Previous chapters have considered Thatcher's ideas, convictions and policies in broadly chronological fashion. Since more than twenty years have passed since she left office, it is not too early to offer at least provisional judgement about the longer-term significance of Thatcherism as a whole. This chapter examines a number of themes that historians and political scientists have identified as important either for Thatcher herself or to the wider significance of the policies she developed in the 1980s.
Thatcher was uncomfortable with intellectual abstractions, her instinct being to doubt their relevance and utility. Thus, the very notion of ‘society’ – the living laboratory of social scientists, a key professional group for whom she had little time – worried her. In 1987, she was famously reported in the popular magazine Woman's Own as saying that there was:
no such thing as society. There are individual men and women and there are families. And no government can do anything except through people, and people must look to themselves first. It's our first duty to look after ourselves and then to look after our neighbour.1
This ‘society statement’ was frequently quoted to support characterisations of Thatcher as selfish and heartless. Though her policies had malign effects, she was neither. Certainly, she believed that charity began at home and that most people were, to a very large extent, masters of their own fate. As she acidly remarked: ‘When I heard people complainthat “society” should not permit some particular misfortune, I would retort, “And what are you doing about it, then?”’ Her perception of society was competitive, not collaborative. It was held more from prejudice tempered by personal experience and it did immense damage – largely because, unlike most other powerfully simple statements issuing from the mouths of politicians, she actually – indeed, fervently – believed it.
Thatcher's stated objective was to recover what she variously called ‘Victorian virtues’ and ‘Victorian values’. Her partial conception of these tells us much:
The Victorians … had a way of talking which also summed up what we were now rediscovering – they distinguished between the ‘deserving’ and the ‘undeserving’ poor. Both groups should be given help: but it must be help of very different kinds if public spending is not just going to reinforce the dependency culture. … The purpose of help must not be to allow people merely to live a half-life, but rather to restore their self-discipline and their self-esteem.2
Here we encounter the cultural essence of Thatcherism: make people stand on their own feet and replace a dependency with an enterprise culture. Her analysis presents two problems. First, it rests on a spectacularly narrow perception of what these values actually were. Second, it distorted both policy and public attitudes. Thatcher's briskly confident assertions on subjects about which she knew little – and nineteenth-century British history certainly falls into that category – were made surprisingly often not for political effect but as statements of deeply held belief.
Although the Victorians distinguished between the deserving and the undeserving poor they did so within a clear social context. Those same Victorians who believed in laissez-faire as a guiding principle of economic policy also substantially increased the role of the state. From the 1830s onwards, they passed factory, mines and employment legislation and they established central agencies to administer the Poor Law and education for the poor. While some of these initiatives were harsh and punitive, others were the precursors of twentieth-century welfare legislation. By the 1870s, most educated Victorians accepted that ‘social legislation’ was essential to an emerging ethic of public service rooted in social, as well as individual, improvement.3 The Victorians also had a developed civic ideal. They reformed and extended the role of local government, which administered a wider range of services. Administrative experts in Victorian Britain – men such as Edwin Chadwick in public health or James Kay-Shuttleworth in education, for example – would have described policy-making on the basis of ‘gut feeling’ and limited knowledge as defined by prejudice not principle. For these reasons, it is difficult to accept the judgement of one political scientist that Thatcherism can be explained ‘as a reassertion of nineteenth-century liberalism’.4 Another, David Marquand, was much nearer the mark when he pointed out that the ‘vigorous virtues’ of the nineteenth-century market economy were themselves nourished by ‘a stock of moral capital accumulated over long generations to which the norms of the market place were at best alien and at worst anathema’.5
Thatcher hated socialism; it threatened everything she held most dear. She did not dispute with socialists on the basis of theoretical argument but from conviction. She believed that socialists embraced woolly international ideals grounded in spurious perceptions of equality. These failed to acknowledge differences between both people and nations. Such differences should be celebrated, not flattened out. She also believed that socialism was incompatible with patriotism. In a speech soon after becoming leader of the Conservative Party in 1975, she argued that quintessentially British virtues of ‘self-reliance and personal independence’ were under particular attack from a Labour government.6 In 1977, she asserted that ‘the tide is beginning to turn against collectivism, socialism, statism, dirigisme, whatever you call it. It is becoming increasingly obvious to many people who were intellectual socialists that socialism has failed to fulfil its promises’.7 Socialists also behave wastefully because the money they spend is not theirs, but the taxpayers. ‘Socialist governments traditionally do make a financial mess. They always run out of other people's money.’8
Perhaps Thatcher was tilting at windmills. By the 1970s, Labour – though it contained convinced socialists – could hardly be termed a ‘socialist party’. In the early 1980s under the leadership of Michael Foot and with the socialist Tony Benn at the height of his influence, it did move leftwards. The consequence, however, was a party split (see Chapter 3), which helped Thatcher to win a landslide election victory in 1983.
