Today sees the death, by stroke, of the UK’s longest serving and only female Prime Minister Margaret Thatcher. Champagne corks might well be popping in Trafalgar Square, but we must remember that while the woman has died (nothing to gloat over in and of itself); her damaging world view has seized the body politic and continues to choke it of all compassion.
Thatcher’s Finest Moments
Margaret Thatcher led the country for 11 years, between 1979 and 1990 and during that time she successfully oversaw the transformation of the UK economy and society from neo-socialism to neoliberalism. If neo-socialism was deemed a disaster for leaving the UK with a National Debt of 45% by 1980, then what can we make of neoliberalism which has racked up a debt of 138% by 2013?
Tony Benn, speaking of Thatcher to the BBC today rightly stated that Thatcher realised that to destroy the Left in the UK you needed to do three things: neutralise Local Government, crush the Trade Unions and most importantly, convince people there is no alternative to neoliberalism. It must be accepted that in all three aims she has been enormously successful.
Let us take a look at the key policies and outcomes of her government, and the enduring legacy of her premiership.
Thatcher’s Local Government Act 1988 contained the notorious Section 28. This clause stated that a local authority “shall not intentionally promote homosexuality or publish material with the intention of promoting homosexuality” or “promote the teaching in any maintained school of the acceptability of homosexuality as a pretended family relationship”.
This meant a generation of young gay and lesbian children growing up in a vacuum where their own developing sexuality was invisible. As one of those gay children, I remember the isolatiom. It was left to programmes like Brookside broke with the Beth Jordache storyline, to teach me I was not alone.
The Council House Sell Off
The great council house sell off, Thatcher’s plan to turn the working class into the new property class, was a manifest failure; more than a third of ex council houses now sit in the property portfolios of wealthy landlords. In fact, the son of Thatcher’s Housing Minister at the time the ‘Right to Buy’ scheme was launched is now the proud owner of no less than forty ex council houses.
The limited remaining council housing rationed out to the poorest of the poor with council housing waiting lists and mortgages ever further out of reach, everyone else is a hostage to the private rental market dominated by these landlords.
Since then, decades of defunct housing policy has left the UK with a housing shortage crisis. The UK is building 100,000 homes a year less than it needs to in order to meet requirements. The National Housing Federation issued a report last year which showed Housing Benefit has doubled in recent years as a direct result of an astronomical increase in housing costs. The report shows an 86% rise in housing benefit claims by working families, with 10,000 new claims coming in per month. House prices are now 300% higher (in real terms) than in 1959. If the price of a dozen eggs had risen as quickly, they would now cost £19. Rents across the UK have risen by an average of 37% in the UK in just the last three years.
In 1973 unemployment was at a record low of 3.4%. In 1979, the UK unemployment rate was 4.7% and 53% of the public felt it was the largest issue facing the UK. Unemployment in the UK reached a record high under the Thatcher government in 1984 with 11.9% of working age people in the UK unemployed. The legacy of high unemployment is being continued by the current Conservative/Liberal Democrat coalition who oversee an unemployment rate of 7.8%.
A great sell off occurred under the Thatcher government from 1979; British Aerospace, Cable & Wireless, Jaguar, British Telecom, British Steel, British Petroleum, Rolls Royce, British Airways, and utilities such as water and electricity all went up for sale. The state-built, subsidised housing stock was put up for sale. Prior to Thatcher, all services and industry listed above were state owned, with wages and prices controlled by a democratically elected government.
These policies have been continued since, and the result has been a dramatic rise of the cost of living.
In the ten years between 1999 and 2009, the annual salary rose 13.6%. During the same period, house prices went up 130%, a loaf of bread went up 147%, a litre of petrol went up 42%. This goes some way to accounting for the fact that personal debt rose during this period by 158% as access to credit created consumer demand which concealed the gap between wage and cost of living inflation.
Inflation according to the Consumer Price Index (CPI) was 17% during the same period. This means a real terms wage drop of 7%.
However, CPI figures represent a wide range of purchases which many average or below average earners do not buy. The UK Essentials Index which focuses on the kinds of everyday items which the UK’s working and non working poor buy showed an inflation rate of 33%.
It is clear and beyond doubt: it simply costs more to live in a state where the basics we need to survive are handed over to private interests to profit from. We had it better when we shared.
The Big Bang
The Big Bang was the Thatcher government’s rampant deregulation of the financial services industry in 1986. The main changes were the abolition of commission charges, the removal of stockjobber intermediaries which made stockbrokers into market makers, and the rise of computerised trading.
