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Rachel Reeves has bought into the wrong Thatcher myth

This lady might be for turning. Credit: Getty

March 19, 2024 - 7:30pm

Rachel Reeves is right to want to emulate Margaret Thatcher’s political revolution, though for the wrong reasons. It’s not the economy, stupid, but the politics.

During a set-piece speech in the City of London tonight, the Shadow Chancellor declared that Labour would usher in a “decade of national renewal” similar to the one which occurred, as she put it, at “the end of the 1970s”. For many in the Labour Party, speaking in such reverential tones of Margaret Thatcher’s record is a further sign of Starmerite degeneracy, even though Reeves also said that “unlike the 1980s, growth in the years to come must be broad-based, inclusive and resilient.”

Yet, in one obvious sense, Reeves’s critics have a point. The very notion that the 1980s amounted to a decade of national renewal is far less convincing than the widely-accepted narrative. As Duncan Weldon shows in Two Hundred Years of Muddling Through, another way of telling the Thatcher story is of a remarkably and unnecessarily deep recession at the beginning of her reign followed by an unsustainable boom, which was then succeeded by another deep recession at the end. “Hardly the best of macroeconomic records,” as Weldon puts it. “And yet it is the one that Thatcher’s prime ministership produced.”

In The Rise and Fall of the British Nation, David Edgerton makes a similar argument, pointing out that in pure economic growth terms, the Thatcher revolution was hardly as revolutionary as the myth suggests. “To be sure, from the depths of the early 1980s, the rate of growth was slightly higher than the post-war average,” Edgerton concedes, “but never enough to make up for the effect of the depression.” Rather like those championing Greece’s economic performance by somehow downplaying the fact that its economy contracted by 45% first, it is not credible to only measure the post-recession record of Thatcher’s time in office. As Edgerton points out, once this is taken into account Britain’s rate of economic growth was higher and steadier in the years 1948–79 than between 1979 and 2000.

As always, you can pick and choose the statistics to make whatever argument you like. If you measure 1981-88, Britain was booming. But if you widen the lens even slightly to take in the Thatcherite slump at the beginning, the average growth rate falls to 2.3% from 1979 to 1988. And that’s not even counting the recession that came at the end of Thatcher’s time in office. By 1990, inflation was back over 10%, prompting interest rates to hit 15% and unemployment to steadily rise back to more than 10% by late 1992. Hardly a decade of national renewal.

The problem with the Reeves framing is that it accepts the economics too quickly and does not put enough stress on Thatcher’s real skill: the politics. It is arguably too contrarian, too clever by half, to dismiss the 1980s as just another decade. This overlooks the sense that built up by 1979 that nettles were not being grasped and painful choices were being delayed, only extending the pain. Focusing on the years after 1979 ignored both the IMF bailout and the Winter of Discontent.

The truth is the Thatcher government differed from its predecessors by being willing to pay a much higher price for longer in order to impose its will — and the state’s authority. To do this it had to convince the public that the pain was worth it. This is part of the skill of leadership. You have to tell a story about why the country is in a mess and what is necessary to make things better, providing meaning for the pain to come. This is what Reeves’s framing lacks.

In George L. Bernstein’s The Myth Of Decline, the American economist takes a scythe to the very notion of Britain’s slow postwar slump, dismissing the framing of Thatcherite renewal in the 1980s. But he also points out that focusing too heavily on the raw numbers alone can also miss the point.

“Such arguments are reminiscent of those who claim that the New Deal of Franklin Roosevelt made little difference in pulling America out of the Great Depression,” he writes. “It may be true that Roosevelt’s policies had only a marginal effect on the massive unemployment of the period, much less on the moribund American economy… [but] the reality of what happened was much less important than people’s perceptions of what happened, and to the generation of Americans who lived through the Depression, Roosevelt transformed their experience of it.” Roosevelt made people believe they had some control over their plight. “This is exactly what Thatcher did.”

Thatcher’s skill was as a politician. She convinced the country it was in charge of its own destiny, that the pain would be worth it (though it would not be her voters who would feel the pain). Labour needs its own story with more poetry and fewer numbers — more myth, not less.


Tom McTague is UnHerd’s Political Editor. He is the author of Betting The House: The Inside Story of the 2017 Election.

TomMcTague

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Michael Cazaly
Michael Cazaly
4 months ago

Thatcher was lucky. The Falklands victory ensured her political, and thereafter her economic success because her policies were accepted
Before the Falklands event there was little chance she would win the next election…if Labour had a half decent leader eg Healey.
However as Powell said…the roulette wheel of history stopped opposite her number, and she did not miss her chance. (I have had to use miss because apparently the word m*ff isn’t allowed…)
Liz Truss should have studied Thatcher’s career more closely…keep your enemies close until you are strong enough to get rid of them.

