Thatcher
Her key policies:
End trade unions in order to promote individualism
Overcome the inefficiencies of state-owned industry
Promote growth and investment by reducing regulations and lifting
the tax burden on successful businesspeople
Foster a greater sense of public participation in the economy
through ownership of shares and property
The Fight Against Inflation
Inflation 1978: inflation stood at 11% but had doubled to 22%
by 1980 – largely due to spiralling pay demands
Thatcher refused to print money to cover inflation as
it punished her ‘careful savers’ and rewarded
‘reckless borrowers’
Continued with the policies of her predecessors
- Awarded public sector workers 25% pay rise
- Allowed an above-inflation pay settlement of 16%
to end a steel strike
Imposition of To control how much money was in circulation
Monetarist Supply-side politics introduced to replace monetarism
Policies In Divided the government
1980 and its
Impact
Monetarist Cut government expenditure
1981 Budget Increased indirect taxes- a packet of cigarettes rose
from 14p to 80p
Monetarist policy
Took £4b out of the economy
Effect of the Riots in several cities – Brixton in London
1981 Budget 1980-81 – manufacturing production fell by 14%
1982 – unemployment had risen to over 3m
Inflation stays single digits for the rest of the 80s
Successes in Dealing with Failures in Dealing with Inflation
Inflation
ü Reduced to single figures and û Monetarist policies caused
remains here for the majority of unemployment to spike over
her time in office 3m in 1982
ü Took £4b out of the economy û Social unrest – riots in Brixton
ü GDP began to grow from -0.7% û Manufacturing production fell
in the first quarter of 1981 to û Cabinet split
1.3% by the second quarter of û Unemployment benefits forced
1982 up government spending
û 1979 inflation was 10.3% and
was 10.9% in 1990 – no real
change
, û 1980 – inflation rose to 22%
û 1980-81 – Britain may have lost
as much as 25% of its
manufacturing base
Popular Capitalism – idea that everyone in society should have
the opportunity to own property and own shares in companies,
aiming to create a wide spread of privately owned wealth
Supply Side Economics – policies that boost economic growth by
increasing the supply of goods and services
Privatisation
Why did Would cut government expenditure on loss-
Thatcher think making industries and cut the number of civil
this would be servants by replacing them with private
beneficial? employees
To reinvigorate the economy by promoting
competition and innovation
Revenue generate by sale of state assets would
fund a reduction in tax
Help to create a wider ownership of shares –
incentive to work harder
Privatisation Sale of British Telecom in 1984 and British Gas
Gathering in 1986 that really saw the launch of ‘popular
Pace capitalism’
Shares sold cheaply to ensure a quick sale and
wide take-up
- 1979 – 1990: number of shareholders
increased from 3m to 11m
Impact of Uneven distribution of shares
Privatisation - Only 9% of unskilled male workers
- 1/2 all professional males
Most shares went to investment firms
- Individuals owned 38% shares in 1975 but
only 20% by 1990
Most successful aspect of popular capitalism
was the sale of council houses – over 1m sold
1979-88
£19b raised by selling state assets that were
used to pay for tax cuts – Macmillan compared
to ‘selling the family siler’
Privatisation Privatisation of rail between 1994-97 –
After Thatcher government continued to subsidise private
firms that operate the trains
- Government spending on trains has doubled
since 1994
Private Finance Initiative under John Major in
1992
- Public-private partnerships designed to
inject private funding and expertise into
, traditionally state-run concerns
Clear by 1997 that future generations of
taxpayers would have to pay a huge amount of
money to the private firms who put in the initial
investment
Successes of Privatisation Failures of Privatisation
ü £19b raised by the sale of û Uneven distribution of shares
state assets – able to fund û Failure of popular capitalism
tax cuts – only 20% of shares owned
ü BT privatisation led to better by individuals in 1990
customer service – û Privatisation of British Rail
previously customers had to had not improved service
wait 6 months for the û Led to prices increasing
installation of a BT line, faster than inflation – gas
today they are installed and water
within 15 minutes û ‘Selling off the family silver’
ü Number of shareholders went û Unemployment – 200,000
from 3m to 11m from 1979- jobs lost from coal
90 privatisation
ü Increased competition
