Conclusión

Prior to Margaret Thatcher’s Conservative Party election in 1979, England was considered a Welfare State, although it had not always been so. It was, in fact, John Maynard Keynes himself, as well as other economists who supported his ideas and who were also brought in to consult with the government during World War II, which led to England’s adoption of Keynesian policies in the wake of World War II.112

The 1944 “Full Employment” white paper signalled Winston Churchill’s Conservative coalition

government’s intention to “accept as one of their primary aims and responsibilities the maintenance of a high and stable level of employment after the war.”113 The installation of a majority Labour government led by Clement Attlee from 1945-1951 saw the introduction of the pillars of England’s Welfare State: the National Health Service, nationalization of various state industries, national insurance, and further measures to maintain full employment. By the time a new Conservative government was voted into office in 1951 (again headed by Winston Churchill), “the radical leftward shift in public opinion . . . meant that Churchill, having opposed the Labour manifest in 1945, was now,

112 _{Michael J. Oliver and Hugh Pemberton, “Learning and Change in 20}th_{-Century British Economic}

Policy,” Governance: An International Journal of Policy, Administrations, and Institutions 17, no. 3 (2004): 423. Keynes died in 1946, but he had been employed by the Treasury since World War I.

113

Andrew Britton, “Full Employment in the Market Economy,” National Institute Economic Review

150, no. 62 (1994): 62. While it may seem unlikely that a Conservative government would introduce such a piece of legislation, Churchill’s government was actually comprised of a coalition between the

Conservative and Labour Parties. The Full Employment white paper represented “the very limits of coalition consensus.” The Conservatives agreed to support it because it demonstrated to the public that they supported post-war reconstruction, while the Labour party saw it as policy integral to advancing their social democratic vision. See Kevin Jeffreys, The Churchill Coalition and Wartime Politics, 1940-1945

through political pragmatism, obliged broadly to adopt it.”114

Thus, although they did not ideologically support the Welfare State, various Conservative governments up until Margaret Thatcher’s 1979 election actually supported (at least publically) the Welfare State agenda in order to cater to public opinion.

Adoption and various modifications to Keynesian-inspired unemployment and economic policies kept unemployment in England to below 2.5% until the summer of 1971, when it rose to 3.8% by the end of 1972. The government responded by increasing public spending and cutting taxes, yet inflation and unemployment continued to grow. This, combined with an unexpected and rapid quadrupling of oil prices and subsequent inflation of other commodities in 1974, led to both a government and a workforce whose income could not match their necessary economic expenditures. 115 Ultimately, Prime Minister Edward Heath’s Conservative government was replaced with Harold Wilson’s Labour government because of the economic policy choices and their consequences made by the Conservative government leading up to the 1974 election. Wilson himself retired in early 1976 and was replaced by James Callaghan.116

Michael J. Oliver and Hugh Pemberton asserted that “1976 was one of the defining moments in [England’s] move toward neoliberalism,”117

with the time between 1974 and 1976 serving as a “transition phase” between the two policy paradigms.118 During this time, a series of external pressures—including a drop of approximately one- third of the pound sterling’s value against the international standard of the American dollar—increased inflation. In addition, the government was unable to settle union wage contracts, which resulted in a three-day work week for several months in 1974 when a coal miner’s strike led to electricity shortages. These external and internal pressures made it increasingly impossible for the Wilson government to continue implementing

Keynesian style economic and social policies.119 In addition, the IMF, from which the British government had continued to borrow heavily and extensively in order to support

114 _{Knight, Governing Britain Since 1945, 1-2.}

115 _{Oliver and Pemberton, “Learning and Change,” 429.} 116

Ibid.

117 _Ibid.

