Bad Government

Politics is about winning elections, those who are elected are, in the main, good politicians.  Unfortunately good politicians are not necessarily the best people to run a .  I think this is a fundamental weakness in Western democracies.  It is also why I do not favour an elected House of Lords, no more politicians please.  Of course I do not approve of the current constitution of the House of Lords - hereditary Lords, former MPs and Bishops.  In my view the membership should consist of able people from the professions and from all walks of life, appointed by a non political panel.  It should not be more than 200 in number and each appointment should be for a limited period. But the politicians would never let that happen.

Part 1 Mrs Thatcher

On at least two occasions in The Pump I have expressed an opinion that we have been badly governed throughout the last thirty years, at least.  I thought that I should try and justify that opinion.  Thirty years ago was 1982.  In 1979 Mrs Thatcher was elected and there is no denying that, at that time, there was much wrong withBritain.  In particular there was something like a war going on between the workforce, through their unions, and the management.  The management were rather amateur and incompetent with an antagonistic rather than a collaborative attitude towards the workforce.  In 1944, towards the end of the war, Keynes wrote in relation to our industrial future “If by some geographical slip the US Air Force (it is too late now to hope for much from the enemy) were to destroy every factory in the North-East coast and in Lancashire (at an hour when the Directors were sitting there and no one else), we should have nothing to fear”.  He might have included theMidlands.    (Japanese, German and Indian managers have shown what can be achieved).  On the other hand the workforce were militant and belligerent and the union leaders were drunk with their power, both sides were, it seemed, prepared to go to the extreme of destroying their industries.  Mrs Thatcher was convinced that the unions were the problem and decided that she would curb their power, a decision that most people supported and might be regarded as ‘good’ government, but she failed to recognise the shortcomings of management. Her policies of tight money control, reduced state intervention, privatisation, free markets, low taxes, constraints on the labour movement, low inflation as a priority over control of unemployment, came to be known as Thatcherism.

The initial result of the introduction of these policies was that unemployment was almost doubled to over 2million.  Some pits were closed. There were riots inLondonandLiverpooland the situation inNorthern Irelandwas bad.  Inflation soared to a mind blowing 20%.

In 1982 we had theFalklandswar, arguably this was largely due to Thatcher’s government failing to recognize the danger and giving the wrong signals to the Argentines.  Unemployment reached the staggering figure of 3,624,700 (the irony was that, prior to her election in 1979, when unemployment was less than 1.5million the conservative posters showed a dole queue with the slogan ‘Labour isn’t working’).  Despite this, on a wave of crazy nationalism following the success in theFalklands, Mrs Thatcher was re-elected.  She was fortunate at this time also in that, prior to that election, Labour’s gang of four had destroyed the Labour party’s electoral opportunity by forming theSDPand splitting Labour’s support.

Her programme of pit closures continued and that led to violent clashes between strikers and police.  Cuts in government spending were particularly severe in the field of scientific research.

In 1985 the pound fell to a record low of $1.0765.  Her style of government had become very autocratic, Heseltine and Leon Brittan resigned, talking of a breakdown in constitutional government.  The Greater London Council was strongly held by Labour and the leader, Ken Livingstone, pursued socialist policies.  This greatly annoyed Mrs Thatcher and, against the wishes of the majority of Londoners and against the best interest of London, she abolished theGLC, breaking the government of London down into Boroughs, leaving no central body looking after London’s interest.

Almost against all reason, Mrs Thatcher was re-elected again in 1987, primarily because of theSDPand the Labour Party’s inadequate leadership.  She went on to introduce the Poll Tax, with the consequential riots and an eventual climb down.  In 1987 the stock market collapsed and theUKwas officially in recession, this recession lasted for four years and was the longest post war recession.  It was a time of collapse in the value of houses and numerous repossessions.  Unemployment that had been falling increased again and was back over 2.5million.  Finally Mrs Thatcher was rejected by her own party and forced out of office in November 1990.

During her term of office she endeavoured to follow her policies.  Her belief in free markets was partly the reason for the deregulation of the Stock Exchange in 1986, the so called ‘Big Bang’ in the City. Privatisation of state owned industries was one of her main aims.  British Telecom was privatised in 1984, British Gas in 1986, British Steel in 1988 and the Water industry in 1989.  BP, which evolved from the Anglo Iranian Oil Company, was entirely state owned, Mrs Thatcher privatised BP in three stages between 1979 and 1987 (BP is now the third largest global energy company and the fourth largest company in the world).  These were all extremely valuable major national assets sold off at bargain prices.

British Leyland had been part nationalised in 1975 when British Leyland was created as a limited company encompassing practically all of the British motor industry, with the government as the major shareholder.  At the time BL cars, a subsidiary of the holding company employed 128,000 and produced 1million cars a year, and Leyland Truck and Bus employed 31,000.  The sad history of BL is enough for a long article in itself, suffice it to say that it was extremely badly managed and also suffered with serious industrial strife.  It should be remembered, however, that, despite this, the 1100/1300 range was the top selling model for many years, that the Mini was internationally acclaimed and the Metro was the best selling super mini in the 1980s.  The privatisation of BL began in 1984 when Jaguar was sold to Ford, Land Rover followed, Leyland Trucks merged with Daf and Leyland Bus was sold to Volvo.  The other minor companies such as Alvis were sold off along the way.  Finally the remaining Rover Group was sold to British Aerospace for a risible sum.  British Aerospace had no interest in operating as a motor manufacturer and had no concern for the workforce or the national interest, they only bought the company because of the value they saw in its assets and, having bought it, proceeded to sell off much of the land for development making a considerable profit.  They then sold what remained to a foreign company, BMW.  (BMW then took over the BL design for the new Mini and made a great success of that part of the business using the same workforce).

