The First Thatcher Government 197983 Thatcher embarked on

The First Thatcher Government, 197983

Thatcher embarked on an economic experiment called ‘monetarism’ • Aim – to cut inflation • How? Less government borrowing and cuts in public spending. • Never been tried in a democracy, only in Chile (ruled by the dictator Pinochet)

The economic revolution • • • Monetarism would end wasteful government spending. Thatcher believed Heath and Macmillan had strayed too close to socialism with their consensus approach. Thatcher wanted to promote a competitive spirit rather than see the state subsidise unprofitable industries. An end to state intervention (especially stop-go), and let market forces dictate the economy. In 1979 income tax was cut from 33% to 30%. Individuals and companies could keep more of their own money > less money to state > forces cuts in public spending Increase in VAT e. g. 1979 budget saw increase from 8% to 15%. People should be taxed as little as possible on what they earn, and pay more tax on what they choose to buy. So a clear move away from consensus politics. pp 117 -119. Assess the impact of monetarism.

However, during this first administration created many • High monetarism interest rates prevented people problems from borrowing and the govt was unwilling to help. By the end of 1982 25% of British manufacturing was destroyed and 3. 3 m unemployed. • Industrial production fell e. g. steel cut by 30%. Many steelworks closed, esp. in south Wales, the north, Scotland the Midlands. • This commitment to monetarism contributed to a polarisation of society e. g. 60% blacks unemployed, parts of Liverpool experienced 60% adult male unemployment. Riots across UK in 1980 and 81, notably in Toxteth, Liverpool.

Impact on the Conservatives • • • Opinion polls showed Thatcher to be the most unpopular PM since polls began. The Party itself was third in the polls. In 1980 364 leading economists wrote to the national broadsheets denouncing the monetarist approach. She stuck to her policies and told a party conference in October 1980, ‘you turn if you want to. The lady’s not for turning’. MT seemed unconcerned by the plight of the 3 m unemployed Michael Heseltine was concerned. Went to Liverpool many times and recommended aid to industrial areas ravaged by unemployment. Many within Cabinet supported him. (Archive Trust) Lost a number of by-elections e. g. Crosby -. a 19, 000 Conservative majority was overturned into a 5, 000 majority for newly-formed SDP. Also lost Croydon and Glasgow

Read pages 122 -125. Describe the impact of Thatcher’s economic policy INFLATION RECESSION BANKRUPTCY REGIONAL UNEMPLOYMENT DE-INDUSTRIALISATION MANAGED DECLINE ECONOMIC REALIGNMENT RIOTS Y. E. S. NORTH-SOUTH DIVIDE SCARMAN REPORT REGENERATION

Thatcher tackled the unions • ‘unfinished business’ Why? • 1980 Employment Act: restricted picketing to the pickets’ own place of work i. e. banned flying pickets • 1982 Employment Act: TUs could be fined for unlawful strikes (must be a ballot). Strikes could no longer be held during employer/union negotiations • 1983 election manifesto promised tougher action on unions • Working days lost through strikes: 1980 (12 m), 1981 (4 m), 1983 (3. 7 m). • laying down foundations for future action against the unions.

A summary of her first government. • Ever since WW 2 aim for both political parties had been full employment and welfare. Monetarism and tackling the unions marked the end of the post-war consensus