

amount of money the government had to spend to sustain it. They mainly consisted of two

changes: in 1981, the basic state pension was detached from the average national wages

and linked to average prices of goods instead. Until then, changes in the average wages

automatically led to pensions rising in the same amount, which usually was higher than the

inflation rate.57 58

In 1986, measures were taken that were originally supposed to lead to the abolishment of

the State Earnings Related Pension Scheme (SERPS), which was introduced by the Labour led

52

http://en.wikipedia.org/wiki/National_Health_Service_and_Community_Care_Act_1990 - accessed on February 8, 2012 53

http://news.bbc.co.uk/2/hi/health/background_briefings/your_nhs/85952.stm - accessed on February 8, 2012 54

http://www.nhs.uk/Tools/Documents/HistoryNHS.html - accessed on February 8, 2012 55

http://en.wikipedia.org/wiki/History_of_the_National_Health_Service_%28England%29#Development_of_the_NHS_.28England.29_and_NHS_Wales_since_1970 - accessed on February 8, 2012 56

http://www.nhs.uk/NHSEngland/thenhs/about/Pages/nhscoreprinciples.aspx - accessed on February 8, 2012 57

http://www.watsonwyatt.com/render.asp?id=10187&catid=2 - accessed on February 8, 2012 58

http://www.manhattan-institute.org/html/finkelstein_speech.htm - accessed on February 8, 2012

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government in the 1970s to increase the basic state pensions of people who were not

subject to a pension plan given by their employer. It paid out 25% of the average income

that the retiree received during the best 20 years of earning. In the early 1980s, most

experts came to the conclusion that the costs of this system were much higher than

expected and that it would not be sustainable over a longer period of time. However, since

parts of the public, the political opposition and even insurance companies and some

members of the conservative party were in favour of keeping SERPS, Thatcher could not

entirely dissolve it. The changes introduced with the 1986 Social Security act therefore set

about to convince workers to opt out of SERPS. The possibility of saving a percentage of

one’s pre-tax income into a private pension was introduced, while from 1988 onwards the

amount paid out through SERPS was reduced to 20% of the 20 years with the highest

income. The number of British citizens who chose to abandon SERPS was much larger than

initially expected by the government, which anticipated that 300.000 workers would choose

to leave SERPS by 1988, while in reality the number reached 3.2 million by 1988 and 5.5

million by 1995.57 58 59

The linking of the basic state pension to average prices in 1981 was accepted by most people

since it was introduced in a time where Britain was faced with economic problems caused by

the recession of the early 1980s and it did not create any immediate disadvantages for its

recipients, with the decline of the affected pensions in comparison to the income of an

average worker only becoming visible after some years. The actions set to create and

promote alternatives to SERPS can be seen as successful in convincing many citizens to leave

the state funded program, which was finally abolished in 2002 under Tony Blair’s New

Labour government. However, it also caused disadvantages for many people who left SERPS

due to misinformation and pressure from insurance companies. Some chose to change to a

private pension at a point where they would have received higher pensions from the State

Earnings Related Pension Scheme, while others chose to leave their companies’ pension plan

for a private pension with little or no financial participation from their employer.57 Today, as

the results of Thatcher’s changes to the pension system become fully visible, they are

frequently criticised. The Marxist magazine Gegenstandpunkt, for example, sees Margaret

Thatcher’s government responsible for lowering pensions to a point where “[…] an ordinary

employee’s state pension is frequently below the official poverty line and is supplemented by

welfare benefits so that in the end it barely suffices to scrape a living”.60

Thatcher’s policy on the British Education System can on the one hand be characterised

similarly to her stance on many other services provided by the state. Her goal was to

increase quality while reducing costs and allowing for more competition within the system

59

http://en.wikipedia.org/wiki/State_Earnings-Related_Pension_Scheme - accessed on February 8, 2012 60

http://gegenstandpunkt.com/english/UK-social-reforms.html - accessed on February 8, 2012

16

by giving more possibilities to private institutions and investors. On the other hand, several

steps were taken to reduce “left-wing” ideology that many members of the conservative

party saw within the curriculum and among the staff of the local education authorities,

which were said to be dominated by members of the labour party.61 62

During the 1970s - despite Thatcher’s opposition to the trend during her time as Minister of

Education - the so called “Tripartite system”, where children were split up into three types of

schools according to their abilities after having completed primary education and a final

exam at the age of 11, was replaced by a system of comprehensive secondary schools in

most parts of England.61 63 Still being against this change as Prime Minister, she attempted to

halt it in 1979 by lifting the order to the education authorities to transform all remaining

grammar schools into comprehensive schools, and later, with the Education Reform Act

1988, introduced City Technology Colleges as a new alternative to comprehensive schools.

