Margaret Thatcher once said that her greatest political achievement was New Labour. Tony Blair said today she was a ‘towering figure’, ‘genuine leader’ and ‘generous-spirited’ person who was ‘rightly admired’ and will be ‘sadly missed’; and though they disagreed on ‘certain issues’ he thought his ‘job was to build on some of the things she had done rather than reverse them’. Twenty-five years ago he wrote in the LRB:
What makes things even worse for radical, progressive spirits is that the Ultra-Right appears to be even more in control of the Conservative Party this year than it has been previously. Mrs Thatcher clearly regards herself as a dea ex machina, sent down from on high to ‘knock Britain into shape’. She will wield her power over the next few years dictatorially and without compunction. On the other hand, there is a tremendous danger – to which Dr Owen has succumbed – in believing that ‘Thatcherism’ is somehow now invincible, that it has established a new consensus and that all the rest of us can do is debate alternatives within its framework. It is essential to demythologise ‘Thatcherism’.
Mrs Thatcher has enjoyed two advantages over any other post-war premier. First, her arrival in Downing Street coincided with North Sea oil. The importance of this windfall to the Government’s political survival is incalculable. It has brought almost 70 billion pounds into the Treasury coffers since 1979, which is roughly equivalent to sevenpence on the standard rate of income tax for every year of Tory government. Without oil and asset sales, which themselves have totalled over £30 billion, Britain under the Tories could not have enjoyed tax cuts, nor could the Government have funded its commitments on public spending. More critical has been the balance-of-payments effect of oil. The economy has been growing under the impetus of a consumer boom that would have made Lord Barber blush. Bank lending has been growing at an annual rate of around 20 per cent (excluding borrowing to fund house purchases); credit-card debt has been increasing at a phenomenal rate; and these have combined to bring a retail-sales boom – which shows up dramatically in an increase in imported consumer goods. Previously such a boom and growth in imports would have produced a balance-of-payments deficit, a plunging currency and an immediate reining-back on spending, with lower rates of growth.
Instead, oil has earned foreign exchange and also produces remittance payments from overseas investments bought with oil money. The situation is neither stable nor healthy in the long term: but in the short term it allows the living standards of the majority to rise rapidly, even though the industrial base, the ultimate foundation of a successful economy, is still only achieving the levels of output of 1979. The fact that we have failed to use oil to build a productive and modern industry for the future is something historians will deplore.
Imagine if the man who wrote that had become prime minister.