The death of Margaret Thatcher, Britain's only female and longest-serving prime minister of the 20th century, sparked a divisive debate earlier this month. Media and public argued over what would be the most appropriate way to say a last farewell to the Iron Lady. Questions centred on whether Thatcher should be afforded a £10 million public funeral given her highly controversial policies of cutting welfare benefits, income taxes and the size of the state. Regardless of which side of the debate you stand on, there's no doubt that Thatcher's policies have strongly shaped the political and economic landscape of modern Britain.
Margaret Thatcher served as the UK's prime minister from 1979 to 1990 and her terms in office were defined by classic Conservative policies of free markets, financial discipline, nationalism and privatisation. Although these policies led to growth in some areas of British business, particularly in the City of London, many are questioning if these benefits have come at too high a price, particularly for the disadvantaged.
Thatcher entered office against an economically challenging backdrop: high inflation, flat to negative GDP growth and increasing unemployment. Heavily influenced in her economic thinking by economist Milton Friedman, she increased interest rates to slow the growth of money supply and reduce inflation. However, this negatively impacted GDP growth, increasing unemployment. To stimulate demand, Thatcher lowered direct taxes on income and increased indirect taxes.
Britain's longest-serving prime minister followed a heavily right-wing fiscal policy, reducing expenditure on social services such as education and housing, and became the first Oxford-educated post-war Prime Minister not to be awarded an honorary doctorate by the university due to cuts she made to higher education spending. Such divisive policies led to Thatcher's approval rating falling to 23 per cent by December 1980, lower than that recorded for any previous prime minister. The media started questioning Thatcher's direction, some arguing for a U-turn in policies. However Thatcher famously clarified at the Conservative Party conference in 1980 that, "The lady's not for turning". And by 1987, she'd had some success - unemployment was falling and inflation was low.
One of the defining themes of Thatcher's time in the office was her clash with the trade unions. She entered office following the "Winter of Discontent", a series of trade union strikes against the Labour government's pay caps for public sector workers, which had destabilised the country. Thatcher was committed to reducing the power of trade unions, whose leadership she accused of undermining parliamentary democracy and economic performance. She decided to resist trade unions' demands and close more than 100 coalmines.
Thatcher achieved her goal of significantly reducing the power of trade unions, whose membership fell from 13.5 million in 1979 to fewer than 10 million at the end of her time in office in 1990. However, the economic cost of the bitter industrial strife that resulted is estimated to have reached £1.5 billion, and it left a legacy of economic hardship in many areas of the UK, particularly the north, and widening differences in prosperity between rich and poor.
Thatcher is also well known for her privatisation of state industries: more than £29 billion was raised from the sale of nationalised industries and £18 billion from the sale of council houses. Although in the short-term this policy helped to finance government spending and limited the size and unwieldiness of the state, many argue that the policy had negative long-term consequences. For instance, it can be argued that the current housing shortage was partly fuelled by the 1980s council house sell-off.
One of the defining moments of Thatcher's rule was winning the Falklands War. In response to a 1982 attack by the Argentinian ruling military junta on the British-controlled Falkland Islands, she set up and chaired a War Cabinet to take charge of the conduct of the war. Argentina surrendered just over two months later and the operation was hailed as a success, propelling Thatcher's ratings. The conflict, however, saw the loss of nearly 1,000 military and civilian lives, and hostility between Argentina and the UK over the islands persists to this day.
Towards the end of the 1980s the British public began to feel that the lady had gone too far: she reformed local government taxes by replacing domestic rates, a tax based on the nominal rental value of a home, with a "Community Charge" of the same amount for each adult resident, more commonly known as the poll tax. The flat rate tax sparked public outrage culminating in the 1990 poll tax riots and was widely cited as the trigger for Thatcher's resignation in November that year.
Would you have voted for Thatcher?
"I'd have voted for Maggie because, and I put on my 80s cap at the moment, the country is screwed. We're ruled by the unions, who no-one voted for. We're in danger of becoming a socialist country. We've tried everything else - we need to take Maggie's medicine." Jack Smith - University of Edinburgh
"Ideologically - and in retrospect - a mindful yes. Hard work, ability and enterprise clearly constituted the north star of her rules-based free market policies, which, in the end, got validated in Britain's broad economic performance. I would just hope that the process of deindustrialization was not so severe and the resulting economic regionalisation of the country so acute. Nowadays, Britain continues to pay a price for both." Przemek Gotfryd - The London School of Economics
"I would have been convinced by Thatcher's rhetoric and policy, especially in the first election, because the economy was doing so badly at the time. I think I would have voted for her the first time. As the time went on, and it became more apparent what her agenda was, I would have become quite anti-Thatcher and I would not have voted for her after that, especially due to her policies around social cohesion and immigration." Rishi Patel - University College London