These Colleges are funded in part by private investors and unlike the other secondary

schools, are not controlled by regional departments but answer directly to the Department

for Education. The introduction of comprehensive education was, however, well received in

Britain at the time, and the number of City Technology Colleges stayed far behind the

government’s expectations, with only 15 opening, most of which converted to the newly

created “academy” system in the early 2000s.62 64

The Education Reform Act 1988 reduced the power of local authorities in other ways as well:

they were now required to take the wishes of students and parents into consideration when

assigning them to secondary schools, a task that until then was done almost automatically.65

Additionally, Local Management was introduced, which allowed schools to control their

budgets on their own, without having to consult their regional education authority first and

schools were given the possibility to become “Grant-maintained schools” if the majority of

parents was in favour of the step. Grant-maintained schools were completely independent

from their local authority and were funded directly by the government. Over the next

decade, a total of about 1200 schools became grant-maintained, until the system was

abolished in 1998 by Tony Blair’s government. 62 66 A “National Curriculum” was also

introduced with the Act of 1988, which both set the values and goals that the British

education system should follow and certain targets in key subjects that students should

meet at the end of each of four key stages.61 62 To assess whether the targets are met,

standard assessment tests were introduced in English, Mathematics and Science. The

61

http://www.educationengland.org.uk/history/chapter08.html - accessed on February 10, 2012 62

http://www.earlhamsociologypages.co.uk/conthatnewright.html#New_Right - accessed on February 10, 2012 63

http://en.wikipedia.org/wiki/Comprehensive_school#United_Kingdom - accessed on February 10, 2012 64

http://en.wikipedia.org/wiki/City_Technology_College - accessed on February 10, 2012 65

http://www.umanitoba.ca/publications/cjeap/articles/younglevin.html - accessed on February 10, 2012 66

http://en.wikipedia.org/wiki/Grant-maintained_school - accessed on February 10, 2012

17

national curriculum is still in practice today in a similar manner to when it was introduced in

1988, although extensive changes are discussed at the moment.67 68

Thatcher’s policy on higher education and universities also led to much controversy since

under her leadership, students and professors perceived their institutes’ budgets as being

significantly lowered, despite contradicting announcements by the government. These

conflicts escalated to the point that in 1985, Oxford University decided not to award an

honorary doctorate to Thatcher in protest of her measures, making her the first Oxford

alumna who became a Prime Minister and did not receive such a degree.69 70 71

3.3. Privatisation and Deregulation

Privatisation and de-nationalisation are among the measures that are most commonly

associated with Margaret Thatcher’s term in office.72 73 However, the very first acts of

privatization in Britain, albeit on a very small scale, were actually committed by the

preceding government led by PM James Callaghan, a member of the Labour party, who sold

a small stake in British Petroleum due to pressure by the IMF in 1977.74 75 Thatcher’s

government itself hardly practiced any kind of privatisation during its first years in office and

the first partial sales of national companies, among them being half the shares of Cable and

Wireless plc. and 51% of Britoil, were not mainly done for ideological reasons, but mainly to

counteract the countries debts after the recession of 1980 and 1981. 75 76 77

Only after the successful sale of 51% of shares of British Telecom to private investors in 1984

- much more stock being requested than available by both British citizens, often investing in

stocks for the first time in their lives and investment banks, did the Thatcher government

decide to make privatisation one of their main political tasks.77 78 79 This was done in order to

67

http://en.wikipedia.org/wiki/National_Curriculum_%28England,_Wales_and_Northern_Ireland%29 - accessed on February 10, 2012 68

http://www.insidegovernment.co.uk/children/reform-curriculum/ - accessed on February 15, 2012 69

http://en.wikipedia.org/wiki/Premiership_of_Margaret_Thatcher#Domestic_criticism - accessed on February 10, 2012 70

http://news.bbc.co.uk/onthisday/hi/dates/stories/january/29/newsid_2506000/2506019.stm - accessed on February 10, 2012 71

http://www.atm.damtp.cam.ac.uk/mcintyre/papers/LHCE/uk-higher-education.html - accessed on February 10, 2012 72

http://www.answers.com/topic/thatcherism-2 - accessed on February 1, 2012 73

http://www.telegraph.co.uk/news/features/3636207/Margaret -Thatcher-Radical-visionary-who-rescued-Britain.html - accessed on February 1, 2012 74

