Rolling Back of the State 1979/90 - The Impact of Thatcher 1979 - 1990

Thatcher’s views

·       Strong moral values rooted in Methodist upbringing

·       Felt state intervention was to blame for Britain’s decline; high taxes discouraged entrepreneurship, state ownership crushed innovation and competition, welfare state bred dependancy

·       Welfare state = nanny state

·       Wanted to break from consensus

·       Inspirations:

o   Keith Joseph - new right conservative

o   Friedrich von Hayek - economist, published a book advocating against a large welfare state

o   Neo-liberalism - free market economic thinking, against state intervention and regulation, became popular among conservatives in the 70s

·       Aims:

o   Reduce the size of the state - small government

o   Reduce government interference in people’s lives

o   Promote efficiency through privatisation and ‘contracting out’

Civil Service

·       Originally 732 000 civil servants in Britain - 3x more than comparable nations

·       Thatcher brought in business-minded people and advisors from outside the government to help slim down the civil service

·       Thatcher abolished the Civil Service Department in 1981 - she saw it as a trade union

·       MINIS - introduced by the Environmental Minister, allowed him to closely monitor the cost and responsibility of civil servants, inefficiencies could be uncovered and cut out (job losses)

·       ¼ environmental minister workers were fired in 3 years

·       MINIS was rolled out to other ministries

·       By 1988 22.5% of civil servants had been sacked - saving £1 billion

·       ‘Next Steps’ report of 1988 recommended a less centralised civil service + more flexible ‘agencies’ that could work with the private sector

·       By 1991 there were 57 of these agencies - by 1997 76% of the civil service worked in 100 different agencies

·       Brian Harrison - ‘ the most substantial revolution within the civil service since the 1850s’

Success?

YES - Thatcher slimmed down the civil service (by 1988 22,5% servants had been sacked), made it more co-ordinated and efficient (use of agencies instead of centralised service).

Local Government

·       Thatcher wanted to slim down local government and reduce its independence

·       1985 Local Government Act allowed her to abolish councils - Greater London Council + 6 others city councils abolished

·       Wanted to cripple the labour councils who tried to fight her policies 

·       Cut central government payments from 60% to 49% of funding and introduced rate ‘caps’ to stop local councils plugging the funding gaps

·       ‘Community charge’ was rolled out in 1989 in Scotland and 1990 in England and Wales - became known as the ‘poll tax’ and was hugely unpopular as the poor paid just as much as the rich (regressive tax), led to riots and the tax was eventually abandoned

·       Encouraged councils to use ‘contracting out’ to promote greater efficiency and reduce costs. Wandsworth was an example - by 1985 staff numbers in Wandsworth had fallen by 1/3

·       Nationally the total number of government employees feel from 2.5 to 2.1 million between 1979-1995

·       ‘Right to Buy’ in 1980 intended to reduce people dependence on local government and promote pride and responsibility through private ownership:

o   Scheme hugely popular 200 000 council houses sold between 1982--83

o   However lack of available council houses made it harder and more expensive for councils to house the poorest in society

Success?

MOSTLY SUCCESSFUL - Thatcher was able to reduce power of local government and slim it down, however in doing this she increased the power and interference of central government - against her aims

NHS

·       Thatcher wanted to slash NHS just like civil service - would have loved to abolish tax funding entirely and enforce private health insurance

·       However NHS the ‘crown jewel’ of the welfare state - too beloved by the public to change radically

·       Between 1980 and 1987 spending on NHS rose 60%

·       Third election victory in 87’ gave Thatcher more confidence

·       1989 ‘Working for Patients’ white paper called for creation of ‘internal markets’ with healthcare

·       Free market elements introduced after Thatcher’s fall from power - reforms highly unpopular with doctors and did not deliver cost savings:

o   spending on NHS managers increased from £25.7 million to £383.8 million

o   1996 34 NHS trusts were in debt

o   Quality of care decreased - 2% of hospital beds lost between 1990-1994

o   Requirement to ‘meet targets’ disliked by doctors and nurses

Success?

FAILURE - NHS spending rose at a slower rate than previous governments, but Thatcher was not able to cut costs (the NHS rose from 12% of government spending in 1979 to 15% in 1996) or improve efficiency with free market principles (internal markets a failure)

Education

·       Thatcher wanted to raise education standards and give more value for money

·       Education Minister created a national curriculum and merged the O-level and the Secondary Leaving Certificate into one GCSE

·       New syllabus rolled out in 1986

·       1988 Education Act made the National Curriculum compulsory, introduced the ‘Key Stages’ with examinations

·       Exam results used in league tables - to encourage competition, drive up standards and encourage parents to pick the best schools for their children

·       ‘Better’ schools were quickly oversubscribed, demand for schools drove up house prices in the catchment area - poorer families were priced out of good schools

·       Schools also allowed to get funding directly from the central government, reducing the power of LEAs, giving head teachers and governors more control of budgets and spending

·       1,200 schools became more independent this way

Success?

PARTIAL SUCCESS - Reforms did increase competition and drive up standards, local government power was reduced, but poorer families were ‘priced out’ and central government power increased - state not rolled back

Overall:

Thatcher was successful in slimming down the state in some areas (civil service, local government) but government spending was still significant in the Thatcher era, and the state was not ‘rolled back’

Thatcher failed to cut overall government spending and the total tax bill also rose throughout Thatcher’s time in power from 38.5% to 41% (1979-1990). Average tax for each person rose from 31-37% of their income