The Premiership of Margaret Thatcher began on 4 May, 1979, with a mandate to reverse the UK's economic decline and to reduce the role of the state in the economy. Thatcher was incensed by one contemporary view within the Civil Service, that its job was to manage the UK's decline from the days of Empire, and she wanted the country to assert a higher level of influence and leadership in international affairs. She was a philosophic soul-mate of Ronald Reagan, elected in 1980 in the United States, and to a lesser extent Brian Mulroney, who was elected in 1984 in Canada. Conservatism now became the dominant political philosophy in the major English-speaking nations, apart from Australia. In contrast her relationship with Australian Prime Minister Bob Hawke was rather strained due to their contrasting views on South Africa and the Commonwealth (Hawke was a republican), and Thatcher did not endorse previous Australian Prime Minister Malcolm Fraser as Secretary General of the Commonwealth.
In May 1980, one day before she was due to meet the Irish Taoiseach, Charles Haughey, to discuss Northern Ireland, she announced in the House of Commons that "the future of the constitutional affairs of Northern Ireland is a matter for the people of Northern Ireland, this government, this parliament, and no-one else."
In 1981, a number of Provisional Irish Republican Army (IRA) and Irish National Liberation Army prisoners in Northern Ireland's Maze Prison (known in Northern Ireland as 'Long Kesh', its previous official name) went on hunger strike to regain the status of political prisoners, which had been revoked five years earlier under the preceding Labour government. Bobby Sands, the first of the strikers, was elected as a Member of Parliament (MP) for the constituency of Fermanagh and South Tyrone a few weeks before he died.
Thatcher refused at first to countenance a return to political status for republican prisoners, famously declaring "Crime is crime is crime; it is not political. However, after nine more men had starved themselves to death and the strike had ended, some rights relating to political status were restored to paramilitary prisoners.
Thatcher's public hard line on the treatment of paramilitaries was reinforced during the 1980 Iranian Embassy Siege where for the first time in 70 years British armed forces were authorised to use lethal force in Great Britain.
Thatcher also continued the policy of "Ulsterisation" of the previous Labour government and its Secretary of State for Northern Ireland, Roy Mason, believing that the Unionists of Northern Ireland should be at the forefront in combating Irish republicanism. This meant relieving the burden on the mainstream British army and elevating the role of the Ulster Defence Regiment and the Royal Ulster Constabulary.
As a monetarist, Thatcher started out in her economic policy by increasing interest rates to slow the growth of the money supply and thus lower inflation. She had a preference for indirect taxation over taxes on income, and value added tax (VAT) was raised sharply to 15%, with a resultant actual short-term rise in inflation. These moves hit businesses -- especially the manufacturing sector -- and unemployment quickly passed two million, doubling the one million unemployed under the previous Labour government.
Political commentators harked back to the Heath Government's "U-turn" and speculated that Mrs Thatcher would follow suit, but she repudiated this approach at the 1980 Conservative Party conference, telling the party: "To those waiting with bated breath for that favourite media catch-phrase—the U-turn—I have only one thing to say: you turn if you want to; the Lady's not for turning." That she meant what she said was confirmed in the 1981 budget, when, despite concerns expressed in an open letter from 364 leading economists, taxes were increased in the middle of a recession, leading to newspaper headlines the following morning of "Howe it Hurts", a reference to the Chancellor Geoffrey Howe. In January 1982, the inflation rate had dropped back to 8.6% from earlier highs of 18%, and interest rates were then allowed to fall. Unemployment continued to rise, reaching an official figure of 3.6 million — although the criteria for defining who was unemployed were amended allowing some to estimate that unemployment in fact hit 5 million. However, Norman Tebbit has suggested that, due to the high number of people claiming unemployment benefit whilst working, unemployment never reached three million. By 1983, manufacturing output had dropped 30% from 1978.
The confrontation over strikes carried out in 1984-85 by the National Union of Mineworkers (NUM) in opposition to proposals to close a large number of mines proved decisive. The government had made preparations to counter a strike by the NUM long in advance by building up coal stocks, ensuring that cuts in the electricity supply — the legacy of the industrial disputes of 1972 — would not be repeated.
Police tactics during the strikes came under criticism from civil libertarians, but the images of crowds of militant miners attempting to prevent other miners from working proved a shock even to some supporters of the strikes. The mounting desperation and poverty of the striking families led to divisions within the regional NUM branches, and a breakaway union, the Union of Democratic Mineworkers (UDM), was soon formed. A group of workers, resigned to the impending failure of the actions and worn down by months of protests, began to defy the Union's rulings, starting splinter groups and advising workers that returning to work was the only viable option.