As we have seen (Chapter 1), an economic consensus had been building during the 1970s against Keynesian solutions to economic problems, partly because they caused inflation and partly because they assumed a strongly interventionist role for the state in finding jobs and generating wealth. Thatcher thought that such initiatives were bound to fail. They were almost always at the expense of freedom of commerce and incentives to individual enterprise. For Thatcher, Keynesian policies were the – barely – acceptable face of socialism.
The collapse of the Soviet Union in 1990–1 seemed to validate Thatcher's views about the malignancies of socialism. It was the internal contradictions of socialism, rather than accumulations of capital as Karl Marx had argued,9 that had caused the collapse both of an empire and an economic system. While it cannot be plausibly argued that the fall of what the US President Ronald Reagan called Russia's ‘evil empire’ had much specifically to do with the homilies Thatcher delivered in Eastern Europe (see Chapter 9), she claimed considerable credit for the retreat of socialism in the West.
Britain became a more unequal society under Thatcher. She provided incentives for high-earning risk takers who, in their turn, would create jobs, make a greater impact in overseas markets and thus increase overall national prosperity. General consumption levels increased sharply during the decade 1978–88. The proportion of families with telephones increased from 62 to 85 per cent and the percentage of families using central heating went up from 54 to 77.10 The least privileged, however, rarely benefited. If an unofficial ‘poverty line’ is drawn at half the average national income, the numbers in poverty increased from 5 million in 1979 to 14.1 million in 1992.
The changing structure of the workforce also disadvantaged the poorest families. It is true that more women found part-time and fulltime employment and that young married couples – the so-called ‘Dinkies’ (dual income, no kids) – were able to achieve greater prosperity than ever before. However, though the number of two-income families rose during the Thatcher period, the proportion of families with no full-time worker also rose – from 29 to 37 per cent. Inequality was the inevitable result and the sharpest anomalies were found at the extremes of society. For many in the middle ranks, Thatcherite Toryism brought greater prosperity. After deducting costs of housing, the average real income of British families rose between 1979 and 1992 by 37 per cent. However, the real incomes of the poorest 10 per cent declined by 18 per cent while those of the richest 10 per cent increased by 61 per cent. In 1979, the richest 10 per cent of the population held 20.6 per cent of the nation's wealth and the poorest 10 per cent 4.3 per cent. In 1991, the proportions were 26.1 and 2.9 per cent respectively.11
Thatcher saw no reason for apology. In a speech to the faithful at the party conference in 1988, she asserted that, through increased charitable giving, private enterprise was addressing the ever-widening gap between rich and poor: ‘Many businesses are now giving a percentage of their profits to help the community in which they are situated … The fact is that prosperity has created not the selfish society but the generous society.’12
The ‘facts’ suggested otherwise. As always, many of the very wealthy were making charitable donations on a lavish scale. In doing so, many were recognising both their good fortune and their social obligations. Most also had a more sophisticated understanding of how a complex industrial society works than did Thatcher. Private industry, however, exists primarily to make profits for its shareholders and lighter tax burdens boost profits. Thatcher did not mention that the main business motive for charitable donations was to make optimal use of the generous levels of tax relief they attracted. Tax avoidance was also developing into a substantial growth industry, aided by some of the sharpest financial and legal brains at work in the City. As would become obvious over the next two decades, many senior figures in the finance sector were motivated by selfishness, pure and simple.13 Generosity did not come into it, except perhaps via the hefty donations paid into Tory party funds by some of the most accomplished tax avoiders.14 The enterprise culture had little time for the civic duty of tax-paying. The idea that ‘Taxes are what we pay for civilised society’15 seemed simply outlandish.
