standards time and time again; a family man could
not live on his wages but was forced to collect a
whole range of state social benefits. The country
was in a mess. Many blamed the unions, others
the government.
Having lost the support of the Liberals and of
the Scottish nationalists after the failure to push
through devolution proposals for Scotland and
Wales, the government was forced to hold a
general election in May 1979 and was soundly
defeated.
A new Conservative prime minister, Margaret
Thatcher, who had ousted Heath as party leader
in 1975, promised radical change. Like Heath she
did not come from a privileged background, but
was the proud daughter of a grocer; she was an
example of what could be achieved in post-war
Britain by hard work, courage and dedication.
Describing herself as a ‘conviction politician’
whose policies and outlook were based on simple
values, she gained the support not only of the
middle classes but also of the working classes,
especially among the skilled workers whose dif-
ferentials had suffered. With the austere Sir Keith
Joseph as her intellectual mentor, she promised
to move away from the past compromises of
Labour and Conservative, which had shifted the
centre of politics constantly to the left.
The new policies were designed to allow market
forces to improve Britain’s competitiveness. State
industries would be made so efficient that they
could hold their own without subsidies from the
taxpayers; once profitable, some of them would be
sold back to private enterprise. The power of the
trade unions would be curbed, and they would be
made accountable both to their members and to
the public. According to Conservative thinking, a
better balance between employer and employee
would in this way be restored. Individual responsi-
bility and independence had to be encouraged;
hard work and enterprise would once again reap
their rewards. Direct taxation was reduced. A pop-
ular electoral move was to promise that council-
house tenants would be able to buy their homes at
a reduced price. Social benefits would be restricted
to those who, through old age or sickness, were
not able to help themselves; they would not be
extended to the able-bodied striker for instance.
The government would not finance its expenditure
by printing money and so fuel inflation; sound
money would be its watchword.
During Mrs Thatcher’s first year in office, the
election promise to honour pay awards led to
widespread and substantial wage increases. This,
together with the second oil-price rise of 1979–
80, knocked the economy sideways, as inflation
climbed to over 20 per cent. The government
nevertheless carried out part of its programme by
shifting the fiscal burden from direct to indirect
taxation. The lowering of income tax, and the
promise to reduce direct taxation further, proved
an election winner over the next decade. The
harsh deflation of 1980 and 1981, with a tightly
controlled money supply and high interest rates,
decimated British manufacturing industry and
sent unemployment soaring to over 3 million.
Full employment had ceased to be a priority of
government policy. By the autumn of 1981,
according to opinion polls Margaret Thatcher had
become the most unpopular prime minister since
Neville Chamberlain in 1940. But she now dis-
played what was to become her greatest electoral
asset: she stuck to her policies. Within the gov-
ernment too she asserted her control, gradually
ridding herself of ‘wet’ ministers – former promi-
nent Heath supporters – and replacing them with
loyal followers of her own views. To the country
at large she declared that there was no other way
to restore the patient to health.
The Labour opposition meanwhile was enfee-
bled by internal divisions between its militant left,
the soft left and the right. Its drift to the left led
in 1981 to the formation on the right of an
entirely new party, the Social Democratic Party,
which later concluded an electoral pact with the
Liberal Party, and the Alliance was born. For a
time it appeared uncertain whether the Labour
Party would survive as the main opposition. The
split in the opposition electoral vote rendered
Thatcher’s Conservative government unbeatable
for almost a decade, although the Conservative
share of the vote never exceeded 44 per cent at
the general elections of 1979, 1983 or 1987.
In April 1982 Britain was plunged into a most
improbable conflict with Argentina. When the