We’re still living in Margaret Thatcher’s world

Ten years on from her death, the former prime minister’s free-market settlement continues to define Britain.

Photo by David Levenson/Getty Images

In the 1990s, after well-lubricated lunches with her former aides Charles Powell and Bernard Ingham, Margaret Thatcher would sometimes declare: “Come on, we are going to march up Downing Street and reclaim No 10.”

Few prime ministers have so yearned to return to government after being evicted (Powell believed that she never had another happy day). But holding office – as Thatcher’s successor John Major learned – is not the same as holding power. The struggle for intellectual and political supremacy is waged over decades, not years. Truly great leaders govern in exile by forcing their successors to retain their reforms.

It is this distinction that Thatcher achieved: not one of her privatisations has been overturned by subsequent governments: British Telecom, British Gas, British Airways and British Steel – such assets left the state, never to return. Asked at a dinner in Hampshire in 2002 what she considered to be her greatest achievement, Thatcher replied: “Tony Blair and New Labour. We forced our opponents to change their minds.”

When she died ten years ago this weekend (8 April), there was much talk of how polarising Thatcher remained, decades after leaving office. But on one point there was consensus: she redefined the limits of the possible. (Ed Miliband, the Labour leader in 2013, praised her for having “moved the centre ground”.)

Some of Thatcher’s achievements have grown less distinctive with the years. At the time of her death she remained the only woman to have served as prime minister; a decade on, two others have held the office (with more mixed success).

Back in 2013, many on the left and the right doubted whether the Conservative Party would ever win another majority; Thatcher’s landslides gleamed all the more brightly. Only two years later, David Cameron shattered such fatalism. At the 2019 general election, the Tories won their highest share of the vote since Thatcher’s triumph in 1979 (43.6 per cent). The strange death of Conservative England became the strange rebirth.

Yet in the ideological sphere, Thatcher remains in a class of her own. British politics has hardly been stable but the pillars of the edifice she built have outlasted the storm.

What was the essence of Thatcherism? Contrary to some of her latter-day followers, it was not public spending cuts and tax cuts. Real-terms spending rose in every year of her premiership apart from two (1985-86 and 1989-90). Unemployment and disability benefits for former industrial workers, housing benefit for struggling tenants and higher defence spending drove up state expenditure even as it fell elsewhere.

Potted accounts of Thatcherism typically cite the cut in the top rate of income tax from 83 per cent to 40 per cent and the cut in corporation tax from 52 per cent to 35 per cent. Fewer mention that VAT was raised from 8 per cent to 15 per cent and National Insurance from 6.5 per cent to 9 per cent, while windfall taxes were imposed on the banks and energy companies and the poll tax on households. Rather than low taxes, Thatcherism more often meant lower taxes for the right kind of people.

Instead of merely a smaller state, Thatcher led one that was formidably strong in advancing financial interests. UK house prices rose by 187 per cent and London house prices by 251 per cent as more than a million council homes were sold off; the UK accounted for 40 per cent of the total value of all assets privatised across the OECD between 1980 and 1996.

“If the left had ever perpetrated a similar confiscation on the rich, the right would have howled with righteous rage and pain,” wrote Ian Gilmour, the former Conservative cabinet minister and Thatcher’s most eloquent Tory critic, in his 1992 book Dancing with Dogma.

Every UK government since has dwelled in the shadow of this economic revolution. Rather than challenging the fundamentals of Thatcherism, New Labour sought to humanise it by redistributing income through tax credits and targeting pensioner and child poverty.

Blair boasted that his government would “leave British law the most restrictive on trade unions in the Western world”. Public investment was neglected in favour of the profligate private finance initiative and the City of London indulged as never before. “I always thought my job was to build on some of the things she had done rather than reverse them,” Blair confirmed on the day of Thatcher’s death.

Twenty-six years earlier, in the London Review of Books, he wrote of the “tremendous danger” in believing that Thatcherism “is somehow now invincible, that it has established a new consensus and that all the rest of us can do is debate alternatives within its framework”.

In so doing, Blair accurately anticipated the future of British politics. True, the Labour left broke free from the sealed tomb intended for it and attempted Thatcherism in reverse. But this project’s defeat was so emphatic that it already resembles a mere anomaly. Keir Starmer’s Labour exhibits no desire to roll back the Thatcherite settlement.

As important as New Labour’s creation has been the survival of the New Conservatives. A once-proud One Nation wing has never recovered from the death-blow that Thatcher inflicted on it. That David Cameron and Boris Johnson are sometimes described as members of this dormant faction only confirms how much history has been forgotten. Neither showed any interest in rewilding Maggie’s farm. Cameron’s government was content to sell Royal Mail (Thatcher herself was “not prepared to have the Queen’s head privatised”).

[Read also: The uncertain future of the Tory party]

Today’s Conservative Party exists in a wholly Thatcherite universe: only variations on the original theme are permitted. In the 2022 Tory leadership election, Rishi Sunak laid claim to one part of Thatcher’s legacy – fiscal conservatism – while Liz Truss appropriated another: tax cuts and supply-side radicalism. Neither questioned whether they were looking in the wrong place.

Sunak may be the most Thatcherite prime minister since Thatcher herself. His fiscal discipline is truer to her spirit than Truss’s kamikaze tax cuts and he is most animated when championing free ports – economic zones liberated from standard tariffs and regulations. For Sunak, who endorsed Leave in the EU referendum, the appeal of Brexit was to tilt the UK in an even more pro-market direction.

The debate over whether Thatcher would have backed Brexit has sometimes veered into ghoulishness. But those who cite her support for the European project in the 1975 referendum too readily ignore her later work. Having vanquished so many of her original foes, Thatcher came to see the EU as a new one. She was animated by the possibility of liberation (routinely citing Singapore as an exemplar for the UK). Her former chancellor Nigel Lawson, who died aged 91 on 3 April, put the case for Brexit most succinctly: “To finish the job that Margaret Thatcher started.”

We are still living with the revolution that she initiated – including its unintended consequences. Thatcher’s economic liberalism was in perpetual tension with her social conservatism. Today’s Britain, where same-sex couples can marry, where less than half the population identifies as Christian, and where private landlords own 40 per cent of former council homes is not the one she sought. But the economic model she created has overwhelmed all challengers.

“Will Rishi Sunak or Keir Starmer win the general election?” commentators ask animatedly. In many respects, Margaret Thatcher already has.