Transcription
Margaret Thatcher was, you know, you sink or swim on your own. It's not for us.
With Andy Burnham claiming in his first speech as Prime Minister that Britain took some wrong turns in the '80s. That was of course a decade when Margaret Thatcher was in power. Evan, he's now promising what the biggest changes in 40 years. So, we need to dive into what Thatcherism was. How would you sum up?
Right. So, I I think it was a pretty radical program in a number of areas moving Britain from a kind of a somewhat mixed economy with a very large state intervention to a much more market-led economy. And I think you could probably say there were sort of five or six different things in that. One was privatizing things that were public sector, putting them into the private sector. It started with um the GPO, the telephone bit of the General Post Office, which we then renamed British Telecom and then privatized. And then went right through the '80s gas, water, rail, all that. So, that was one very big part.
Second really big part that I think people forget was deregulating bits of the economy. We had quite a regulated economy. So, it's amazing to think that in those days there were just a lot of rules and regulations. You couldn't buy reading glasses at the chemist like you can now. You had to have an optician's appointment. When you went abroad, there were exchange controls. There was a limit on how much money you could take out of the country. In fact, there was a little page in the passport where they could write in if you're taking out taking out a large sum of money. Um all of that in in loads of areas, the City of London very deregulated. We had a big bang in '86, changing the rules, lightning the rules. A lot of deregulation across the economy. So, privatization, deregulation.
And then the other really big area of that I know you wanted me to get get to which is in macroeconomic management of the economy where governments had desperately tried to hold inflation down by price controls, by income and wage controls. Margaret Thatcher said, "Forget all of that. If you If you charge too high a wages, you'll just lose your job. We'll have much higher unemployment." So, Margaret Thatcher made a choice to let unemployment go much much higher, squeeze down on money supply, just say there's not going to be inflation, we're not going to indulge your high wages, you just go out of business, your company goes out of business, and you lose your job. It was a very brutal medicine.
Yeah.
And it got inflation down in a very brutal way.
And because And at that time, I mean, she had the power to wield this sort of heavy stick because the government at that time was in control of interest rates, and interest rates went up to a I mean, a shocking 17% and they stayed pretty high through the whole decade.
Right. We had high interest rates, we had a tight monetary policy bearing down on inflation, and it caused a lot of unemployment, and you know, that the scar of that remains. And it was a very painful medicine.
affected were I mean, I was reading Northern Ireland, one in five people were out of work in 1983. And And the other areas particularly hit, Northern England and Scotland.
Right. So, I was going to say the very last thing that I would say was a another component of Thatcherism was a willingness and a desire really to see the economy make a transition, and to make a transition from old industries in which Britain perhaps wasn't as competitive as it had used to been, towards new industries, particularly service industries around the banking and the city. And whereas previous governments had desperately tried, if you like, to keep these old industries alive, Margaret Thatcher was, you know, you sink or swim on your own. It's not for us to to to keep you alive. So, you had all these industries like the car industry shrank, the mining industry, obviously very famous case, the steel industry. All these industries um shrank very markedly in in those years. And it
And then we should say in parallel, and particularly with mining, it was obviously very apparent, she took on the unions.
And and then to make all of this work, you had to take on the unions, you had to weaken union power, and to thus say it's between you and your employer how your company does, what wages you get, and whether your company survives. And it was a it was all you can say is it was a very tough it was a very tough medicine. And by the end of the '80s, when she left, you can say unemployment had come back down again because essentially you know, the the medicine had sort of worked in getting inflation down, getting inflation expectations down, and squeezing it out, and unemployment started coming down again. Um But what the the core
I think the lowest it got to was 2 million in 1979.
Unemployment, yeah. No, it was it was it just felt like we went from one regime where unemployment was below a million to a new regime, a new world where it had peaked over three and was it was comfortably sort of over two. Um But it so it was a very
interesting that I mean the I mean it's listening to this idea that it's between you and your employer, but you haven't necessarily got the power of the unions any longer.
Exactly, exactly. So, it really was between an individual and an So, it was it was a massive it was a massive shift of power. If you want to look at it in the kind of traditional Marxist in way of a battle of capital versus labor, it was a big shift towards the forces of capital away from the forces of of Um it's not quite as simple as that, because what was going on is there were lots of industries that were flourishing in the south of England. Service industry, banking, and there were lots of industries that were struggling, decaying, and and were exiting. And they tended to be geographically confined to the the north north of England. The reason why there is persistent distaste for Margaret Thatcher and why a lot of people are not convinced by the growth rates that you hear quoted is that never was there really expressed a plan for what you did in those areas where the industries were dying. So, saying, "Well, look, we've opened new service industries in in and around the M25 outside London." That's no compensation if you're in an industry that's been dying in the north of England. So, I mean, it's And and never really did I think people feel that she managed to convey a vision for half the country, the half the country
Yeah.
whose whose industries had not done so well.
