The fall of the labour government ended the era of post-war consensus that reigned Britain for over 30 years. Prior to the election of Margaret Thatcher in 1979, Britain gained high levels of unemployment, industrial unrest and inflation which led to the desperate need of radical change. Indeed, the election in 1979 covered fundamental reforms in all areas of society which was referred to by historians as the ‘Thatcher revolution’. It can clearly be said that Thatcher did represent a ‘revolution’ of economic management as the Thatcherite policy transformed Britain to a post-industrial economy and had altered many aspects of it which in turn brought about much needed modernisation to Britain against the consensus which had previously been developed. Despite this widespread view, one cannot solely say that Thatcher revolutionised Britain alone, events such as the Falkland’s War and the discovery of North Sea Oil evidently helped her in improving the nation. Thus, the extensiveness of Thatcherism means that one cannot say the revolution was a failure. I will begin by discussing that the economic reforms put forward had the most substantial impact in modernising Britain. I will then move on to the impact political reforms made such as the civil service and industrial relations and will finally move on to the changes made regarding the welfare state.
The economic reforms that Thatcher proposed revolutionised facets of that sector entirely, with the privatisation of many industries, the success in weakening the power of the trade unions and the pursuing of a new Monetarist policy – removing the post-war Keynesian consensus. Monetarism was achieved with the implementation of a taxation rise, expenditure cuts, interest rates increasing, the pound appreciated and the money supply being managed. In a third election campaign of 1987; Thatcher could state her early aims were achieved as the economy was humming and inflation was kept under control, the pound was strong, banks were lending freely to businesses, consumers were spending and exports were increasing. Although, successful in reducing inflation, unemployment soared and in January 1983 3.2 million people were out of work – the highest since the war. Indeed, there was a certain need to tackle inflation in the late 1970’s and Thatcher was fortunate to have The Falklands war perfectly timed to give her an unexpected landslide in the 1983 election and the public finances also received a huge boost from oil revenues in which 10% of tax revenues were coming from oil in the early 1980s. This enabled a wave of tax cuts – mostly on income tax for high earners. Therefore, the discovery of North Sea Oil was extremely helpful to the Thatcher government as it gave Britain an alternative energy source to replace Britain’s ineffective and uncompetitive coal industry. Britain’s victory in the Falkland’s War also significantly helped the government in gaining popularity and thus revolutionising modern Britain. Despite the fact that Thatcher was certainly lucky and opportunistic, one cannot attribute the comprehensive nature of her economic success to these factors: the 1980s revolution was truly a “Thatcher revolution”.
New market based supply-side policies was a key element of Thatcher’s economics. Privatisation was the most conspicuously successful supply-side aspect which involved key public sector industries where the shares of big companies like BP, BT, British Gas and British Airways were sold to the general public. These shares were often sold below market value, and when companies floated, stockholders immediately experienced an increase in wealth. Thatcher came to see herself as having a mission to reverse the Atlee government’s great swathe of nationalisation, vital in reducing the size of the state sector and increasing the size of the more efficient private sector, but also as a means of spreading share ownership which was part of her ‘popular capitalism’ vision. Privatisation was considered as the ‘most far-reaching achievement of the Thatcher era’ according to an experienced commentator. The £3,900 million sale of British Telecom in 1984 was a turning point, and she was attracted to the growing public demand for shares, profits for the government and the transfer of state assets to private hands. Taking major assets out of public ownership reduced government debt and raised revenue to fund popular cuts in the direct rate of income tax. It amassed nearly £19 billion by 1987 and had the added benefit of being popular across the Conservative party. Evidently, privatisation had a huge effect on the global economy; it stimulated economic growth and improved living standards as privatised businesses cut costs, increased service quality and innovated. To claim that Thatcherism was a failed revolution would be completely false as Thatcher can be said to have changed the industrial structure of Britain as well as many other countries and created a new orthodoxy of ownership which proved to be durable and adaptable.