http://www.privatizationbarometer.net/atlas.php?id=9&mn=PM - accessed on February 1, 2012 75

http://www.guardian.co.uk/business/2000/nov/22/thatcher.politics1- accessed on February 1, 2012 76

http://www.bized.co.uk/dataserv/chron/kf80.htm - accessed on February 1, 2012 77

http://www.ft.com/cms/s/0/51ccaa1c-20c2-11e1-816d-00144feabdc0.html - accessed on February 1, 2012 78

http://www.libertystory.net/LSUNFORGETTHATCHER.htm - accessed on February 1, 2012 79

http://news.bbc.co.uk/2/hi/business/4061613.stm - accessed on February 1, 2012

18

increase the efficiency of the British industry and liberalise Britain’s economy, which caused

the process of deregulating and selling state-owned companies to gain pace: in 1985, a law

to deregulate to a great extent the state owned bus services was introduced, in 1986, British

Gas plc. was fully sold on the stock market, in 1987 British Airways and the British Airport

Authority were made public among others and in 1988, British Steel was privatised. 80 81 82

The initial success of the majority of sales of formerly state-owned companies that occurred

during Thatcher’s leadership was partially brought about by advertising campaigns aimed at

convincing British citizens to invest in shares of newly privatised companies, such as the “Tell

Sid” campaign accompanying the sale of British Gas plc..77 81 It also coincided with the

measures of modernisation and deregulation of the London Stock Exchange taken in 1986,

known as the “Big Bang”.83 These reforms were aimed at increasing the competitiveness of

London in comparison to other global financial hubs and created the possibility for banks to

become brokers themselves, while also abolishing fixed commissions for brokers and

introducing an electronic trading system, resulting in a period of growth for the London

Stock Exchange and Britain’s financial sector in general.83 84 85

To account for the loss of direct state control in many parts of the national infrastructure,

several new authorities were set up to regulate the newly created free market such as Ofgas,

Oftel or London Buses Limited.86 87

The effects of Margaret Thatcher’s privatisation policies are still controversially debated

today as opinions differ on whether the results de-nationalisation had on Britain’s economy

are mainly positive or negative. Most analysts agree that Thatcher’s reforms paved the way

for further privatisations enforced by her successors, such as the privatisation of the British

railway system, some viewing her measures as a counterpart to Clement Attlee’s policy, who

started a strong trend towards nationalisation after World War II.88 89 Positive effects that

are attributed to de-nationalisation under Thatcher are the ending of monopolies in many

industries, creating more competition and thus lowering the prices that the consumer has to

pay.82 It is also widely accepted that inconveniences that existed in state-owned companies

such as lack of friendly and efficient customer support or outdated technologies soon

disappeared once these enterprises were sold and faced with private competition.78

80

http://en.wikipedia.org/wiki/Transport_Act_1985 - accessed on February 1, 2012 81

http://www.gasarchive.org/privatisation1.htm - accessed on February 1, 2012 82

http://www.guardian.co.uk/society/2001/mar/20/5 - accessed on February 1, 2012 83

http://financial-dictionary.thefreedictionary.com/Big+Bang- accessed on February 1, 2012 84

http://en.wikipedia.org/wiki/London_Stock_Exchange#.22Big_Bang.22- accessed on February 1, 2012 85

http://wiki.uiowa.edu/display/06e169/The+Big+Bang- accessed on February 1, 2012 86

http://en.wikipedia.org/wiki/Margaret_Thatcher#Domestic_affairs- accessed on February 1, 2012 87

http://en.wikipedia.org/wiki/Privatisation_of_London_bus_services- accessed on February 1, 2012 88

http://www.guardian.co.uk/society/2001/mar/20/5 - accessed on February 1, 2012 89

http://en.wikipedia.org/wiki/Clement_Attlee#Nationalisation - accessed on February 1, 2012

19

Another consequence that is seen positively by Thatcher’s followers is that she increased the

number of private shareholders from 3 million to 11.5 million during her term, which helped

raise support among the public for her actions.90 Critics, however, often argue that many

jobs were lost due to measures set in order to increase efficiency of companies that are now

solely focused on achieving high profits to satisfy their shareholders rather than the interests

of the public.75 Also it is claimed that some corporations were privatised at the cost of their

former identity, often being either merged with international businesses or split up into

several smaller firms. One example for this is British Gas plc. which was restructured and

split into two companies in the years 1996 and 1997. These companies were later

restructured themselves and today, the brand name “British Gas” is used by one of these

companies, Centrica plc..91 Another point of critique is that shares for newly privatized

companies were sold for relatively low prices, which lead to high demand from investors and

positive performance but might have reduced the amount of money gained by the state.75 77

