1 How did Margaret Thatcher change the UK? AQA E xtended P roject Q ualification Elsa Perelyguine 2023 Word count: 86 53 2 “If you just set out to be liked, you will be prepared to compromise on anything at any time, and would achieve nothing”. Margaret Thatcher 3 Table of Contents Introduction ................................ ................................ ................................ ..................... 4 Background ................................ ................................ ................................ ..................... 5 Early life ................................ ................................ ................................ ................................ ... 5 Political career ................................ ................................ ................................ ........................ 6 Economic policies ................................ ................................ ................................ ......... 6 Keynesian ideology ................................ ................................ ................................ ............... 6 End of consensus ................................ ................................ ................................ .................. 7 Free market ................................ ................................ ................................ ............................. 7 Thatcherism ................................ ................................ ................................ ............................ 8 Monetary policies ................................ ................................ ................................ ................... 9 Tax cuts ................................ ................................ ................................ ................................ 10 Privatisations ................................ ................................ ................................ ........................ 11 Trade unions ................................ ................................ ................................ ......................... 11 Social policies ................................ ................................ ................................ .............. 13 Employment ................................ ................................ ................................ .......................... 13 Right to Buy ................................ ................................ ................................ .......................... 14 Poll tax ................................ ................................ ................................ ................................ ... 15 Foreign policies ................................ ................................ ................................ ............ 16 Falklands war ................................ ................................ ................................ ........................ 16 Relationship with the EU ................................ ................................ ................................ .... 17 Political legacy ................................ ................................ ................................ ............. 18 Conclusion ................................ ................................ ................................ .................... 19 Bibliography ................................ ................................ ................................ ................. 20 4 Introduction Margaret Thatcher was the Prime Minister of the United Kingdom from 1979 to 1990. She was the first female Prime Minister of the UK and the longest serving Prime Minister of the 20 th century. The reforms that she did to the economy are remembered until nowadays. It is unquestionable that without Thatcher, the UK wouldn’t have been the same. She made possible a shift to the right of the British political ideas and implemented policies that liberalised the economy. She r educed the power of the state and favoured the privatisation of many state - owned industries, leading to a more competitive market where citizens could accede products at the best price and quality. Thatcher fought for the implementation of a free market system in which private firms would have no other choices than to be efficient and innovative. The economic reforms she put to the fore were her biggest battles, but her social policies and foreign policies are also two aspects showing her uncompromising s tyle of leading the country. Margaret Thatcher managed to change the UK because she knew since the beginning what she was doing. It was a woman of convictions that got to power because she knew what needed to be done to save the UK from its economic decline. This woman was not for turning. Margaret Thatcher stayed for 11 years in power but her impact on the UK politics and society are not about to be forgotten yet. 5 Background Early life Margaret Thatcher was born Margaret Roberts on 13 th October 1925. She grew up in the market town of Grantham in Lincolnshire and lived above the family’s grocer's shop. She has a sister, Muriel, who was born in 1921. She is not from a posh and privileged family but from a rigorous family that had always had to work hard to supply all they needed. Even during the World War 2 they “ threw themselves into voluntary and civic work for the war effort and were even busier than in peacetime”. 1 Her parents, Alfred and Beatrice Roberts, were middle - class shopkeepers. Her father was a self - made man, the son of a shoemaker who had left school at 13. He began to work in the grocery trade and later owned a grocery store in Grantham. He was a careful and prudent man, with ambition that his family should never suffer and was determined to build a solid and, if possible, wealthy base for his family. He had the sense of thrift and civic duty. Her father was the first one to have significant influence on Margaret and he “ took a keen interest in his daughters’ schoo ling”. 