Her key policies:
End trade unions in order to promote individualism
Overcome the inefficiencies of state-owned industry
Promote growth and investment by reducing regulations and lifting
the tax burden on successful businesspeople
Foster a greater sense of public participation in the economy
through ownership of shares and property
The Fight Against Inflation
Inflation 1978: inflation stood at 11% but had doubled to 22%
by 1980 – largely due to spiralling pay demands
Thatcher refused to print money to cover inflation as
it punished her ‘careful savers’ and rewarded
‘reckless borrowers’
Continued with the policies of her predecessors
- Awarded public sector workers 25% pay rise
- Allowed an above-inflation pay settlement of 16%
to end a steel strike
Imposition of To control how much money was in circulation
Monetarist Supply-side politics introduced to replace monetarism
Policies In Divided the government
1980 and its
Impact
Monetarist Cut government expenditure
1981 Budget Increased indirect taxes- a packet of cigarettes rose
from 14p to 80p
Monetarist policy
Took £4b out of the economy
Effect of the Riots in several cities – Brixton in London
1981 Budget 1980-81 – manufacturing production fell by 14%
1982 – unemployment had risen to over 3m
Inflation stays single digits for the rest of the 80s
Successes in Dealing with Failures in Dealing with Inflation
Inflation
ü Reduced to single figures and û Monetarist policies caused
remains here for the majority of unemployment to spike over
her time in office 3m in 1982
ü Took £4b out of the economy û Social unrest – riots in Brixton
ü GDP began to grow from -0.7% û Manufacturing production fell
in the first quarter of 1981 to û Cabinet split
1.3% by the second quarter of û Unemployment benefits forced
1982 up government spending
û 1979 inflation was 10.3% and
was 10.9% in 1990 – no real
change
, û 1980 – inflation rose to 22%
û 1980-81 – Britain may have lost
as much as 25% of its
manufacturing base
Popular Capitalism – idea that everyone in society should have
the opportunity to own property and own shares in companies,
aiming to create a wide spread of privately owned wealth
Supply Side Economics – policies that boost economic growth by
increasing the supply of goods and services
Privatisation
Why did Would cut government expenditure on loss-
Thatcher think making industries and cut the number of civil
this would be servants by replacing them with private
beneficial? employees
To reinvigorate the economy by promoting
competition and innovation
Revenue generate by sale of state assets would
fund a reduction in tax
Help to create a wider ownership of shares –
incentive to work harder
Privatisation Sale of British Telecom in 1984 and British Gas
Gathering in 1986 that really saw the launch of ‘popular
Pace capitalism’
Shares sold cheaply to ensure a quick sale and
wide take-up
- 1979 – 1990: number of shareholders
increased from 3m to 11m
Impact of Uneven distribution of shares
Privatisation - Only 9% of unskilled male workers
- 1/2 all professional males
Most shares went to investment firms
- Individuals owned 38% shares in 1975 but
only 20% by 1990
Most successful aspect of popular capitalism
was the sale of council houses – over 1m sold
1979-88
£19b raised by selling state assets that were
used to pay for tax cuts – Macmillan compared
to ‘selling the family siler’
Privatisation Privatisation of rail between 1994-97 –
After Thatcher government continued to subsidise private
firms that operate the trains
- Government spending on trains has doubled
since 1994
Private Finance Initiative under John Major in
1992
- Public-private partnerships designed to
inject private funding and expertise into
, traditionally state-run concerns
Clear by 1997 that future generations of
taxpayers would have to pay a huge amount of
money to the private firms who put in the initial
investment
Successes of Privatisation Failures of Privatisation
ü £19b raised by the sale of û Uneven distribution of shares
state assets – able to fund û Failure of popular capitalism
tax cuts – only 20% of shares owned
ü BT privatisation led to better by individuals in 1990
customer service – û Privatisation of British Rail
previously customers had to had not improved service
wait 6 months for the û Led to prices increasing
installation of a BT line, faster than inflation – gas
today they are installed and water
within 15 minutes û ‘Selling off the family silver’
ü Number of shareholders went û Unemployment – 200,000
from 3m to 11m from 1979- jobs lost from coal
90 privatisation
ü Increased competition
