When she became head of the British government, Great Britain had already experienced two decades of economic malady and chaos. The pound was losing in value, the inflation was nearly 25%, and unemployment, despite the rules that the economists supporting interventionism believed in, rose hand-in-hand with inflation. Trade unions were overthrowing governments and hampering competitiveness.
The dockers’ union agreed that members of other unions could unload ships, but on the condition that members of their trade union would receive pay for overseeing the competition’s work. Typesetters from the influential Society of Graphic and Allied Trades censored the newspapers they printed. The miners’ unions demanded constant pay raises, even though coal mining had stopped being profitable.
The turn of 1978 and 1979 has even been called the ‘Winter of Discontent’ – strikes in the public sector were paralyzing the country. The streets were littered with mountains of trash, the striking workers refused to bury the dead.
In May 1979, the conservatives won the elections under the leadership of a 54-year-old Margaret Thatcher. When she handed over power in fall of 1990, Great Britain had a thriving economy, the inflation was back under control and unemployment was no longer a problem.
Miss Thatcher’s first move was to cut budget expenditures by £1 billions – despite the laments of the opposition and moderate conservatives (they were called ‘wets’, which simply meant ‘cowards’) who claimed that it would lead to the country’s disintegration.
The main slogan of Thatcherism was: ‘Let’s move the borders back’. This meant privatization. The first to go was the National Freight Corporation, a state-owned transport company. Then metallurgy, gas distribution, telecommunication and waterworks.
At the same time, communal apartments and flats were sold to their occupants at a lower price; millions of people participated in the privatization of communal services, something that turned out to be good business for all. ‘Through privatization, especially one that leads to the most widespread acquisition of property by members of the society – the state’s power becomes reduced,’ wrote Thatcher in her memoir.
‘This is not a government, but the abdication of the government,’ lamented the ‘wet’ conservative Edward Heath who was the Prime Minister at the beginning of 1970s. He lost his position when the six-week long strike of the National Union of Miners, whose leader was the communist Arthur Scargill, forced the government in 1974 to arrange for snap elections.
Thatcher knew that she had to break the resistance of the radical union members, so she purposefully lead to clashes with the miners. The British mining industry, like most of the heavy industry, was state-owned. The debt of the National Mining Management was well above £1 billion, with three out of four mines generating losses. In September 1983, Head of the Board Ian MacGregor announced the closing of the least profitable ore deposits. The government increased the reserves of coal and oil, and the parliament introduced acts that enabled the use of force in dispersing trade union protests.
This was the bat. The carrot was the gratuities for the laid-off miners – one thousand pounds for each year of work at the mine. Long-employed miners received around £30 thousand, so more than a year’s worth of salaries.
Moreover, Scargill prepared for the clash with government as if it were a battle. Part of the union’s funds was moved offshore, including to communist countries. ‘There are no unprofitable mines, only ones that require more investments,’ he used to say. But he also repeated: ‘We will never accept mechanization in the mining industry that will lead to reductions in workforce.’
The strike began on March 12, 1984 and lasted until March 5, 1985. The alleged reason was the closing of a Cortonwood mine in the Yorkshire County. Scargill was sure of his strength. He believed his advisors who assured him that the power stations have reserves for only eight weeks and that the government will have to relent even in spring when the power consumption is lower. In addition, Scargill did not secure the support of most miners – opinion polls showed that the strike was supported by less than half of them.
The strikers’ main weapon was the picket brought from place to place – their participants used force to prevent miners, who wanted to work, from accessing the mines and transporting coal. Fighting against the pickets required mobilizing a strong police force – around 20 thousand police officers were brought in, often from the far edges of Britain.
By the power of the new law, the court forbade the flying pickets. The police arrested the participants and the courts sentenced them to brief confinement. Seven thousand miners were released on disciplinary charges for breaking the law.
In October 1984, the court declared the strike to be illegal and find both Scargilla and the union. It set a precedent that let to taking over the union’s possessions, which ultimately forced the strikers to end the protest.
Breaking up the trade unions’ strength enabled the government to carry out reforms and it gave access to the job market for millions of young people. Income taxes were lowered and budget deficits were recompensed with higher direct taxes. The Bank of England raised interest rates and dealt with inflation. Certain budget expenditures were also cut. Most shares in companies that were nationalized after World War II were sold and millions of British citizens were the buyers.
For the first time in many years, job efficiency and GDP started to grow. Unemployment rose at first – due to employment reduction in state-owned companies – but soon after it quickly started falling down.
The attitude towards the reforms was not divided into leftist-rightist, but split into effective industries-backwards industries. In essence, it was a civilizational clash. Those employed in dynamically growing industries and companies, mainly in the services sector, were supportive of the government’s new path forward.
In October 1990, after 12 years of governing, the Iron Lady’s popularity among the citizens plummeted and she had to relinquish her power, even within the party. On the face of it, it appeared that it was due to the so-called poll tax, a tax levied by districts on adult citizens, which was supposed to bolster the budget of local governments.
Protests against it made thousands of citizens gather on the streets of London. This time it were not the union members who were against the Prime Minister, but mainly smaller entrepreneurs. Supporters of the Prime Minister within the Conservative Party had no intention of dying for her. ‘They were not the Polish Uhlans,’ she wrote many years later.