2 He used to bring home each week books for her daughters to read and discussed the reading and learning they got from it. “ The Roberts family read a wide variety of newspapers and had a radio – they were probably better informed than most”. 3 He pushed them to adopt a critical stance. It is perhaps the foundations of what had made her a logical and determined star of debate. He was also a politician who served for 16 years in the town council and even became an alderman in 1943 and mayor of Granth am between 1945 and 1946. He used to describe himself as a “ staunch Conservative”. 4 He was also a Methodist lay preacher. Their family’s life was revolving around Methodism, and she had always been taught of these values. Her family would go on the Sunday morning to the church. Her mother was a successful dressmaker. Briefly, she grew up in a family that was “° practical, serious, and intensely religious” 5 Margaret grew up with the belief that families were the foundation stone of a well - functioning society and thus her parents always made anything possible to provide to their daughters a stable, well - run, and well - kept home. In term of her studies, she was first a chemistry student in Oxford and graduated in 1947 but would discover later that chemistry wasn’t the thing she really wanted to do with her life. She worked for four years as a research chemist while reading in her spare time for the bar. She became a barrister in 1954 and practised law for a few years. She had always taken part a lot in different political activities, from her early years in Grantham to the politics students' group of the university. She was the Treasurer and then President of the Oxford University Conservative Association. She finally entered politics and joined the Cons ervative P arty. Margaret ran for Parliament in 1950 but would be elected only in 1959. She married the wealthy businessman Denis Thatcher in 1951 and in 1953 had two children, who were twins. Denis Thatcher can be qualified as “ the closest advisor Margaret Thatcher ever had, or who she would listen to – constantly beside her in the years to come”. 6 1 Beckett, 2006. Thatcher . Haus Publishers Ltd. p.11 2 Beckett, 2006. Thatcher Haus Publishers Ltd. p.5 3 Beckett, 2006. Thatcher Haus Publishers Ltd. p.9 4 Beckett, 2006. Thatcher Haus Publishers Ltd. p.9 5 Thatcher, 1995. The Path to Power HarperCollins. p.5 6 Beckett, 2006. Thatcher Haus Publishers Ltd. p.55 6 Political career Thatcher entered Parliament in 1959 after winning a seat for the Constituency of Finchley in northern London. She became Secretary of the Education under Edward Heath government. To follow the government’s pledge of cut spending, Thatcher ended in 1970 a free milk program for the schoolchildren. Since then, her political opponents called her the “Milk Snatcher” and she was already at the time considered to be one of the most unpopular public figures in Britain. In 1975 the Conservatives lost the General elections and were back in the opposition. It’s also the ti me when she defeated the former Prime Minister Edward Heath and took over in 1975 the leadership of the party. She became the Leader of the Opposition until the next general elections in 1979, when the Conservative party won again a majority in Parliament. Their victory in the general election of 1979 happened just after the “Winter of Discontent”, a time where the UK saw many strikes happening leading the country to a standstill. Thatcher stand and though line against the unions finally began to gain popul arity in the party and in the country and certainly favoured the return of the Conservatives. Margaret Thatcher became Prime Minister of the UK in 1979 and will leave 10 Downing Street 11 years later. Economic policies Keynesian ideology Before Thatcher arrived in power, the Keynesian ideology was very popular in the UK. It was the economic system in place after the Second World War. The Keynesian ideology is based on the central planning of the industry and the society. This is how some Western countries managed to win the war, by planning and controlling industries, which many, in addition to vast swathes, were owned by the state. The Keynesian economists say that the purpose of government intervention through public policies is to achieve full employment and price stability. Taxing a lot meant that the government “ would be responsible for using that taxation to support welfare – including full employment”. 7 The government should intervene in the short run and not wait for the market to fix things by its own in the long run. Following Keynesian theories, “ government supported manufacturing industry either by providing subsidies or by taking control into their own hands through nationalisation”. 