92

3.4. Relationship with Unions

Traditionally strong in Britain, the trade union’s influence on politics was very visible during

the 1970s: a conflict between the conservative prime minister Edward Heath and the

National Union of Mineworkers helped the Labour party return to power by winning both

general elections held in 1974, while the “Winter of Discontent” in 1979 played an important

part in ensuring Margaret Thatcher’s victory in the 1979 general election.93

During Margaret Thatcher’s term in office several measures were taken that reduced the

immunity and influence of British unions: With the Trade Union Act of 1984, they were

required to hold a ballot with a majority of positive votes before declaring a strike94, and

several Employment Acts that set a stricter framework for picketing – the act of protesting

directly in front of a workplace to prevent strike-breakers and customers from entering the

premises- took away parts of the immunity that unions had enjoyed until then. It also limited

the use of the closed shop policy – companies declaring that they would only hire workers

that are member of a union. 95 96 97 98 99 100 The recession of the early 1980s, in combination

90

http://www.heritage.org/research/lecture/what-we-can-learn-from-margaret-thatcher - accessed on February 1, 2012 91

http://en.wikipedia.org/wiki/British_Gas_plc - accessed on February 1, 2012 92

Stewart Morris, ‘Did the Thatcher governments change Britain?’ 93


http://www.legislation.gov.uk/ukpga/1984/49/part/II/1991-02-01?timeline=true&view=plain - accessed on February 1, 2012 95

http://www.legislation.gov.uk/ukpga/1980/42/enacted?view=plain - accessed on February 1, 2012 96

http://www.legislation.gov.uk/ukpga/1982/46/enacted?view=plain - accessed on February 1, 2012 97

http://en.wikipedia.org/wiki/Employment_Act_1982 - accessed on February 1, 2012

20

with the reforms passed by the government that weakened the unions standing, led to a

strong decline of membership among the unions: while during the 1970s about 12 million

workers were union members, this number was almost cut in half by the late 1980s.93

A conflict between Thatcher’s government and the unions that is referred to as “Britain's

most bitter industrial dispute of recent times”101 is the miners’ strike that started in March

1984 and lasted for one year. Starting out as a strike in a single coal mine in Yorkshire, it

soon led to half of Britain’s miners ceasing to work after the British National Coal Board

announced that 20 mines were to be closed, meaning that 20.000 jobs would be axed.102 The

head of the National Union of Mineworkers, Arthur Scargill, called for a national strike on

March 12, 1984. This later proved to be problematic since no ballot was held as the law

would have required, and in some regions the majority of miners were actually in favour of

remaining at work. This led to the appearance of pickets at mines where workers were still

at work and several violent skirmishes with the police.101

During the strike Thatcher’s government employed a hard stance on the union, due to the

fact that in previous years sufficient reserves of coal had been built up.93 Many workers,

however, were faced with the choice of either returning to work or relying on donations in

order to afford their daily expenses and be able feed their families, since they did not get

paid for the duration of the strike, which lasted longer than most workers initially

expected.103 After one year of protesting, the National Union of Mineworkers was faced with

a decline of striking workers and the perspective that continuing the strike was more likely

to worsen matters for its members than to get the employers to change their position.

Therefore, on March 3, 1985 a small majority of union representatives voted in favour of

ending the strike, despite not having reached a compromise with the government.104 105

Margaret Thatcher’s hard stance on the unions was therefore both successful, as she had

“taken on the strongest union in the land and won”101 and caused a significant loss of power

of the unions, but at the same time controversial, as she treated the unions much harsher

98

http://www.businessdictionary.com/definition/picketing.html - accessed on February 1, 2012 99

http://www.direct.gov.uk/en/Employment/TradeUnions/DG_10027549 - accessed on February 1, 2012 100

http://en.wikipedia.org/wiki/Picketing_%28protest%29 - accessed on February 1, 2012 101

http://news.bbc.co.uk/2/hi/uk_news/3494024.stm - accessed on February 1, 2012 102

http://archiveshub.ac.uk/features/mar04.shtml - accessed on February 1, 2012 103

http://www.wcml.org.uk/timeline/1984/ - accessed on February 1, 2012 104

http://www.unionhistory.info/timeline/1960_2000_Narr_Display_2.php?Where=NarTitle+contains+%27The+1984-85+Miners+Strike%27 - accessed on February 1, 2012