The Miners' Strike lasted a full year before the NUM leadership conceded without a deal. The Conservative government proceeded to close all but 15 of the country's pits, with the remaining 15 being sold off and privatised in 1994. Private companies have since then acquired licences to open new pits and open-cast sites, with the majority of the original mines destroyed and the land redeveloped. The defeat of the miners' strike led to a long period of demoralization in the whole of the trade union movement.
At the end of March 1984, four South Africans were arrested in Coventry, remanded in custody, and charged with contravening the UN arms embargo, which prohibited exports to apartheid South Africa of military equipment. Mrs Thatcher took a personal interest in the Coventry Four, and 10 Downing Street requested daily summaries of the case from the prosecuting authority, HM Customs and Excise. Within a month, the Coventry Four had been freed from jail and allowed to travel to South Africa – on condition that they returned to England for their trial later that year. In April 1984, Thatcher sent senior British diplomat, Sir John Leahy, to negotiate the release of 16 Britons who had been taken hostage by the Angolan rebel leader, Jonas Savimbi. At the time, Savimbi's UNITA guerrilla movement was financed and supported militarily by the apartheid regime of South Africa. On April 26, 1984 Leahy succeeded in securing the release of the British hostages at the UNITA base in Jamba, Angola. In June 1984 Thatcher invited apartheid South Africa's president, P. W. Botha, and foreign minister, Pik Botha, to Chequers in an effort to stave off growing international pressure for the imposition of economic sanctions against South Africa, where Britain had invested heavily. She reportedly urged President Botha to end apartheid; to release Nelson Mandela; to halt the harassment of black dissidents; to stop the bombing of African National Congress (ANC) bases in front-line states; and to comply with UN Security Council resolutions and withdraw from Namibia. However Botha ignored these demands. In an interview with Hugo Young for The Guardian in July 1986, Thatcher expressed her belief that economic sanctions against South Africa would be immoral because they would make thousands of black workers unemployed. In August 1984, foreign minister, Pik Botha, decided not to allow the Coventry Four to return to stand trial, thereby forfeiting £200,000 bail money put up by the South African embassy in London.
On the early morning of 12 October, 1984, the day before her 59th birthday, Thatcher escaped injury in the Brighton hotel bombing during the Conservative Party Conference when her hotel room was bombed by the Provisional Irish Republican Army. Five people died in the attack, including Roberta Wakeham, wife of the government's Chief Whip John Wakeham, and the Conservative MP Sir Anthony Berry. A prominent member of the Cabinet, Norman Tebbit, was injured, and his wife Margaret was left paralysed. Thatcher herself would have been injured if not for the fact that she was delayed from using the bathroom (which suffered more damage than the room she was in at the time the IRA bomb detonated). Thatcher insisted that the conference open on time the next day and made her speech as planned in defiance of the bombers, a gesture which won widespread approval across the political spectrum.
On 15 November 1985, Thatcher signed the Hillsborough Anglo-Irish Agreement with Irish Taoiseach Garret FitzGerald, the first time a British government gave the Republic of Ireland a say (albeit advisory) in the governance of Northern Ireland. The agreement was greeted with fury by Northern Irish unionists. The Ulster Unionists and Democratic Unionists made an electoral pact and on 23 January 1986, staged an ad-hoc referendum by resigning their seats and contesting the subsequent by-elections, losing only one, to the nationalist Social Democratic and Labour Party (SDLP). However, unlike the Sunningdale Agreement of 1974, they found they could not bring the agreement down by a general strike. This was another effect of the changed balance of power in industrial relations.
Thatcher's political and economic philosophy emphasised reduced state intervention, free markets, and entrepreneurialism. Since gaining power, she had experimented in selling off a small nationalised company, the National Freight Company, to its workers, with a surprisingly positive response. After the 1983 election, the Government became bolder and, starting with British Telecom, sold off most of the large utilities which had been in public ownership since the late 1940s. Many people took advantage of share offers, although many sold their shares immediately for a quick profit and therefore the proportion of shares held by individuals rather than institutions did not increase. The policy of privatisation, while anathema to many on the left, has become synonymous with Thatcherism and was also followed by Tony Blair's government. Wider share-ownership and council house sales became known as "popular capitalism" to its supporters (a term coined by John Redwood). By 1987, inflation had fallen further to 4.2%.
In the Cold War, Mrs. Thatcher supported United States President Ronald Reagan's policies of deterrence against the Soviets. This contrasted with the policy of détente which the West had pursued during the 1970s, and caused friction with allies who still adhered to the idea of détente. U.S. forces were permitted by Mrs. Thatcher to station nuclear cruise missiles at British bases, arousing mass protests by the Campaign for Nuclear Disarmament. However, she later was the first Western leader to respond warmly to the rise of the future reformist Soviet leader Mikhail Gorbachev, declaring that she liked him and describing him as "a man we can do business with" after a meeting in 1984, three months before he came to power. This was a start of a move by the West back to a new détente with the USSR under Gorbachev's leadership, which coincided with the final erosion of Soviet power prior to its eventual collapse in 1991. Thatcher outlasted the Cold War, which ended in 1989, and those who share her views on it credit her with a part in the West's victory, by both the deterrence and détente postures.