Tax policies increased social inequality in Thatcher's Britain. Tax reduction was a central, though unachieved, Thatcherite objective. At the end of 1996, taxation accounted for 37.2 per cent of a taxpayer's annual income; in 1979 it had been only 31.1 per cent.16 Characteristically, though, this strategic failure was masked by a tactically significant political success for Thatcher the politician. The burden of direct taxation in the same period was reduced from 19.9 per cent to 17.7 per cent. Thatcher well knew that the public perceives taxation as relating to the amounts which are taken directly from pay packets via the Pay As You Earn (PAYE) scheme. They think less frequently of the high levels of ‘indirect’ tax that they pay every time they fill their car's petrol tank or eat a meal in a restaurant. In consequence, the Labour Party was unable, at least until 1997, to shed its unwelcome image as ‘the party of high taxation’.
When New Labour came to power in 1997, the chancellor of the exchequer, Gordon Brown, confirmed that it would not increase the outgoing government's expenditure plans. Since rates of direct taxation were also maintained, New Labour expenditure on its cherished social policies had to be funded by a range of ingenious, but cumulatively mendacious, ‘stealth taxes’. National Insurance contributions were the most straightforward of these.17 It was an intentional legacy of the Thatcher years that a political party could not thrive in the UK if saddled with a ‘taxing and spending’ reputation.
The theme of income inequality persisted throughout the Major and New Labour governments. The Blair government, complicit in the culture of greed and grab, did nothing to curb the excesses of executive reward even during the huge stock-market falls of 2001–3 when the ‘kings of business’ could not begin to argue that they had added value to their companies. In any case, the earnings of successful businessmen paled into insignificance compared with the rewards on offer for senior bankers in the years following deregulation (see Chapter 3). In the later 1980s their incomes, though rising rapidly, were relatively modest. A lax regulation regime and back-scratching remuneration committees soon sent them into the stratosphere. In 2011, the outgoing chief executive of Barclays bank, Bob Diamond, received £17.7 million in salary, bonuses, benefits and share awards. Payment by results – the usual limp rationale for exorbitance and greed – did not come into it. Diamond received his substantial bonus even when, on his own admission, Barclay's performance had been ‘unacceptable’. When, after the Royal Bank of Scotland was taken into state ownership in 2008, Stephen Hester took over as chief executive, he was given 10.4 million of the bank's shares – then worth more than £6.5 million – just as a reward for taking a job that initially paid a mere £1.2 million a year.18 It has been calculated that taxpayer support for the banks during the crisis that began in 2008 amounted by 2012 to more than £19,000 from every man, woman and child in Britain. Only a quarter of that subsidy was disbursed in loans to manufacturing industry.19
The most detailed recent study of social inequality was commissioned by the Brown government. It found that:
Britain has moved from being a society where the income of those near the top had three times the incomes of those near the bottom in the 1960s and 1970s to one where, since the start of the 1990s, they have had four times as much.20
The key period for increase in income inequality was that over which Thatcher presided: ‘between the late 1970s and the early 1990s’. It continued to widen thereafter. Furthermore, the weight of economic advantage and disadvantage ‘reinforce themselves across [an individual's] life cycle, and often on to the next generation. It matters more in Britain who your parents are than in many other countries’. Similarly, ‘inequalities in earnings and incomes are high in Britain both compared with other industrialised countries, and compared with thirty years ago’.21 Clearly, the theory of ‘trickle down’, whereby the economic activities of the most successful benefit almost all of society over time, is refuted by a mass of evidence that suggests that the opposite happens.
