Margaret Thatcher was less Thatcherite than we think
Kaveh Pourvand, 10 April 2013
In all the discussion of Margaret Thatcher’s legacy since her passing, few have commented on the discrepancy between rhetoric and action during her time in government. Whether it is viewed with whole hearted approval or utter disdain, it is commonly assumed that Thatcher’s economic policy involved nothing but rapid privatisation, deregulation, tax-cutting and a stoically non-interventionist attitude to the fate of British jobs and companies under the open market. However, former Civitas researcher David Merlin-Jones has shown that, contrary to the standard narrative, Thatcherism in practice was more nuanced than this. Margaret Thatcher was not as devoutly Thatcherite as she is remembered.
Take the car industry, today a big success story for Britain. When Japanese firm Nissan first agreed to build a plant in the UK in the 1980s, Thatcher’s government agreed to sell it greenfield land outside Sunderland for below-market prices of £1,800 per acre, ensuring that the site was built in an area of high unemployment. It also directly subsidised Nissan’s UK operations with state aid.
The Thatcher government also devoted time and resources getting state-owned industries into shape before privatising them. Merlin-Jones points out that some of the greatest increases in manufacturing efficiency and profitability occurred while the companies were still under state ownership. During 1980-1, it cost the British Steel Corporation £4bn to produce £3bn of steel. However, by the mid-1980s government efforts had led to half the workforce being cut and labour productivity doubling. By the time it was privatised, BSC had overtaken both the US and Germany in productivity levels and had become a far more viable institution.
Nor did the Thatcher government always leave industries to bear the full force of market competition following privatisation. Her government maintained ‘golden-shares’ in both BAE and Rolls-Royce when they were sold and the government subsidised the involvement of multiple British companies in the development of the European Airbus A320 commercial passenger plane.
In short, Thatcher was very much prepared to pragmatically put free-market ideals to one side when situations demanded. Indeed, one might even say that her record provides good examples of successful government intervention. That is something Cameron and Osborne should bear in mind as they consider her legacy.