In 1985, as a deliberate snub, the University of Oxford voted to refuse her an honorary degree in protest against her cuts in funding for higher education. This award had always previously been given to all Prime Ministers who had been educated at Oxford.
In the aftermath of a series of terrorist attacks on U.S. military personnel in Europe, which were believed to have been executed at Colonel Qaddafi's command, President Reagan decided to carry out a bombing raid on Libya. Both France and Spain refused to allow U.S. aircraft to fly over their territory for the raid. Thatcher herself had earlier expressed opposition to "retaliatory strikes that are against international law" and had not followed the U.S. in an embargo of Libyan oil. However Thatcher felt that as the U.S. had given support to Britain during the Falklands War but she had opposed the U.S. invasion of Grenada and that America was a major ally against a possible Soviet attack in Western Europe, she felt obliged to allow U.S. aircraft to use bases situated in Britain. Later that year in America, President Reagan persuaded Congress to approve of an extradition treaty which closed a legal loophole by which IRA members/Volunteers escaped extradition by claiming their murders were "political". This had been previously opposed by Irish-Americans for years but was passed after Reagan used Thatcher's support in the Libyan raid as a reason to pass it.
Her liking for defence ties with the United States was demonstrated in the Westland affair when she acted with colleagues to allow the helicopter manufacturer Westland, a vital defence contractor, to refuse to link with the Italian firm Agusta in order for it to link with the management's preferred option, Sikorsky Aircraft Corporation of the United States. Defence Secretary Michael Heseltine, who had pushed the Agusta deal, resigned in protest after this, and remained an influential critic and potential leadership challenger. He would eventually prove instrumental in Thatcher's fall in 1990.
In 1986, her government controversially abolished the Greater London Council (GLC), then led by the strongly left-wing Ken Livingstone, and six Metropolitan County Councils (MCCs). The government claimed this was an efficiency measure. However, Thatcher's opponents held that the move was politically motivated, as all of the abolished councils were controlled by Labour, had become powerful centres of opposition to her government, and were in favour of higher local government taxes and public spending. Several of them had however rendered themselves politically vulnerable by committing scarce public funds to causes widely seen as political and even extreme.
Thatcher had two notable foreign policy successes in her second term.
Though an early backer of decriminalization of male homosexuality (see above), Thatcher, at the 1987 Conservative party conference, issued the statement that "Children who need to be taught to respect traditional moral values are being taught that they have an inalienable right to be gay". Backbench Conservative MPs and Peers had already begun a backlash against the 'promotion' of homosexuality and, in December 1987, the controversial 'Section 28' was added as an amendment to what became the Local Government Act 1988. This legislation has since been abolished by Tony Blair's Labour administration.
Thatcher, the former chemist, became publicly concerned with environmental issues in the late 1980s. In 1988, she made a major speech accepting the problems of global warming, ozone depletion and acid rain. In 1990, she opened the Hadley Centre for climate prediction and research. . In her book Statecraft (2002), she described her later regret in supporting the concept of human-induced global warming, outlining the negative effects she perceived it had upon the policy-making process. "Whatever international action we agree upon to deal with environmental problems, we must enable our economies to grow and develop, because without growth you cannot generate the wealth required to pay for the protection of the environment" .
At Bruges, Belgium, in 1988, Thatcher made a speech in which she outlined her opposition to proposals from the European Community for a federal structure and increasing centralisation of decision-making. Although she had supported British membership, Thatcher believed that the role of the EC should be limited to ensuring free trade and effective competition, and feared that new EC regulations would reverse the changes she was making in the UK: "We have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed at a European level, with a European super-state exercising a new dominance from Brussels". She was specifically against Economic and Monetary Union, through which a single currency would replace national currencies, and for which the EC was making preparations, now known as the euro and in force as legal tender since 2002 in twelve European countries. Britain has so far remained outside the so-called eurozone. The speech caused an outcry from other European leaders, and exposed for the first time the deep split that was emerging over European policy inside her Conservative Party.
Thatcher's popularity once again declined, in 1989, as the economy suffered from high interest rates imposed to temper a potentially unsustainable boom. She blamed her Chancellor, Nigel Lawson, who had been following an economic policy which was a preparation for monetary union; in an interview for the Financial Times, in November 1987, Thatcher claimed not to have been told of this and did not approve.
