Premiership of Margaret Thatcher

Margaret Thatcher's term as the prime minister of the United Kingdom began on 4 May 1979 when she accepted an invitation of Queen Elizabeth II to form a government, and ended on 28 November 1990 upon her resignation. She was elected to the position in 1979, having led the Conservative Party since 1975, and won landslide re-elections in 1983 and 1987. She gained intense media attention as Britain's first female prime minister, and was the longest-serving British prime minister of the 20th century. Her premiership ended when she withdrew from the 1990 Conservative leadership election.

In domestic policy, Thatcher implemented sweeping reforms concerning the affairs of the economy, eventually including the privatisation of most nationalised industries, as well as weakening of trade unions. She emphasised reducing the government's role and letting the marketplace decide in terms of the neoliberal ideas pioneered by Milton Friedman and Friedrich Hayek, promoted by her mentor Keith Joseph, and promulgated by the media as Thatcherism. In foreign policy, Thatcher decisively defeated Argentina in the Falklands War in 1982. In longer-range terms she worked with Ronald Reagan to wage a war against communism during the Cold War. However, she also promoted collaboration with Soviet leader Mikhail Gorbachev in ending the Cold War.

In her first years she had a deeply divided cabinet. As the leader of the "dry" faction she purged most of the One Nation "wet" Conservatives and took full control. By the late 1980s, however, she had alienated several senior members of her Cabinet with her opposition to greater economic integration into the European Economic Community, which she argued would lead to a federalist Europe and surrender Britain's ability to self govern. She also alienated many Conservative voters and parliamentarians with the imposition of a local poll tax. As her support ebbed away, she was challenged for her leadership and persuaded by Cabinet to withdraw from the second round of voting – ending her eleven-year premiership. She was succeeded by John Major, her Chancellor of the Exchequer.

After retiring from the Commons in 1992, she was given a life peerage as Baroness Thatcher (of Kesteven in the County of Lincolnshire) which entitled her to sit in the House of Lords. In 2013, she died of a stroke at the Ritz Hotel, London, at the age of 87. Domestically, Thatcher remains a highly controversial and polarising figure; notwithstanding this, historians and political scientists usually rank her as an above-average prime minister. Her tenure constituted a realignment towards neoliberal policies in Britain, with the complicated legacy attributed to Thatcherism debated into the 21st century.

First term (1979–1983)

Thatcher was Britain and Europe's first female prime minister. She appointed few women to high office and did not make women's issues a priority, but her pioneering election was widely hailed as an achievement for women in general.

Thatcher, having to share the media spotlight with Queen Elizabeth II and Diana, Princess of Wales, increasingly assumed regal poses, such as taking the salute at the victory parade after the Falklands War, and becoming the centre of attraction on foreign visits. Tensions between the two were kept hidden until 1986, when ''the Sunday Times'' reported on the Queen's alleged criticism of Thatcher's policies, especially regarding the people of the Commonwealth, as "uncaring, confrontational and socially divisive." Thatcher often ridiculed the Commonwealth, which the Queen held in very high esteem.

Economic affairs

Biographer John Campbell reports that in July 1978, before Thatcher became prime minister, when asked by a Labour MP in the Commons what she meant by socialism:

Deflationary strategy

Under Margaret Thatcher's government, the taming of inflation displaced high employment as the primary policy objective.

As a monetarist, Thatcher started out in her economic policy by increasing interest rates to slow the growth of the money supply and thus lower inflation. She had a preference for indirect taxation over taxes on income, and value-added tax (VAT) was raised sharply to 15%, with a resultant actual short-term rise in inflation. The fiscal and monetary squeeze, combined with the North Sea oil effect, appreciated the real exchange rate. These moves hit businesses—especially the manufacturing sector—and unemployment exceeded 2 million by the autumn of 1980, up from 1.5 million at the time of Thatcher's election just over a year earlier.

Political commentators harked back to the Edward Heath government's "U-turn" and speculated that Thatcher would follow suit, but she repudiated this approach at the 1980 Conservative Party conference, telling the party: "To those waiting with bated breath for that favourite media catchphrase, the U-turn, I have only one thing to say: You turn if you want to. The lady's not for turning". That she meant what she said was confirmed in the 1981 budget, when, despite concerns expressed in an open letter from 364 leading economists, taxes were increased in the middle of a recession, leading to newspaper headlines the following morning of "Howe it Hurts", a reference to the Chancellor Geoffrey Howe.

