What impact did Thatcher’s governments (1979-90) have on
Britain, 1979-90? (HISTORICAL INTERPRETATIONS)
❖ The effect of Thatcher’s economic policies
❖The extent to which state intervention and the public sector were
‘rolled-back’
❖ The extent of political and social division within Britain
❖ The effect of Thatcherism on politics and party development
1. The effect of Thatcher’s economic policies
Thatcher’s first priority was the economy when she became in power.
Thatcher’s beliefs
Her ideas were radically different from mainstream conservative ideas. The term ‘Thatcherism’
was a series of ideas or principles that inspired Thatcher throughout her terms.
Conviction politics
Thatcher believed that politics should be rooted in the fundamental beliefs of political leaders.
Thatcher rejected consensus politics, believing that sticking to principles was more
important. She viewed finding consensus as morally wrong.
→ She believed that one of the main problems with post-war politics was that politicians
sought consensus rather than doing the right thing.
Thatcher’s economic outlook
She was against high levels of tax, debt and unions. She thought her ideas were common
sense rather than an ideology.
● Firstly, Thatcher believed that everyone should work hard in order to earn a living.
● Secondly, hard work should be rewarded. She wanted low income taxes because tax
prevented people earning the money they earned
● Thirdly, the key to economic growth was individual enterprise
As a result of these basic economic ideas, Thatcher and many from the party believed that
government spending had to be cut as it required high tax. She also believed that unions
interfered with the free market.
The rule of law
She was a believer in the rule of law. People should obey the law.
,→ She disliked radical forms of protests like strikes. She believed that change should
come from elections. She rejected these forms of protest because they were most likely used
by unions, feminists or black rights groups.
Nationalism
She was a believer of Britishness. British people should celebrate their culture and rights.
The origin and evolution of Thatcher’s views on the economy (the effects)
What she wanted to achieve was:
➔ Lifting tax burden on successful business people
➔ Promoting growth and investment by cutting red tape
➔ Overcome inefficiencies of state-owned industry
Before any of this was possible, Thatcher had to tackle the ‘evil’ of inflation to put the
economy on a stable path.
Economic change 1979-90
Monetarism 1980-82
The fight against inflation
Monetarism (priority on controlling inflation over controlling unemployment). Her initial
measure was tax rises and spending cuts.
● Thatcher believed that access to money should be cut, which meant raising
interest rates and many companies struggled to survive.
● She refused to print money to cover inflation, she placed her trust in the economic
policies of a few experts, but the key problem was that no one was quite sure what the
best measure to tackle inflation
Taxation
Her first policy to tackle inflation was to change the tax system. They raised the VAT, at the
same time, they lowered taxation and cutting the standard rate of income tax.
➔ Cutting income tax helped the rich who had higher incomes than the poor.
Spending cuts
She focused on public spending cuts to rebalance the economy.
Thatcher’s 1981 budget was a turning point. New taxes were introduced on North Sea oil
(this became a major source of income for Thatcher’s government) and taxes went up by £4
billion. At the same time, she introduced cuts in education, health and benefits.
➔ There were unpopular cuts to housing and social security which had negative
consequences, there were riots
By 1982, unemployment rose to over 3 million, the highest figure since 1930.
, Nationalised industry 1979-82
She disliked state-run industries because they were less efficient than private industries as
they didn’t have to make profit. To reduce government spending on nationalised industries,
she appointed Sir Keith Joseph as secretary of state for industry,
Joseph allowed some of Britain’s national industries to decline. Therefore, timetables were
set for industries to become more efficient and start making money, this meant laying off large
numbers of workers to cut wage bills. Joseph was only willing to invest government money
in nationalised industries in return for guaranteed job losses.
Supply side economics 1982-87
Supply side is an economic theory that governments should encourage production, they should
do this by cutting taxes and removing regulations.
→ A range of supply-side policies was introduced to replace monetarism, this included
cuts to income tax, cuts to welfare
Tax cuts
She didn’t believe that taxes should be used to take money from the rich to subsidise the poor.
She wanted tax cuts for the wealthy to promote investment and more government
income.
● VAT increased, both VAT and National Insurance are regressive taxes, they take a
higher amount of income from the poor than the rich. This shift in the tax burden from
direct to indirect taxes contributed to the growing gap between the rich and poor
Privatisation under Thatcher
This was another one of Thatcher’s economic policies. It was a process where state-owned
businesses were sold to private shareholders.
● she believed that returning companies to the private sector would make them more
profitable and efficient
● Government tried to encourage people to buy shares, the policy was an attempt to
create ‘popular capitalism’, in which larger proportion of society owned shares. Buying
shares was popular because the government tended to sell shares below the market
rate.
● Privatisation was slow, but quickened the pace in her second term.
The Conservative government privatised:
➔ British gas
➔ British telecom
➔ Car manufacturer Jaguar
The privatisation of British Gas raised over £5 billion for the government.
Shares were sold cheaply to ensure quick sale. Over 11 million were shareowners.