Stephen Walsh
Stephen Walsh
4 months ago
Reply to  Michael Cazaly

For most recent British Prime Ministers the invasion of the Falklands would have been considered an unlucky event. They would have failed to show leadership and resolve, and the war would have ended as a debacle. Consider how Edward Heath, David Cameron or Theresa May would have fared. Great prime ministers make their own luck.

Alan Melville
Alan Melville
4 months ago
Reply to  Stephen Walsh

To be entirely fair to Heath (and I loathe the man by the way), I have little doubt that he would have done exactly what Thatcher did over the Falklands. Heath had many faults, but neither moral nor physical cowardice were amongst them.

Billy Bob
Billy Bob
4 months ago
Reply to  Michael Cazaly

She was lucky in many ways. The Falklands gave her a boost and possibly won her the election in 83. After that Labour imploded and she had no viable opposition for the rest of her tenure. Her spell in charge also coincided with many more women entering the workforce which boosted GDP, and had a massive windfall through North Sea Oil. Throw in all the money from selling off publicly owned utilities and council houses, to only achieve a rate of growth of around 2% per annum is shockingly bad

Norfolk Sceptic
Norfolk Sceptic
4 months ago
Reply to  Billy Bob

“… she had no viable opposition for the rest of her tenure.”

So true, from the Opposition Benches! Most of the opposition came from her own cabinet! I remember the Wets, always sniping. What she lacked was allies, not comrades or friends, but independent supporters to help differentiate the best policies from the OK.

I remember, on C4, IIRC, the closure of a mine, with new, local, well paid jobs, with training available, but the Union rejected it. There might have been a good reason, but it appeared there wasn’t. It might have been too much change, with those in the hierarchy not wanting to lose their status: who knows? It’s not the sort of thing TV people are interested in. But there didn’t appear to be anyone pointing out that it could be a game changer, so the outcome was inevitable.

Where I’ve lived, an opportunity like that would never have been missed, looked at, or at least not given up at the first hurdle. After all, we had just had the Winter of Discontent.

Champagne Socialist
Champagne Socialist
4 months ago

There’s a very good chance that Thatcher would not have been re-elected in 1983 (or possibly 1984) without the impact of the successful campaign in the Falklands. Although Michael Foot probably wasn’t the most effective opposition leader either…

Champagne Socialist
Champagne Socialist
4 months ago

I’m not sure why people are downvoting this comment. I didn’t even say anything mean about nasty old Maggie!

Stephen Walsh
Stephen Walsh
4 months ago

The Conservatives won the 1987 and 1992 elections with almost identical shares of the vote (and more actual votes) than they won in 1983. It can’t all have been because of the Falklands War.

Billy Bob
Billy Bob
4 months ago
Reply to  Stephen Walsh

In 87 and 92 Labour were a shambles, the party torn apart by internal strife and divisions.
83 could have gone either way. It would have been close but she was definitely struggling before the invasion

Martin M
Martin M
4 months ago
Reply to  Billy Bob

83 could have gone either way. 
Seriously? Labour had a leader who always looked like he had woken up under a bridge, and the worst manifesto imaginable!

Martin M
Martin M
4 months ago

I up-voted it!

Martin M
Martin M
4 months ago

Although Michael Foot probably wasn’t the most effective opposition leader either…
If you want an example of “understatement”, that is it. Labour’s “Longest suicide note in history” 1983 election manifesto wasn’t exactly a well thought out document either.

A D Kent
A D Kent
4 months ago

Thatcher was an utter disaster. She squandered the great bulk of the UK’s North Sea windfall to instigate a new era of the financialisation of everything. The myths around her allowed Blair to finish the job and every institution in this country has been massively damaged by their free-market guff.

Billy Bob
Billy Bob
4 months ago
Reply to  A D Kent

She was a cuckoo in the nest of conservatism, nothing was conserved under her watch

R Wright
R Wright
4 months ago
Reply to  A D Kent

While she went too far in many place, she did nothing like the constitutional vandalism of Blair in 1998-2004. To compare them is a bridge too far.

Billy Bob
Billy Bob
4 months ago
Reply to  R Wright

Blair was simply a continuation of Thatcherism. She sold us out to be ruled financially by the markets, he sold us out politically to be ruled by quangos and supranational groups. They also both claimed “there is no other way” to justify their policies, irrespective of how damaging they were to society.

Peter B
Peter B
4 months ago
Reply to  Billy Bob

Not true. Their understanding and conception of what Britain was, is and should be was completely different.
Thatcher believed in small government and the initiative and responsibility of individuals, families and private business. Blair did not.
Thatcher believed in thrift. Blair believed in consumerism.
Thatcher made the country better. Blair made it worse.
Blair danged on repeatedly about “touch choices”. Thatcher actually took tough decisions.
Thatcher didn’t merch her reputation to get filthy rich. Blair did.

