Friday, 26 April 2013

Baroness Thatcher: Zeitgeist or Mammon

Well that's one perspective

We have been exposed to the life and times of Mrs Thatcher incessantly for the past week or so and the funeral has taken place. Her ability to secure diametrically opposed views has never been in doubt nor has the impact she made to life in Britain in the 1980's. Living and working in Scotland it was easy to blame her for the collapse of traditional industries and the deepening social malaise that ravaged the country.

It would not be totally fair to attribute the economic decline to her government; industries were collapsing and a new direction was needed but not the one she took. Throughout her period in office Scotland was in the doldrums as were several other regions in the UK that had hosted traditional manufacturing industries. The recovery of the economy in Scotland as with much of the north of England took a lot longer than it did in the south east of England. It did materialise in Scotland throughout the late 1990's and until 2008 when the testerone charged financial sector dumped the UK into a double recession. On social malaise her government was culpable: high unemployment, underinvestment in education, health and the public infrastructure, increasing crime and growing inequalities were all a consequence of doctrinaire government decisions.

The main question about the Thatcher legacy is whether there really was a revitalisation of the economy and, if so, could it have been achieved by a less doctrinaire approach. One that worked with the grain of the Scottish work ethic and its sense of community rather than one which endorsed free markets, outsourced or privatised public services and encouraged the making of money rather than tangible assets.

There are lots of ways to consider her impact but there are some common themes that emerge whichever way you look at them.

The GDP of the UK stagnated during her premiership. In practice it plummeted during the first three or four years and then slowly recovered during the "loads of money" phase before dipping again. At the end of her period of office our manufacturing sector had been reduced to just 15% of the economy. Britain unlike Germany, Italy or France seemed to put little premium on safeguarding our key manufacturing industries. Mercedes, Bosch, Fiat, Indesit and Renault have survived and thrived as have the key public infrastructure organisations in other parts of Europe. In Britain Blair and Brown were the heirs of Thatcher when it came to economic policy: they also trusted the markets and serving Mammon.

Contrast that with Germany or Italy where more consultative industrial relations saw the maintenance or growth in manufacturing by investing in productivity. Germany nurtured its its manufacturing industries and made it Europe's strongest economy today. In Britain many of the industries that were sacrificed were state owned. They needed new investment to improve productivity but selling them off was more of a doctrinaire fire sale with little attempt to secure long term investment from bidding companies who were often seeking to break up the business and sell off the assets. They had little commitment to securing the future of the industries or the communities that were dependent on them.

There was far less activity in the encouragement of research, design and innovation which are the drivers of a more sustainable economy. Instead there was far more emphasis on marketing and selling, wheeling and dealing, sponsoring and levering. Enterprise requires confidence and the consumer confidence index ended up at the end of her premiership pretty much where it started at -25%, after a sharp but short lived peak in the midst of the Lawson inflationary years of 1988-89. And despite the extravagant increase in the wealth of many citizens, the UK had a slower rise in living standards per capita than either France or Italy and we still lagged 17% behind that of Germany in 1990.

The sale of Council Housing which allowed over a million households to transfer to owner occupation is often cited as her most popular policy.  For those tenants who lived in a desirable area and had long tenancies this was the case. But for many other tenants, the policy denied them a transfer to a better house. For future needy tenants, particularly the young and the mobile workforce it consigned them to a poorly regulated private rented sector or staying at home. Council housing became more stigmatised and social polarisation intensified. Social rented housing made up 34% of the UK housing stock in 1979 but had dropped to 26% in 1990.

There was a commensurate rise in owner occupation from 55% to 66%. But at what cost? House building rates dropped by 20% during her premiership to 203,000 in 1990 with social house building declining by 70% over the period. House prices rose by 61% in real terms, spurred on by the shortages that were becoming manifest. So whilst the cost of housing was rising, the construction sector was in decline. It was the estate agents, banks, surveyors and private landlords who benefited. In other words the middlemen who made huge gains from the vastly increased expenditure on housing which was inflated by the unsustainable access to credit.

Our public services of Education, Health, Transport, Water were starved of investment and this created a mood of disillusionment from the long suffering parents, customers as well as their increasingly maligned workforces. They were being softened up for privatisation which followed in the 1990's for water, rail, waste collection and disposal, residential homes, airports, road maintenance and many more. Many public services were transferred to what often became private monopolies and the long established links between local small and medium sized businesses and local public services were lost.

Crime soared along with the increase in unemployment and many cities were ravaged by riots. Stable communities that had grown up around the extraction or utilisation of natural resources became ghost towns as profits and jobs migrated to the south east.

On the world stage she did holler for Britain and the victory in the Falklands gave her a reputation for ruthlessness which restored Britain's status as an aggressive power not yet willing or having the nous to find a new role in the world order.  This was less a victory than a relapse which prevented Britain taking a lead in fighting apartheid or tackling world poverty or safeguarding the environment. Was it sustainable or sensible for Britain to continue to spend the third highest proportion of its GDP, after the USA and Russia on defence?

So she may have been a conviction politician and she raised the profile of the UK abroad by playing her cards with an assurance that was not always prudent. But at home the growing social polarisation, the failure to invest in public services or to trust localities and the encouragement of a culture of untrammelled wealth for the middlemen made her the mother of two nation Toryism who was blind to any alternative strategy.

Her government did free some entrepreneurial activities but she brought discord where there was once partnership between the public and private sectors. She created a license for the private finance to rip into public sector budgets and to take an ever increasing share of budgets that were increasingly ring fenced. The losers were local businesses, taxpayers and the recipients of services who were now funding the middlemen as well as those who delivered services. The middlemen behaved like a post industrial nation of shopkeepers as they milked their customers not once but twice, first on fees and then on annual charges.

She gambled away north sea oil and allowed the financial sector to play footsie with our pensions. The hope and aspirations of more affluent households might have been realised through share issues, housing inflation, easy credit and tax reductions. Conversely many millions more were unable to afford to get on the ladder of prosperity stoked up by share issues, rampant inflation and deregulation.

So as we watch her once disloyal and rumbustious cabinet of 1990, who removed her from office, engage in an extravagant bout of sycophantic sophistry about her achievements, those who were the victims of the era have remembered the damage her policies inflicted on their lives. It may have appeared unseemly and callous behaviour when they protested before and during the funeral but they were not for turning. They had seen no good or greatness emanating from the Iron Lady and their views were based on an annuity of authentic anger. It was a more honest response than the gratuitous praise heaped on her by her cabinet and fellow travellers.

Nil Magnum Nisi Bonum

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