Prof. Ingrid von Rosenberg

Industry: Manufacture declined dramatically! Today only about 25 % of workforce employed in it down from peak of 36 % in 1950s.

Industries performing well: pharmaceuticals, aerospace, defence equipment.

Industries doing badly: cars, consumer electronics, consumer goods, telecommunication

Privatisation: Was no big issue when Thatcher came to power – became one from 1987 on with privatisation of British Airports Authority. After that 1/3 of public sector industries sold affecting 650.000 employees (e.g. British Airways, Rolls Royce (air engines), British Steel, Rover Group (cars), Regional water companies, regional electricity companies, electricity generation. Earlier: Jaguar (cars), Sealink ferries, British Telecom, British Gas – all 1984).

Who bought?

Politically proclaimed: individuals. Aim: to turn Britain into "nation of shareholders". In fact number of shareholders rose: 1979 – 7 % to 1989 – 22 %. But many resold their shares. Example British Gas: 4.4 mio held shares in 1986 – fell to 2.7 mio.

Most of the sales went to big companies, many of them foreign or multinationals (e.g. Rolls Royce bought by BWM).

Gain for government: 1982-1987: 10.8 bio pounds.

Criticisms: 1. "selling the family silver"! 2. Advertising, e.g. for Telecom, often too expensive. 3. Often also assets sold at a too low price.

Deregulation of job market ("flexibility of job market", i.e. making hiring and firing easier):

1. Abolition of minimum wage
2. Clipping of workers’ rights to claim unfair dismissal
3. Cuts in employers’ contribution to national insurance

Fight against the Trade Unions:

Series of laws 1980, 1982, 1984, 1988 reduce power of unions.

Results: a) Secret ballots for most decisions, not just major strikes, make action clumsy.

b) To set up a "closed shop" 80 % must vote for it.

4. Unions made liable for damages done by wild strikes.
5. No social security payments for families of strikers.
6. No more co-operation with government ("no more beer and sandwiches at No. 10"!)

Miners’ Strike of 1984-85. (Biggest contest!)

Coal used for only 1/3 of energy in 1979, great competition by oil, nuclear power and cheap imported coal. However, in 1984 there were still 174 pits employing 181.000 miners. Gov. planned drastic cuts. 1984 it became known that 20 pits employing 20.000 were to be closed down, among them the most modernised and efficiently producing ones. Great uproar among the mining communities – people realized that with the industry their traditional way of life and culture was threatened. Put up determined resistance, voted for strike action, striked for a whole year. Leader: Arthur Scargill, General Secretary of NUM, a Communist. His opponent: Ian McGregor, Director of National Coal Board, old-style employer. Classical fight in 19^th cent. manner, rather undiplomatically led by Scargill on the miners’ side. Gov. very severe: sent armed policemen and troops against picketing miners. For the first time policemen equipped with firearms and plastic riot shields. Violence on both sides. Important: Women joined in the struggle on the miners’ side, changed consciousness and attitude of many of them for life ("Women Against Pit Closure"). Strike finished and lost March 1985. Defeat of NUM. Today remembered as a highly symbolical event in the life of mining communities. After that, gradual closing down of industry. In spring 1999 only 41 mines still working (all privately owned, privatised after 1993), employing 14.000 miners. Today critics say the drastic reduction may turn out to have been unwise in case of future changes in demand.

Long-term consequences: All unions lost 2 mio members, lost political clout, yet remained active on shop-floor level. Economic recovery in mid 80s made less strikes necessary.

In 1980 recession set in (2 years before world recession): 27.000 businesses went bankrupt (only 5.000 in 1978), manufacturing output fell 15 %, national income fell 3 %, unemployment rose 250 % to 10 % (see above), inflation rose from 10 % to 20 %.

One reason outside GB: Second Oil Crisis 1979 as consequence of Iranian Revolution: export from Iran cut. Affected GB indirectly as world market prices rose. Reduced import balanced by North Sea Oil (also source of income for Gov. via tax).

Falkland War 1982: Diverts attention from bad economic situation at home – burst of nationalist feelings, skilfully exploited by Thatcher. Costs GB 115 soldiers’ lives and 900 mio pounds. Nationalist feelings help Thatcher win the 1983 election.

Economy picks up after election. Suddenly demand rises by 14 % p.a.: consumption boom. Private expenditure mostly covered by borrowing, i.e. hire purchase: 1980-1988 a rise of 100 %! Personal credits mushroom from 1980: 90.5 bio pounds to 1988: 325 bio pounds. Most consumer goods not produced at home, but imported (rise of 100 %) – leads to big trade deficit (remember: manufacture low in GB!). Slow return to 1979 level.

1986 "Big Bang" – crash of stock market. Leads to deregulation of Stock Exchange.

Greatest failure of economic policy: inablility to stop expenditure. Despite Thatcher’s aim to "roll back the state" and reduce expenditure she did not manage, taxes had to be raised after initial cuts for all but the top earners (40 % down from 83 %). Level of exp. remained roughly the same: 1979: 44 % of GDP cf. 1990: 42 %). Reasons: high cost of unemployment, ageing of population (more pensioners), more single mothers, rising health costs (all social security + 38 %), higher investment in defence (Falkland War and after; + 21 %), and in law and order (+ 57 %; see below).