118 _{Mark D. Harmon, “The 1976 UK-IMF Crisis: The Markets, the Americans and the IMF,”}

Contemporary British History 11, no. 3 (1997): 4.

the stability of the pound sterling, had begun to consider the advantages of actively enforcing its “major shift” clause. This clause stated that the IMF would be consulted and serve in an advisory capacity if a developed country required a serious revision of

economic policy.120 In September of 1976, the British government decided that it would halt the rapid slide of the pound sterling by securing a loan from the IMF.121 In return, and at the end of a bitter and protracted six-week negotiation process that the government tried to circumvent by going to the Americans for support (which they refused), the IMF lent Britain almost US$4 billion, but with specific conditions that were the beginning of English neoliberal reform. These included limiting the amount of money that could be borrowed to support the public sector, a £500 million sell-off of state-owned British Petroleum shares, and a promise to cut a total of £2.5 billion in public expenditures over the next two years.122 The result was that the government no longer had the ability to engage in the style of Keynesian macro-economic policies that it had in the past.123 Instead, it had to focus on selling off assets and reducing both its social expenditure and the members of its public service, reflecting the adjacent and peripheral concepts of minimal state and reduced social expenditure found in the core Welfare concept.

Employment and economic conditions continued to deteriorate through the remainder of the decade, however. The Callaghan government, as a Labour government, continued to be supported by the unions even though it had imposed a “wage restraint” policy. This policy allowed unions to negotiate raised wages, but limited those wages in order to prevent a “wages explosion” in response to inflation. When a fourth phase of wage restraint at 5% was introduced in the autumn of 1978, the Trade Union Congress (representing Britain’s trade unions) rejected it, bringing about the “Winter of

Discontent.”124

Running from December 1978 until February 1979, it began with an

120 _{Ibid., 3.} 121

Ibid., 11. The British government went first to the United States, but the United Stated would not agree to lend money until the IMF guaranteed that it would, essentially, take over the loan if the British government could not pay it back within six months. This being an impossible feat, the Americans basically steered the British into an agreement with the IMF that would see the types of reforms the Americans did not have the authority to impose placed on the British government through IMF intervention.

122 _{Ibid., 13.}

123 _{Oliver and Pemberton, “Learning and Change,” 430.}

124 _{William Rodgers, “Government Under Stress: Britain’s Winter of Discontent 1979,” The Political}

“unofficial” strike led by oil tanker drivers, followed by a more general road haulage strike (sometimes referred to as the “lorry strike”) that crippled both commerce and the day-to-day functioning of public institutions, such as schools, and essential services, such as health care and waste collection. In the meantime, unions argued for wage increases of up to 23% and the Ministry of Defence was told to have troops on standby in case

military intervention was needed (ultimately, troops were never deployed).125 William Rodgers summarized the situation by stating that “the complacency of the Prime Minister and the paralysis of his Government were measured against the appearance of Britain under siege.”126

James Thomas wrote effectively that the Conservative’s “found their most powerful expression in the myth of the winter, symbolizing an ideological failure to which the only answer was the neoliberal alternative that could and had made Britain great again, economically, politically, internationally, and even morally” throughout their time in office (1979-1997). The Winter of Discontent, and the events leading up to it, served as fodder for Conservative discourse expounding the need for—and the common sense of— neoliberal change. Indeed, it allowed the Conservatives to re-introduce the economic liberal values on which the party was originally founded. Thatcher herself, in the wake of the 1974 Conservative election loss and the run-up to her 1975 election as Conservative Party leader, was quoted saying,

One of the reasons for our electoral failure is that people believe that too many Conservatives have become socialists already . . . My kind of Tory party would make no secret of its belief in individual freedom and individual prosperity, in the maintenance of law and order, in the wide distribution of private property, in rewards for energy, skill and thrift, in diversity of choice, in preservation of local rights in local communities.”127

Embedded in this statement are direct references to the neoliberal concepts of

individualism, self-interest, entrepreneurship, the enterprise culture, privatisation,

minimal state, freedom, personal responsibility, the legal state, ownership, and individual

125 _{Ibid., 174-176.} 126 _{Ibid., 177.}

127 _{Margaret Thatcher, quoted in Geoffrey K. Fry, The Politics of the Thatcher Revolution: An}

initiative. Thatcher’s intentions, then, for the Conservative party, were clear from before

her election as party leader.