At a meeting before the Madrid European Community summit in June 1989, Lawson and Foreign Secretary Geoffrey Howe forced Thatcher to agree to the circumstances under which she would join the Exchange Rate Mechanism, a preparation for monetary union and the abolishment of the Pound Sterling. At the meeting, they both claimed they would resign if their demands were not met. Thatcher responded by demoting Howe and by listening more to her adviser Sir Alan Walters on economic matters. Lawson resigned that October, feeling that Thatcher had undermined him.
That November, Thatcher was challenged for the leadership of the Conservative Party by Sir Anthony Meyer. As Meyer was a virtually unknown backbench MP, he was viewed as a "stalking horse" candidate for more prominent members of the party. Thatcher easily defeated Meyer's challenge, but there were sixty ballot papers either cast for Meyer or abstaining, a surprisingly large number for a sitting Prime Minister. Her supporters in the Party, however, viewed the results as a success, claiming that after ten years as Prime Minister and with approximately 370 Conservative MPs voting, the opposition was surprisingly small.
Thatcher's new system to replace local government taxes, outlined in the Conservative manifesto for the 1987 election, was introduced in Scotland in 1989 and in England and Wales in 1990. The rates were replaced by the Community Charge (more widely known as the "poll tax"), which applied the same amount to every individual resident, with discounts for low earners. This was to be the most universally unpopular policy of her premiership and had the effect of limiting the number of people on the electoral register.
Additional problems emerged when many of the tax rates set by local councils proved to be much higher than earlier predicted. Opponents of the Community Charge banded together to resist bailiffs and disrupt court hearings of Community Charge debtors. The Labour MP, Terry Fields, was jailed for 60 days for refusing on principle to pay his Community Charge. As the Prime Minister continued to refuse to compromise on the tax, up to 18 million people refused to pay, enforcement measures became increasingly draconian, and unrest mounted and culminated in a number of riots. The most serious of these happened in London on 31 March 1990, during a protest at Trafalgar Square, London, which more than 200,000 protesters attended. The huge unpopularity of the tax was seen as a major factor in Thatcher's downfall.
One of Thatcher's final acts in office was to put pressure on US President George H. W. Bush to deploy troops to the Middle East to drive Saddam Hussein's army out of Kuwait. Bush was somewhat apprehensive about the plan, but Thatcher's memoirs summarise her advice to him during a telephone conversation with the words, "this was no time to go wobbly!"
On the Friday before the Conservative Party conference in October 1990, Thatcher ordered her new Chancellor of the Exchequer John Major to reduce interest rates by 1%. Major persuaded her that the only way to maintain monetary stability was to join the Exchange Rate Mechanism at the same time, despite not meeting the 'Madrid conditions'. The Conservative Party conference that year saw a large degree of unity; few who attended could have imagined that Mrs Thatcher had only a matter of weeks left in office.
On 1 November 1990, Sir Geoffrey Howe, one of Thatcher's oldest and staunchest supporters, resigned from his position as Deputy Prime Minister in protest at Thatcher's European policy. In his resignation speech in the House of Commons two weeks later, he suggested that the time had come for "others to consider their own response to the tragic conflict of loyalties" with which he stated that he had wrestled for perhaps too long. Her former cabinet colleague Michael Heseltine subsequently challenged her for the leadership of the party, and attracted sufficient support in the first round of voting to prolong the contest to a second ballot. Though she initially stated that she intended to contest the second ballot, Thatcher decided, after consulting with her Cabinet colleagues, to withdraw from the contest. On 22 November, at just after 9.30 a.m., she announced to the Cabinet that she would not be a candidate in the second ballot. Shortly afterwards, her staff made public what was, in effect, her resignation statement:
Having consulted widely among my colleagues, I have concluded that the unity of the Party and the prospects of victory in a General Election would be better served if I stood down to enable Cabinet colleagues to enter the ballot for the leadership. I should like to thank all those in Cabinet and outside who have given me such dedicated support.Neil Kinnock, Leader of the Opposition, proposed a motion of no confidence in the government, and Margaret Thatcher seized the opportunity this presented on the day of her resignation to deliver one of her most memorable performances:
...a single currency is about the politics of Europe, it is about a federal Europe by the back door. So I shall consider the proposal of the Honourable Member for Bolsover (Mr. Skinner). Now where were we? I am enjoying this."She supported John Major as her successor and he duly won the leadership contest, although in the years to come her approval of Major would fall away. After her resignation a MORI poll found that 52% agreed with the proposition that "On balance she had been good for the country", while 48% disagreed thinking she had been bad. In 1991, she was given a long and unprecedented standing ovation at the party's annual conference, although she politely rejected calls from delegates for her to make a speech. She did, however, occasionally speak in the House of Commons after she was Prime Minister. She retired from the House at the 1992 election, at the age of 66 years. Her continued presence in the House of Commons after the resignation was thought to be a destabilising influence on the Conservative government.