Saved the UK did she? Yes and no

By Andy McSmith

Thatcher's influence was major but many changes may have happened anyway.

David Cameron says: 'Margaret Thatcher didn't just lead our country - she saved our country.' Photo / AP
David Cameron says: 'Margaret Thatcher didn't just lead our country - she saved our country.' Photo / AP

Baroness Thatcher was a leader of exceptional determination and willpower, driven by an absolute conviction that she knew what was best for Britain.

"Margaret Thatcher didn't just lead our country - she saved our country," Prime Minister David Cameron claimed. If Thatcher saved Britain, what did she save the country from, and where is it now?

Inflation and strikes

It is not really disputed that Britain was in bad shape in 1979. Trade unions are often blamed because of the prevalence of strikes during the 1970s, but what people forget is that there was a reason for their militancy.

Inflation, which affected everybody, ate into the value of people's pay. It took huge pay rises just to keep up with prices. Inflation was rapidly coming down before Thatcher came to power but was still in double figures, at 10.3 per cent a year, in 1979. At first, the Thatcher Government unintentionally pushed it right back up over 20 per cent, but then ruthlessly brought it down to 5 per cent in time to secure victory in the 1983 election.

Today, it is 3.2 per cent. So it can reasonably be said that Thatcher saved the UK from runaway inflation.

Trade unions

Thatcher's Government introduced a series of laws to curb union militancy, but when inflation was out of the system employees had less reason to strike for higher wages, regardless of the state of industrial legislation. Instead, they faced the worse threat of being out of work. The main strikes of the 1980s, such as the year-long miners' strike, were over jobs, not pay. Every redundancy of a union member weakened the union. There were 1.4 million jobless in 1979, or 5.3 per cent of the workforce. That figure peaked at more than 3 million in 1986. Currently it is 2.52 million, or 7.8 per cent - so Thatcher certainly did not save the UK from unemployment, though she did permanently weaken the unions. There were 12 million members of TUC affiliated unions in 1979. Now there are six million.

State ownership

"We were the first country in the world to roll back the frontiers of socialism," Thatcher claimed. If "socialism" means state ownership of industry, the claim is undeniably true. In 1979, the electricity, gas, water, coal and steel industries, and British Telecom and BP, were all state-owned. Now all are in private hands. Those privatisations were popular and in practice irreversible, because they replaced state monopolies with private firms competing in the market, improving efficiency. The exception, the botched privatisation of British Rail, was not her doing.

Home ownership

In 1979, 55 per cent of the population lived in owner-occupied homes, and 42 per cent in council houses or other "socially rented" accommodation. Today owner occupation is around 70 per cent, while 18 per cent are in council or housing association homes. So she helped to bring millions of working class families the benefits of home ownership - but at a cost of rising homelessness, because the council homes that were sold have not been replaced. In 1979, there were just over a million households on housing waiting lists, now there are 1.8 million - though most of that rise came after Thatcher's time.

Public debt and spending

Thatcher's Government did a good job of driving down government debt, which was 43.6 per cent of GDP in 1979, and 26.7 per cent in 1990. In 2009, after the banking crisis, it was back where Thatcher found it as a proportion of national output, and rising.

In gross figures, the debt was £88.6 billion in 1978-79, and £1.1 trillion in 2011-12. But she had those one-off asset sales and tax receipts from North Sea oil to help pay off debt, which no other government has had.

Public spending went up in the early Thatcher years, from 45 per cent of GDP to 48.5 per cent, before she started to bring it down. It was back at the 1979 level in 1987, and carried on falling until 1999, after which Labour let it rise slowly until 2008, when the cost of bailing out the banks made it shoot up from 41 to 48 per cent. It should be back to its 1979 level next year.

The pound

Thatcher believed in keeping the value of sterling high. The pound was worth US$2.06 in 1979. It shot up to US$2.42 by October 1980, then fell to US$1.81 within a year. It was US$1.96 when she left and is now US$1.51, so she did not "save" sterling from depreciating internationally.

Freedom to borrow

In 1979 there were strict rules about mortgage lending, about how shares were bought and sold, and how much money could be taken abroad. Her Government scrapped them all, allowing building societies to become banks and banks to lend for mortgages, though any other government might have had to do the same because computer technology was globalising the money markets.

The changes made it much easier for a young couple to raise a mortgage, but much harder to stop banks behaving recklessly. Her policies also pushed up house prices. A house that cost £83,000 in 1979 would cost £163,000 now.

Sexual freedom and crime

During her time sexual freedom generally increased, along with the divorce rate and the rate of abortions. This is not something she encouraged, but she generally did not try to interfere. She presided over a frightening rise in the crime rate, from just over 2.5 million recorded crimes in 1979 to 4.5 million in 1990. Lately, the figures have been falling, so that by 2010 it was below the 1990 figure. Thatcher did not "save" Britain from crime.

Britain's place in the world

A large part of the pre-1979 British malaise was assumed to be the loss of the empire and the sensation that having been the world's third most powerful state in 1945, the UK was sinking down the league table. Thatcher raised the nation's morale through the victory in the Falklands. But not much has changed. In 1979, Thatcher agreed to buy Trident from the US. Now, the Government is preparing to update it. Then, Western opinion was outraged when the USSR sent the Red Army into Afghanistan. Now the West is embroiled in a war in Afghanistan. Then, Thatcher was in a minority of one at an EU summit, when she battled for a reduction in the UK's contribution to the EU budget. Two months ago, Cameron was rather less isolated as he battled to keep the overall EU budget down. Overall, Thatcher did not save the UK from losing its position as a premier league world power, but she made patriotic Britons feel less miserable about their lost status.

Then and now: UK statistics

1979

* 56.27m Population

* £199.22b Gross domestic product

* £248.96 Average household income per week £83,169Average house price

* 70.33 years life expectancy men 76.41 years life expectancy women

2013

* 63.2m Population

* £1.5t Gross domestic product

* £442 Average household income per week

* £163,056Average house price

* 78 years Life expectancy men

* 82 years Life expectancy women.

- Independent

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