In keeping with this neoliberal ideology and prior to the 1979 election, Thatcher released the Conservative Party General Election Manifesto, which began by positioning the Welfare State’s collectivism against the freedom of individuals, stating,

FOR ME, THE HEART OF POLITICS is not political theory, it is people and how they want to live their lives.

No one who has lived in this country during the last five years can fail to be aware of how the balance of our society has been increasingly tilted in favour of the State at the expense of individual freedom.

This election may be the last chance we have to reverse that process, to restore the balance of power in favour of the people.128

This anti-collectivism discourse, which as discussed above is typical when convincing the electorate of the need for neoliberal reform, was also positioned as common sense: “[This manifesto] sets out a broad framework for the recovery of our country, based not on dogma, but on reason, on common sense, above all on the liberty of the people under the law.”129

It also drew upon neoconservative ideology—hardly surprising as the

Conservative Party was typically the party of the educated, upper classes who cherished pre-War World Two memories of Britain as a naval superpower and global colonizer— stating, “here has been a feeling of helplessness, that we are a once great nation that has somehow fallen behind and that it is too late now to turn things round.”130 “What has happened to our country” she asked, “to the values we used to share, to the success and prosperity we once took for granted?”131

The 1979 Manifesto outlined five tasks necessary to restore the nation to its past splendour and free individuals from the state:

1. To restore the health of our economic and social life, by controlling inflation and striking a fair balance between the rights and duties of the trade union movement.

128 _{Conservative Party (UK), “Forward,” 1979 Conservative Party General Election Manifesto,}

accessed Feb. 29, 2012, http://www.conservative-party.net/manifestos/1979/1979-conservative- manifesto.shtml. (original emphasis).

129 _Ibid. 130 _Ibid.

2. To restore incentives so that hard work pays, success is rewarded and genuine new jobs are created in an expanding economy.

3. To uphold Parliament and the rule of law.

4. To support family life, by helping people to become home-owners, raising the standards of their children's education, and concentrating welfare services on the effective support of the old, the sick, the disabled and those who are in real need.

5. To strengthen Britain's defences and work with our allies to protect our interests in an increasingly threatening world.132

The first task spoke to immediate concerns on the part of the electorate that had grown out of the Winter of Discontent. In addition, by limiting the ability of the unions to demand wage increases, the government could help ensure that the price of goods and services stayed closer to natural cost of production and fair market value, thereby also addressing issues of inflation and facilitating free exchange and creating an enterprising culture in the market place. The second task was related closely to the core concepts of the Market and Welfare: Individuals should be encouraged to work hard within a system that will reward them for such work and allow them to achieve success so that they need not draw on the resources of the state. Indeed, the Manifesto stated (in a very common- sense discourse) that the Conservatives wanted “to work with the grain of human nature, helping people to help themselves—and others. This is the way to restore that self- reliance and self-confidence which are the basis of personal responsibility and national success.”133

The third task embodied the core concept of the Constitution whereby the state enacts negative laws to support the neoliberal state. The core concept of Property

was invoked in the fourth task, which emphasized ownership (including educational ownership, discussed further in Chapter Four). This task, along with the fifth task, also drew on neoconservative ideals of focusing on the family unit and defense of the nation. In reviewing the manifesto, it becomes clear that the Conservative Party approached the 1979 election with two main discourses: (1) a neoliberal discourse based economic liberalism (referred to at the time as corporatism or monetarism) that would lead to greater individual freedom from the state and foster self-reliance and (2) a

132 _Ibid.

neoconservative discourse focusing on the family unit and on restoring England’s past glory.

The 1979 Manifesto also contained specific suggestions for how the five tasks were to be enacted, many of which also reflect neoliberal concepts. They included reduction in government borrowing (balancedbudgets), removal of price controls (free exchange), reduced income taxes (income-tax relief), selling off state assets (short-term profit, privatization, share-ownership), exploring the creation of jobs in promising new sectors and cutting back subsidies in floundering sectors (evolution), denationalizing state industries (privatization, minimal state, short-term profit, share-ownership), instituting fair trade policies (free exchange), supporting small business development (enterprise culture, ownership, entrepreneurship, individualism), and increasing parents’ right to

choose their children’s schools (deregulation, education vouchers, legal privilege),134 the last of which is discussed at length in Chapter Five.

