The first year of Margaret Thatcher

I awoke to the BBC revealing some of the details from 1979-80 from the Thatcher archive. As always, and as then, the talk was about the cuts not working. If they cared to look back at the figures, they would see that in her first year in office Margaret Thatcher’s government put through a huge increase in public spending, honouring commitments to very large pay awards throughout the public sector. Strangely the awards were the “Clegg awards”. From memory cash public spending rose by almost one quarter.  Controlling growth in public spending (“the cuts”) started properly in the 1981 budget.  Even these so called “cuts” meant public spending in the public sector’s preferred “real terms” continued to grow by more than the growth of the economy for the first four years of  her Premiership. In the second half of her term stronger economic growth cut welfare and benefit spending as more people went to work. Over her term as a whole public spending grew by 1.1% a year in real terms.  The government’s popularity nosedived in the first couple of years when spending was still surging. Economic recovery and recovery in popularity occurred after the 1981 budget, once control over spending and borrowing was asserted.

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20 Comments

  1. adam
    Posted March 19, 2011 at 9:14 am | Permalink

    It was (Bilderberger) Denis Healey who sold out Britain to the IMF and called for public spending cuts in 1976.
    Socialist International has a good record of handing economic democracy away in the countries they run, then blaming the right. Just happened to Greece in 2009.

  2. lifelogic
    Posted March 19, 2011 at 9:14 am | Permalink

    We have the worst of all worlds talk of cuts but no actual cuts. Made even worse with the BBC endlessly “explaining” this nonsense to us viewed through their arty, lefty. green, even bigger state, pro EU glasses.

    Just like the Guardian – but at least nobody but slightly dim students actually read that.

  3. APL
    Posted March 19, 2011 at 10:14 am | Permalink

    JR: “If they cared to look back at the figures, they would see that in her first year in office Margaret Thatcher’s government put through a huge increase in public spending ..”

    Why do you keep being surprised that the BBC is biased toward the Left? What you describe is the ‘narrative’ the BBC has nurtured, ‘Tories cut government spending – BAD’, ‘Labour increases government spending – GOOD’. From the deranged world of BBC journalism, Government spending is a GOOD of and by itself. The BBC isn’t about to abandon the narrative in favor of the truth now. It would outrage too many of the drones that still take orders from the BBC.

    What is peculiar is that you write about it as if it is surprising. The Tories have been in government for a year and have done nothing about the BBC.
    That in large part is why the administration will fail.

    • lifelogic
      Posted March 19, 2011 at 8:21 pm | Permalink

      Not likely to be much change with Lord (Chris) Patton as chair of BBC Trustees either.

    • zorro
      Posted March 19, 2011 at 8:34 pm | Permalink

      The government in charge is not a tory government, but it does have a Common Purpose with the other political parties of selling (giving away) this country to the EU…..

      zorro

  4. OldRightie
    Posted March 19, 2011 at 11:07 am | Permalink

    As ever, the BBC using convenient methods to promote their left agenda.

  5. alan jutson
    Posted March 19, 2011 at 11:10 am | Permalink

    John, its called selective reporting and its been growing fast over the past few decades.

    This type of reporting will eventually kill the truth and the ability of genuine reporters who are/were gifted at forensic interviewing die off.

    Selected facts are used for sensational headlines.

    The sad fact is that the BBC is one, and a state (taxpayer) funded organisation to boot.

    Solution to the BBC is in your own hands.

    • lifelogic
      Posted March 19, 2011 at 8:34 pm | Permalink

      You say “Solution to the BBC is in your own hands.”

      Indeed it is – So what does Cameron do he appoints Lord Patton.

      The pre-framing by BBC reporters of any discussion on any BBC news programs, radio 4 or on Newsnight is a complete joke.

      Always, always, always for a bigger state, the so called “sustainable” agenda, the “equality” and bigger government more regulation agenda, the pro public transport, anti car/plane, anti nuclear, pro green, pro EU.

      With Murdock, Dr Beeching, Tebbit and Thatcher always as the evil fall guys.

      Sort them out – Patton certainly won’t!

  6. Liz
    Posted March 19, 2011 at 12:24 pm | Permalink

    The BBC will never let facts get in the way of an opportunity for Thatcher bashing or Tory/Coalition bashing for that matter.