Norfolk Sceptic
Norfolk Sceptic
4 months ago
Reply to  Peter B

And we just had the Winter of Discontent. And anything positive looked like a miracle, whether you believe the or not.

Walter Marvell
Walter Marvell
4 months ago
Reply to  Peter B

Yes. Thatcher believed in the nation state. Blair sold us out to the new EU (forgetting to get our consent).

Walter Marvell
Walter Marvell
4 months ago

Forget Maggie. Reeve has bought into the vision of Growth Uber Champion ….Liz Truss!!!. How comic!!! And yet deeply weird too, because her self evident love of EU State Gosplan Command- think, vacuous policy free gobbledegook, the Techno-Regulatory Machine and the empowerment of Supply side nightmare Red Robbo labour unions positions Rach herself as the new Defender of Degrowth Progressivism – the Queen of The Anti Growth Coalition.

Gerry Quinn
Gerry Quinn
4 months ago

I’m Irish and Maggie had a lot of respect here (even if the IRA later tried to kill her. The unions here were not at quite such an uncontrollable level as in the UK, but they were bad – and when she broke them, she broke them here too.

Billy Bob
Billy Bob
4 months ago
Reply to  Gerry Quinn

You Paddy’s can’t do anything right can you!

Liam F
Liam F
4 months ago
Reply to  Gerry Quinn

i had forgotten that, or maybe i was too young….I do seem to remember Charlie Haughey bringing her a gift of some silverware for some strange reason. Bizarre times. GUBU et al.

David Lindsay
David Lindsay
4 months ago

The 1979 General Election changed nothing that mattered. The Budget of December 1976 had already done that. Nothing happened under Margaret Thatcher and Geoffrey Howe or Nigel Lawson that would not have happened under Jim Callaghan, Denis Healey, and whoever had succeeded either or both of those. Britain was in recession within a year, and unemployment had doubled within two years, as would also have happened if the other side had won. Peter Tapsell would have been a far better First or Second Lord of the Treasury than any of them.

What a ridiculous creature is Rachel Reeves. She denies plagiarism by instead defending her actions as a textbook definition of plagiarism. Her time at the Bank of England and at the British Embassy in Washington, she flaunts in an accent that would have precluded her employment by either of them. She revels in her inability to live within her own very generous means, yet either she peddles opportunistically Thatcher’s “kitchen table” fallacy of the economically illiterate, or she truly believes it. One of Reeves’s underlings was torn apart on Newsnight by Victoria Derbyshire. It was a joy to watch.

j watson
j watson
4 months ago

Author is correct that the Thatcherite economic revolution grossly overrated. The North-South imbalance was accelerated and locked in by her Govt. And on the ‘politics’ she was much more divisive than Reeves’ Labour can afford to be, if they win. Remember Thatcher and her cronies thought Scotland good place to try out the Poll Tax and her successors grumble about Devolution! You couldn’t make it up.
Labour will need a strong renewal narrative that indicates much pain at the start. They will be getting the mother of all ‘hospital passes’.

Norfolk Sceptic
Norfolk Sceptic
4 months ago
Reply to  j watson

MT didn’t have ‘cronies’, but she did have to deal with the Wets in Cabinet. They wanted to get rid of her, so didn’t inform her of the discontent.

They strengthened after she resigned, were successful over Maastricht, and have never really left the party.

Martin M
Martin M
4 months ago

Thatcher smashed the unions, flamed the Argentinians, and tormented the EEC (as it then was). What’s not to like?

Peter B
Peter B
4 months ago

A very patchy article – parts ring quite true, whilst others simply are not.
It is simply not good enough to say that growth was not exceptional under Thatcher if measured from 1979 to 1991 (two recessions and one boom). What we need to understand is where growth would have been if she had not been there and we’d blundered on without making the necessary, painful reforms. Nor that long term reforms don’t pay off in the short term – the decade after 1995 was built on Thatcher’s reforms.
Similarly, it isn’t good enough to claim that Roosevelt’s policies in the 1930s were a success because whilst economically not successful, they made people “feel better” about having a bad time. Not if you don’t consider that better alternatives may have been missed.
A quick check reveals that Tom McTague was born in 1984 and so has no direct experience of the Thatcher era. Nor indeed of the 1970s, which is essential to really understand it. I’ve yet to come across anyone writing about Thatcher who has any compelling insights who didn’t live through those times.