8 The Keynesian ideology was very popular and was dominating the economic theories and policies between the Second World War and the 1970’s not only in the UK but in the Western countries in a more general way, notably in the USA before the Reagan’s era. The Keynesian are aiming to regulate the business cycle with fiscal policy. Keynesian economics argue that demand drives supply and so it is necessary to spend or invest more than they save. During a recession, a government should increase spending and massively invest, even if it leads to go to debt. It may help create jobs and boost consumer buying power. Keynesian economy also aims to minimise the inequality between people from different social class by providing them free education and health services. In a nutshell, the goal is to “ minimise 7 Beckett, 2006. Thatcher Haus Publishers Ltd. p.49 8 Beckett, 2006. Thatcher Haus Publishers Ltd. p.48 7 inequalities of class and wealth” 9 Keynesian theory which involves government expenditure is opposed to the monetarist economics, a theory developed by Milton Friedman, described below. This is what Margaret Thatcher believes in and wants for the UK and therefore she is ending the Keynesian era, but she first had to deal with the problem of the consensus. End of consensus When Margaret Thatcher arrived in power in 1979, a consensus between the conservatives and the labours was established in the UK since the end of the Second World War. The Atlee government expanded the welfare state, he wanted a country “ where the state was res ponsible for the welfare and education of the people”. 10 The post - war consensus describes the shared view between the major political parties in the UK concerning the economic order and social model that had to run the country. They were standing for a mix ed economy, that would balance between public and private ownership. It was the time of social policies following the Keynesian ideology. To Thatcher, this style of government was “ centralizing, managerial, bureaucratic, and interventionist”. 11 Edward Heath was the last Conservative Prime Minister under the consensus era and tried for example to accommodate Labour and the trade unions within the British parliament. The consensus needed to end. In the 1970’s Britain was called the sick man of Europe and was in decline. In 1976 the FMI had to help the country’s financial problem with a loan of 4 billion pounds. No economic growth could happen in these socialist times, particularly with the weight that had acquired the anti - capitalist trade unions and the nationalised and thus monopolised industries. In Thatcher’s book “The Downing Street Years” , she wrote a paragraph on her thoughts about the British people regarding the consensus: “ They had given up on socialism – the thirty - year experiment had plenty failed – and were ready to try something else” As soon as she arrived in power, Margaret Thatcher rejected the consensus and stood for her beliefs and her principles. She gave her opinion about consensus in a speech: “The process of abandoning all beliefs, principles, values, and policies in search of something in which no one believes, but to which no one objects; the process of avoiding the very issues that have to be solved, merely because you cannot get agreement on the way ahead. What great cause would have been fought and won under the banner: ‘I stand for consensus?’”. Margaret Thatcher was about to achieve a fundamental change of direction. She and her cabinet stood for a new beginning; they didn’t want more of the same. Free market In the late 18th century, Adam Smith formulated the ideology of the classical economics in his book “The Wealth of Nations”. This new way of thinking the economy focused on economic growth and economic freedom. The government should not intervene, the free ma rket should be the only one to regulate the economy. In the 20 th century, Milton Friedman and his colleagues of the Chicago School of Economics theorised again the economics ideology of the free market. They stood against deficit spending, and they argued that the economy should be deregulated. The government should have only little role in an 9 Beckett, 2006. Thatcher Haus Publishers Ltd. p.49 10 Beckett, 2006. Thatcher Haus Publishers Ltd. p.48 11 Thatcher, 1993. The Downing Street Years HarperCollins. p.6 8 economy of a country. As Friedman said: “Government has three primary functions. It should provide for military defence of the nation. It should enforce contracts between individuals. It should protect citizens from crimes against themselves or their property. When the government, in pursuit of good intentions, tries to rearrange the economy, legislate morality, or help special interests, the cost comes in inefficiency, lack of motivation, and loss of freedom. Government should be a referee, not an active player.” Margaret Thatcher was an adept of this economics ideology, like was Reagan on the other side of the Atlantic. When Ronald Reagan acceded to power in 1981, he implemented the free - market system and liberalised the economy, just like his British counterpart. Both thus shared the same political ideology and that’s what created a natural alliance during almost a decade between their two countries and their economic ties got strengthened. In Thatcher’s book “The Downing Street Years” she described the free market system as “a vast sensitive nervous system, responding to events and signals all over the world to meet the ever - changing needs of peoples in different countries, from different classes, of different religions, with a kind of benign indifference to their status” She had first been introduced to this theory when she was just 18 years old and was an Oxford student. She read “The Road to Serfdom” from Friedrich Hayek, a famous Austrian economis t and political philosopher who notably developed the concept of the deregulation of the markets and fought against socialism. Hayek won the Nobel Prize for economics in 1974. This book had a huge impact on Margaret and was one of which influenced her the most. Hayek argued against socialism and said that you cannot compromise with it because it tends always to totalitarianism outcomes. Austrian school economists proclaim that recessions and booms are naturally happening and the intervention by the state should just worsens