Unemployment

In 1981, as unemployment soared (exceeding 2.5 million by the summer and heading towards 3 million before Christmas) and the Government's popularity plunged, the party chairman, Lord Thorneycroft, and two cabinet ministers, Lord Carrington and Humphrey Atkins, confronted the Prime Minister and suggested she should resign; according to her adviser, Tim Bell, "Margaret just told them to go away". Thatcher's key ally in the party was Home Secretary, and later Deputy Prime Minister, William Whitelaw. His moral authority and support allowed her to resist the internal threat from the " Heathite" wets.

After the Brixton riot in West London in April 1981, employment secretary Norman Tebbit, responding to a suggestion that rioting was caused by unemployment, observed that the unemployment of the 1930s was far worse than that of the 1980s—and that his father's generation never reacted by rioting. "I grew up in the 1930s with an unemployed father", Tebbit said. "He did not riot. He got on his bike and looked for work, and he went on looking until he found it."

Over two million manufacturing jobs were ultimately lost in the recession of 1979–81. This labour-shedding helped firms deal with long-standing X-inefficiency from over-manning, enabling the British economy to catch up to the productivity levels of other advanced capitalist countries.

The link between the money supply and inflation was proven accurate, and by January 1982, the inflation rate had dropped back to 8.6% from earlier highs of 18%. Interest rates were then allowed to fall. Unemployment continued to rise, passing 3 million by January 1982 and remaining this high until early 1987. However, Tebbit later suggested that, due to the high number of people claiming unemployment benefit while working, unemployment never reached three million.

By 1983, manufacturing output had dropped by 30% from 1978, although economic growth had been re-established the previous year. The productivity turnaround from labour-shedding proved to be a one-off and was not matched by growth in output. The industrial base was so reduced that thereafter the balance of payments in manufactured goods was in deficit. Chancellor Nigel Lawson told the Lords' Select Committee on Overseas Trade: "There is no adamantine law that says we have to produce as much in the way of manufactures as we consume. If it does turn out that we are relatively more efficient in world terms at providing services than at producing goods, then our national interest lies in a surplus on services and a deficit on goods."

Defence spending

In her first six months as prime minister, Thatcher repeatedly prioritised defence spending over economic policy and financial control. However, in 1980, she reversed this priority and tried to cut the defence budget. The 1981 Defence Review by John Nott, the defence minister, dramatically cut the capabilities of the Royal Navy's surface fleet. She replaced Francis Pym as defence secretary because he wanted more funding. The cuts were cancelled when the ships destined for cuts proved essential in the Falklands War.

Housing and urban enterprise

One of Thatcher's largest and most successful policies assisted council tenants in public housing to purchase their homes at favourable rates. The "Right to Buy" had emerged in the late 1940s, but was too great a challenge to the post-war consensus to win Conservative endorsement. Thatcher from her earliest days in politics favoured the idea because it would lead to a "property-owning democracy". By the 1970s, many working-class people had ample incomes for home ownership, and eagerly accepted Thatcher's invitation to purchase their homes at a sizeable discount. The new owners were more likely to vote Conservative, as Thatcher had hoped. The downside to this was that it eventually led to council house shortages, as the share of the money from the sale of the houses to be used to construct more council properties gradually fell by the end of the 1980s, and saw fewer councils building affordable housing.

To deal with economic stagnation in the inner cities, the Government introduced "enterprise zones" starting in 1981; the idea began in Britain and was adopted by the United States and some EU countries. It targeted designated small, economically depressed neighbourhoods and exempted them from some regulations and taxes. The goal was to attract private capital and new business activity that would bring jobs and progress to declining areas. Important projects included those in London Docklands, Salford and Gateshead.

Foreign relations

Rhodesia, 1979

Before the 1979 election Thatcher was on record as supporting the all-white government of Ian Smith in Rhodesia. Under intense world pressure it held elections that included some black voters. One of them, Methodist Bishop Abel Muzorewa, became prime minister of "Zimbabwe-Rhodesia" in June 1979 with Smith's support. Thatcher, new to 10 Downing Street, praised the bishop. White Rhodesians expected Britain to recognise the Muzorewa regime and end crippling sanctions. However, Thatcher reversed herself. She withheld recognition and manoeuvred the Muzorewa government into accepting new elections. They had to include Joshua Nkomo and his Zimbabwe African People's Union as well as Robert Mugabe and his Zimbabwe African National Union. These were revolutionary movements that Rhodesian security forces had been trying to suppress for years. Under her direction, foreign secretary Lord Carrington brokered the Lancaster House Agreement of December 1979. It resumed British control of Rhodesia, declared a ceasefire, ended guerrilla action, and quickly led to the creation of the Republic of Zimbabwe. Thus Thatcher's refusal to recognise the Muzorewa government ultimately allowed Mugabe to take power, an outcome that outraged whites in Rhodesia but which satisfied British opinion and was applauded internationally. Hugo Young () states, "She had been instrumental in creating another Third World country."

