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Blair’s Thatcher, Thatcher’s Blair

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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.


  1. SpinningHugo says:

    He did.

    Some people are stuck in 1987, want to re-fight the battles of the 80s, and seek a return to the 70s.

    Other people have have moved on.

    • Coldtype says:

      Moved on to what exactly SpinningHugo? How is it that the mass of British citizens are now “better off” with a shuttered manufacturing sector, the dismantling of the NHS, and an unaccountable financial sector given a green light to utilize fraud as a business model? Think hard on it for this is the Iron Lady’s legacy.

      • SpinningHugo says:

        (i) The mass of British citizens simply are better off. Median and mean earnings are far, far higher. Even in the bottom decile people are better off relative to where they were.

        (ii) We manufacture more than we did. Manufacturing is less important as a share of the economy true (because the economy is larger). manufacturing is about the same size relative to the economy as for all other modern western states (eg France) save for Germany.

        (iii) The NHS is better by any criterion you care to use. Health outcomes are vastly better than they were, say, 30 ears ago.

        (iv) There was indeed a financial crisis, but that is not the same thing as saying fraud is accepted.

        If this is Thatcher’s legacy (and I doubt it is, almost all of these things would have happened if she had never existed) then well done her.

        Why let, you know, facts get in the way of your silly 1970s view of the world.

        • keith smith says:

          This is misleading stuff. Of course we are ‘better off’, simply because Thatcher came to power 34 years ago, and even at 2% compound growth GDP would double in that time. And as a result, health, manufacturing output etc all have increased. The question is, how good has this performance been, given UK circumstances and in comparative context? The central economic development of the Thatcher years was the emergence of North Sea oil, first onstream in a major way in 1980. Blair was exactly right about the revenue implications. Thatcher was the first and only Prime Minister to have faced a massive relaxation both of the government budget constraint, and the balance of payments constraint on UK growth. The public investment opportunities were very signficant, but were not addressed. The outcomes don’t seem great. The best way of comparing overall performance is the UNDP World Development Index, which includes GDP, but adds health, education, housing outcomes etc. The UK is 26th, below every other relevant European economy, and just above Greece and Cyprus. The recent OECD Economic Survey of the United Kingdom 2013 is sobering stuff, pointing out that UK investment and therefore productivity are in very bad shape. Comparing the UK with Norway is a bit unfair given the population difference, but Norway’s amazing infrastructure investment programme and foreign asset accumulation to buttress a well-designed pension system are indicators of the road not taken. And by the way, saying that those who don’t want to join in the triumphalism have a ‘silly 1970s view of the world’ is worthy of Mel Phillips.

  2. Geoff Roberts says:

    It would be quite a surprise if today’s leaders had declared that Ms Thatcher had done more harm than good during those years of Tory domination. As the rich get richer and the precariat fall deeper her legacy is the lottery capitalism that is destroying the structures of Greece, Italy, Spain. Others will follow as the speculators move astronomic sums of virtual capital about the financial universe looking for new roosting grounds that offer nice profits and expect Thatcher’s successors to bail them out when they get it wrong.

  3. streetsj says:

    i love that sequence where Dennis is mowing the lawn with this huge mower which he twirls round at the end of the row with great panache (a U-turn indeed); cut to Mrs T wielding the secateurs at some decidely prickly roses.

  4. Jonangus Mackay says:

    Blatcherism. The unacknowledged actuality of its increasingly fragile socio-economic consequence: http://bit.ly/17oGy3N

  5. casi_insurgente says:

    of course, it’s not actually technically true that she cut taxes. The average tax rate as a proportion of income rose from 38% to 40%. She just happened the shift taxes from direct to indirect ones, and the burden from rich to poor.

    So much for the smaller state and leaving the individual to spend money as they pleased

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