Wednesday, 10 April 2013

RIP: Margaret Thatcher

It will probably be another 50 years before historians can look back dispassionately and examine the legacy of Margaret Thatcher. One of the best adjectives to describe her tenure as Prime Minister is that it was "transformational"; that is a good term, because it is not judgmental. It is certain both from supporters and critics alike that she changed British society in ways that hitherto had been outside the post-war consensus government.

She succeeded in becoming Prime Minister after the dying years of the Callaghan administration. This was the time of the "winter of discontent", when bodies were being left unburied because of strike action, rubbish was accumulating, and the Unions were flexing their muscles.

It is hard to appreciate just how undemocratic the Unions were. The Union barons, with block votes, dominated the Labour Party, with no need to take account of the views of their membership by secret ballot, flying pickets went around the country, attracting just those kind of militant thugs who did not really care about political issues, but just enjoyed a good scrap.

The Heath government had gone head on against the Unions over pay negotiations, and failed. Lack of power caused by diminishing coal supplies led to the three-day week, and the TV stations going off the air early in the evening. Locally, Channel Television, unaffected by the UK conditions, resorted to showing some wonderfully vintage black and white films to plug the gap.

Once Wilson was back in Number 10 Downing Street, the scramble for pay just let rip; there was really little attempt to constrain the nationalised industries, and as a result of that, and the oil crisis, inflation was rocketing. When the Callaghan Government tried to salvage the economy with help from the IMF and tighter monetary control, the Unions went on strike everywhere.

It was in these tempestuous times that Margaret Thatcher won the election and became Prime Minister. By cleverly picking a fight against the most militant of Trade Union leader's Arthur Scargill, and by introducing laws which outlawed secondary picketing, and illegal strike action without full secret ballot on members, she set to face the same battle which had wrecked Heath and Callaghan with a better armoury.

Scargill knew he could not count on a full ballot to support him, so he decided not to bother, and simply called out the Union members on strike. This was to be his undoing. In the first instance, coal had been stockpiled for power stations, so Margaret Thatcher could play a waiting game, and secondarily, the undemocratic means of calling a strike meant that legal action could be taken against the miners, freezing Union bank accounts, and removing their economic buffer. As Andrew Marr pointed out, she was lucky in her choice of enemies; another Union leader may have acted more cautiously.

The government won the battle with the miners, and began a radical programme of mine closures of the most uneconomic pits. As North Sea oil was coming on line, this changed the assessment of what was economic and what was not. After all, in a time of fuel scarcity, it would be worth mining at greater cost, and it is possible that some pits would be viable today when more limited fuel supplies have driven the price of oil up, and made previously uneconomic forms of oil extraction viable.

Instead, the short sightedness of the policy of allowing present market forces rather than future projections meant that a massive mine closure programme was instituted, leaving the North of England, and parts of Wales, the coal powerhouses, devastated. The transition was so quick that hundreds of families and workers were thrown on the scrap heap; no consideration was given to any kind of transitional planning for new ventures and employment.

It was the same kind of shortsightedness that caused Margaret Thatcher's greatest triumph - the Falklands War. The Government was steadily reducing and cutting back the armed forces; the Naval presence in the South Atlantic around the Falkland Islands was removed. The message that Argentina could see was that the Britain was withdrawing from defence of its overseas territories, so General Galtieri, looking for a diversion from his crumbling domestic policies, saw a quick takeover as a means of boosting his popularity once more. The situation of the Navy when Britain went to war was so bad they had to hire cruise ships to transport the troops into the war zone.

Of course, winning the war was a huge boost to Margaret Thatcher's popularity, and complaints about domestic policy were largely overshadowed in the next election by the triumph of the foreign polity, which was played up for all it was worth by the Conservative marketing agencies and politicians.

But on the domestic front, the ideological nature of the Thatcher revolution would have far-reaching consequences, some of which are with us to this day. Of course it was sensible to remove some industries from the scope of Nationalisation. The Government had no reason to be heavily involved in running the business of planes, trains or automobiles. But the programme of privatisation which followed often left too little oversight and regulation.

