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Taxes
June 1979 Budget raised indirect taxes (most importantly Value Added Tax VAT) from 8% to 15% but he 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 -
Pensions
June 1979 Pensions would be based not on the ‘movement in prices + earnings, whichever is greater’ but solely on prices – Pensioners set to get poorer relative to those in work -
Increased Public Sector Pay
1979 Thatcher agreed to recommendations for increased public sector pay awards -
Unemployment Act 1
1980 Employment 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. -
Falling Demand for Goods
1980-81 falling orders for manufactured goods saw the start of a recession + GNP fell by 3.2%. -
Manufacturing Production Falls
1980 Partly due to Govt. unwillingness to prop up manufacturing production fell by 11% -
Inflation
Inflation of 22% in spring 1980 up from Labour figure in 1979 -
Production Decline
Manufacturing production which was already declining, fell by 14% 1980-81, partly caused by this govt. policy unwillingness to intervene -
Riots
Consequences of economic recession wave of riots across inner-city London, Liverpool, Manchester, Leeds + Bristol in summer 1981 -
Unenployment rises
Unemployment rose to 2.7million in 1981, the highest since the depression of the 1930s -
Productivity Increase
1981 Productivity increased amongst those still in work -
Labour Tax Rate Abolished
1981 Budget 25p lower rate of tax introduced by Labour in 1978 was abolished -
Unemployment Act 2
Employment Act 1982 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) -
Tax Burdens
Although direct taxes fell, the overall tax burden increased from 34% of GDP in 1978-79 to 40% of GDP in 1982/3 -
Public Expediture
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 -
Inflation decrease
Inflation down to 10% 1982 – partly due to high unemployment -
Thatcher’s continuation in office threatened
Opinion polls showed the Prime Minister’s personal popularity + that of her govt. had declined significantly. -
Inflation
Inflation 5% in 1983 -
Conclusion
Margaret Thatcher had some strong links to her policies regarding the economy and tade unions. Some of these policies were unsuccessful but Thatcher kept her word and didn't make any U turns. In the end, however, inflation reached 5% and proved that her policies were successful in the long term.