By the second decade of the twenty-first century, some commentators were arguing that the scandals that engulfed journalists who illegally tapped phones and the bankers who, equally illegally, fixed and fiddled interest rates were symptoms of a deeper malaise:
It has to do with the way we [as a society] tolerated a vast increase in the wealth divide. A society that allows bankers to be remunerated in millions at the same time as there is widespread child poverty has lost its way. Attitudes that encouraged greater and greater inequity are the same ones that created the conditions for the abuse of power that so many of these scandals reveal.22
Thatcher not only wiped the floor with socialism; she changed the thinking of the Labour Party. In consequence, even in non-ideological Britain, the centre of political gravity shifted some way to the right, where it has remained. Ironically, though, this proved to be at the expense of Conservative fortunes. For reasons explained further in Chapters 11 and 12, the fundamentally divided Major government (1990–7) lacked direction while the Labour Party, scarred by four successive election defeats, was reinventing itself as a curiously bland amalgam unimaginatively packaged as New Labour. Major's broken-backed administration was followed by thirteen years of New Labour under first Tony Blair (1997–2007) and then Gordon Brown (2007–10). Even in highly favourable circumstances, the Conservatives failed to win an overall majority at the general election of 2010.
Belatedly recovering from the shock of long-term deprivation of office, traditional Conservatism struggled to recover its old values. More than twenty years after it was last in majority government, the provost (headmaster) of Eton College, a minister under Thatcher and later a member of Major's Cabinet, warned against excessive veneration of the market: ‘Conservatives should never make the mistake of falling in love with free enterprise. When they do, they make fools of themselves.… Private equity firms owning care homes. This isn't a Tory world.… Private good, public bad is just not true.’23
Meanwhile, high-powered economists and political thinkers were weighing in. Many argued that, after thirty years of what might be called ‘brute capitalism’, it was necessary to tame at least the wilder excesses. Capitalism was most effective, and most beneficial, when it accommodated the need for ‘common welfare’. Economists noted both the increasing inequalities in Western society and the limited success of private-finance initiatives that too often saddled supposed beneficiaries with unsupportable long-term debts while making large profits for small minorities.
Economic revisionists also argued that, from the 1980s onwards, right-wing politicians had become besotted with ‘Chicago School’ thinking (see Chapter 1). More economists began to urge the adoption of Keynesian solutions adapted to meet early twenty-first century imperatives.24 These were needed not only to deal with the unprecedentedly wide-ranging and severe economic crisis that began in 2008 but to address the moral dimension at the heart of Keynes's work and that Thatcher had scorned. It was a ‘first-order moral and economic mistake’ to govern, as too many governments from the Thatcher-Reagan era onwards had done, on the basis that ‘[t]he state threatens enterprise, invites damaging taxation, and is the root cause of spreading inflation’. To pull the West out of long-term depression, policies were needed that recognised ‘[h]uman beings need each other for mutual support’.25
Thatcher's drive against the local authorities, most of which rejected her prescriptions in the 1980s, concentrated power in Westminster and, more specifically, in No. 10 Downing Street (see Chapter 5). One distinguished commentator believed that political centralisation ‘has so strained the conventional limits of the British constitution that the constitution became a part of party politics, rather than a set of rules set above conventional party-political conflict’.26 Thatcher's ‘conviction politics’ explains how she used power. She believed that observing constitutional niceties delayed and impeded effective government. Increasingly, she did things her way. Particularly after she won her second election victory (see Chapter 3), fewer big issues were being debated at length in Cabinet, since the outcome had already been determined by small groups of trusted ministers and advisers. By the late 1980s, she had arrogated quasi-presidential powers rather than acting as the chairman of Cabinet. Major made half-hearted attempts to re-establish Cabinet government, though it did him little good (see Chapter 11). Blair governed more like Thatcher. Here, too, the Thatcher legacy mattered.
Perhaps the greatest paradox of the 1980s is that a regime that came to power vowing to get the state off people's backs ended up substantially increasing the power of central government. Its enthusiastic henchmen were highly politicised, though unelected, ‘political advisers’, many of whom wielded greater influence than Cabinet ministers, particularly if those ministers were not of the true Thatcherite faith. As we have seen (Chapter 10), Thatcher made clear her preference for the economic advice given by Alan Walters over that of her ablest chancellor of the exchequer. During the Major and Blair years, the use of special political advisers (none too warmly referred to as ‘Spads’) increased.
