Despite the rhetoric of “rolling back the state”, Margaret Thatcher was less successful in cutting public spending than many of her supporters (and opponents) like to believe. As the IFS graph below shows, real-terms spending rose in every year of her premiership apart from two. Only in 1985-86 and 1989-90 did spending fall, by 1.1 per cent in the former and 2.3 per cent in the latter. On average, it increased by 1.1 per cent a year. Under the coalition, by contrast, it is forecast to fall by an average of 0.4% a year in real terms (departmental spending is being cut by 11% but debt interest and high unemployment mean the total reduction is far smaller).
While Thatcher squeezed spending on public services such as health and education, mass unemployment and the consequent increase in spending on benefits (which, unlike the current government, she allowed to rise with inflation) ensured that total expenditure remained high.
- 1979-80 44.6%
- 1980-81 47%
- 1981-82 47.7%
- 1982-83 48.1%
- 1983-84 47.8%
- 1984-85 47.5%
- 1985-86 45%
- 1986-87 43.6%
- 1987-88 41.6%
- 1988-89 38.9%
- 1989-90 39.2%
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