the recovery of the economy. To Hayek, Franklin Roosevelt's New Deal, and the development of the UK’s welfare state after the second world war are manifestations of a collectivism occupying the same spectrum as Nazism and C ommunism. According to Hayek we must be careful “ of the danger of tyranny that inevitably results from government control of economic decision - making through central planning” 12 Hayek had a huge impact in the political beliefs of the time and favoured a rightward shift in the intellectual climate. Margaret Thatcher and a fraction of the Conservative were convinced by the statements of Hayek and the theories of Friedman. But during the consensus era these thoughts were well - kept and rarely publicly expressed. The UK will have to wait for Margaret Thatcher to be in power to see reforms in favour of the liberalisation of the economy. Thatcherism As Prime Minister, the hardest battles she had encountered obviously concerned her economic policies. She thus made sure to call only economic ministers that where true believers of her economic strategy. She gradually got rid of the “wets”, the name she gave to the ones opposed to monetarist policies and cuts to public spending. The economic policies that Mar garet Thatcher implemented as well as her unique way of lead ing the country for 11 years are well known under the name “Thatcherism”. It refers in a general way in the belief of the free market and small state. Some big economic reforms are for example the selling off state assets, trade union legislation and the attempts to lower inflation. Thatcherism main reforms also include the diminution of taxation and the deregulation of many industries, notably the financial sector. She made the “Big Bang of London” possible, and this is how London made a caught up in the world of finance and regained its place of a world financial centre. 12 Hayek, 1944. The Road to Serfdom Max Eastman. 9 Since 1986 and the reforms she decided for the capital, London is attracting global businesses and jobs are created. The banking industry was expanding. These reforms led the UK to a more liberal economic system and favoured a more flexible and dynamic economy. Government interfering this little aimed to encourage entrepreneurship and wealth creation. These reforms also aimed to increase the competition between firms and to reduce the bureaucratic red tape. The Thatcherism also represents the strong belief that the state should get out of the way to let individuals take responsibility and to let them exercise their own choices. This is not the role of the government to regulate people ’s li f e. She set the foundations of the Thatcherism ideology in her first Tory conference as a leader, where she said: “Let me give you my vision: A man’s right to work as he will, to spend what he earns, to own property, to have the state as servant and not as master – these are the British inheritance... We must get private enterprise back on the road to recovery – not merely to give people more of their own money to spend as they choose, but to have more money to help the old and the sick and the handicapped... I believe that, just as each of us has an obligation to make the best of his talents, so governments have an o bligation to create the framework within which we can do so... We can go on as we have been doing, we can continue down. Or we can stand up and with a decisive act of will we can say Enough”. 13 Margaret Thatcher and her first government put to the fore the neoliberal measures that were necessary for the establishment of the free market system. In addition to the ones mentioned above, important measures are for example the removal of subsidies to industries, the reduction of the welfare spending and the redu ction of the government expenditure in a general way. Monetary policies Margaret Thatcher followed an economic policy called monetarism. It’s basically the control of the money supply to control inflation. Taming inflation was one of Margaret Thatcher's priorities. During the 1970’s the inflation reached almost the 25% and when she took power in 1979 the inflation was wavering around 10%. To tackle the inflation, Margaret Thatcher raised the interest rates in 1979 up to 17%. She controlled the public spen ding and reduced the amount of money in the marketplace to give its value back, and thus tackling inflation. In other words, she controlled the money supply to defeat inflation. The government stopped spending money as they used to do. In 1980 - 81 the publi c spending decreased, and it spawned around 900 million pounds of savings. In her book “ The Downing Street Years ” (p.54), Thatcher argued “It is your tax which pays for public spending. The government have no money of their own. There is only taxpayers’ money”. Another aim was to reduce the wage demand of the workers because increase in wages will lead nowhere but to more and more inflation. Monetarists say that inflation is happening because “ the government allows the supply of money in the economy to grow by providing subsidies for industry and wage rises”. 14 During Thatcher’s first years in Downing Street, inflation didn’t stop but even rose from 10.3 percent inflation to 21.0 percent. She had to wait and by the mid 1980’s the inflation finally came down to 4%. Thatcher managed to keep inflation to a relatively low rate throughout her mandates, even if it meant more unemployment. She has never been for turning and made it clear in her book: “Our strategy was the right one, but 13 Thatcher, 1995. The Path to Power HarperCollins. p.308 14 Beckett, 2006. Thatcher Haus Publishers Ltd. p.51 10 the price of putting it into effect was proving so high, and there was such limited understanding of what we were trying to do, that we had great electoral difficulties. However, I was utterly convinced of one thing: there was no chance of achieving that fundamental change of attitudes which was required to wrench Britain out of decline if people believed that we were prepared to alter course under pressure”. 