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Thatcher agreed to recommendations for increased public sector pay awards
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- Budget raised indirect taxes (most importantly Value Added Tax VAT) from 8% to 15% but cut the top rate of income tax from 83% to 60% + the standard rate from 33% - 30% - shift from direct to indirect tax designed to boost incentives by allowing the successful high earners to keep of their income.
- Interest rates were raised by 14% + these later reached 17% in Nov, rewarding those with large savings, but hurting people with debts.
- Major relaxation of exchange controls
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Pensions would be based not on the 'movement in prices + earnings, whichever is greater’ but solely on prices – Pensioners set to get poorer to those in work
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Large pay awards for police + army
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Inflation of 22% in spring 1980 up from Labour figure in 1979
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Falling orders for manufactured goods saw the start of a recession + GNP fell by 3.2%.
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- The Act made secondary picketing illegal but didn’t make ballots compulsory or ban sympathetic strikes.
- All new closed shops (i.e. union only Labour in an industry) had to be approved by a 4/5 of those affected + public funds were made available to encouraged unions to hold postal ballots.
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Partly due to Govt. unwillingness to interfere, manufacturing production fell by 11%
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Manufacturing production, which was already declining, fell by 14% . Partly caused by govt. policy unwilling to intervene
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Unemployment rose to 2.7million, the highest since the depression of the 1930s
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Budget 25p lower rate of tax introduced by Labour in 1978 was abolished
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1981 Productivity increased amongst those still in work
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Consequences of economic recession causes riots across inner-city London, Liverpool, Manchester, Leeds + Bristol
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unemployment > 3 million
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Public expenditure continued to rise, reaching 44.5% of the gross domestic product (GDP) in 1982, largely as a result of the huge increases in the number of those receiving unemployment benefit
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Although direct taxes fell, the overall tax burden increased from 34% of GDP in 1978-79 to 40% of GDP in 1982/3
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Opinion polls showed the Prime Minister’s personal popularity + that of her govt. had declined significantly.
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Inflation down to 10% 1982 – partly due to high unemployment
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- Provided compensation from public funds to people dismissed from closed shops.
- It also made ‘union labour only’ requirements in contracts illegal.
- Trade unions became liable for damages if they were the cause of unlawful industrial actions.
- It gave employers legal redress against industrial action where the action was not wholly or mainly about employment matters (i.e. strikes which could be considered political)
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In Conclusion, Thatcher stuck to her principles but with disasterous results. However, in the end the economy did seem to be recovering. Based on this, I don't think Thatcher would have been re-elected.
