The permanence of Thatcherism

Bagehot

There is no alternative

The permanence of Thatcherism and the politics of unpopularity

POLITICS has turned funereal. New Labour was buried by ululating commentators after last month’s flawed budget. Now the -ism that spawned Tony Blair’s hybrid creed is apparently following it into oblivion. The 30th anniversary of the Iron Lady’s first general-election win in May 1979 has been marked by reports, often exultant, of the death of Thatcherism.

There are two strands to this diagnosis. One is that Margaret Thatcher’s deregulatory reforms, in particular the “Big Bang” of 1986, caused the financial crash; in this critique Mrs Thatcher (as she was in office) personally dispensed bankers’ bonuses from her handbag. The wider point is that the economic model she advocated, and which her apostate Labour successors embraced, has been discredited. Neo-liberal, Thatcherite economics, runs this argument, was fatally undermined by its own internal weaknesses, then interred after the crunch amid a mêlée of Keynesian splurges and nationalisations. None of us is a Thatcherite now.

The first charge is true only in the way that, say, the Versailles treaty “caused” the second world war. There have been too many intervening years, factors and governments for the case to stand up—though it reflects Mrs Thatcher’s mythic status that, for some, she must be to blame. The wider argument is plain wrong. The themes of British politics in the next few years will be recognisably Thatcherite. So will many of the policies.

Conviction and confusion

One nostalgic motif may be confrontation with trade unions. Of course, they are not the destructive power in the land that they were in 1979: Mrs Thatcher saw to that. Their membership has shrunk; their leaders are saner. All the same, the squeeze on pay and pensions in the public sector that may be needed to help cut Britain’s deficit will doubtless provoke a serious punch-up.

Another is privatisation. Admittedly, the state has temporarily taken charge of the new commanding heights of the economy, the banks. But elsewhere the process of privatisation begun by Mrs Thatcher and furthered by her heirs continues: witness the row between Gordon Brown and Labour MPs over plans for Royal Mail. More importantly, in areas that Mrs Thatcher only nibbled at—health, education and welfare services—politicians will push on with bringing in private provision and applying the rigours of the market to the functions of the state.

Then there is the question of tax. The new top rate of income tax, of 50% for earnings over £150,000 ($225,000), is cited as evidence of Thatcherism’s combustion. Yet the angry response has shown how widespread and ingrained is the doctrine that Mrs Thatcher preached: that low tax is good for both enterprise and government revenues. Moreover, while the latest increase may be myopic, it is scarcely the sort of confiscatory levy imposed before she took over: the realm of the possible in taxation has shrunk. Taxes may rise in the immediate future (as they did after the notorious budget of 1981); but a 1980s-style backlash against over-taxation across the whole spectrum of wealth may well follow. There could be a renewed push for tax reform, shifting the burden, as Mrs Thatcher did, from income tax to other kinds.

Britain is not the place it was in 1979: it is more complex, more tolerant and hedonistic, haunted less by imperial decline than by pseudo-imperial overstretch. Its problems are different too. Thirty years ago, taming inflation and making the country governable were Mrs Thatcher’s first priorities. Now one pressing need is to fulfil an aspiration she never realised: a dramatic reduction in the proportion of national wealth consumed by the state. For all the excitable short-term neo-Keynesianism, the basic long-term solution is Thatcherite: stringent economic discipline.

Imposing that discipline will bring with it two other Thatcher trademarks: controversy and intermittent unpopularity. The atmosphere of politics, like some of its content, is set to be Thatcherite. And Mrs Thatcher’s experience offers her successors a template for the uses and management of opprobrium.

For Mr Brown, the comparison is shaming. Shortly after he moved into Number 10, he invited Mrs Thatcher round for tea, describing them both as “conviction politicians”. Yet whereas her premiership was controversial in pursuit of a transformative goal, his has been a study in purposeless unpopularity.

Meanwhile David Cameron, the current Conservative leader, is in one sense the first post-Thatcherite holder of that office; only now have the clefts in the party left by her ousting healed. Mr Cameron is a different sort of Tory: less of an economic determinist than Mrs Thatcher, more socially liberal, more in the party’s “one nation” tradition. But he has assimilated at least one major lesson of her often misremembered career. She was a revolutionary but also an incrementalist, whose biggest upheavals were mostly not announced in her manifestos.

Mr Cameron is being similarly cautious. He now lauds Mrs Thatcher where once he seemed to distance himself from her, using her name as a byword for political bravery—but without saying precisely what form his own bravery will take. His Tory colleagues talk about how loathed they expect to be after six months in government—but not exactly why. The outstanding question is this: for all the shortage of upfront details, Mrs Thatcher knew what she wanted to achieve. Do the Cameroons?

At a recent press conference Mr Cameron was asked about the Thatcher anniversary. Serendipitously, as he answered, a military band struck up outside the window; Mr Cameron clenched his fist and talked with mock bombast about giving “pride back to Britain”. He is of a generation for whom invisible, ironising inverted commas hang above any grand or portentous statement. They didn’t for Mrs Thatcher. Her lesson is that Mr Cameron needs to know his mission, stick to it and hold his nerve.

The Conservatives in government

A cold coming they'll have of it

The Tories, favourites for the next election, embrace austerity

FAMOUS for its top girls’ boarding school and a racecourse beloved of preposterously hatted blue-bloods, Cheltenham is the kind of town where the recession seems a small war in a distant country. The timing of the Conservatives’ recent spring conference there was as congenial as its setting: at most 13 months remain before a general election that, judging by the polls (see chart), will end the Tories’ prolonged absence from power.