15 Figure 1 Graph showing the inflation rates during her mandates. 16 Tax cuts One of her important economic policies is the lowering of taxes. “Tax cuts were designed to shift responsibility for spending on health, welfare and entrepreneurial activity from the government to the individual”. 17 According to the concept of supply and demand, people will spend their money on things they value and find important, which is the most efficient way to reduce market failure. In 1979, high earners paid 83% tax on their income. She cut taxes and reduced the income tax and by 1988 the income tax for the highest income went down to 40%. She believed that this would encourage entrepreneurship and lead to more investments from the rich to the economy. The basic rate of income tax was established at 25%. The taxation shifted from direct to indirect taxation, as shown with the VAT that increased from 8% to 15%. VAT became an important source of government tax revenue. Margaret Thatcher argued that this money was one “individuals should have the right to spend themselves”. 18 To Thatcher, it’s the people responsibility to spend their money wisely, and not the task of the government to take it from them. 15 Thatcher, 1993. The Downing Street Years HarperCollins. p.168 16 Figure 1 : https://www.washingtonpost.com/blogs/wonkblog/files/2013/04/thatcher_post_inflation.png 17 Beckett, 2006. Thatcher Haus Publishers Ltd. p.69 18 Beckett, 2006. Thatcher Haus Publishers Ltd. p.51 1 1 Privatisations As said above, before Margaret Thatcher became Prime Minister, the UK had gone through a socialist era following the thoughts of Keynes, and thus many industries were owned by the state. Under Thatcher’s time in power, many of these public services became privatised, such as “British Petroleum” (1979), “British Aerospace” (1981), “Jaguar” (1984), “British Telecommunications” (1984), “British Gas” (1986), “British Airways” (1987), “Rolls - Royce” (1987), water and electricity companies (1989 and 1990). They were all back into private hands. The diminution of the power of the state was one of Thatcher’s first reforms and she wrote in her book “The Downing Street Years” (p.32) that she and her government began “the painful but necessary process of shrinking down the public sector after years in which it was assumed that it should grow at the expense of the private sector ”. The shares of these industries were sold to the public, often below the market price. Thatcher argued she had created a “share - owners democracy” and often people who had bought shares saw an increase in their wealth. By the end of Thatcher’s mandate, the people owning shares or stocks increased from 3 million up to 9 million. The success of the privatisations can be seen with the arriving of new firms in the market, leading to competition. Past nationalised industries were not monopolies anymore. Gas, electricity, and telecoms markets became very competitive, and that’s what made possible the prices to fell sharply. The public services were often inefficie nt in comparison to private firms in a competitive market, leading by the incentives to be always more efficient and to do their job at the lowest costs. Having many firms in a market helps to give the consumers the best quality of products at the price dictated by the market. Monopolies are a limit to the liberty of consumers. Competition is a very important process that punishes inefficiency and let the market delivers products at the quantity and quality that wouldn’t have been achieved by planning. To Thatcher, the state must not regulate the market because it regulates by itself, and it ensures that everyone gets what they deserve. Trade unions The fight against the Trade Unions was one of the biggest issues Margaret Thatcher had to deal as Prime Minister. A Trade Union is an organisation of lots of different workers that bargain especially for higher wages but also for better working conditions. The Trade Unions, if supported by a majority of the members, organise official strikes, in other words, work stoppages. In the 20 th century, collieries in Britain were becoming increasingly more inefficient and needed excessive costs. The mines in Britain were not as flourishing as it happened to be and so by the 1970’s some of them began to be shut down. I n the 1980’s the coal production in the UK was becoming very unprofitable and the industry relied heavily on government subsidies. This is why Margaret Thatcher wanted the privatisation of the state - owned industries (for example steel and coal). To her, “t he trade unions were quickly becoming the best possible example of the damage socialism could do”. 