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Thatcherism – The End of Consensus

Radical change develops as a reaction to some existing situation that is causing problems. There were two aspects that Thatcherism and what have been called New Right ideas reacted against:-

1. The period from 1945 to the 1970s was one of considerable political agreement. The sharing of power by the parties during the war and the Conservatives’ acceptance of the main elements of the programme that the post-war Labour Government had carried out, after its landslide victory, led to a broad consensus around a number of areas:-

  • After Labour had nationalised a few basic industries the boundary between the public and the private sector was only changed in a few industries, such as steel and road transport
  • Keynesian economic management was adopted to prevent unemployment and manage excess demand by deflating and inflating the economy as necessary. This was accompanied by a policy of Government help to the regions that had seen high unemployment in the 1930s
  • A constructive relationship was developed with the trade unions to consult them on issues that affected them and Government intervened when needed to help settle industrial disputes
  • A welfare state, including a National Health Service and a local authority house building programme, was supported which was mostly universal but with a few means tested elements
  • A decolonisation programme, the Atlantic Alliance, an independent nuclear deterrent and (from the 1960s) participation in Europe were broadly agreed by the leadership of both parties

All this was in the context of Britain’s relative imperial and economic decline and Government managed the crises that this change created from time to time.

Mrs Thatcher’s adversarial nature revolted against the idea of consensus and she called it,

“The process of abandoning all beliefs, principles, values, and policies in search of something in which no one believes, but to which no one objects; the process of avoiding the very issues that have to be solved, merely because you cannot get agreement on the way ahead”.

2. By the 1970s, problems were occurring that centrist politicians in the two parties were finding intractable.

  • The rise in oil prices in 1973 sent a shock through the western economies. Inflation in Britain rose to a peak of over 25% in 1975 while unemployment also rose. Keynesian economic management did not have a prescription for simultaneous inflation and unemployment. The Labour Government began to abandon Keynesianism and instituted public expenditure cuts and a prices and incomes policy
  • The Wilson Government of 1966-70 and the Heath Government of 1970-4 had both failed to carry through reform of the trade unions and the miners’ strike of 1973-4 had contributed to the end of the Heath Government. The Labour Government’s incomes policy began to collapse in the winter of 1978-9 with major strikes in the public sector
  • The view developed that Britain was facing a crisis of ungovernability. As well as the problems with the trade unions, consensus politics had allowed interest groups to influence government with the result that public expenditure increased to meet their various demands
  • The idea of welfare dependency developed as a critique of the universal Welfare State
  • International free trade policies had increased the interrelationship between the world’s economies to help produce the process that we now know as globalisation, leading to new challenges for the British economy
  • Manufacturing industry was collapsing in the inner areas of main cities leading to a new inner city problem

On the left, the new situation was seen as a crisis of welfare capitalism and the reaction, within the Labour Party, was to demand an Alternative Economic Strategy and a more socialist direction for a future Labour Government.

On the right a set of ideas about a smaller state and changes in economic policy coalesced into the intellectual movement that has been called The New Right.