105

http://en.wikipedia.org/wiki/UK_miners%27_strike_%281984%E2%80%931985%29#The_formal_end - accessed on February 1, 2012

21

than any of her recent predecessors and even referred to the unions as being “the enemy

within”.106

4. The Influence of Thatcherism on British Politics in Recent Years

In the years after Margaret Thatcher’s departure from office, Britain’s economic policy

continued to move in the direction that she and her government had set. Her conservative

successor John Major did not make any drastic turns from her ideology and Bob Jessop,

Professor at the University of Lancaster says that his government “could be interpreted as

'Thatcherism with a grey face'”.107 As part of his policy, he continued to privatize state-

owned businesses, most famously British Rail in 1994..108 109 110 When the Labour Party, led

by Tony Blair, returned to power in 1997, it had also been affected by the Thatcher era. It

was rebranded as “New Labour” and promoted a so called “third way”, which was set in

between Keynesian politics of government intervention and Neoliberal deregulation.106 111 112 The Labour Party no longer called for measures of redistribution, but did continue to

emphasize the role of the state in economics, with the goal of positioning itself as the new

business party in Britain.113 John Kampfner, journalist for the conservative Daily Telegraph,

arrives at the conclusion that the economic policy of Blair’s New Labour government and its

continuation under Gordon Brown can be seen as Thatcherite. Stressing the fact that state

involvement was only intensified in some select ways such as increasing support for the

unemployed and setting minimum wages, he arrives at the conclusion that “Blair not only

confirmed many of her policies, but in some respects actually took them further […]”.114

Kampfner points out that under New Labour, many elements of Thatcherism were left intact,

for example keeping the unions in check and continuing the support for collaborations of the

state with private investors.

Today’s British government - a coalition between the Conservative Party and the Liberal

Democrats, in office since 2010 and led by Conservative PM David Cameron – which aims to

deal with the consequences of the current global economic crisis with the concept of a “Big

Society” is also attributed with promoting some elements of Thatcherism. The Big Society,

which was the main agenda of the 2010 Conservative election programme, is a plan that is

106

http://www.politicalbiography.co.uk/margaret-thatcher-biography/28-margaret-thatcher-and-the-trade-unions.html - accessed on February 1, 2012 107

Bob Jessop, ‘From Thatcherism to New Labour: Neo-Liberalism, Workfarism, and Labour Market Regulation’ 108

http://en.wikipedia.org/wiki/John_Major - accessed on February 12, 2012 109

http://osb.revues.org/717 - accessed on February 12, 2012 110

http://en.wikipedia.org/wiki/Privatisation_of_British_Rail - accessed on February 15, 2012 111

http://en.wikipedia.org/wiki/Third_way_%28centrism%29 - accessed on February 12, 2012 112


http://www.bbc.co.uk/history/british/modern/thatcherism_01.shtml - accessed on February 12, 2012 114

http://www.telegraph.co.uk/news/newstopics/themargaretthatcheryears/1895878/Margaret-Thatcher-inspiration-to-New-Labour.html - accessed on February 12, 2012

22

promoted by the government as giving more power to local communities. This will be

achieved by reducing centralism and bestowing more power upon the local governments

and authorities as well as private companies and local organisations and charities. These are

to get higher aid by the state for in turn taking on responsibilities that were previously

fulfilled by the welfare state. In 2011, Cameron additionally announced that in the future

private companies and organisations should be able to make offers for taking over almost

any type of public sector work. Because of this practice of increasing private competition to

the public institutions in order to cut costs, many analysts see the government in line with

the privatisation policy of Margaret Thatcher.115 116 117 118

Another part of Cameron’s policy where comparisons between Thatcher and Cameron are

frequently drawn is his reform of the National Health Service. With the Health and Social

Care Bill 2011, Cameron announced plans to greatly restructure the NHS, the biggest

changes being the abolishment of both the strategic health authorities, which distribute the

NHS funds on a regional level and the primary care trusts, which are currently responsible

for planning out the healthcare in their respective areas by commissioning medical care

providers and NHS trusts.119 120 Instead, the budgets are to be distributed to clinical

commissioning groups who take over the responsibilities. Many interpret this as a further act

of privatisation and outsourcing since while these groups are officially to be run by local

General Practitioners, it is expected that private companies will invest and participate in

these groups. 121

While Thatcher herself mainly focused her reforms of the NHS on the introduction of an

internal market and only brought about small steps towards more private money being

involved in the healthcare system, similarities between Cameron’s policy and Thatcherism

can still be found, since his changes would reduce the direct control of public institutions,

handing them over to participants of the free market, one of the main elements of

