Tag Archives: policy

Inflation and unemployment – the Margaret Thatcher experience


From 1979, inflation doubled in the first year of the Thatcher administration from 10% to 22%. The recession that followed brought the rate down to 5% in 1980. At the same time, unemployment soared to a breathtaking three million – and that was the official figure.

For Thatcher, inflation was always a bigger priority than unemployment. This was unusual at the time because memories of the starving jobless in the 1930s still loomed large in Britain.

Whereas in Germany, memories of hyper-inflation chimed more with the Thatcher viewpoint. That’s not to say British people weren’t fed up with price rises in the 70s – but the spectre that haunted families more was the prospect of the breadwinner being out of work.

To combat inflation, Thatcher embraced an economic theory called “monetarism” that necessitated high interest rates, higher taxes (VAT doubled almost straight away) and sharp cuts in public spending. The result of what one politician dubbed “voodoo economics” was disastrous for millions of people between 1979 and 1981.

It didn’t even work very well as a theory. Inflation was brought under control by 1980 but the money supply continued to grow. So there were further spending cuts that led to calamitous falls in economic output and whole regions de-industrialised. Unsurprisingly – monetarism was dumped by 1984.

To get a clearer idea of Thatcher’s thinking on inflation, I found a 1974 speech made in Preston by Thatcher’s economic guru Keith Joseph. He made it very clear that inflation was regarded by the Tories as the main enemy and not the traditional bogey of unemployment.

In fact, he argued, governments had been so spooked by the Great Depression of the 1930s that they thought mass joblessness was always around the corner. So governments spent money and then tried to hold down pay with incomes policies – always unsuccessfully.

Keith Joseph’s words in 1974 make interesting reading given what was to happen in Thatcher’s first two years in power with unemployment leaping:

It is perhaps easy to understand; our post-war boom began under the shadow of the 1930s. We were haunted by the fear of long-term mass unemployment, the grim, hopeless dole queues and towns which died. So we talked ourselves into believing that these gaunt, tight-lipped men in caps and mufflers were round the corner, and tailored our policy to match these imaginary conditions. For imaginary is what they were.

“Inflation is caused by governments” – speech by Keith Joseph in 1974

Already by the mid-1970s, people were shocked by an unemployment level of 500,000. Joseph swept that aside. Public money should not be used to create jobs. And anyway, he went on, a significant percentage of the unemployed were shirkers and scroungers.

There are the drifters and hippies who draw “welfare” but engage in activities to earn money, legal or illegal. From time to time the Ministry carries out local checks, and suddenly the number of registered unemployed melts away. How many fraudulent unemployed there are at any given time can only be estimated, but they probably account for at least a tenth of the registered unemployed at normal times. We ought to do more about such people, but expanding demand will not turn them into honest men.

“Inflation is caused by governments” – speech by Keith Joseph in 1974

Ken Livingstone versus Sir Horace Cutler – both leaders of the defunct GLC


There could not have been a greater contrast on a personal and political level between the outgoing Conservative leader of the GLC Sir Horace Cutler and incoming Labour leader Ken Livingstone. I’d almost liken Cutler to a royalist and Livingstone to a roundhead.

Cutler had the demeanour of a cheerful Victorian cad and villain. Livingstone was the earnest supporter of oppressed minorities. So when the two faced off on TV, there would be no overlap of views or areas of compromise.

 

Predictions for Maggie’s future – from 1979


The Economist

The Economist – December 1979

Maggie had been in power for eight months at the end of 1979. The Economist magazine (broadly sympathetic to her aims) was making its predictions for a new decade – the 1980s. So how did The Economist think Thatcher was going to fare in the years ahead?

Well, the next election was due in 1984 and they thought that was way too close for a government rapidly losing the level of popular support it had enjoyed in the May, 1979 General Election.

Like Cameron today, Thatcher was pleading for more than one term in office to achieve her aims but at the end of 1979, the polls were suggesting Labour would come back to power. The Economist thought the Labour faces just rejected by the electorate – Peter Shore, Dennis Healey, John Silkin – would be back in ministerial posts.

