Thatcherism

 

Thatcherism captures the imagination of an electorate demoralised by the struggles between capital and labour in the 1970s.

Thatcherism’s ‘free market’ values promise a ‘share and home-owning democracy’ – or cash, as most people simply called it. People can buy and sell shares in private companies but will also soon be able to trade shares in Britain’s privatised publicly owned industries and utilities.

Firstly, Thatcher deregulates London’s financial services industry in October 1986, a sweeping overnight change known as ‘big bang’. British firms can freely trade overseas and European capital can flood into London.

Computers replace share traders dealing face-to-face on the floor of the London Stock Exchange. The release of exchange and credit controls creates a new boom in credit, borrowing and debt.

Large UK-based institutional investment funds switch more of their funds to overseas industries and companies, causing disinvestment in UK manufacturing. Deregulation abolishes fixed commissions on share deals and abandons ancient distinctions between advisory stockbrokers and stock traders. Stamp duty on share and bond purchases are drastically cut from 2% to 0.5%.

Cuts in corporation tax are covered by removing capital investment allowances for machinery and factories – a measure which both helps and hinders manufacturers. Value Added Tax rises for goods and services whilst financial services and insurance enjoy VAT exemptions.

Financial services investment booms by over 320% between 1979 and 1989, compared to a  13% rise in manufacturing investment.

Large institutions eat small trading firms before finding themselves swallowed by even larger players. Bonuses soar. Tax revenues for the Treasury increase. A pin-striped suited yuppie ‘loadsamoney’ culture sweeps away the old bowler hatted ‘my word is my bond’ financial ethos.

This burgeoning bonus-whipped open market sells Britain’s publicly owned utilities and public housing. Thatcherism – capital’s favoured brand of that age – continues to sell off the UK’s family silver, even after Margaret Thatcher the politician resigns as Prime Minister in 1990.

Privatised utilities include:

  • British Petroleum privatised 1979
  • British Aerospace 1981
  • Cable & Wireless 1981
  • Amersham International 1982
  • National Freight Corporation 1982
  • Britoil 1982
  • Associated British Ports 1983
  • Enterprise Oil 1984
  • Jaguar 1984
  • British Telecommunications 1984
  • British Shipbuilders 1985
  • British Gas 1986
  • British Airways 1987
  • Rolls-Royce 1987
  • BAA 1987
  • British Steel 1988
  • Water 1989
  • Electricity 1990
  • Coal 1994
  • Railways sell-off completed 1997

 

The outright sale of these publicly owned assets proffers a shortcut to a promised land of instant cash and gratification. Many people, eager to be easily pleased, literally buy into the promise – and then promptly cash in their shares to make a quick buck. They congratulate themselves – even though they have already paid for these utilities through their taxes.

The vast bulk of these shares end up in the hands of corporate finance houses. Thatcherism has effectively transferred wealth from the people to vested corporate finance interests in the City.

Similarly, a vast swathe of council flats sold through Thatcherism’s ideological right to buy policy will later end up in the hands of private landlords.

 

Council homes

© Paul Coleman, London Intelligence, London, 2017