Taking the trains as one example, the split of the monolith of British railways into smaller private companies, whose bottom line was their shareholders, meant that unless strongly regulated, insufficient funds would be returned to maintaining infrastructure. Successive post-Thatcher governments inherited this policy and kept it as the status quo, until eventually a number of train disasters caused by poorly maintained lines led to government intervention. But it began with the Thatcher regime, which over relied on market forces, and was lax on regulation.

We can see the same aspects unfolding in the water industry after privatisation. In some locales, the often ancient network of pipes needed a good deal of money thrown at it; pipes were leaking so much water that drought provisions would remain in place even when the region concerned had considerable volumes of rain to boost the reservoirs. But there was not sufficiently strong regulation, just a trust to the markets to resolve the matter. When given a choice between distributions to shareholders or reinvestment in infrastructure, there could be little doubt which direction the markets would go.

The private television companies also suffered from the ideology of shaking up the system with market forces. When franchises came up for renewal, the whole matter was turned into a circus by making them bid in a blind auction. Some lucky ones bid low and stayed producing, but others - Yorkshire being an example - virtually bankrupted themselves with loans, so that although they got the franchise, there was simply not the money there had been for quality television. Coupled with a decline in advertising revenue, this reduced the output of quality television to a fraction of what it had been, paving the way towards endless reality TV shows, which required no actor to be paid, and could be churned out cheaply.

But probably the most pernicious long-term disaster was the deregulation of the City. Lax regulation - a "light touch", first instituted under the Thatcher government, but inherited and continued by successive governments thereafter, meant that morality was jettisoned in favour of the culture of get rich bankers bonuses and city traders taking huge risks. Along the way, Barings Bank collapsed, Polly Peck collapsed and there is a straight line of lax regulation, and over reliance on market forces leading from the 1980s to the present day banking crisis.

The final ideological change was a failure. The Community Charge or "Poll Tax" was pushed through to replace property rates, and proved hugely unpopular. It was clear that Margaret Thatcher was committed to it on principle, and would not moderate her stance; its abolition would not be possible while she was still Prime Minister. Fears of Conservative defeat meant that she had become an albatross around the neck of her party, and a challenge begun by Michael Heseltine led to her resignation as Prime Minister.
Like all politicians, she had her strengths and weaknesses. An appeal to populism, and an ability to take on the Unions when they were acting like undemocratic robber Barons was a great strength, as was her determination to fight the Falklands War rather than sue for peace. The monetary policy, with a bit of help from North Sea oil revenues flowing into the Exchequer, also helped to reduce inflation to manageable proportions; previously it had been increasingly rising out of control.

But he strength was also her weakness, an inability to doubt that what she was doing was right, and foresee that market forces alone could not deliver what she wanted to achieve. That blinkered approach and ideology would leave a toxic legacy that we live with today, and it would eventually seal her own fate as Prime Minister.

1 comment:

James said...

The Government had no reason to be heavily involved in running the business of planes, trains or automobiles.

Actually, government had every reason to be involved in running trains.

The whole model of privatised business relies on the private providers offering competing services which all ride on top of one infrastructure. This is true of all the privatised utilities - gas, electric, telephone - and is also particularly true of railways.

The drive for cost control means that the service providers have proved unwilling to pay for the infrastructure they use. Look at Yorkshire Water, who paid massive dividends while losing 30% of their water in the pipes. Look at the failure to roll high-speed broadband out to large areas of the UK because BT don't want to pay for other people to have business advantage.

Having also seen what happened when the Severn flooded in July 2007, I would not trust the private sector to manage an emergency breakdown in the infrastructure. The forces had to be called in to distribute bottled water and sandbag the local grid substation - had they not succeeded (and it was touch and go) a third of a million people would have been without both power and drinking water.

On that basis, government ownership and management of infrastructure at least looks desirable. And the businesslike way in which BR ran Network SouthEast, Intercity and Scotrail from the late 1980s onwards suggests that any benefits from the service-provider plus infrastructure model over a properly integrated business are far less than the ideologues claim.