We are all still living with Thatcher’s legacy – for now
Margaret Thatcher’s legacy is one of rising inequality, ruthless de-industrialisation and decimated communities. It’s an economic model past its sell-by date, writes Diane Abbott
I entered Parliament in 1987 when Margaret Thatcher was beginning her third term. There is no doubt that she was a striking figure in a Parliament much more overwhelmingly male and elderly than it is today. And there is no doubt also that most of the serried ranks of Tory men sitting behind her in the chamber of the House of Commons were terrified of her. On the Labour opposition benches, we would speculate as to why that might be. Many of us concluded that it was because of the fraught relationship some of these upper class men may have had with their nannies.
It is also beyond question that Margaret Thatcher was a transformative figure. But the question is were the transformations she wrought in British politics, the economy and society all for the good? Part of the reason why, at the distance of forty years, the Thatcher years have something of a rosy glow is the extent to which New Labour quietly accepted much of her policy thrust. Her Chancellor Geoffrey Howe once said her “real triumph was to have transformed not just one party but two, so that when Labour did eventually return, the great bulk of Thatcherism was accepted as irreversible”. What Margaret Thatcher shows us is that a genuinely radical leadership can create lasting change.
One of the transformations often ascribed to Margaret Thatcher was the attitude to women in politics. But the truth is that, although there was symbolic value to Margaret Thatcher being Britain’s first woman Prime Minister (and it was very much part of her “brand”) in practise she did next to nothing for women in politics, including in the Tory Party. At many points in her premiership she had fewer women in her cabinet than her male Tory predecessors. This is by contrast with her successor Theresa May who, whatever her other faults, has systematically promoted talented women. Just recently she has promoted a first woman to Secretary of State for Defence. Margaret Thatcher, however, seemed always to want to be the queen bee surrounded by flocks of docile men (although Michael Hesteltine had other ideas).
Where Margaret Thatcher did achieve real transformation, although a malign one, was the levels of inequality which spiralled in her era. Until she became Prime Minister Britain had become a steadily more equal nation. The process had begun during the post-war years. The data available shows that the share of income going to the top 10% of the population fell over the 40 years to 1979, from 34.6% in 1938 to 21% in 1979, while the share going to the bottom 10% rose slightly. But as soon as Margaret Thatcher became Prime Minister this process of narrowing inequality reversed sharply. Inequality rose considerably over the 1980s, reaching a peak in 1990. There are many aspects of Margaret Thatcher’s policies which may have increased inequality, but her systematic weakening of trade unions (what she described as flexible labour markets) was undoubtedly part of it.
But perhaps the most fundamental way in which Margaret Thatcher transformed the British economy was the growth in the importance of speculation and financial trading to the economy, at the expense of industry. Some of this was inevitable; employment is always changing.
But the Thatcher de- industrialisation was ruthlessly executed. It reached its peak with her year-long confrontation with the National Union of Mineworkers. Margaret Thatcher defined miners as “the enemy within”. She won, but to this day decimated mining communities struggle with the social and economic consequences. More widely, unions have never recovered the same power.
In the Big Bang, banking deregulation, tax cuts and the ‘loadsamoney’ culture she fostered were the origins of the 2008 global financial crisis. While Norway built up an enormous sovereign wealth funds with the proceeds of North Sea oil, Thatcher and Lawson frittered it away with tax cuts. This led directly to the unsustainable ‘Lawson boom’, which ended with yet another crash.
In fact, contrary to widespread assertion, Thatcher’s economic record was an extremely poor one, much worse than the preceding comparable period when Britain had become ‘the sick man of Europe’. In 30 years between 1949 and 1979 real GDP more than doubled. But in 30 years from 1979 to 2009, which were the Thatcher-Major-New Labour years, the economy grew at a considerably slower rate. In terms of per capita GDP, which goes to people’s prosperity, the contrast is even more stark. In the 30 year before Thatcher real per capital GDP almost doubled, but in 30 years of her era it only grew by a little over half.
Margaret Thatcher is mostly remembered for the poll tax, the miners’ strike and the Falklands war. Her transformative effect on the British economy deserves to be equally well remembered. Remembered but not admired.
Diane Abbott is Labour MP for Hackney North and Stoke Newington and Shadow Home Secretary