According to Robert Matthews, the success of the Lancaster House negotiations can be explained by four factors:

Iranian Embassy siege, 1980

Thatcher's determination to face down political violence was first demonstrated during the 1980 siege of the Embassy of Iran, London, when the armed forces were for the first time in 70 years authorised to use lethal force on the British mainland. For six days in May, 26 hostages were held by six gunmen; the siege came to a dramatic end with a successful raid by SAS commandos. Later that day, Thatcher went to congratulate the SAS men involved and sat among them watching a re-run of the attack. The breaking of the siege by the SAS was later ranked by the public as one of television's greatest moments.

Her decisiveness—christened the "resolute approach" by the Prime Minister herself—became Thatcher's trademark and a source of her popularity. In the words of one historian:

Commenting on the SAS's action, social services secretary Norman Fowler agreed: "Mrs Thatcher attracted public support because she seemed to be taking action which the public overwhelmingly thought was right but never thought any government would have the nerve to carry out".

Afghanistan and Poland

When the Soviet Union troops entered Afghanistan in December 1979, Thatcher saw it as a typical example of "relentless Communist imperialism". However, the foreign ministry said the Kremlin was desperately trying to save its failing ally there. Thatcher supported the American plan to boycott the Moscow Olympics, as did Parliament. However, the athletes disagreed, and they went to Moscow anyway.

Thatcher gave the go ahead for Whitehall to approve MI6 (and the SAS) to undertake 'disruptive action' in Afghanistan. Supporting the Central Intelligence Agency (CIA) in Operation Cyclone, they also supplied weapons, training and intelligence to the mujaheddin. Thatcher visited Pakistan in October 1981 meeting with Pakistan leader General Mohammad Zia-ul-Haq. She visited some of the many hundreds of thousands of Afghans gathered in refugee camps there giving a speech stating that the 'hearts of the free world were with them'. Five years later two of the Mujaheddin warlords Gulbuddin Hekmatyar and Abdul Haq met Thatcher in Downing Street.

The Polish crisis of 1980 and 1981 involved large-scale anti-Communist protests in the heartland of Soviet-controlled Eastern Europe. Thatcher recognised that Soviet hegemony was vulnerable in Poland and offered public support for Lech Wałęsa and his Solidarity labour union, in close co-operation with the United States and Pope John Paul II (a long-time leader of Polish Catholicism). Thatcher considered Poland as a key centre of Soviet vulnerability. She offered limited help to Solidarity in tandem with the United States. Success came with the thaw in superpower relations, the consolidation of Thatcherism at home and the march of neo-liberal ideas internationally.

Falklands War, 1982

On 2 April 1982, the ruling Argentine military junta invaded the Falkland Islands, and on 3 April invaded South Georgia, British Crown Colonies that Britain had always ruled but which Argentina had claimed. Thatcher had not previously shown concern for the islands and had proposed large-scale cuts to her naval forces. Thatcher listened primarily to Admiral Henry Leach, the First Sea Lord; and to Admiral Sir Terence Lewin, the Chief of the Defence Staff. She immediately decided to expel the invaders. She replaced foreign minister Lord Carrington with Francis Pym and rounded up diplomatic support. The United Nations Security Council denounced Argentina's aggression, and France and other allies provided diplomatic and military support. In the United States, Reagan was supportive, but he also launched diplomatic initiatives to resolve the crisis without a war. Thatcher assembled and sent a naval task force to take back control in three days.

In the six weeks it took to arrive, she engaged in diplomatic efforts moderated by Reagan's secretary of state Alexander Haig, but Argentina rejected all compromise proposals. Public opinion, and both major parties, backed Thatcher's aggressive response. The task force sank an Argentine cruiser, forcing the Argentine Navy back to its home harbours. However, it had to deal with a nearby land-based Argentine Air Force, using primarily surface-to-air heat-seeking missiles, Harriers, and V bombers, the last to crater the Port Stanley runway. Argentine forces in the Falklands surrendered on 14 June; the operation was hailed as a great triumph, with only 258 British casualties. Victory brought a wave of patriotic enthusiasm and contributed to Thatcher's re-election, with one poll showing that 84% of the electorate approved of the Prime Minister's handling of the crisis.

Restoring British control over a small colony was a response to aggression, but it also represented a sensibility that Britain had a responsibility to protect its "kith and kin

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