FAR too much nonsense is being spoken about Lady Thatcher’s time in office. Here is my take on five key myths.
MYTH 1: POPULARITY
Thatcher won 43.9 per cent of the vote in 1979, 42.4 per cent per cent in 1983 and 42.2 per cent per cent in 1987, landslide results that contemporary politicians can only dream of. Her opinion polls today remain extremely strong: YouGov polling finds that she is deemed the greatest post-1945 prime minister, and that 52 per cent believe she was a great or a good PM, against 30 per cent who said she was poor or terrible. Even in the north, 49 per cent approve, against 35 per cent who don’t; only in Scotland is the balance against her. Yes, many hated her – but lots loved her, and the majority of today’s public approves.
MYTH 2: PUBLIC SPENDING
Total managed expenditure went up modestly in real terms during her time in office, with spending higher on areas such as the NHS, but the state’s overall share of GDP diminished substantially. Public spending, on the Treasury’s measure, fell from 44.6 per cent of GDP in 1979-1980, to 39.4 per cent of GDP in 1990-91, a 5.2 percentage point decline.
The real extent of the fall is masked by the bitter recession of the early 1980s as she weaned the UK from extreme levels of inflation. Spending rose to a peak of 48.2 per cent of GDP by 1982-83, the economy battered by soaring unemployment, before being slashed. The peak to trough reduction in spending was 8.8 per cent of GDP, though it is slightly exaggerated by the unsustainable growth in the last couple of years caused by Lord Lawson’s cheap money bubble.
In theory, David Cameron wants to cut public spending from 46.5 per cent of GDP in 2010-11 to 40.5 per cent of GDP in 2017-18, an achievement which would be truly Thatcherite; but such a reduction looks unlikely to materialise because of his inability to introduce Thatcher-style supply-side reforms and marginal tax rate cuts.
MYTH 3: COALMINING
Far more miners lost their jobs in the 1960s, especially under Labour’s Harold Wilson – and far more mines shut – than in the 1980s. In 1960, 605,000 miners produced 196.7m tonnes of coal. By 1970, 289,000 miners produced 144.7m tonnes; by 1979-80, 235,200 miners extracted 123.3m tonnes. By the time she left office, 62,000 miners extracted 91.6m tonnes. Manufacturing production rose by 7.5 per cent per cent during Thatcher’s time in office, nailing another lie, with industrial production going up even faster.
MYTH 4: ECONOMIC PERFORMANCE
Thatcher’s supply-side reforms worked. The economy grew 3.03 per cent a year in the 1950s, 3.18 per cent a year in the 1960s, 2.07 per cent in the 1970s, 3.09 per cent in the 1980s under Thatcher, before expanding by 2.77 per cent in the 1990s (when her legacy remained) and by 1.77 per cent in the 2000s, according to an analysis by Sam Williamson of the University of Illinois.
MYTH 5: TAX CUTS.
There are some who point to the fact that the total tax take under Thatcher increased from 33.7 per cent of GDP in 1979-80 to 34.9 per cent as proof that she wasn’t a real tax-cutter. That is nonsense. She raised value added tax substantially, but her massive cuts to income and corporation tax were hugely important and beneficial. The increase in the tax take was caused primarily by the rebound in growth in later years (and was slightly exaggerated, once again, by the Lawson bubble).
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