Conservative governments

Conservative governments
   The Conservative Party traditionally shuns the notions of ideology and abstract thought, and has established a practice of responding to particular circumstances in a manner which will preserve those institutions beneficial to the existing social and economic status quo. This approach has been tempered with a paternalistic concern for the less welloff, but only in so far as this facilitates the maintenance of established hierarchies. Some commentators have argued that the Thatcher government represented a discontinuity within Conservative party history, that far from eschewing ideology Thatcher and her colleagues embraced it, even in the face of negative public opinion. Yet there is evidence of continuity within the Thatcher administrations, if not obviously within the economic sphere then certainly in the social policy of her governments.
   The transfiguration within the Conservative party began in 1965 with the election of Edward Heath as leader. Heath’s election was notable for two reasons. First, there was the manner in which he became leader. In late 1946 the selection process had been reformed at the instigation of Sir Alec Douglas Home into the now familiar three-stage voting process, allowing MPs to select their own leader from among their peers. Second, Heath was not of the same ilk as previous Conservative leaders. He was not an aristocrat, coming instead from a lower-middle class background. Significantly, Heath was elected rather than his opponent Enoch Powell, who demonstrated a commitment to the laissez-faire ideals that were to grip the party within a decade. That is not to say that Heath rejected these ideals, but rather that he was more moderate in choosing a policy line that challenged Labour Party policy yet remained within the boundaries of the postwar consensus. This attitude can be attributed to Heath’s distinctly conservative nature. He did not consider reducing state intervention out of a deep-seated ideological conviction, but because he felt it a practical approach to the problems of the time. Under Heath, the Conservatives were defeated in the 1966 election. In the 1966 election manifesto, Heath sought to distance the Conservative Party from Labour. Heath chose to commit the Conservative party to the European community (in itself a commitment to free market principles), and promised reform of the welfare state and trade unions. These measures amounted to an attempt to forge public opinion rather than respond to it, which was a notably atypical line for a Conservative leader to adopt. It failed, and the Labour Party retained government.
   The tone of the manifesto for the 1970 election, which the Conservatives won, was distinctly neoliberal, tempered with Heath’s pervading caution. Thus, although it talked of ending wage control policies and stressed a ‘hands-off’ approach to the economy, it did not specifically talk in monetarist terms or include privatization plans. The subsequent administration was marked by two distinct periods. In the first, immediately following the election, Heath threw off the Keynesian assumptions prevalent in politics at the time and pursued a deflationary nonstatist approach to the economy. In the second, he renounced these ideas and went back to a Keynesian approach in 1971, a move known as the Heath Uturn. In the face of growing business failures and rising unemployment, Heath adopted a reflationary budget, instigated government support for ailing industries and businesses (such as Rolls-Royce) and created the interventionist Industrial Development Executive. Unfortunately, these measures coupled with a strict incomes policy were to bring about the demise of the Heath government. A large increase in the balance of payments deficit, rising inflation and strikes (leading to ‘the Winter of Discontent’) cost the Conservatives the next election. Such failure indicated that it was time for a change of leadership. In the ensuing contest, Margaret Thatcher secured the leadership in the second ballot. From the outset it was clear that Thatcher did not share the common Conservative aversion to ideology, and it is arguably in this respect that it is most valid to view her administration as a watershed. Previously, the party had adopted the policy most appropriate to the time. Heath adopted anti-interventionist, monetarist ideals only as a response to the problems of the economy as he perceived them. Thatcher, however, adopted an individualistic, laissez-faire approach with passionate fervour. Monetarist economic policy was one such ideal. Monetarist theory experienced a revival in the 1970s. Britain experienced the phenomenon of ‘stagflation’, increasing inflation and increasing unemployment. The Keynesian orthodoxy could not explain this, but monetarism could. The theory stated that the money supply needed to be controlled, because if the money supply exceeds the level of real output then inflation ensues. (The Labour Prime Minister, James Callaghan, had been forced to set financial targets as a condition of an IMF loan.) Thatcher warmed to monetarist theory very quickly, and, following her victory in the 1979 election, it was immediately used with the objective of reducing inflation. The government published the Medium-Term Financial Strategy, detailing parameters of growth for the money supply up to 1984. The MTFS also contained plans for the Public Sector Borrowing Require-ment (PSBR), the difference between government revenue and expenditure. The planned reduction in the PSBR was an idea antithetical to Keynesianism when there were already such high levels of unemployment. The result was clear: as inflation fell, unemployment rose drastically. However, contrary to monetarist theory the money supply (M3) actually grew as inflation fell. Strict control was not working. In 1982 with the revision of the MTFS, discretionary monetary policy was adopted. Aware of an upcoming election the government cut interest rates, in effect relaxing monetary policy. In 1984, economic circumstances forced Chancellor Nigel Lawson to suspend the monetary target range. Monetarist policy ceased to dictate Conservative economic policy. In a move which illustrates inconsistency within the Thatcher era, a period of reverse monetarism followed, during which time the principles of monetarism were abandoned.
