a businessman who by 1978 had become the chief strategist in her private office. In the autumn of 1977 Hoskyns presented Thatcher with a paper, ‘Stepping Stones’, which set the objectives with which she came to power. 4 The paper was a diagnosis of the forces underlying the current British malaise and recommended curbing union power, controlling inflation and securing balanced budgets. An archetypal early Thatcherite, Hoskyns displayed the characteristics of that breed, well summarized by Hugo Young: ‘a fierce pessimism about the past, millennialist optimism about the future and a belief in the business imperative as the sole agent of economic recovery’. 5 These attitudes marked Thatcher off from the other leading politicians of her party and the rest of the British political class at that time. From the start she displayed some of the qualities of a missionary; but in the early days she did not aim to save the world, only Britain.
Post-war policy in Britain was based on the belief that steady economic growth could be promoted by a combination of deficitfinancing and lax monetary policy. Whether John Maynard Keynes would have endorsed the mix may be open to question, but a generation of politicians, civil servants and academic economists viewed this ‘Keynesian’ combination as an infallible recipe for economic growth. Yet by the 1970s growth was faltering and unemployment and inflation were rising, while industry was locked into a series of destructive wage disputes. On the wilder fringes of the Right there was talk of something like a communist state coming to power. There was never any danger of this happening – the risk in the seventies was Britain would become a country more like Argentina than anywhere in the Soviet bloc. Still, the crisis was real. The old ways had stopped working.
Margaret Thatcher was not the first leading British politician to accept that the post-war settlement was no longer viable. It was Denis Healey, the Chancellor of the Exchequer in James Callaghan’s Labour government, who thrust this fact into the centre of British politics. Throughout the mid-seventies Healey tried to persuade his party that the post-war settlement no longer worked, but Labour’s strong links with the trade unions and the opposition of much of its membership thwarted the shift in policy Healey wanted. Thatcher also faced entrenched opposition. Her overriding priority was to alter the system of collective wage bargaining that governed much of British industry. This meant a showdown with the trade unions, and after the miners’ strike of 1984–5 their power was broken. British corporatism – the triumvirate of government, trade unions and employers that had managed the economy since the Second World War – ceased to exist. Henceforth the economy would grow within a new framework that ensured low inflation and a flexible labour market. The social costs of putting this framework in place were high, involving a period in which unemployment rose steeply and a long-term increase in economic inequality, but in political terms it was a resounding success. Thatcher’s vision of the kind of government and society that would come about when something like the free market had been reinvented was chimerical and utopian; but the deregulation of market forces she engineered formed the basis of a new settlement that was sufficiently productive to be generally accepted, and is likely to remain in force until history renders it irrelevant. 6
Thatcher’s successful challenge to the British consensus did notsatisfy her ambitions. Like de Gaulle she had come to see herself as embodying the nation. Unlike the General, she launched a wide-ranging assault on national institutions. She regarded local government with particular scorn, and prompted by the rightwing think tanks she adopted the ‘poll tax’, a flat-rate local levy that was deeply unpopular. The poll tax sowed deep doubts about Thatcher’s leadership in her own
Post-war policy in Britain was based on the belief that steady economic growth could be promoted by a combination of deficitfinancing and lax monetary policy. Whether John Maynard Keynes would have endorsed the mix may be open to question, but a generation of politicians, civil servants and academic economists viewed this ‘Keynesian’ combination as an infallible recipe for economic growth. Yet by the 1970s growth was faltering and unemployment and inflation were rising, while industry was locked into a series of destructive wage disputes. On the wilder fringes of the Right there was talk of something like a communist state coming to power. There was never any danger of this happening – the risk in the seventies was Britain would become a country more like Argentina than anywhere in the Soviet bloc. Still, the crisis was real. The old ways had stopped working.
Margaret Thatcher was not the first leading British politician to accept that the post-war settlement was no longer viable. It was Denis Healey, the Chancellor of the Exchequer in James Callaghan’s Labour government, who thrust this fact into the centre of British politics. Throughout the mid-seventies Healey tried to persuade his party that the post-war settlement no longer worked, but Labour’s strong links with the trade unions and the opposition of much of its membership thwarted the shift in policy Healey wanted. Thatcher also faced entrenched opposition. Her overriding priority was to alter the system of collective wage bargaining that governed much of British industry. This meant a showdown with the trade unions, and after the miners’ strike of 1984–5 their power was broken. British corporatism – the triumvirate of government, trade unions and employers that had managed the economy since the Second World War – ceased to exist. Henceforth the economy would grow within a new framework that ensured low inflation and a flexible labour market. The social costs of putting this framework in place were high, involving a period in which unemployment rose steeply and a long-term increase in economic inequality, but in political terms it was a resounding success. Thatcher’s vision of the kind of government and society that would come about when something like the free market had been reinvented was chimerical and utopian; but the deregulation of market forces she engineered formed the basis of a new settlement that was sufficiently productive to be generally accepted, and is likely to remain in force until history renders it irrelevant. 6
Thatcher’s successful challenge to the British consensus did notsatisfy her ambitions. Like de Gaulle she had come to see herself as embodying the nation. Unlike the General, she launched a wide-ranging assault on national institutions. She regarded local government with particular scorn, and prompted by the rightwing think tanks she adopted the ‘poll tax’, a flat-rate local levy that was deeply unpopular. The poll tax sowed deep doubts about Thatcher’s leadership in her own
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