19 The trade unions were a big interference to the free market. Thatcher wanted to stand up to unions because they believed that because they were in the public sector, they should be allowed to ignore commercial reality and the need for higher productivity. According to Thatcher, the inefficient pits should be closed to grow the economy, even if it meant to become more dependent on imported 19 Beckett, 2006. Thatcher Haus Publishers Ltd. p.57 1 2 coal, oil, gas and nuclear. Exports from abroad were cheaper and a changing energy culture combined with the new environmental issue led to the fall of the coal industry in Britain. The country shifted from a profit - losing coal mining industry to a more services - led industry. But there were opposition. To stop pit closures and raise wages, trade unions gained lots of power and were in the 1970’s able to bring the country to a standstill through going on strikes. Moreover, they were able to use industrial arrest to ask for higher wages. The National Union of Mineworkers is a trade union for coal miners and organised the three main miners’ strikes, in 1972, 1974 and 1984 - 85. Arthur Scargill became the leader of the NUM in 1981 and the union had around 170,000 members at that time. During the two strikes of 1972 and 1974, the NUM had a strategy that worked. Their aim was to shut down the coal production and its transportation (except the ones for the vital services), leading to power cuts and fuel shortages. Their strategy worked well in the 1970’s, their power was huge, and they were able to force government’s hand at the negotiating table. They were able to ran som the country. It’s basically them who humiliated and brought down Edward Heath, the last Conservative Prime Minister before Thatcher. The situation changed with Thatcher as she was decided to not comprise anything with the Trade Unions and was prepared for the strikes. Thatcher limited the power of the unions and reduced their influence on government policies through a series of reforms, for example the Employment Act 1980. Her policies were popular to the public but also to some miners, as written in “ The Downing Street Years” (p.40) : “As time went by, it became increasingly clear to the trade union leaders and to the Labour Party that not only did we have huge public support for our policies, but that the majority of trade unionists supported them too , because their families were being damaged by strikes which many of them had not voted for and did not want” Thatcher was determined to not be affected by the strikes, not like had been the Heath government. In 1984 miners walked out to protest pits closure. The Coal Board had announced that 20 uneconomic pits would have to close, putting 20,000 miners out of work. As a reaction, more than half the country’s miners went on strike. Scargill called for a nationwide strike. The striking miners shut down many pits across Britain. The strike lasted for a year, but Thatcher refused to give out for the demands of the NUM. The strike of 1984 saw violent clashes between the police and strike pickets. Police was on the side of the government and regularly intervened to prevent picketing and to ensure no disruption to supply lines. The battle of Orgreave even saw about 8000 miners faced 5000 force of police officers. This battle is considered the most violent confrontation in the long - year strike. There were conflicts with the police but also within the union between the miners supporting the strike and the ones opposed to it. Thatcher’s plan slowly started to work. Before the strike, she managed to stockpile supplies of coal and coke in many sites around the country. The Thatcher government also made agreements with non - unionised haulage firms to keep up going the transportation of coal from storage facilitates to power stations and factories. For example, secret deals with non - unionised drivers to transport the coal. The stockpiles were thought to keep the country supplied for at least six months. She made everything possible to ensure that the country wouldn’t be crippled as during the previous strikes. As time went by, life conditions for the minors got progressively harder. Since the state stopped finance them, they were dependant on their local union money. They were no longer receiving money from the NCB (National Coal Board). But time flew and unions pockets had begun to become empty. Miners saw their financial situation become unsustainable. As a result, some of them were back to 1 3 work. The strike officially ended in March 1985, and it was a defeat for the miners. They went back to work without receiving demands. The National Union of Miners was hugely weakened. Margaret Thatcher had defeated the miners, moreover without making concessions. Her reputation of the Iron Lady was born. After this victory Thatcher kept continuing to reduce the unions’ economic stranglehold and to privatise these state - owned industries. The pit closure programme continued. She provided the UK a more dynamic and competitive economy. 174 deep coal mines existed in the UK in 1984 and in 1994, at the time the industry got finally privatised, there were just 15 left. Figure 2 Graph showing the number of Trade Union Membership 20 Social policies Employment While Thatcher attempted to fight against inflation by higher interest rates and higher taxes and spending cuts, the rate of unemployment rose sharply. Thatcher believed that controlling inflation was more important than controlling unemployment. Tackling inflation had for consequence mass unemployment. It reached 3 million people unemployed in 1983 and this would not fall below until 1987. By ma intaining 4 - 5% inflation every year the unemployment was over 10% during most time of her mandates . Debates can be made about whether that was a good trade - off. The government was not aiming to reach full employment, as Thatcher believed that only a competitive market could survive in the long run. She basically put the labour market to the hands of the capitalist world and let the marketplace deal with the employment, and not helping the one asking for higher wages. As unemployment stayed at a high l evel during the 1980’s, it affected her first years in power, and she lost in popularity. In some places where unemployment was high, riots took place. Unemployment 20 Figure 2 : https://www.economicshelp.org/wp - content/uploads/2012/11/union - membership - 1900 - 2007 - 500x329.png 1 4 was also a consequence to the decline of traditional manufacturing firms. The UK was evolving from a manufacturing industry to a service industry. There were big changes happening. We can talk about a deindustrialization of the UK, and some areas were hit harder than others, for example the Midlands, the North, central Scotland, and South Wales. These are areas where entire families depended on heavy industries such as coal and iron. In Liverpool the unemployment rate even increased over 20% in the 1980’s. Figure 3 Graph showing the unemployment rates. 