Thatcher also appointed chiefs of ‘quasi-autonomous non-governmental organisations’ (Quangos) on grounds of political sympathies at least as much as on executive or administrative abilities. Once again, professional civil servants, their political neutrality tested to destruction by managerialist ministers, were marginalised (see Chapters 5 and 8). One distinguished journalist noted a new culture in government:
Until Mrs Thatcher took the stage, leaks from career civil servants (as opposed to so-called ministerial ‘advisers’ from outside Whitehall) weren't just rare; they were almost unthinkable. So why the change? One reason is the sheer shabbiness of what… government is doing under the cloak of confidentiality. Another is the steady and intentional mix of politicisation and deliberate destabilization which has been government policy ever since 1979.27
Another asserted that ‘officials’ role as givers of objective advice and askers of inconvenient questions has been battered into submission. In its place has grown a system and practice of surrender to ministerial imperatives.’28
Government by central diktat, with specific responsibilities subcontracted to ‘providers’ working to meet often arbitrarily determined ‘targets’ was not specially efficient and certainly not cheap. Centralism had further corrosive consequences. It reflects lack of trust in, and threatens public disengagement from, local politics. A ‘democratic deficit’ results. Using central power to impose ever more regulations, to create ever more structures and to proclaim new (not infrequently moving) targets and performance indicators is not an indicator of coherent government. Rather, it is, recipe for confusion, demoralization and resentment. In the words of one commentator: ‘The consequence has been the remorseless march not of big government… but of big, intrusive and incompetent government.’29
Only recently has it become clear that the deregulation of the City of London, during the so-called ‘Big Bang’ of 27 October 1986, was one of the most significant reforms of the entire Thatcher era. In the 1970s and early 1980s, the City, at least as much as trade unions, had been a haven for restrictive practice. It was controlled by a small number of firms. Influence and success on the trading floor derived more from family connections and ‘jobs for the, privately educated, boys’ than from ability or business acumen. One commentator called the Stock Exchange ‘one of the nation's least loved cartels’ while the City of London nurtured ‘an ossified class structure that seemed to belong to another century’.30
Deregulation brought change as radical as it was speedy – and greedy. Far from threatening the livelihoods of British bankers and stockbrokers, which some Tory politicians had predicted, those prepared to adapt to a faster pace could participate in wealth generation on a scale hardly dreamt of previously. Banks expanded, largely through mergers with wealthy foreign enterprises that had previously been excluded. Stolid, established British merchant banks such as Warburg and Kleinwort Benson were assimilated into larger, and much more aggressive, enterprises. Company take-overs were frequent and during the bidding process share prices reached giddy heights. Opportunities abounded for quick-witted, ruthless stockbrokers and investment bankers to make rapid fortunes through speculative trading, or gambling, as Margaret Thatcher's grocer father bluntly called the buying and selling of shares.31
But Alfred Roberts had been dead for more than fifteen years in 1986 and it is anyway highly doubtful whether his Wesleyan Methodist reservations about the morality of gambling would have influenced his daughter any longer. Bankers could trade more or less as they liked, taking more or less whatever risks they could get away with, confident that the complaisant regulatory regime within which they were supposed to operate was no bar to market fixing, creative accounting and the other shenanigans that comprise the dark arts of money manipulation. Not until the collapse of the US investment bank Lehman Brothers in 2008 and the international financial crisis that ensued did the full extent of banking malpractice and downright illegality begin to be revealed. During the time between ‘Big Bang’ and the collapse of Lehman, London maximised its competitive advantages and established itself as the financial capital of the world. By 2011, and despite the intervening buffeting, the policy chairman of the City of London could still claim that ‘as a financial centre, London remains the envy of the world… the one with the greatest international capital flows’.32
From 1986 on, the deregulated City capitalised on an internationally ‘welcoming business environment’. The speed of the transformation surprised everyone. It is hardly surprising that, well before Thatcher left office, the City's burgeoning reputation had turned political heads, particularly in a governing party that prided itself on its closeness to, and understanding of, business. International financial primacy seemed to confirm that Thatcher had indeed turned things round. But international finance is an arcane business, operating in what to most outsiders is a closed world. Deregulation gave bankers the licence to develop complex systems grounded (if at all) in abstruse mathematical models.
