SPECIAL REPORT

THE THATCHER REVOLUTION

AFTER A DECADE, BRITAIN’S PRIME MINISTER FORGES AHEAD WITH HER RIGHT-WING AGENDA

ANDREW PHILLIPS May 8 1989
SPECIAL REPORT

THE THATCHER REVOLUTION

AFTER A DECADE, BRITAIN’S PRIME MINISTER FORGES AHEAD WITH HER RIGHT-WING AGENDA

ANDREW PHILLIPS May 8 1989

The lunchtime crowds at Debenhams, a major London department store, swarm around counters piled with high-priced clothes, kitchen gadgets and electronic goods. But in one corner of the store’s top floor they are snapping up something completely different. Just behind the furniture section is Debenhams Share Centre, a walk-in boutique where shoppers can catch up on the latest financial news and buy or sell company shares listed on the London Stock Exchange. Since the centre opened 21 months ago, Debenhams has concluded about 25,000 deals—part of an explosion in share owning and trading in Britain in the past decade. While only seven per cent of Britons owned stock in 1979, among the lowest proportion in the West, Britain is now near the top with 20 per cent. It is a dramatic reversal—and one that is at the heart of the change in economic fortune and social climate brought about under a remarkable leader who this week celebrates 10 years in power: Prime Minister Margaret Thatcher.

On May 4, the date of that milestone, Thatcher has much to celebrate. The changes that her government has brought about over the past decade have been among the most radical ever seen in Britain. From a country sinking slowly under old, inefficient industries, hidebound union practices and a longstanding disdain for enterprise, she has sought to forge a leaner, more competitive nation. She has attempted nothing less than a rewriting of the basic assumptions of British politics—and played a crucial role in setting the conservative agenda that dominated the Western world throughout the 1980s (page 40). She has never been popular personally, and critics claim that her policies have widened the rift between rich and poor in Britain. But for better or worse, through skill and sheer luck, she has, overall, succeeded to a degree that has mesmerized her public and confounded her foes. Even many of her fiercest critics confess to a sneaking admiration. “Part of me loathes what she stands for,” says Martin Jacques, editor of Marxism Today, a left-wing magazine. “But another side of me is impressed by her drive to modernize.”

Laurels: After 10 years, there is no sign that Thatcher is slowing down. Unlike her political soul mate, former U.S. president Ronald Reagan, lengthening tenure has brought neither sloth nor scandal upon Thatcher. She underlined her dogged determination to press ahead when she announced weeks ago that her 10th anniversary at 10 Downing Street—a record unmatched in 160 years—will be “a normal working day.” Her government has a narrow lead over the opposition in opinion polls as it nears the midpoint of its third term—traditionally a time of low popularity for the party in power. And, far from resting on her laurels, Thatcher has unleashed a new series of radical reforms aimed at extending her right-wing revolution to new areas of British life. “She is gaining confidence and skill in office,” says Madsen Pirie, director of the conservative Adam Smith Institute in London and an admirer of the prime minister. “This is still a very innovative government.”

For Thatcher personally, the years of 16-hour working days with barely a week off each year appear to have had only beneficial effects (page 41). Those who have watched her closely maintain that, at 63, she looks sharper, brighter, even more youthful than when she took office. But at the same time, she has adopted an almost imperial bearing, combined with an often-mocked tendency to refer to herself with “the royal we.” For many Britons, that reached ludicrous heights in March when her son Mark’s first child was born and she grandly proclaimed that “we have become a grandmother.”

Despite such quirks, Thatcher has won wide respect and even awe for the scope of her ambition. She has repudiated the very basis of British politics—the consensus under which the country was governed from the 1950s to the end of the 1970s. Both Labour and Conservative politicians assumed that the welfare state, large nationalized industries and a general leftward drift in social policy were permanent political fixtures. Socialists sought to move left more quickly, while Tories tried to go more slowly. But no major leader attempted to reverse direction entirely—until Thatcher took power on May 4, 1979. Since then, she has rolled back the frontiers of the state and declared that her goal is nothing less than “the death of socialism.” Her right-wing radicalism caught the mood of the 1980s—and Britain became the pacesetter of change throughout the Western world.

Unions: Those changes included an assault on what the Conservatives diagnosed as Britain’s central problem in the late 1970s: a huge public sector burdened with subsidized industries and dominated by restrictive unions. The Tories cut subsidies, forcing companies to do away with tens of thousands of jobs and driving unemployment to a high of 3.1 million, or 11.2 per cent of the workforce in July, 1986 (it now stands at 6.7 per cent). They privatized 19 state-owned industries, transferring 750,000 jobs from the public to the private sector. They forced local authorities to sell public housing units to tenants—raising the proportion of Britons who own their own homes from 53 per cent in 1979 to about 66 per cent today. They made it easier for ordinary people to buy company shares and harder for unions to wield power in the workplace. By the end of the decade, more Britons were shareholders (about 11 million) than were union members (9.5 million).