Thatcherism. However, since the NHS reforms are one of the most fiercely debated parts of

Cameron’s policy, it is not yet known how much of the original plans will be put into practice

once the changes are effective, as the public discussion in Britain is still on-going with parts

of the British public calling for an overhaul of the bill.122 123

115

http://www.wsws.org/articles/2010/jul2010/came-j20.shtml - accessed on February 12, 2012 116

http://en.wikipedia.org/wiki/Big_Society - accessed on February 12, 2012 117

http://www.bbc.co.uk/news/uk-politics-12520491 - accessed on February 12, 2012 118

http://blogs.telegraph.co.uk/news/alexsingleton/100076991/is-david-cameron-reinventing-himself-as-a-thatcherite/ - accessed on February 12, 2012 119

http://en.wikipedia.org/wiki/NHS_strategic_health_authority - accessed on February 12, 2012 120

http://www.nhsconfed.org/Networks/PrimaryCareTrust/AboutThePrimaryCareTrustNetwork/Pages/About-the-Priamary-Care-Trust.aspx - accessed on February 12, 2012 121

http://en.wikipedia.org/wiki/Health_and_Social_Care_Bill_2011 - accessed on February 12, 2012 122

http://www.bbc.co.uk/news/health-16632291 - accessed on February 12, 2012 123

http://www.guardian.co.uk/politics/2012/feb/12/nhs-bill-toxic-conservatives-lansley - accessed on February 12, 2012

23

5. Conclusion

Even to this day there are diverging opinions on the question of whether Margaret

Thatcher’s policy was on the whole a good thing for Britain’s economy. This can be seen, for

example, when looking at the results of a questionnaire among British citizens conducted by

the BBC. Some hail her because they believe that she prepared the British economy for the

future, enabling it to stay competitive by modernising it and reducing the influence of the

unions, which they see as a disadvantage. Other British citizens regard her term as Prime

Minister as a good thing altogether because they were able to personally benefit from it

through investing in shares of newly privatised companies. The people who gave more

critical answers to the BBC mostly dislike exactly these changes: they say that working

conditions tended to become worse and only a relatively small part of the people who

bought stocks really made a significant profit. A number of citizens also mention in their

responses that they generally have the impression that the social climate in the British

society cooled down under Thatcher’s government, with competition increasing while less

opportunities for career and education became available to them.124

Amongst economists and journalists, opinions are split just as much: some praise her, saying

that her reforms modernised Britain and enabled it to stay competitive, creating “popular

capitalism” and inspiring many other countries to turn to Neoliberal policies. Simon Heffer,

author for the Guardian even goes as far as saying that Thatcher as Prime Minister was a

“Radical visionary who rescued Britain”.125 Many critics of her economic policy bring forth

the number of jobs that were lost while Thatcher was in office, as businesses were

privatised, the economy deregulated and the power of the unions greatly reduced. An

article in the New Statesman, for example, states the belief that Thatcher is “still guilty after

all these years“ for bringing about reforms that lead to many societies in cities that were

affected by job cuts being „destroyed“.

The economic indicators during the Thatcher era also allow for different conclusions.

Unemployment numbers, for example, rose sharply in the early 1980s, rising from 1.1 million

in 1979, to a peak level of more than 3 million or 12 per cent of the working population in

1984. Afterwards, the levels started to decline slowly, being at 1.6 million in April 1990, 6

months before the end of Thatcher’s time as Prime Minister.126 127 128 129 The GDP

124

http://news.bbc.co.uk/2/hi/talking_point/1878902.stm - accessed on February 13, 2012 125

http://www.telegraph.co.uk/news/features/3636207/Margaret-Thatcher-Radical-visionary-who-rescued-Britain.html - accessed on February 13, 2012 126

http://news.bbc.co.uk/2/hi/in_depth/4447082.stm - accessed on February 13, 2012 127

http://www.tradingeconomics.com/united-kingdom/unemployment-rate - accessed on February 13, 2012 128

http://www.bized.co.uk/dataserv/chron/kf80.htm - accessed on February 13, 2012 129

http://www.bized.co.uk/dataserv/chron/kf90all.htm - accessed on February 13, 2012

24

meanwhile developed very differently: it initially sank in the years of the recession in Britain,

1980 to 1982, and then continuously grew until Thatcher resigned.130

In the end, it is up to the individual to decide whether one approves of Thatcherism or not,

depending on one’s ideology and stance on government involvement, union policy and

neoliberal politics in general. However, one thing that certainly becomes clear when

researching opinions on Thatcher’s policy is that her leadership polarises, and as stated in

the beginning of this work, only very few people who did some research on her policies stay

indifferent to what she did.

