Peter Hoskin: Let’s look at the Thatcher Years in full, not just in parts

This article first appeared in the Tuesday edition of ConHome's Party Conference Daily.

You probably know the story about the blind men and the elephant. It’s the one where a group of the former touch a specimen of the latter to find out what it is like. One blind man touches a tusk, and concludes that the elephant is like a spear. Another touches the ears, and concludes that it’s like a fan. For yet another, it’s the tail, which feels like a piece of rope. And so on and so on. As John Godfrey Saxe’s verse telling of the story finishes:

“…each was partly in the right,
And all were in the wrong!”

I mention this because something similar is happening in the case of Margaret Thatcher. People — many of them Conservatives — have reached back to her years of government, grabbed on to a single part of them, and emerged with a very firm idea about what they were like. Spending cuts! The Falklands! Facing down the unions! Standing up for business! No turning! But while all of these ideas are partly in the right, they are also in the wrong. The Thatcher governments must be looked at in the whole for the right lessons to be drawn from them.

A fuller account of the Thatcher Years might begin, as so many political stories do, within the pages of the Budget; or, rather, within the pages of several Budgets, from across the 1980s. And how radical some of them were! We rightly remember the 1981 Budget, which prompted 364 economists — including one young tyke called Mervyn King — to write a letter in protest at its measures to restrain public spending and raise taxes at a time of recession. And what about the Nigel Lawson Budget of 1988, which slashed the top rate of tax from 60p to 40p? Wowee.

But as soon as you start laying these Budgets side-by-side some less well-remembered truths emerge. For instance, real public spending was only cut in two financial years of the Thatcher era: 1985-86 and 1988-89. It rose in every other. Similarly, the structural deficit was in surplus for only two years. It rose steadily from 1983 onwards.

These truths, like the rest of this article, are not intended to disparage Margaret Thatcher’s achievements. The fiscal tightening that her Government achieved in 1981 alone — from a structural deficit of 3.4 per cent of GDP to a surplus of 1.5 per cent, all in one year — was astonishing. But, given how some people remember the Thatcher years, a comparison with the current Coalition’s policies may produce surprising results. As it happens, George Osborne is cutting real public spending in every year, not just two years, of this Parliament*. He is coaxing the structural deficit into a year-on-year downwards trend.  

Even between the covers of that contentious 1981 Budget there are sections that undermine the modern caricature of Margaret Thatcher. The levies imposed on banks, North Sea oil, petrol, tobacco and alcohol were booted skywards — testament to the fact that, if you want to cut the deficit quickly, then short-term tax increases are often an effective way to go about it. And the Budget’s targets for cutting public spending were subsequently missed — testament to another fact, that the best-laid fiscal plans can be battered out of shape by a jittery economy.

And on it goes. Did you know that defence expenditure actually declined slightly over the Thatcher Years, albeit driven by the decline of the Cold War? Or that health expenditure rose by around 30 per cent? Indeed, while she would go on to push controversial measures such as tax breaks for private medical insurance, the early Thatcher Years were much like the early Cameron Years in their careful regard for the NHS. There aren’t, after all, many stages of evolution between “The National Health Service is safe in our hands” and “I’ll cut the deficit, not the NHS”.

The early Thatcher Years contain other counterpoints to what would follow. The Prime Minister who would battle the trade union bosses was previously a union member herself. One of the first speeches that she gave upon being elected as party leader was to the Conservative Trade Unionists, and it made clear her pride in the union movement as well as her disapproval of its excesses. “Just as it is right that the immense power and influence of the trade union movement should be recognised,” reads one line, “so it is right that such powers and influence should be used in the interests of the whole community.”

Similarly, the Prime Minister who would introduce Section 28 was previously an MP who supported the extension of gay rights in the 1960s. It was myopic of journalists to attack Mrs Thatcher as a “reactionary cavewoman” and a “desiccated calculating machine,” as some did after she oversaw cuts to school milk in 1971. This was a politician with strong convictions in multiple directions.

No wonder so many of Mrs Thatcher’s colleagues came to see her as a fiery emissary for change, rather than as a straightforward Conservative. Peter Hennessey’s history of post-1945 Prime Ministers contains two wonderful quotes in this regard, both uttered by late admirers of hers. The first is Woodrow Wyatt, explaining that he liked her precisely because, “she is not a Conservative … She is a radical making a revolution which horrifies many Conservatives.” And the second is Milton Friedman, claiming that she is “not a typical Tory. She really is the closest thing there is equivalent to a nineteenth century liberal in British political terms.” Thatcher, the revolutionary liberal?

Now, as we push this further, not even the most famous Thatcher sound-bites can escape reassessment. “The Lady’s not for turning” was said at the 1980 party conference in response to the many clamorous voices calling for a change in economic policy. Yet, while she didn’t exactly yield to those calls, the iron did bend slightly. It’s striking that, in the six months after that conference speech, the UK base rate was cut by a hefty 4 per cent. Before then, Margaret Thatcher had been eager to keep interest rates especially high, so as to tightly control inflation.

And as for “there is no such thing as society”, Lady T dealt with that herself in her autobiographical The Downing Street Years. “My meaning, clear at the time but subsequently distorted beyond recognition,” she wrote, “was that society was not an abstraction, separate from the men and women who composed it, but a living structure of individuals, families, neighbours and voluntary associations.” And that adds up to an intellectual discussion worth having, not a slogan to be parroted or denigrated depending on your political inclinations.

With all that said, I hope you don’t mind if I return to the list that I included towards the top of this article, only this time with a few additions. Spending cuts! Spending rises! The Falklands! Defence cuts! Facing down the unions! Being a union member! Standing up for business! Hitting business with taxes! No turning! A bit of turning!

The truth about Margaret Thatcher has more sides to it than many people, her admirers as well as her opponents, care to admit. This doesn’t detract from her political legacy; quite the opposite. It reveals it for what it is: a whole, and not just a jumble of parts.

* When the distortive, one-year effects of a recent fiscal alteration to Royal Mail pensions are discounted.