The shockwaves of Thatcher’s Big Bang led directly to our Big Bust with the 2007/8 Financial Crisis. Despite current propaganda that the national debt and the ensuing austerity policies are required to roll back excesses in public spending, the reality is the Financial Crisis was caused by the unregulated financial services sector.
There was collusion between government and the financial services industry, to avoid proper regulation of financial services in general, and the derivatives market in particular. There was intense lobbying in the US and the UK to maintain this position, with senior government figures on both sides of the Atlantic stepping in directly to prevent the Commodity Futures Trading Commission (in the US) and the Financial Services Authority in the UK, from ever coming close to putting the appropriate safeguards in place around these products.
This left banks, brokers and insurance companies free to mount the biggest assault on fiscal logic known to man. They started to rapidly expand their theoretical balance sheets by leveraging debt to almost infinite ratios.
High Street Banks and Mortgage Providers, credit card companies and other debt merchants chased the custom of individuals with little or no regard for their ability to pay back the loans. They did this to sell on to Investment Banks as Collateral Debt Obligations.
This product was then, with the support of the Cartel’s gatekeeper, the Credit Ratings Agencies, declared Triple A for its credit worthiness; the same as a government bond.
The banks then took these investment products and sold them to unknowing pension companies who bought them on the basis that they were now deemed perfectly safe.
The same banks then insured for the very product they sold the pension firm going toxic. These are called Credit Default Swaps (CDS). There was no limit on who could set up these CDS’s either. So, banks could place greater risk into the market by betting not only on their own toxic sell offs, but those of other banks.
At every point of these exchanges, significant fees are being handed over, generating paper profits, making balance sheets look amazingly positive, with no actual product or service underpinning them.
Finally, in 2007 all those little over leveraged consumers around the world started to find it impossible to repay their loans. As CDS claims went in the insurers couldn’t cope with the financial hit and started to fold, the brokers balance sheets couldn’t handle the hit and started to fold, and the high street banks, unable to claim from broker, bank or insurer started to fold.
However, instead of these corporations collapsing, this extraordinary mountain of toxic private debt was transferred into public debt by the Bank Bailout.
In the bailout of 2008/9, the UK government chose (without consultation) to guarantee funding to the banking sector, of 101% of GDP. That is, the UK diverted over £2trn of tax payer money from public expenditure, to a handful of banks.
This is equivalent to almost 3 times its entire annual budget; twenty years of NHS spending (£106.7bn a year); forty years of education spending (£48.2bn); or five hundred years of job seekers allowance (£4.9bn a year).
Not one banker went to court or jail. Not one new regulation has been placed on the financial derivatives market. These same products are being packaged and sold across the financial services industry right now. The Banks were left free to carry on business as usual, on our dime.
Thatcher also radically overhauled the tax system in favour of corporations and the wealthy at the expense (literally) of the average wage earner.
UK Corporation Tax in 1984 was 52%. By 1986 it was 36%. In 1999 it dropped to 30% and in the most recent budget it was cut to 20%.
Company taxes now constitute only 12.5% (Corporation Tax is just 7%) of the tax revenues of the UK. In comparison, the people’s taxes, (income tax and VAT) make up more than 60% of the tax income. Corporation Tax is lower today than at any time in its history.
Heroes of Thatcher credit her with ‘taking on the unions’ as if this were some sort of benevolent act for the country as a whole, and not simply a dismantling of the rights which had protected the British worker from the overwhelming power of the corporate system.
Among the Thatcher government’s union busting policies were the abolition of the closed shop policy which meant people no longer had to join a union to seek employment in a trade. They imposed strict rules for secret ballots which had to be held before a ballot which removed the successful tactic of flash strikes, or flying pickets.
The Bitter Legacy
But beyond the Poll Tax, the Union Busting, the Big Bang and Section 28, the bitterest legacy of Thatcher has been the neoliberal consensus. Thatcher’s announcement that ‘there is no such thing as society’ was perhaps the death of a cooperative culture in the UK. We are a crueller, less equal society for it. In the UK today, the richest 10% are 100 times richer than the poorest 10%. The gap between richest and poorest is double that of our European neighbours. For these reasons, whilst many of us are far too decent to gloat the death of the woman, we reserve the right to refuse mourning her as a national hero and work towards the day when we can burst champagne corks at the demise of her brutal legacy.