Prosperity: Thatcher described her policies as a drive to create a “property-owning democracy.” At its basis, it amounted to an attempt to break the class-driven mould of British politics: a Conservative party run by traditional Tory grandees drawing support from the suburbs and shires, confronting a Labour Party based on the unions and armies of cloth-capped workers from the cities. In its place, Thatcher has sought to create a more fluid, open social structure in which merit and money play a greater role than class and tradition.

For many Britons, the result has been a decade of unrivalled advancement and prosperity. The story of Valerie Thompson, a 32-year-old high flyer in London’s financial world, reflects the new opportunities created in Thatcherite Britain. Born in London’s working-class East End, Thompson worked evenings and weekends as a child at her father’s vegetable and shellfish stalls. She left school at age 15, and, she says now, her greatest ambition was eventually to own a pub. Instead, she went to work as a file clerk in the London office of the Salomon Brothers investment bank. At age 21, she started trading Eurobonds and by 30, she was earning more than $250,000 a year as head of the company’s debt syndicate. Now, she is setting up her own firm, Euromarket Trading Consultants Ltd.

Thompson’s remarkable rise would have been unthinkable in the traditional London financial world of bowler-hatted gentlemen quietly piling up profits in a clubby atmosphere. But it proved possible in the competitive, less class-conscious social climate fostered by Thatcher. Thompson herself maintains that Thatcher’s policies and example helped her break through the barriers that would almost certainly have kept her back in the past. “I was personally inspired by Thatcher,” she says. “She has forced people to take responsibility for their own lives, to accept change. Socialism and the unions just want to spoon-feed people and limit their lives. Thatcher wants to do away with that.” Thompson is one of many winners in the Thatcher revolution and has the rewards to show for it: a large house, a Jaguar car and the opportunity to make even more money with her own company. “I want to be a multimillionaire and I intend to make it,” she declares. “I don’t feel in the least embarrassed by money—that’s very English and traditional.”

Throughout Britain, the winners outnumber the losers—but even in the shadow of London’s financial district the casualties of a decade of Thatcherism are evident. On one cold night last week, volunteers from the Salvation Army toured London streets counting the number of homeless people sleeping in so-called cardboard cities. Experts have estimated that about 4,000 people sleep outdoors each night in the capital—and say that changes in government benefits have contributed to a doubling of that number over the past 10 years.

Thatcher’s many critics point to such failures to argue that the “economic miracle” she claims to have performed is more hype than reality. Britain is more prosperous than it was in 1979, they concede, but economic disparities have grown wider. Britain’s rate of economic growth may have been behind only that of Japan and Canada in the late 1980s, but its manufacturing sector has never recovered from the devastation wreaked by the deep recession and government cuts of the early part of the decade. Even now, after seven years of steady growth, the manufacturing output has barely recovered to its 1979 level, and Britain is experiencing a serious trade deficit. In addition, Thatcher’s critics argue, the country has been cushioned by $260 billion in revenues from North Sea oil that will start to run out over the next decade. “There is no economic miracle if you look at the record over the entire decade,” says Wynne Godley, a Cambridge University economist. “It’s a gigantic con trick.”

Hospitals: Godley maintains that Thatcher has not tackled the underlying problem of Britain’s lack of competitiveness in the world economy. Long before she came to power, Britain suffered from relatively low educational levels, poor industry training programs, and low rates of investment in private industry and many public services. Public investment, about six per cent of national output in the late 1960s, is now less than two per cent. The decline is reflected in deteriorating roads, inadequate public transportation and shoddy standards in hospitals. Neal Ascherson, a journalist with The Observer newspaper, spent five days as a patient in a London hospital in mid-April and wrote: “The bedsheets in the ward had holes in them and we dried ourselves on old pillowcases because the towels had run out. There was no bath or shower, so washing was done in plastic washing-up bowls filled from a sink in the corridor. I have known that hospital for over 25 years, and watched its walls grow scarred, its metal work scratch away, its pipes rust and its floors crack.”

Underfunding of British health care did not start with Thatcher’s election in 1979. Britain has always spent a much smaller share of its national output on health than other advanced countries—including Canada—and the government maintains that it has increased spending on health by 30 per cent after inflation in the past decade. But after seven years of rising prosperity in southern England, major tax cuts directed largely at those with relatively high incomes, and two government budgets with sizable surpluses, an increasing number of Britons argue that the time has come to spend more on improving public services. In fact, a recent Gallup poll found that, by the overwhelming margin of 84 per cent to seven per cent, respondents said that the government should spend more on social services rather than making further tax cuts.