   The Thatcher government’s radicalization of the economy was not limited to monetarism. There was also a strong commitment to altering the balance of the postwar mixed economy in favour of private ownership. A widespread programme of privatization was set in motion, a programme in line with the Thatcherite belief in the primacy of the market. Thatcher believed that state intervention caused inefficiency, that markets became distorted, and that industry became wasteful and lacklustre. The privatization of British Telecom (BT) was a signal event as the company maintained a (virtual) monopoly and as such was able to exploit the telecommunications market. Ever the champion of the consumer, the Conservative government drew up legislation and established a watchdog to monitor the industry, following a sequence of events which became common in subsequent privatizations. The programme of privatization was felt by some commentators to extend beyond sound economics into the grounds of an ideological obsession.
   Nationalized industries were not the only barrier to the free market identified by the Thatcher government. The trade unions also stood in the way of an efficient capitalist economy, by seeking wage and productivity agreements. Through these actions, British industry lost competitiveness and the British economy suffered inflation and low growth. Widespread legislation was introduced to curb the power of the unions. Secondary picketing was banned, ballots prior to strike action became compulsory, and, most significantly, unions had to follow certain procedures before striking (if they did not they could be sued). Union membership dropped, and by 1993 stood at its lowest level since 1946. The Thatcher administration was unique in the Conservative tradition for disregarding public opinion. Reforms of the National Health Service and social security system are good instances, but the most outstanding example was the community charge. Introduced in the Local Government Finance Act of 1988, it quickly became known as the poll tax. The level of popular opposition to the poll tax, thanks largely to the regressive nature of the tax, was overwhelming and, in addition to intra-party divisions over Europe, was to lead to Thatcher’s political demise.
   The liberal attitude towards the economy did not however extend into other areas of policy making. Thatcher’s social policy was authoritarian in nature. Emphasis was given to the traditionally Conservative ideals of order and authority. Correspondingly, there was an extension in police powers and stiffer penalties for offenders. Far from encouraging liberal attitudes in society, as the government did in the economy, the Conservatives tried to reverse them.
   The Thatcher era was of great political and economic significance. It altered the balance of the mixed economy through extensive privatization, while liberalization and deregulation opened up the British economy (for example, there was the removal of exchange controls in November 1979). The importance of the market became universally accepted. The trade unions and their influence was weakened (particularly the coal miners’ union, the NUM, which was weakened by its defeat in the 1984–5 miners’ strike). The structure of the British tax base was altered from domination by direct taxation to a strong emphasis upon indirect taxation. The rhetoric of the time was radical, but the policy outcomes were not always equally so. The size of the state did not shrink, nor did the money supply. Public expenditure levels have been maintained. With the decline of the traditional working class and increasing consumer affluence, the Conservative Party found that its ideals were not as unpopular as once they might have been. The Thatcher administration simply exploited this in setting the political agenda. In her pragmatic responses and authoritarian nature Thatcher reflected old Tory style, but in her ideological convictions she did not.
   John Major was left with a set of difficult circumstances following his election as leader in November 1990. The economy was in the grip of recession, while Thatcher’s dominant leadership style left Major looking weak rather than con-ciliatory or a unifying force. The internal tensions over Europe which contributed to Thatcher’s ousting remained unresolved, an election loomed, and the Labour party were experiencing an upturn in fortunes compared to the barren days of the early 1980s. The Conservative Party rallied round their new leader in order to secure victory at the 1992 election. The party appealed to the public with reduced taxation and increased spending, resulting inevitably in an increasing PSBR. Major did well out of the Gulf War in 1991, experiencing a boost in personal ratings as a consequence. It was important for Major that he portrayed himself as different to Thatcher, but not too different. At the party conference in 1991 he gave a speech intended to illustrate this. He presented a more moderate path than Thatcher, yet still emphasized themes such as the right to choose and wealth creation. He aimed for compromise over Europe by securing opt-out clauses, and with the party behind him, led it to the 1992 election. After winning the 1992 election, Major and the Party had mixed fortunes. The economy took a long time to recover from recession. The party were dogged by allegations of improper behaviour on the part of individual MPs, such as David Mellor, Michael Mates, Steven Norris, Graham Riddick and David Treddinick (over ‘cash for questions’). The behaviour of the government was questioned by the Scott Inquiry and the Nolan Commission set up to investigate ‘sleaze’. Major also suffered attacks from within his party, which remained fiercely divided over Europe, and he failed to satisfy the more right-wing elements within his party, who called for a return to the Thatcher era. Major did not break with the ideas of the Thatcher administration; indeed, some of the most illiberal legislation on crime and punishment was passed under Major. In true Conservative tradition, he adapted Thatcherism to circumstances and his leadership style. He attempted to unify a divided party with a view to electoral success by subsuming ideology, but ultimately failed in the face of New Labour’s promises of change and modernization.
   Further reading
    Evans, B. and Taylor, A. (1996) From Salisbury To Major, Manchester: Manchester University Press.
    Gamble, A. (1991) ‘The Thatcher Decade in Perspective’ in G.Peele, A.Gamble and P. Dunleavy (eds), Developments in British Politics 3, London: Macmillan.
    Hutton, W. (1996) The State We’re In, London: Vintage.

Encyclopedia of contemporary British culture . . 2014.

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