130

http://news.bbc.co.uk/2/hi/in_depth/4447082.stm - accessed on February 13, 2012

25

6. Abstract

Die vorliegende Fachbereichsarbeit beschäftigt sich mit der Wirtschaftspolitik Margaret

Thatchers, die von 1979 bis 1990 Premierministerin des Vereinigten Königreichs war. Nach

einer kurzen Zusammenfassung der Biografie und der Aufzählung einiger Höhepunkte ihrer

Amtszeit, die nicht ökonomischer Natur sind, wird die Situation der britischen Wirtschaft in

der Zeit vor Thatchers Amtsantritt skizziert, die unter anderem durch Probleme mit dem

Staatshaushalt und Konflikte mit den Gewerkschaften gekennzeichnet war. Der weitere Teil

der Einleitung erklärt die Bedeutung von Neoliberalismus und Monetarismus, welche

bedeutende Elemente in Thatchers Ideologie waren.

Im Hauptteil wird auf die einzelnen wirtschaftspolitischen Reformen der Politikerin und

deren Auswirkungen eingegangen. Ihre Geldmittel- und Steuerpolitik, die vor allem auf eine

Veränderung der Last von direkten auf indirekten Steuern hinauslief, sowie Thatchers

Veränderungen am Gesundheits-, Pensions- und Bildungssystem werden beschrieben. Jede

der drei letztgenannten Reformen hatte das Ziel, die Ausgaben des Staates zu senken, im

Bildungs- und Gesundheitswesen sollte außerdem mehr Konkurrenz – auch durch private

Anbieter – und Entscheidungsfreiheit erzielt werden. Im Gesundheitssystem, das in

Großbritannien unter dem Namen „National Health Service“ betrieben wird, wurde

beispielsweise ein „interner Markt“ eingeführt, um Leistungen künftig günstiger zu erhalten.

Im Kapitel über Privatisierungen und Deregulierungen in Großbritannien wird der von

Thatcher eingeschlagene Weg von einer zu großen Teilen aus verstaatlichten Betrieben

bestehenden, hin zu einer größtenteils privatisierten Wirtschaft skizziert. Im letzten

Abschnitt des Hauptteils gehe ich auf die Konflikte zwischen Margaret Thatchers Regierung

und den Gewerkschaften ein, auf die Reformen, die den Einfluss der Organisationen

schwächten und insbesondere auf den Streik der Minenarbeiter in den Jahren 1984 – 1985.

Dieser Konflikt, der als Protest gegen Schließungen von Minen begann, wurde von beiden

Seiten mit aller Härte ausgefochten und endete schließlich in einer Niederlage der

Gewerkschaft, die den Protest nach einem Jahr aufgeben musste, ohne ein Einlenken der

Arbeitgeberseite erzielt zu haben.

Im vorletzten Kapitel gehe ich der Frage nach, welche Auswirkungen Thatchers Politik auf die

ihr nachfolgenden Regierungen hatte. Die Ähnlichkeiten und Unterschiede des

Thatcherismus zu Tony Blairs und Gordon Browns „New Labour“ werden erläutert, bevor

schließlich auf die heutige britische Regierung unter dem konservativen Premierminister

David Cameron eingegangen wird. Bei deren Programm sind Ähnlichkeiten zu den Reformen

Margaret Thatchers vor allem in geplanten Ausschreibungen öffentlicher Dienstleistungen

an private Anbieter sowie in tief greifenden Änderungen des Gesundheitssystems, die im

Moment in England heftig debattiert werden, zu finden.

26

Im abschließenden Kapitel der Arbeit werden sowohl positive und negative Stimmen aus der

Bevölkerung als auch kritische und lobende Kommentare von Wirtschaftsjournalisten

zusammengefasst, um zu verdeutlichen, wie kontroversiell der Thatcherismus noch heute

betrachtet wird.