  7. Lindsay McDougall
    Posted March 19, 2011 at 2:04 pm | Permalink

    Sorry, but we haven’t the luxury of being able to copy Margaret thatcher. Our inherited annual government deficit is much bigger than hers, so we have to act faster and harder than she did, and we have to do it in the difficult circumstances of a coalition government.

    The annexes to the June 2011 budget report show that public expenditure will be flat in real terms during this parliament and decline as a proportion of GDP. That’s the policy, we should stick to it, and trimming by the Right is just as unacceptable as trimming by the Left. The legitimate dispute between Right and Left is over the balance between public expenditure and taxation, not the rate of deficit reduction. On the latter it is TINA, TINA, TINA all the way.

  8. waramess
    Posted March 19, 2011 at 2:32 pm | Permalink

    Saved by the bell of privatisations, and so could Cameron if he had the steel that the Lady had. There are however no soft options but there are tough battles and impossible battles. Which I wonder will Cameron elect to fight?

    • Stuart Fairney
      Posted March 19, 2011 at 8:04 pm | Permalink

      Turns out he maybe a neo-con, who would have thought it?

    • zorro
      Posted March 19, 2011 at 8:36 pm | Permalink

      He’s too busy copying his master focusing on conflicts abroad….

      zorro

  9. Grumpy Old Man
    Posted March 19, 2011 at 3:37 pm | Permalink

    The recovery in popularity also had something to do with the successful conclusion to the Falklands adventure, as I recall.

  10. Javelin
    Posted March 19, 2011 at 3:45 pm | Permalink

    I think most people will realise the cuts haven’t started yet – despite every effort by the BBC – I think the term “phoney recession” and “continued overspend is defying gravity” will chime better with the public more than the BBCs spin. Cameron and his Minsters needs to use the terms “phoney recession” and “defying gravity”.

    Having said this I think the UK economy is in the sane position as the road runner who has run off the end of the cliff and is defying gravity. The public believe QE was a banking trick to put off the recession and gravity will eventually succeed. I don’t think the public believes there will be a private sector recovery as most jobs are part time and China and India will benefit from any growth.

    After seeing the Arab Spring, the Japanese quake, the US slipping back into recession and the EU sovereign debt crisis I was thinking, just how stable is the UK economy?

    I came to the conclusion that all it will take is a SMALL BAG of FLOUR dropped on the train at Canary Wharf would cause most people to seriously evaluate their financial situation and realise that the UK is dependent of the financial sector and should that bag of flour turn out to be a dirty bomb they would be completely “screwed”. Wiley Coyote would fall like a stone.

    • Stuart Fairney
      Posted March 19, 2011 at 8:05 pm | Permalink

      Don’t worry about dirty bombs, they are ineffective as the CIA discovered in the 1950’s and did Saddam in the 1980’s

  11. norman
    Posted March 19, 2011 at 7:39 pm | Permalink

    We´ll find out later next week whether the Chancellor thinks history is bunk or if he fancies more than one term in government.

  12. zorro
    Posted March 19, 2011 at 8:48 pm | Permalink

    All this government does is crush any hope of recovery, raise taxes against people who work and keep ridiculous levels of benefits for those who have never worked. I am really disappointed on every level with David Blair……except for his ability to turn his mind from the job in hand and start posing on the international scene.

    zorro

  13. sjb
    Posted March 19, 2011 at 9:29 pm | Permalink

    JR wrote: “In the second half of her [Mrs Thatcher’s] term stronger economic growth cut welfare and benefit spending as more people went to work. ”

    Agreed, but let us not forget that the public finances under her stewardship benefited considerably from privatisation receipts and North Sea Oil.
    http://www.scotlandoffice.gov.uk/scotlandoffice/files/Scotland%20and%20Oil%20-%20Background%20paper.pdf

    During her term of office, the price of a barrel of oil fluctuated between approx. $9 and $22 (see first graph on page 4). It was reasonably foreseeable in the 1980s that the price would rise considerably in 20+ years time so did her government ever consider delaying the extraction of the black gold? Also, did the Cabinet ever propose allocating, say, 5%, of the revenues towards pure research into alternative energy sources?

  14. Alte Fritz
    Posted March 20, 2011 at 7:45 pm | Permalink

    What I remember best of those years is that many viable companies went to the wall, taking with them much of our manufturing capacity and many jobs. That, more than any ‘cuts’ damaged the Conservative party to this day.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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