Social Consequences:

Employment structure: As a result of economic policy (e.g. privatisation) loss of jobs in public services: 1978/9 to 1986/7: - 14 % (but still 22 % of workforce employed by state, more in Northern Ireland – see above). Civil Service: - 19 %.

Employment in manufacture (also see above!): Dramatic decline, esp. in 1980s. 1979-1080: in one year 1 mio jobs lost, esp. in traditional industries (mining, steel, textiles, shipbuilding).

1966: 8.7 mio employed in manufacture

1979: 6.7 mio

1997: 4 mio.

Services rose instead: Mid 80s: 14 mio = 60 % of workforce. 1997: 17 mio = 75 % of workforce.

While production fell, productivity rose1981-1986: 30 %. Reasons: inefficient plants were closed; people were scared to lose their jobs and worked harder.

Share of women rose to 43 % of workforce (European average: 38 %), but they earned only 79 % of men’s wages. Many of them (77,8 % ) in retailing. Many women only in part-time work (ca. 50 %).

Unemployment: Rose sharply in 1980s.

May 1979: 1 mio = 4 %

July 1986: 3.4 mio = 11,1 % (European average: 8 %) – peak of unemployment

Spring 1989: down to 2 mio

New recession in early 90s causes new rise to 1992: 10.5 %. Falling since 1993.

1997: 6.5 %

2001: 3.4. %.

Special problems: a) Blacks were worst affected. b) High rates among young people (30 % of under 18-year-olds). c) Long-term unemployment developed into a special problem.

Government countermeasures (on modest scale because against ideology of Gov.):

1983 Youth Training Scheme (to fight youth unemployment), extended in 1986: 2 years training on the job for 16-year-old unemployed, 1 year for 17-year-olds. Not very successful. Criticism: Not all jobs taught important skills.

Programmes to help adults: a) Training programme for long-term unemployed teaching skills in high-tech area, b) Business Growth Training 1989: financial support to newly self-employed or to small companies to train their staff, c) Restart Programme for Adults – to set up business. Only 2.900 took part.

Income development:

Widening differentials! The real income of most people rose, most so for top 10 %: 22 % (1979-1986) (top managers even 30 %), while bottom 10 % lose 13 %. People speak of "two nations" (expression by Disreali, mid 19^th c.). People living under poverty line increase 55 % to 9.4 mio = 17 % of population. Children, single parent families and blacks suffer most. North-South Divide: The worst areas are in the old industrial centres: the North, Wales, Midlands, parts of Scotland, Northern Ireland. Income in South 44 % better than in Wales, 53 % better than in Northern Ireland. Britain becomes a divided nation with a lot of social friction!

The only really big cut in social spending. 1980 Housing Act: people are encouraged to buy their council houses or flats at 50 % of market price. By 1986 800.000 had done so, yet numbers slowed down after 1982. Public house ownership declined from 31.5 % in 1979 to 26.1. % in 1987 (yet still 5.8 mio state owned units). House ownership rose from 54 % in 1979 to 59 % in 1983.

Rent help for the very poor increases gov. expenditure.

Most problematic: Mortgage tax relief to stimulate buying leads to increased house prices (people rush to buy houses to relief tax bill, which leads to high demand and price rises). Many have to resell: dramatic increase in homelessness, esp. in London ("cardboard city")!

2. Education

a) Schools: In 1960s and 70s two reforms: 1. Child-centered learning in primary sector, no marking, etc. 2. Comprehensives became normal school type: 1987 85 % of pupils attend them.

System carried by 3 columns: 1. State financed schools, 2. Local Education Authorities did the administration incl. allocation of money, 3. teachers decided over and provided contents. Problem: great variety of contents and standards nationwide. Idea of a national curriculum developed in 70s, propagated by Callaghan already in 1976. Taken up and realised by Thatcher Gov.

Conservative Gov. wants to make education more useful for business and to introduce market elements into schooling. Activities of Conservative Governments:

1. "Selective schooling" introduced: Local Authorities made less influential. Replaced by negotiation between "providers" (schools) and "consumers" (parents, business). Parents may choose school, schools may select pupils by interviews and tests. Competition among schools. Funds allocated acc. to number of pupils.
2. "Opting Out": Schools are encouraged to opt out of Local Authority guidance and administer their own budget directly received from Gov. Reluctant response: 1997 only 1.000 of 31.000 schools had done so. Problem: inexperienced headmasters. Continued by Blair.
3. "Assisted Places Scheme": 118 mio pounds invested to support parents of specially gifted children to send them to public schools. Reversed by Blair.
4. City Technology Colleges: New type of schools to be set up by business and Gov. together to promote technical knowledge. Slow take off: in 1990 only 15 opened.
5. National Curriculum introduced by Education Reform Act of 1988 to homogenize

Result: Rise in GCSE and A-Levels. 1995: 29 % of a generation achieved GCSE (Germany 64 %). 2001: 46 %.

Universities: No good relations. Gov. tries to cut costs and force unis to raise private funds. Gov. funding cut down to 55 %, allocated by Universities Funding Council (est. 1986). Many departments closed as ineffective. Polytechnics (more practice oriented) raised to university status and taken away from local authorities guidance.