The culture that developed was deeply damaging. Above all, it privileged short-term ‘deals’. Banks required their traders to be quick of brain, fleet of foot and amnesiac as to morality. Substantial fortunes could be made, both from high levels of basic salary but also from related bonuses linked in impenetrably opaque ways to performance. Performance might be more about luck than ability and even good performance was more about improving an individual bank's trading position than lubricating the wider market, which enabled risktaking entrepreneurs to prosper in the ‘real economy’. In the banks, inadequate performance was much more likely to lead to instant dismissal than to constructive retraining. Either way, judgement was short term. Senior bankers and junior traders alike were operating within a parallel, quasi-Klondike, moral universe. Aware that few outsiders knew what was going on in derivatives markets and the rest, they respected only their own kind. They related more to internal codes and less to external perceptions of what constituted fair dealing and obligations to clients.
No matter; for its admirers, this further demonstrated Thatcher's effectiveness in addressing the problems and humiliations of the 1970s (see Chapter 1). The spectacular success of the City seemed to confirm that a buoyant, expanding British economy had no need of its old manufacturing and extractive industries. Banks provided financial services and the loan funding that would make a reality of Thatcher's dream of the UK as a property-owning democracy.
For most of the time, although there was alarm when mortgage rates rose and house prices fell, as in the early 1990s, the property boom went unchecked. During the period 1987–9, national property prices increased by more than 60 per cent. In the London area, they went up by 31 per cent in 1989 alone.33 By the early twenty-first century, banks were encouraging people with limited resources to take out large mortgages, application for which any old-style provincial bank manager would have considered far too risky. But aggressive lending was now so entrenched that risk ruled. All the conditions for an unsustainable ‘housing bubble’ were in place.
Few, from the Bank of England downwards, noticed how skewed all this activity had become. In the years 1997–2007, banks lent £1.3 trillion, supposedly in support of the British economy. This debt mountain was frightening in itself; to whom it was lent much more so. Of this newly created debt, 84 per cent was in mortgages and financial services.34
Neither Major's Conservative government, nor the New Labour administrations of Blair (especially) and, until 2008, Brown, challenged Thatcher's assumption that Britain's economic future lay with finance and services. No one at the heart of government, it seems, paused to reflect on the prime functions of banking: to protect the savings of ordinary people and to provide the capital needed to establish and develop businesses. In a deregulated era banks operated to a more riskdriven model that placed shareholders centre stage. One economist spelled out the all too frequent consequences:
In order to satisfy impatient shareholders, managers have maximized short-term profits by squeezing other ‘stakeholders’, such as workers and suppliers, and by minimising investments, whose costs are immediate but whose returns are remote. Such strategy does long term damage by demoralising workers, lowering supplier qualities, and making equipment outmoded. But the managers do not care because their pay is linked to short-term equity prices, whose maximisation is what short term-oriented shareholders want.35
By the middle of 2012, Britain no longer trusted financial services – and with good reason. The big banks had created a world ‘where men and women with little skill and no moral compass can become very rich very fast’.36 Worse than this, government's relations with big business were characterised by a mixture of deference and fear. Quite literally, Britain's financial services industry had become too big to fail. It was a commonplace among politicians that, if it did, catastrophe would ensue.
On 5 July 2012, at the height of the controversy over interest-rate fixing by British banks, the prime minister of Qatar officially opened The Shard London in the heart of the City. Qatari money had underwritten the project in 2008, thus enabling it to be built at all. In attendance was the Duke of York, who had given up the overblown title of the UK's special representative for trade and investment a year earlier amid controversy over the dubious nature of the financial company he kept and the massive costs that ‘Air Miles Andy’ had run up in keeping it. At almost 310 metres in height, The Shard became the tallest building in the EU. However architecturally distinguished (and opinions differed strongly), it was in the circumstances difficult for the British public to see this new edifice as anything other than a misbegotten shrine to the City's cosseted isolation, selfishness and greed.
