Since Margaret Thatcher’s passing on the 8th of April there has been increased criticism of Thatcherism. However, there has been less exposition of the good economic outcomes of her Prime Ministership, for example, microeconomic reform through successful privatisation and the rebalancing of power between employers and employees to a more equal stance.
The hallmark of Thatcher’s Prime Ministership is often agreed to be her successful implementation of public sector privatisation and the effect this had on economic efficiencies throughout the British Economy. Her two most famous examples of this are the privatisation of British Telecom in 1984 and her ‘right to buy’ scheme which saw the privatisation of much of the British Public Housing system.
The privatisation of British Telecom saw the selling of Britain’s largest public telecommunication provider to the private sector and the deregulation of the telecommunication industry from 1984 to 1993. This had the short-term effect of producing a return for the government of 14 billion pounds plus an added 30 billion pounds through dividends over the 9 year period of its privatisation. This return helped to reduce the government’s net debt which fell under Thatcher to its lowest level in recent political memory. The Second major effect of the privatisation was the effect on the company itself. BT has seen increases in its labour productivity overtime and lowering of its prices in some areas through increased competition in its sector.
The ‘right to buy’ scheme involved the selling of public housing to tenants at reduced price. This scheme had the effect of dramatically increasing the rate home ownership in Britain. Under Thatcher Prime Ministership home ownership increased from under 57% of owner occupation to 67% owner occupation rates. This policy is positive as it has allowed individuals to build their own wealth through increasing house prices in Britain, thus breaking down economic class barriers, increasing social mobility and providing a source of funds for retirement.
The second major achievement of Thatcher was that of rebalancing of powers of unions and employers in the workplace. In the 1970s the balance of power between workers and businesses was skewed more towards the former then the later. Her strong stance against the Unions had the effect of rebalancing this equation back to or closer to the centre than what it otherwise was. This had the effect of breaking the wage-price spiral that had become accustomed within the British economic system. This lead to a lowering of inflation under her Prime Ministership, with rates falling from 13.4% when she took office to 9.5% when she left office and with a minimum of 3.4% during her tenure. The low levels of inflation under her tenure is largely credited with the restoration of confidence within Britain at the time.
To be clear this is a very short defence of Thatcher’s two most controversial aspects of her Prime Ministership and the positive effects they had on Britain. Margaret Thatcher was the Prime Minister that Britain needed at the time in order to revitalise and restore the British economy after decades of neglect by both sides of politics within Britain.