And there were some things in a way that exacerbated this divide, weren't there? And you can look at, for example, the right to buy, because she thought it was a right that people owned their house. So, she introduced the idea that you could buy your council house.
council house.
And up to a 70% discount.
Discounts? Was it 70%?
Yep. A million people
A lot of people did
in over that decade bought their council house. I think there were From what I understand, half a million council houses were built during the period, but obviously not as much as were sold. And what you then had, of course, was house uh, prices soaring away towards the end of the decade. So, again, those the haves did well, but in order to tackle the house price rises, in uh, interest rates had to go up. And so, the have-nots did worse.
Yeah. Now, well, look, here's here's the way a one way of looking at it is Margaret Thatcher extended the ownership capitalist share owning home owning democracy to a bigger proportion of the population. Predominantly say through this policy of selling council houses so a lot of people who were you know social tenants now were home owners. So you've extended the wealth and you gave them a discount to buy it. So now they're feeling a little bit richer. So you you've extended the ownership economy. And BT tell said remember that? And shares discounted shares on the on the privatized industries. But at the same time you've sort of perhaps worsened the position of the people who you haven't extended that economy to. So if you want the glass half full picture it's like oh the glass is half full. We've got more people owning their homes and all of that. Then you say but hang on for people who haven't born a share of this kind of new ownership economy that you're popular capitalist economy you're creating. They're now left with fewer council homes, fewer choices. You've burned through lots of public sector wealth by giving it to these other people in the form of discounts on on shares and houses. So you've kind of you've you've created a a new divide if you like and that that was why that is why there's never going to be a resolution to whether you are in favor of that because because there are people who exactly exactly good some things that weren't so good the economic yeah the performance of the economy did change and we were we were looking like a more dynamic economy at the end of it than at the beginning.
Of course the legacy is long lasting because it hasn't been undone.
No.
And but when you look at other nations I mean you you mentioned various things that how life changed like reminding people what life was like in the 70s and I'm thinking well a lot of that would have happened anyway a lot of that would have happened under other people.
And a lot of the deindustrialization that happened under Margaret would have happened under other people. And you can see that obviously mines in France have closed down and mines in Germany have closed down. And so a lot of this stuff, if you like, had a kind of historic inevitability about it, perhaps.
So when we go back to the wrong turns, like to bring it up to date, like you think, well, was everybody making these wrong turns?
Yeah, I mean I think I think it's very interesting because actually I think the thing that Andy Burnham is referring to is not all the regulation and the exchange controls and diminishing the City of London and and and and all that. I think what Andy Burnham is is talking about is the deindustrialization that affected the north of England. And it's it's a north of England a strong north of England perspective because that was where the the changing economy hit hardest and there was least least benefit.
And in addressing that
And I mean the the the thing the the thing to say about that is that that happened in two waves. It happened under Margaret Thatcher but there was a second a second wave, really, which is when China became a big part of the global economy in the 2000s. And this was sort of under Tony Blair's watch. And companies all said, "We should put our factories in China." So there was a lot of that deindustrialization occurred under Thatcher. And I think you can argue it was more painful than it needed to be under Margaret Thatcher. There were macroeconomic debates about whether we overshot under Margaret Thatcher. But there was a second wave when when I don't think you can blame Margaret Thatcher for kind of what happened in the 2000s or for the offshoring that occurred when China became a very big player in the world. So um
And if you want to be in government
That's the bit that Andy Burnham I think wants to kind of try and try and rectify or sort out.
Which surely comes down to energy prices because in automated factory, it's energy that's
Well, there's energy prices. We've talked about it before that a lot of what happened in the 2000s, companies are saying these very very geographically dispersed supply chains. You know, you've got Suez Canal ships getting blocking it and you've got the Strait of Hormuz not work. You know, you just want to slightly bring bring things closer to home.
Onshore again.
And then
[clears throat]
Andy Burnham, and I think it's really interesting idea, is thinking if we're going to be spending a lot more on defense, you link that to an industrial policy and you start thinking about some of the kind of building your own kit so that you've got that sovereign capability and that is an opportunity to link the defense agenda to the industry agenda and to
Backing the British business.
But it'll be Look, that is I think that is the bit of all the things we've talked about, that is the bit that Andy Burnham really wants to get a a grip on is how do we reinvigorate those economies of of towns that lost out under Margaret Thatcher and have never kind of quite recovered since.