Britain, 1979-90? (HISTORICAL INTERPRETATIONS)
❖ The effect of Thatcher’s economic policies
❖The extent to which state intervention and the public sector were
‘rolled-back’
❖ The extent of political and social division within Britain
❖ The effect of Thatcherism on politics and party development
1. The effect of Thatcher’s economic policies
Thatcher’s first priority was the economy when she became in power.
Thatcher’s beliefs
Her ideas were radically different from mainstream conservative ideas. The term ‘Thatcherism’
was a series of ideas or principles that inspired Thatcher throughout her terms.
Conviction politics
Thatcher believed that politics should be rooted in the fundamental beliefs of political leaders.
Thatcher rejected consensus politics, believing that sticking to principles was more
important. She viewed finding consensus as morally wrong.
→ She believed that one of the main problems with post-war politics was that politicians
sought consensus rather than doing the right thing.
Thatcher’s economic outlook
She was against high levels of tax, debt and unions. She thought her ideas were common
sense rather than an ideology.
● Firstly, Thatcher believed that everyone should work hard in order to earn a living.
● Secondly, hard work should be rewarded. She wanted low income taxes because tax
prevented people earning the money they earned
● Thirdly, the key to economic growth was individual enterprise
As a result of these basic economic ideas, Thatcher and many from the party believed that
government spending had to be cut as it required high tax. She also believed that unions
interfered with the free market.
The rule of law
She was a believer in the rule of law. People should obey the law.
,→ She disliked radical forms of protests like strikes. She believed that change should
come from elections. She rejected these forms of protest because they were most likely used
by unions, feminists or black rights groups.
Nationalism
She was a believer of Britishness. British people should celebrate their culture and rights.
The origin and evolution of Thatcher’s views on the economy (the effects)
What she wanted to achieve was:
➔ Lifting tax burden on successful business people
➔ Promoting growth and investment by cutting red tape
➔ Overcome inefficiencies of state-owned industry
Before any of this was possible, Thatcher had to tackle the ‘evil’ of inflation to put the
economy on a stable path.
Economic change 1979-90
Monetarism 1980-82
The fight against inflation
Monetarism (priority on controlling inflation over controlling unemployment). Her initial
measure was tax rises and spending cuts.
● Thatcher believed that access to money should be cut, which meant raising
interest rates and many companies struggled to survive.
● She refused to print money to cover inflation, she placed her trust in the economic
policies of a few experts, but the key problem was that no one was quite sure what the
best measure to tackle inflation
Taxation
Her first policy to tackle inflation was to change the tax system. They raised the VAT, at the
same time, they lowered taxation and cutting the standard rate of income tax.
➔ Cutting income tax helped the rich who had higher incomes than the poor.
Spending cuts
She focused on public spending cuts to rebalance the economy.
Thatcher’s 1981 budget was a turning point. New taxes were introduced on North Sea oil
(this became a major source of income for Thatcher’s government) and taxes went up by £4
billion. At the same time, she introduced cuts in education, health and benefits.
➔ There were unpopular cuts to housing and social security which had negative
consequences, there were riots
By 1982, unemployment rose to over 3 million, the highest figure since 1930.
, Nationalised industry 1979-82
She disliked state-run industries because they were less efficient than private industries as
they didn’t have to make profit. To reduce government spending on nationalised industries,
she appointed Sir Keith Joseph as secretary of state for industry,
Joseph allowed some of Britain’s national industries to decline. Therefore, timetables were
set for industries to become more efficient and start making money, this meant laying off large
numbers of workers to cut wage bills. Joseph was only willing to invest government money
in nationalised industries in return for guaranteed job losses.
Supply side economics 1982-87
Supply side is an economic theory that governments should encourage production, they should
do this by cutting taxes and removing regulations.
→ A range of supply-side policies was introduced to replace monetarism, this included
cuts to income tax, cuts to welfare
Tax cuts
She didn’t believe that taxes should be used to take money from the rich to subsidise the poor.
She wanted tax cuts for the wealthy to promote investment and more government
income.
● VAT increased, both VAT and National Insurance are regressive taxes, they take a
higher amount of income from the poor than the rich. This shift in the tax burden from
direct to indirect taxes contributed to the growing gap between the rich and poor
Privatisation under Thatcher
This was another one of Thatcher’s economic policies. It was a process where state-owned
businesses were sold to private shareholders.
● she believed that returning companies to the private sector would make them more
profitable and efficient
● Government tried to encourage people to buy shares, the policy was an attempt to
create ‘popular capitalism’, in which larger proportion of society owned shares. Buying
shares was popular because the government tended to sell shares below the market
rate.
● Privatisation was slow, but quickened the pace in her second term.
The Conservative government privatised:
➔ British gas
➔ British telecom
➔ Car manufacturer Jaguar
The privatisation of British Gas raised over £5 billion for the government.
Shares were sold cheaply to ensure quick sale. Over 11 million were shareowners.