Competition: Such findings cut little ice with Thatcher. Instead, her government is pressing ahead with a series of ambitious new plans designed to further expand the frontiers of what she calls Britain’s new “enterprise culture.” The government has introduced legislation to privatize the water industry and announced plans to turn railways and coal mines over to the private sector, as well. It is going ahead with plans to introduce more competition into Britain’s archaic legal system. And it is extending the principles of private competition into such public services as health care and education by overhauling funding rules for hospitals and universities in ways that will force them to bid competitively for services and students. “The services will remain state-funded but they will have to respond to market forces,” said Pirie of The Adam Smith Institute, which has contributed to many of the government’s reforms. “It’s another step in taking power out of the hands of producers and giving it to consumers.”

Samaritan: Thatcher has explained her continuing drive in terms of a task still undone, a mission still unfulfilled. Many observers have noted the messianic tone in which she frames her long-term goals. “Economics are the method,” she once declared, “but the object is to change the heart and soul.” Many leading members of Britain’s churches have condemned Thatcher’s policies as antisocial and ungenerous—but she has not abandoned the moral high ground to them. Instead, she has fought back in unusual public debates. In one exchange last year with church leaders, she defended her emphasis on private wealth by noting that the Good Samaritan in the biblical tale had more than good intentions to offer—he also had money.

Such moral certitude and overarching ambition have thrown Thatcher’s opponents on the defensive for most of the past decade. The Labour Party, architect of the postwar reforms that put Britain at the head of social policy thinking in the West, had little intellectual ammunition by the end of the 1970s with which to counter the radical new Conservative agenda. Wedded to the unions and committed to maintaining jobs even in inefficient industries, the party appeared bereft of new ideas. “In a sense we became the reactionaries,” Labour MP Kim Howells said recently. “We were singularly unsuccessful in making our case—in part because we didn’t have one.” The party’s woes were compounded by factional infighting and the formation in 1981 of a new centrist force, the Social Democratic Party. Its ultimate effect was to split the anti-Tory vote and help Thatcher win electoral victories in 1983 and 1987.

Unbending: In the past year, Labour Leader Neil Kinnock has moved his party closer to the centre and begun to woo middle-class voters. But the main danger of Thatcher’s success may lie, paradoxically, in the unrivalled dominance she exercises over her government and party. “There is no one to remind her that she is mortal,” says Peter Hennessy, author of two studies of British politics in the 1980s. “The trap is that she may push too far and overreach herself.” Yet even if that happens, Thatcher—unloved, unbending, but unquestionably successful—has already secured her place in the front rank of British leaders.

CASHING IN ON MAGGIE

Practising what their leader preaches, Britain’s free-enterprising Tories are counting on getting a financial—as well as a political—boost from Margaret Thatcher’s 10th anniversary in power. The Conservative party’s official merchandising operation, Blue Rosette, has produced a stream of memorabilia to mark the event—and it does not come cheap. The most expensive item, at $1,200, is a silver tray engraved with Thatcher’s signature and significant dates in her career. Other souvenirs include blue, white and gold Royal Worcester bowls decorated with the prime minister’s portrait and initials at $100 each. Grahame Waterman, Blue Rosette's managing director, said that 1988 revenues were $500,000—and this year the projection is $1 million. “The anniversary,” he added, “will make a significant contribution to the increase.”

Thatcher’s unmistakable features adorn cheaper—and less tasteful—memorabilia as well. London stores stock slippers with her face on the toes at $44 a pair, and caricature masks for as little as $6. Britain’s bookshops are bulging with at least 13 new works devoted to the Thatcher phenomenon—from weighty biographies to a slim unauthorized volume entitled The World’s Best Maggie Thatcher Jokes (sample: “What are the four critical periods for unemployment under Thatcher’s administration? Spring, summer, autumn and winter”).

Curiously, one place where it is almost impossible to find Thatcher memorabilia is her home town, Grantham. The local museum devotes much attention to Sir Isaac Newton, who was born in a nearby village in 1642, but makes only passing mention of Thatcher. She is commemorated only in the three-storey house where she was born and in which her father, Alfred Roberts, ran a thriving grocery shop.

The building’s main floor is now a restaurant called The Premier. Opened in 1983 and specializing in expensive nouvelle cuisine, it was not successful and closed in 1986. Current owner Paul Nesbitt reopened The Premier last year and offers a more moderately priced menu. Nesbitt says that business is good—but that the Thatcher connection does not always help. “The locals are mostly quite anti-Thatcher,” he says. “It puts off as many people as it attracts.” Still, Nesbitt expected a full house on May 4 at a special five-course dinner to celebrate Thatcher’s milestone. The main course: supreme of chicken Margaret.