The Conservative party instituted all of these changes under Thatcher’s administration and continued to refine them when she was replaced by John Major as Prime Minister in 1990. A complete discussion of the neoliberal reforms made by the Conservative administration during its eighteen years in office is beyond the scope of this study; however, some illustrative example are provided here in order to provide a

“snapshot” of the scope of reforms and the manner in which they were enacted. These examples are drawn from Thatcher’s administration, as that is the time in which the largest and most far-reaching neoliberal reforms were enacted.

Thatcher’s first term in office (1979-1983) was marked by a struggle to reduce public expenditure, reduce income-tax, and remove exchange controls (i.e., invoke free trade). Britain was the first country to perform the latter (in October, 1979), much to Margaret Thatcher’s personal satisfaction.135

She was determined not to “bailout” faltering manufacturing industries during her first years in office—facing considerable opposition from the media, economists, and even her own cabinet—insisting that by allowing the demand for goods to run a natural course, inflation would be reduced and

134 _{Ibid., sections I-V.}

135 _{Brendan Evans, Thatcherism and British Politics, 1975-1999 (Phoenix Mill: Sutton Publishing,}

the economy would recover as it evolved to meet the actual demands of consumers.136 As discussed in Chapter Five, this particular line of argument proved particularly important when arguing for the need to restructure England’s public education system to better suit the needs of the economy. While initially the lack of government industry subsidies helped feed an economic recession and record unemployment numbers, by the end of 1982, the rise of unemployment had slowed considerably137 and inflation had fallen from a high of 21.9% in May of 1980 to 5.4%.138 In addition, the unemployment that ensued from the decline of the manufacturing sector undercut the power of the trade unions. This allowed the Thatcher administration to institute a series of anti-union legislation,

including outlawing secondary picketing and giving employers the right to legally act against unions if they violated other newly introduced legislation, such as the requirement to conduct strike votes by secret ballot and to elect union officers.139 Believing that “public expenditure was at the heart of Britain’s economic difficulties,”140

she incurred much criticism for reducing the Public Sector Borrowing Requirement (PSBR) during this time of recession and unemployment, shaving £5.9 billion off the expected PSBR in the 1981 budget.141 Unemployment benefits, in particular, were targeted for reduced social expenditure during the Thatcher administration due to both the demand on

government finances during the peak unemployment of the mid-1980s and to combat the “why work?” attitude that the Conservatives asserted was fostered by such benefits.142 Thus Thatcher’s first administration set the tone of neoliberal reform for its tenure in office: A tough, no-back down, monetarist stance coupled with the need to change the nature of both government spending and the ways in which the government interacted with its people was presented to the public as necessary to drag England out of the depths it reached under Labour government and into the modern era where it could reclaim its

136 _{Ibid., 62.} 137

Jock Bruce-Gardyn, Mrs. Thatcher’s First Administration: The Prophets Confounded (London: The MacMillian Press, 1984), 125.

138_{The Guardian, “UK Inflation Since the 1940s—CPI and RPI,” accessed March 2, 2012,}

http://www.theguardian.com/news/datablog/2009/mar/09/inflation-economics.

139

Knight, Governing Britain Since 1945, 135. These latter two pieces of legislation were meant to limit the power of union heads.

140 _{Kus, “Neoliberalism, Institutional Change and the Welfare State,” 508.} 141 _{Evans, Thatcherism and British Politics, 63.}

past glory. The remainder of this outline of England’s neoliberal reforms focuses on changes meant to minimize the role of government in public sector management and in citizen’s lives.

Richard A. Chapman listed five “key” changes that Thatcher’s conservative government made to public sector management structures in the 1980s, of which four are relevant here. The first was to take greater control of arms length governmental agencies by moving some of their responsibilities directly under the jurisdiction of the government or by dismantling them completely and subsuming all of their responsibilities.143 While this expansion of administrative government may seem to conflict with the emphasis on