Bank deregulation represented a massive step in the direction of ‘neo-liberalism’.37 John Major accelerated the process in 1992 when his government introduced the Private Finance Initiative (PFI), creating so-called ‘public-private partnerships’. The purpose was to fund public infrastructure projects – schools, hospitals and the like – in partnership with private industry. Labour politicians feared a backdoor route to wholesale privatisation but, when in government from 1997, the party, and particularly Gordon Brown, enthusiastically supported the scheme. In effect, PFI endorsed the ideological perception that private industry was more efficient at managing big business projects than was the public sector.
PFI delivered a number of impressive building projects. However, the downsides soon became apparent. In 2002, Jeremy Colman of the National Audit Office explained that initial appraisals of potential projects often gave priority to the politics of a scheme, rather than to its overall cost. The Treasury put pressure on local authorities to favour PFI schemes. As Colman sardonically observed, ‘If the answer comes out wrong, you don't get your project. So the answer doesn't come out wrong very often.’38 Many commentators noted that private enterprise expertise was most marked in agreeing the legal details of a PFI, often on highly advantageous terms. By 2012, it was calculated that PFI projects with a capital value of less than £55 billion would eventually cost the taxpayer more than £300 billion. Meanwhile, NHS trusts were on the verge of bankruptcy, in large part because they could not pay back debts incurred through private-finance arrangements.39 Its defenders pointed out that PFI had been successfully copied in many countries but this vigorous offshoot of Thatcherite neo-liberalism came under increasing criticism early in the twenty-first century. What had been promoted as a magic bullet was killing too many tax-paying patients and storing up long-term debt for those who survived.
‘Outsourcing’ also played an important role in neo-liberal thinking since it also transferred responsibility for providing services from the public to the private sector. It, too, attracted increasing criticism. The huge private security firm G4S suffered exquisite embarrassment when it failed to meet its contracted target to provide 10,000 guards for London's Olympic Games in 2012. The chairman of the West Midlands Police Force, one of many pressed into emergency service, along with the army, to make up a substantial deficiency was scathing: ‘Not only has G4S failed to… recruit enough security personnel, they have also failed to deliver even basic training.’40
When Thatcher won the 1979 general election, the Conservatives won twenty-two of Scotland's seventy-one seats. Only one of these was lost in the Falklands-dominated election of 1983 (see Chapter 3). By 1987, however, when the overall Conservative majority in the UK was reduced from 144 seats to 102, the Tories did disproportionately badly in Scotland, losing 10 of their 21 seats. The outcome in Wales was scarcely less stark. The fourteen Tory seats won there in 1983 were reduced to eight. Both the Scots and the Welsh resented Thatcherite policies that neglected the needs of those long-established manufacturing and shipbuilding industries that were strongly represented in both countries.
Thatcher's successors were unable to halt the Tory party's slide. The Conservatives lost every seat in Scotland when John Major was defeated in 1997 (see Chapter 11). At each of the three general elections so far held in the twenty-first century, they have won only one seat. Wales produced the same wipe-out in both 1997 and 2001, although it did re-establish a foothold in 2010 with victory in eight mostly rural seats. Nevertheless, it was almost thirty years since Wales had returned Tory MPs in double-figure numbers.
Thatcher's economic and industrial policies stretched loyalties within the UK to breaking point. Their effects were most dramatic north of the border. In the mid-1980s, Scottish nationalism awoke from its long torpor. The first-past-the-post voting system militated against the Scottish National Party (SNP) making deep incursions into entrenched Labour majorities in Scotland and it won only two Westminster seats in both 1979 and 1983. It held three when Thatcher left office and the complement has never exceeded six. However, the SNP's share of the vote went up steadily and significantly. In 2010, the Nationalists won 19.9 per cent of the popular vote. Since the Liberal Democrats won 18.9 per cent, the Conservatives were pushed into fourth place in Scotland both in seats won and voting share (16.7 per cent).
The first elections for the Scottish Assembly, responsible for most internal matters under its newly devolved powers, were held in 1999. The SNP won almost twice as many seats as the Conservatives (thirty-five to eighteen). In 2011, the Nationalists won sixty-nine seats, becoming the first party to win an overall majority in the Assembly. It immediately pushed for a referendum on independence. The prospect of a fully independent Scotland was less implausible than at any time since the political union of England and Scotland in 1707.