Significant political changes were made during Thatcher’s terms as prime minister especially towards government ethic, i.e. the civil service. She was determined to reduce the number and power of civil servants, convinced they did not create wealth but reduced it. Wilson, Heath and Callaghan previously tried to reform the civil service and believed they also lacked skills essential for the modern world however; Thatcher made severe cuts and transferred responsibilities to the private sector. She appointed Derek Rayner from Marks and Spencer’s to run an Efficiency unit to eliminate the ineffectiveness of government administration. From 1979 to 1984, 90 multi-departmental reviews and a total of 266 scrutinies took place and identified 600 million pounds worth of saving. The Management Information System for Ministers was also created to document past, present and future activities of each department which then enabled them to make cuts to manning levels. And Thatcher was able to reduce the number of civil servants from 732,000 to 624,000 in her first four years in office. The government emphasised through their policies that efficient management was important in reviving the nation and those management ethics taken from the private sector should be the main motivation of public institutions. It is clear from the aforementioned analysis that Thatcher’s policies to reform the civil service represented a clear break with the past and a number of her policies were continued under her predecessors, suggesting her revolution wasn’t a failure. However, concluding that changes to the civil service since the 1980s are a direct legacy of Thatcherism would be missing some of the other major influences on civil service reform as certainly, there were other influences that brought about the transformation of this sector.
Much has changed in Britain since 1979. In particular, the political role of unions has altered substantially. Another priority Thatcher had was to ‘reform’, that is, crush the unions. Her government pursued a political strategy involving the exclusion of trade unions from policy-making; the introduction of major industrial relations legislation designed to curb union power and the assertion of government authority in relation to powerful unions. Five major pieces of legislation were passed between 1979 and 1990 which significantly changed the legal position of unions as two features were crucial; the removal of the blanket immunity, which unions had enjoyed since the 1906 Trade Dispute Act, made unions liable for civil action in tort and, as such, claims for damages for losses incurred in a illegal strike could be pursued against the funds of the unions. The government were also able to successfully resist a number of public sector strikes, notably the 1984-5 miners’ strike. This reinforced its image of governing competence and helped confirm the triumph of ‘new realism’ in the trade union movement. There is no doubt that Thatcher’s government successfully reasserted the authority of government in relation to trade unions. Not only had unions had little effect on policy, but as legislation had been passed, to a large extent, were complied with by the unions. Therefore, Thatcher’s revolution wasn’t a failure; unions in 1991 were infrequently consulted and had very little influence. In addition, the legislative framework within which unions operate was very different; their activities were much more circumscribed by the law than previously. Despite this, much less has changed on the shopfloor; as there is limited evidence of a major move to derecognise unions or restrict collective bargaining.
Thatcher believed that ‘Welfare benefits, distributed with little or no consideration of their effects on behaviour, encouraged illegitimacy, facilitated the breakdown of families, and replaced incentives favouring work and self-reliance with perverse encouragement for idleness and cheating’. She was encouraged to make radical cutbacks to the Welfare state by poll evidence of declining public support for social spending, from 44 per cent to 22 per cent since 1969, though support for the NHS and other universal services remained high. She proceeded to remove the ‘safety’ net which had protected those with the lowest incomes as affluence was increasing. The first target for cuts was social security where income-related, short-term unemployment and sickness benefits were axed. From 1982 benefits were uprated in line with prices not earnings, ensuring lower rises. Pensions fell from over 23 per cent of average male earnings in 1981 to 15 per cent in 1993, cutting the cost by one third. Changes were also made regarding education and schooling. Thatcher was able to shift the responsibility of welfare from the state to personal, private and voluntary organisations which would be more efficient and effective. Although, the changes made effected families that previously received benefits as it made them poorer, it is argued that these changes to social policy left women in a stronger position by the end of the Conservative era due to improved access to work and enabled lone mothers to do paid work which made women less dependent within families. Moreover, the privatisation of public council housing was seen as a gain.