And there wouldn’t have been much surprise there. After all, through the 1960s and 1970s, Labour and the Tories took turns in power. Nobody would have thought in 1979 that Thatcher would last to 1990. The Economist believed it was “conceivable” that Thatcher would be dumped as Tory leader before 1984.

Europe was a big problem for Thatcher – senior Tories were horrified by her roughing up of the EEC (as the EU was called then). Foreign minister Lord Carrington was seen as a restraining influence on the Prime Minister (he would resign when the Falklands War broke out).

The Economist wrote that Carrington and Home Secretary William Whitelaw might move to “bell the cat” – put Thatcher under firm control and force her into a U-turn towards more traditional One Nation Toryism. She would be forced to adopt a more Ted Heath approach or resign.

The revival of the Liberal Party made a Lib-Con coalition – similar to what we have now – a real possibility. But The Economist thought that Labour – under Dennis Healey, who by 1984 would have defeated the left wing of the party – was more likely to return to power. The magazine correctly predicted that Roy Jenkins and Shirley Williams would form a new political party and for a while, that party would exercise a big influence.

So, how wrong was The Economist? The election was called early in 1983; an unexpected war in the Falklands boosted Thatcher; the Labour left put up a stronger fight and Dennis Healey did not become Labour leader; Thatcher purged her enemies within the Tory party and no bell was put on that cat!

Night clubs still operating a race bar in the 70s and 80s


In the two biographies I’ve had published – with Neville Staple (Original Rude Boy) and Errol Christie (No Place To Hide) – the same question came up of night clubs that operated a race bar back in the 1970s and early 1980s. That is, in breach of legislation, they refused or curtailed entry to people on grounds of skin colour. You wouldn’t believe this could have happened in England within living memory – but oh yes it did.

The proof? Well, in 1978 the Birmingham night club Pollyanna’s was ordered by the Commission for Racial Equality to stop restricting black and Chinese people from attending its functions. Unbelievably the club not only admitted what it did but tried to justify it. Their argument was that in the interests of “a happy situation”, racial quotas had to be imposed. This included telling a university lecturer not to bring in a group of Chinese students!

Errol Christie told me that several Coventry clubs as late as 1981 operated an effective colour bar making it almost impossible for black youth to enter the premises. Ironically, the aforementioned Pollyanna’s did become a meeting place for Brummie punks and skinheads including a certain Ranking Roger, later of The Beat….who was black.

Pollyanna's in trouble

Pollyanna’s in trouble

New Romantic style leaders of 1980


BlitzOut of my personal archive, I’ve dug up an ancient Sunday Times supplement from April, 1980 that was for the most part “celebrating” a year of Thatcher in power. Somehow appropriately, it also had a story about the new musical and style phenomenon that had sprung up alongside Thatcher and pushed punk and 2Tone to one side. It was the era of New Romantic and the Sunday Times had been down to the Blitz to find out who these fops and dandies were.

A 20 year old Steve Strange was identified easily as the leader of the pack. Running the Blitz club in Covent Garden, he would admit 200 “individualists” while turning away 400 who weren’t presumably individual enough. He also ran ‘soirees’ on a Monday night at St Mauritz on Wardour Street – “for intelligent conversation”. The music was Sinatra, Dietrich and Marilyn Monroe. All seems a tadge poncy now but that was very much the ethos of the time.

There has been a return to some of the design flare of the New Romantic era on the Hoxton and indie end of the gay scene. Kids are wearing make up again and extravagent, home made clobber. Back in 1980, one 17 year old wouldn’t have dreamed of being seen dead in jeans – a certain George O’Dowd, who went on to be Boy George. “I’ve looked outrageous since I was 11,” he told the Sunday Times.

Like many seemingly radical movements, New Romantic was actually very retro – constantly referencing the Victorian, Edwardian and the dandies of the Regency. It was sufficiently subversive to wind up the usual suspects in those days as well as being very camp – a way that many gay men could express themselves openly and others could experiment with their sexuality.

On the downside, it seemed to me to be politics-free – a recoiling from the anarchic message of punk or social commentary of ska. We were slowly reconciling ourselves to the devil in Number Ten.