21 Right to Buy Council houses in the UK are houses publicly owned by the local council (district council and borough councils manage the housing) and rented to low - income families and individuals who are unable to afford the rent in the private sector or to buy their own house. The aim of Council Houses is to provide affordable homes. In 1980, The Housing Act was passed by the Parliament. This act gave the right to buy their house from local authority to millions of long - term council house tenants, often at a discounted price. We call it the Right to Buy scheme. It’s one of the big policies defining the Thatcheris m and one of the most important privatisations of the 1980’s. This policy followed Margaret Thatcher’s idea that the state shouldn’t babysit the population. This policy helped the Britain’s poorest people to have a home of their own. More than 2.5 million council houses had been sold. This reform basically exemplified her belief that capitalism is good for everyone, not only the richest but also the modest incomes. Margaret Thatcher wanted council houses tenants to buy their house for many reasons. One of them is that the family will give more interest to their house’s maintenance and will take care to make it a more pleasant place to live. It will help to improve family stability, therefore will have an impact on the town’s community and in a more general way to help the country’s stability. Many of the council houses were built in the 1930’s or in the 1950’s and needed work to be done. They were not kept in 21 Figure 3 : https://www.economicshelp.org/wp - content/uploads/2013/03/unemployment - percent - 79 - present.png.webp 1 5 good conditions and were often associated with poverty, crime, and poor - quality housing. Thatcher thought that the house’s tenants will have more of an incentive to be responsible for where they live if they own the house. And she was right. Improvements began to be seen, people started to reinforce their windows, cut the grass, put solar panels on roof or even install conservatories in back ga rden. They were not relying on the Council to do this anymore. Selling the council houses saved local councils to not pay staggering sums in renovation and maintenance. Some labour councils were reluctant to the Right to Buy scheme because they argued that reducing the stock of Council Houses will lead the poorest people into the private rented sector or into homelessness in worst situations. From 1979 less Council Houses are being built. With the profits from council houses sales the councils are not order ed to build new council houses. “Council could no longer build council houses. The market would provide” 22 But the housebuilders are not building enough houses. It thus led to a deficit in social housing and the waiting list for rented homes is getting longer. Today there are 1.4 million fewer households in social housing than in 1980. A lot of houses are too expensive, and people cannot afford them. We are talking today about a massive shortage in social housing because government doesn’t put enough mon ey in it. At the time this reform was introduced it helped some poor people to buy their own houses but in the long run, it created a shortage in social housing and the poorer people are highly impacted because of the increasing prices. Figure 4 Graph showing the number of purchase of council houses. 23 Poll tax At the end of her mandate (1989 in Scotland and 1990 for England and Wales), Margaret Thatcher established a tax called the poll tax. The poll tax is also called the Community Charge. This tax was levied on every adult, without reference to their income or resources. Its aim was to “make local 22 Moore, R. (2018b) “Margaret Thatcher began Britain’s obsession with property. It’s time to end it,” The Guardian , 22 March. Available at: https://www.theguardian.com/society/2014/apr/06/margaret - thatcher - britains - obsession - property - right - to - buy 23 Figure 4 : https://ichef.bbci.co.uk/news/624/mcs/media/images/67007000/gif/_67007115_council_houses.gif 1 6 councils more accountable to their electors by ensuring that everyone contributed” 24 It was a single rate for everyone regardless of their income. Before, the local taxation was based on the property that we own, but Thatcher believed that it would be fairer if everyone contributed. In other words, it replaced the domestic rates, meaning that no matter the size and the value of the house you own, each person must pay the same amount of money. But people found it difficult to understand this reform, so riots and protests began to happen in the country. Anti - Poll Tax unions were organised and, in some regions, up to 30% of the population refused to pay. In March 1990 took place the sadly famous riot in Trafalgar Square, people were angry and thus the government became very unpopular. The Poll Tax is one of the reasons that contributed to the fall of Thatcher. Being unpopular, when the labour candidate Michael Haseltine challenged her leadership in 19