27

7. List of Sources

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28

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29

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64. http://en.wikipedia.org/wiki/City_Technology_College - accessed on February 10, 2012

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66. http://en.wikipedia.org/wiki/Grant-maintained_school - accessed on February 10, 2012

67. http://en.wikipedia.org/wiki/National_Curriculum_%28England,_Wales_and_Northern_Ireland%29 - accessed on February 10, 2012

68. http://www.insidegovernment.co.uk/children/reform-curriculum/ - accessed on February 15, 2012

69. http://en.wikipedia.org/wiki/Premiership_of_Margaret_Thatcher#Domestic_criticism - accessed on February 10, 2012

30

70. http://news.bbc.co.uk/onthisday/hi/dates/stories/january/29/newsid_2506000/2506019.stm - accessed on February 10, 2012

71. http://www.atm.damtp.cam.ac.uk/mcintyre/papers/LHCE/uk-higher-education.html - accessed on February 10, 2012

72. http://www.answers.com/topic/thatcherism-2 - accessed on February 1, 2012

73. http://www.telegraph.co.uk/news/features/3636207/Margaret -Thatcher-Radical-visionary-who-rescued-Britain.html - accessed on February 1, 2012

74. http://www.privatizationbarometer.net/atlas.php?id=9&mn=PM - accessed on February 1, 2012

75. http://www.guardian.co.uk/business/2000/nov/22/thatcher.politics1- accessed on February 1, 2012

76. http://www.bized.co.uk/dataserv/chron/kf80.htm - accessed on February 1, 2012

77. http://www.ft.com/cms/s/0/51ccaa1c-20c2-11e1-816d-00144feabdc0.html - accessed on February 1, 2012

78. http://www.libertystory.net/LSUNFORGETTHATCHER.htm - accessed on February 1, 2012

79. http://news.bbc.co.uk/2/hi/business/4061613.stm - accessed on February 1, 2012

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81. http://www.gasarchive.org/privatisation1.htm - accessed on February 1, 2012

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83. http://financial-dictionary.thefreedictionary.com/Big+Bang- accessed on February 1, 2012

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89. http://en.wikipedia.org/wiki/Clement_Attlee#Nationalisation - accessed on February 1, 2012

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92. Stewart Morris, ‘Did the Thatcher governments change Britain?’


94. http://www.legislation.gov.uk/ukpga/1984/49/part/II/1991-02-01?timeline=true&view=plain -


95. http://www.legislation.gov.uk/ukpga/1980/42/enacted?view=plain - accessed on February 1, 2012

31

96. http://www.legislation.gov.uk/ukpga/1982/46/enacted?view=plain - accessed on February 1, 2012

97. http://en.wikipedia.org/wiki/Employment_Act_1982 - accessed on February 1, 2012

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104. http://www.unionhistory.info/timeline/1960_2000_Narr_Display_2.php?Where=NarTitle+contains+%27The+1984-85+Miners+Strike%27 - accessed on February 1, 2012

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107. Bob Jessop, ‘From Thatcherism to New Labour: Neo-Liberalism, Workfarism, and Labour Market Regulation’ published by the Department of Sociology, Lancaster University at: http://www.comp.lancs.ac.uk/sociology/soc131rj.pdf

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111. http://en.wikipedia.org/wiki/Third_way_%28centrism%29 - accessed on February 12, 2012


113. http://www.bbc.co.uk/history/british/modern/thatcherism_01.shtml - accessed on February 12, 2012

114. http://www.telegraph.co.uk/news/newstopics/themargaretthatcheryears/1895878/Margaret-Thatcher-inspiration-to-New-Labour.html - accessed on February 12, 2012

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119. http://en.wikipedia.org/wiki/NHS_strategic_health_authority - accessed on February 12, 2012

32

120. http://www.nhsconfed.org/Networks/PrimaryCareTrust/AboutThePrimaryCareTrustNetwork/Pages/About-the-Priamary-Care-Trust.aspx - accessed on February 12, 2012

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Image source (front page):

1. http://aprnonline.com/?p=88266 - accessed at February 14, 2012

33

8. Work Log

May 2011: Decision to write FBA, some initial research

August-September 2011: Collection of sources, finalisation of the exact topic, creation of

bullet points of the paper’s content

December 2011: Work on introduction, research on privatisation and Margaret Thatcher’s

relationship with unions

January 2012: research on Thatcher’s ideology, tax and monetary policy and her reforms of

the British educational system and the National Health Service

January 15, 2012: Completion of the first draft of the chapter on unions

January 31, 2012: Completion of the first draft of the chapter on privatisation and

deregulation

February 2012: Completion of remaining chapters on Thatcher’s policy and ideology,

research on Thatcher’s impact on British politics today

February 12, 2012: Completion of chapter on Thatcher’s impact on British politics today

February 13, 2012: Creation of preface and conclusion

February 14 - 15, 2012: Final corrections

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