Yet the flatness of the jamboree, where activists were subdued, party staff glad to be absent and the speeches of ministers-in-waiting mostly leaden, almost drove observers to check that they had come to the right place. For David Cameron, the “heir to Blair” who has led the Tories to electability over the past three years, the contrast with Labour’s beatific run-up to its 1997 election triumph must grate.

Much of this reflects Britain’s grim Zeitgeist. Tories know that recession and the rise of anti-politics, stoked by stories of Westminster sleaze, means that loathing for the government does not imply love for its opponents. But some of the Cheltenham glumness reflects a dawning awareness that the next government faces a hard and unpopular slog, dominated by the burden of fixing the awful public finances.

The credit crunch and broader crisis that began in 2007 has often wrong-footed the Tories. Not only were they unconvincing on many specifics (they initially opposed the nationalisation of Northern Rock, a failed mortgage lender, for example), but Mr Cameron’s thriving attempt to rebrand the party as sunny and youthful suddenly jarred with the bleaker times. Lulled like many by years of uninterrupted economic expansion, he took a while to shed a complacently post-economic message which vaunted “GWB”, or general well-being, above GDP and suggested that society needed more fixing than the economy. The Tories persisted with their mantra of “sharing the proceeds of growth” between tax cuts and public spending after growth had stopped.

But the recession has discombobulated both main parties. Gordon Brown, despite a dead-cat bounce after his bank bail-out and fiscal stimulus last year, has seen his premiership mauled by it. (The Liberal Democrats’ deputy leader, Vince Cable, has sounded authoritative but his party has made only slim gains in the polls.)

The Conservatives are now deftly re-re-branding themselves as the party of austerity. Their opposition to a debt-financed fiscal stimulus, and particularly to a temporary cut in VAT (a sales tax), seemed quixotic last autumn. It has since gained adherents, even before the mortifying scale of public borrowing was set out in the recent budget. To the frustration of their core supporters, the Tories have not promised to reverse the government’s income-tax hike for high earners. The priority, says George Osborne, the shadow chancellor of the exchequer, is to undo the planned increase in national-insurance contributions. Taxes may have to go up, he thinks, but increasing those on jobs could kill an economic recovery before it begins.

Some in the party grumble that pundits have been slow to credit the Tories with taking brave positions on the economy. They console themselves that the public seems more impressed. A recent ICM poll showed Mr Cameron and Mr Osborne leading their opposite numbers in government on the question of economic competence by a ten-point margin.

None of this is to deny that the Conservatives have some way to go before their voice on economic matters truly carries. Their pledge to scrap inheritance tax for most households, so popular when it was unveiled in 2007 that it helped make Mr Brown retreat from a snap election he was about to call, now seems indulgent. The Tories have implied that implementing the policy may be delayed; it might make sense to scale it down too (it would raise the individual inheritance tax threshold from £325,000 to £1m, or $1.5m). Nor are they providing details about their approach to fiscal retrenchment. That is understandable: Mr Osborne reminds critics that, had he given in to demands for more precise plans in happier years, he would now be tearing them up. But fine print on which taxes are to rise and which budgets are to be cut will be expected eventually.

There are reasons other than the state of the economy to think that the Tories are shaping up to be sober rather than spectacular. Despite his self-styled affinity with Tony Blair, Mr Cameron has none of the former prime minister’s messianic zeal. In his scepticism towards grand plans, and in the privileged background he shares with many colleagues (a political handicap, confess Tories too canny to believe Britain has become classless), he seems to follow more naturally in the tradition of patrician Tory leaders such as Harold Macmillan. His cautious line on health care, which some say is too soft on doctors and nurses, encourages this view, as does his rejection of a big-picture vision of foreign policy in favour of case-by-case pragmatism.

Not just Supermac’s heir

But this tells only half the tale. Mr Cameron harbours some radical ideas, such as greater choice and competition among schools (see article) and the revival of local government. The theme of “giving power away” seems a neat response to plummeting trust in national politics. And Mr Blair, like Margaret Thatcher, acquired much of his boldness in office; Mr Cameron may do the same. Above all, austerity is its own form of radicalism. Efficiency gains alone will not plug the hole in the budget (see article); the government may have to shed functions altogether. Mooted ideas include limiting eligibility for tax credits, child benefit and other goodies to the poor and, because cuts will have to fall on Tory causes too, perhaps scrapping some defence projects.

Not the soporific “do-nothings” of caricature, then, but the Tories have greater expectations than that to live up to. Mr Osborne is confident that the next election will be as seminal as those of 1945, which led to the construction of the welfare state, and 1979, when free-market economics made its comeback. Bold stuff, but he has yet to outline what profound change in Britain’s political economy he foresees.

Others outside Britain have high hopes of the Tories too. As centre-right leaders elsewhere wobble or fall, many conservative-minded observers may look to a new Tory government for inspiration. Some Tories were giddy recently when their favourite American pundit, David Brooks of the New York Times, cited Mr Cameron’s communitarian strain of conservatism—or “Red Toryism”, in the coinage of Phillip Blond, an intellectual fellow traveller—as the future direction for America’s Republican Party. But this too needs elaboration if it is not to fizzle out like Mr Blair’s “Third Way”. What Britain’s government will look like by the middle of next year is increasingly clear. What the country will look like five years after that is less so.