Timothy Baker
Timothy Baker
4 months ago

I am sure that history will ultimately be kind to Lady Thatcher. She gave this country a self confidence that it did not have before her, and certainly needed. Having lived through the period from the fifties onwards I can remember just how grim things felt in the immediate postwar period. The sixties were certainly better than the fifties especially if you were young, but only after we got over the Wilson years did things really start getting better.
High employment rates and high wages were, before inflation kicked in a great time to be working. House prices were affordable and interest rates manageable. Many of us would not be able to buy as good a house now as we could buy then, usually on one wage packet.
Lady Thatcher probably stopped the rot, but sadly she was deposed by political pygmies and things have gone downhill since. Tony Blair was a charlatan who has utterly destroyed this country with his uncontrolled immigration policy and devolution, which has been an unmitigated disaster. Sadly since then we have had a succession of mediocrities, Dave possibly being the worst.

Andrew Fisher
Andrew Fisher
4 months ago
Reply to  Timothy Baker

I admire Margaret Thatcher too. However considering the longer term I think the critics of the parlous economic and cultural conditions of modern Britain state should acknowledge the very real if unwitting early role that Thatcherism played in this.

Margaret Thatcher was far up more an economic liberal than she was a conservative Many longstanding institutions were disrupted or totally changed under her watch. She was one of the key architects of the single European Act which led to so much homogenised legislation across Europe. She was completely relaxed about this and indeed it helped the continuation and broadening of her neoliberal Revolution at home.

Lastly, the privatisation of many assets did bring about a get rich quick mentality among some and tended to erode social structures that are very important for a conservative society. The introduction of Channel 4 was a classic example of this.

Jonathan Andrews
Jonathan Andrews
4 months ago
Reply to  Andrew Fisher

Andrew, clearly some benefited from get rich quick but there was another motive. Many of these industries were grossly inefficient. Wasteful and drained money from ordinary working people and entrepreneurs

Chipoko
Chipoko
4 months ago

Rachel “I-was-an-economist-at-the-Bank-of-England” Reeves. Every time I’ve heard her being interviewed, Ms Reeves reminds the listener/viewer of her job as an economist at the Bank of England. Awful creature!

Walter Marvell
Walter Marvell
4 months ago
Reply to  Chipoko

The Bank that insisted shutting down the economy for two years would have zero impact on inflation. Doh!! The Bank whose 900bn QE caused the bubble in property prices and made the asset Rich 1% classes (like NHS Consultants) super rich. Doh!! The Bank that promotes the twin degrowth ideologies net zero & ESG insanity. Doh! Her sorry Bank is part of a vast cold Statist black hole shredding our universe of enterprise. She should croak away inside it. Not bring in more deathy regulation and Big Dim State power to the UK.

Peter B
Peter B
4 months ago
Reply to  Walter Marvell

The bank that missed it’s 2% inflation target repeatedly and wrote the obligatory letters of apology/explanation to the Chancellor of the Exchequer.
And yet no one ever got fired. While the 2% target was never changed.
Failure without consequence. The cancer of government, civil service and the public sector and precisely the reason they should be smaller and more efficient and staffed by properly paid professionals. Who can also be fired if found wanting.

Norfolk Sceptic
Norfolk Sceptic
4 months ago
Reply to  Chipoko

Is it something of which to be proud? 🙂

Peter B
Peter B
4 months ago
Reply to  Chipoko

She’s merely echoing Starmer: “I was DPP you know …”.
Point me to anyone at all in Labour who has any experience or understanding of private business and enterprise.
Hold on … I’m asking the same question about the current Tories – and getting exactly the same answer …

Andrew Fisher
Andrew Fisher
4 months ago

The Thatcher Revolution was extremely patchy, had very harsh social consequences in many industrial regions, indeed did not massively improve the overall growth rate. However something like it was necessary and indeed inevitable even under a Labour government as was becoming clear in the late 70s. What is not well understood is that you swathes of industry were nationalised as late as the 1970s. The British economy was absolutely sclerotic, the unions were far too powerful and a radical change of direction was needed. However it is true that long term investment is not as good as it should be, and productivity is still mediocre in the UK

Jonathan Andrews
Jonathan Andrews
4 months ago

This is fair. Politicians have much less control over the economy than they, and we, imagine. Thatcher made a valiant and partially successful attempt to wrest power from vested interests and give them to individuals and families.

Over the last thirty years, I perceived that they have not even attempted to reduced the power of the Blob. Maybe, it’s not possible and I should give up but I’d prefer not to believe that.

I think it’s even deeper a malaise. I think we have forgotten that (nearly all of us) we are able to be responsible for ourselves. We are happy to let others, experts, to control our lives. My fear is that those experts know no better how to solve complex problems then the rest of us and, in fact, their hubris leads us in to deeper water.