Many people, it seems, look back on Mrs Thatcher’s reign through rose coloured spectacles.  It is said that she brought inflation under control, but that is one of the myths associated with her that is just not true.  In 1978, before she was elected in 79, the inflation rate was 8.3%. Not long after she came to power, the rate peaked at no less than 21.9%.  In 1989, after she had been in power for 10years, the annual rate was down to 7.8%, but by 1990, just after she left it was 9.5, higher than when she came to power.

I have seen it written that “Mrs Thatcher’s experiment becameBritain’s new and increasingly successful economic reality”.  I am not sure what economic success; in 1990, when she left, we were in recession and the housing market had collapsed. It was her good fortune that she came to power just asNorth Seaoil was coming on line.  She sold off much of our national assets in the form ofNorth Seaoil, British Gas, British Telecom, electricity generation and marketing, etc, and that provided a significant boost for the treasury.   This time of new wealth from North Sea Oil and gas and the sale of assets was a time to foster our industries and encourage long term planning and help set UK Ltd on to a course for sustainable prosperity, but she was so set on pursuing her ideology that she was blinkered to all other considerations and the money was frittered away.

It was not just industries that were sold off cheaply, the public ownership of housing was against her philosophy.  She compelled local councils to sell off much of their housing stock, often at give away prices, and prevented them from rebuilding their stock.  It was great for many council tenants but it has resulted in a serious shortage of affordable housing available to those desperately short of accommodation and has contributed to the serious housing shortage currently facing the nation.  She believed that individuals should be responsible for their own lives and envisaged the minimum assistance from the state, despite these views, however, she was conscious of the political consequences of high unemployment figures she had created, particularly in coal mining areas and she encouraged, as best she could, the transfer of unemployed to the disabled register.  Many GPs in depressed areas were sympathetic to their patients and cooperated, only recently has there been a strong attempt to ensure that disabled benefits are for the disabled. She also believed that if you created a situation where the rich could get richer the wealth would trickle down to everyone, she encouraged people to look after number one.  This all led to individuals becoming selfish and greedy with less concern for others. She created a divisive society with increasing inequality.

During her time we also saw an increase in immigration and her government made no real effort to bring it under control. Her attitude towards business and industry was one of laissez-faire, she did not believe in state interference or state ownership, business and industry had to make their own way, ‘it was no place for government to prop up lame ducks’.  She went further by placing government orders with overseas companies if she considered that the nominal price was lower regardless of the impact the decision might have on employment, tax revenues or the industry concerned.  It is interesting to reflect that, In 1971 Rolls Royce ran into financial difficulties over the development costs of the RB211.  To avoid the company going into administration, the government of the day took the company into state ownership, they saved the firm from bankruptcy and subsequently restored it to private ownership.  Now Rolls Royce has an international reputation for excellence with a very large share of the global aero-engine market and is currently held up as one of our leading manufacturers. It is Rolls Royce’s and the nation’s good fortune that Mrs Thatcher was not PM at the time, if she had been I have no doubt we would be making engines for General Electric now.

She withdrew much of the support for science, she abolished the UK Atomic Energy Authority, the CEGB and NCB and in so doing destroyed our capability to design nuclear power stations, along with our ability to develop cleaner more efficient use of coal.  Research in electricity generation became fragmented.  State support for industry was an anathema to her so that we lost out to rival nations such as Japan, Germany and France (the latter two now control much of our electricity industry.

It is true that she introduced welcome legislation to curb the power of the unions, but her greatest blow to the unions was by destroying much of our manufacturing base.  Manufacture is a major wealth generator, but Mrs Thatcher expressed her belief that the nation’s future was in the service industries, in particular the financial services sector.  Towards this end she agreed to the deregulation of banking and the stock exchange, reluctantly the US eventually had to follow suit because London was cornering the market.  The net result of that deregulation is something that we are all too well aware of today. (As an aside it is interesting to note that prior to the ‘big bang’ all the companies in the London Stock Exchange were British companies, now 65% of the City workforce are paid by foreign employers.)  Surprisingly, perhaps, it was said that she was not in favour of privatising British Rail, if so she displayed some wisdom there.

She was always opposed to closer integration with Europe.  She was opposed to Britain joining the European Exchange Rate Mechanism but was finally persuaded to join by Nigel Lawson, Geoffrey Howe and John Major, Britain joined one month before she resigned.  Subsequent events show that she was right to oppose. She was wise enough to respond well to Mikhail Gorbachev and, with President Reagan, took advantage of the opportunity he offered to end the cold war and ease tensions. She urged President George W Bush to go to war with Iraq over the invasion of Kuwait in August 1990, she may have been right to do so. However, she left office with British manufacture a fraction of what it had been, with a nation poorer in terms of the loss of national assets, with an economic recession, a housing market collapse, high unemployment and inflation no less than when she came to office and interest rates of 14%.

In conclusion, I believe that she created a change in our culture such that it was acceptable to be greedy and, through deregulation of the banks and the City, she sowed the seeds of the banking catastrophe.  She also sowed the seeds of the current dire housing shortage.

The privatisation of our utilities has produced no benefit for the average citizen, but has transferred some of our national wealth to foreign ownership and made those already rich richer.  She started the trend towards a widening gap between rich and poor.

Her conviction that our future was in the service industries led to a retraction of manufacture, creating a situation from which it will now be difficult to recover.

I have always espoused the causes of more women and more people with a science background in parliament.  How disappointing that, when we got our first woman prime minister and one with a science degree that it should be Mrs Thatcher. I believe that we are still suffering from her legacy.

(Major, Blair and Brown, to follow)

Ron Watts