In purely electoral terms, the Conservatives did not need support in either Scotland or Wales. Psephologists agreed that a solely English parliament would give the Conservatives a virtual monopoly of power. If the 1979 general election had been held only in England, Margaret Thatcher's overall majority would have been ninety-six seats rather than forty-three. In 1983, she would have won a majority of 201. It was to general surprise that John Major eked out a narrow overall Conservative majority of twenty-one at the election of 1992. If fought in England alone, he would have been in dreamland. His majority – 114 seats – would have been almost five times as large. Finally, an all-English general election in 2010 would not have produced a hung Parliament. Instead of being thirty-six seats short, David Cameron would have luxuriated in a comfortable overall majority of sixty-three.41
Issues of culture and belonging are not, of course, circumscribed by dry-as-dust electoral arithmetic once every four or five years. Identity matters more. How do the constituent elements of the UK interact and to what extent do citizens still perceive themselves both as separately English, Irish, Scottish or Welsh while also members of the confederation officially known as the United Kingdom of Great Britain and Northern Ireland? In Scotland and Wales, Thatcher's policies caused many to reflect on their allegiance to a United Kingdom.
Thatcherism also divided England. Deep, if uneven, channels of separation were dug between the main manufacturing and mining areas of the north and the increasingly finance and services-driven south. In the south-east, these service industries explain why, in the period 1993–2008, London achieved an overall annual growth rate just short of 5 per cent. At 4.7 per cent, the rest of the south-east was not far behind. By contrast, the north-west and Yorkshire had annual growth rates of barely 4.0 per cent while the north-east had an annual growth rate of only 3.6 per cent. The index of productivity per person paints an even starker picture. Using index numbers, with 100 representing England as a whole, productivity in London in the years 1993–2008 rose from 138.0 to 147.8. In the north-west, it declined from 93.1 to 87.7. The north-east, where productivity declined from 90.7 to 81.1, again brought up the rear.42
Calculations of ‘gross value added’ – a measure of the goods and services produced in a given area – also show that London and the south-east became increasingly productive relative to other regions, and particularly to those where the ‘old industries’ concentrated. The value added in the north-east was a mere 45 per cent of London's. The West Midlands, whose motor manufacturing and electronic industries had been powerhouses of economic recovery in the 1930s, now lagged a long way behind. By 2009, its value added was less than a half of London's.43
Regional variations provide an important measure of health and morale in nation states as a whole. This is why the EU quantifies intranational developments in member states. Since the 1980s, its research confirmed that British society was becoming increasingly unequal. By 2010, the UK had the second largest regional variation in GDP per inhabitant.44 Only Turkey's was greater. Sweden's was three times less than that of the UK.
From 2008, prolonged recession exacerbated regional variations. In 2011, the Coalition government, while asserting that the growth of private-sector employment ‘will more than compensate for the reduction in public sector employment’, acknowledged that ‘job growth may be challenging’ in local authorities impacted by retrenchment in public sector employment.45 In the plainer English it should have used, the government meant that ‘job growth’ would be ‘difficult’; hardly surprising since it required local authorities to ‘retrench’ or, in similarly plain English, ‘cut jobs’. ‘Retrenchment’ had particularly severe consequences in the underprivileged areas, further widening a cavernous gap between rich and poor.
In 1984, Thatcher had said that ‘creating new jobs is the main challenge of our time’.46 She meant what she called ‘real jobs’, few of which were planned for the public sector. In the neo-liberal lexicon, ‘real jobs’ were created in the private sector through research, investment and development in new technologies. In practice, and despite shining exceptions that included ‘rebirths’ in Leeds and Manchester, insufficient opportunities of any kind were created in the old industrial areas. Services and finance created new jobs disproportionately in places where they were needed least. Although the Blair and Brown governments funded regional policies, these generally increased the cost of welfare benefits more than they created jobs. As such, they were, at best, sticking plaster. Thatcher's neo-liberal policies produced disproportionate concentration of economic prosperity in the southeast and growing discontent elsewhere. The great irony is that the Conservatives, who always stressed their commitment to the abiding integrity of the UK, did so much to threaten its continuance.