Leading Article: Twenty years on, the Iron Lady still divides the nation

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SHE IS only 5ft 4in tall, but she still casts a long shadow over British political life. Although John Major was Prime Minister for longer than either Clement Attlee or David Lloyd George, he has already become a mere comma in history separating Tony Blair from his true predecessor.

Monday is the 20th anniversary of the watershed election of 1979, often ranked by historians with the landslides of 1906 and 1945. Anniversaries are usually occasions for celebratory dinners and harmless reminiscence; this one has seen the shadow darken William Hague's week after his deputy, Peter Lilley, thought it a good time to make a speech attempting to junk the sacred legacy.

And what is the state of that legacy now? An important part of it was to make the Tory party unleadable. She did that by turning what had been the party of pragmatism into an ideological party. And the mistake always made by ideologists is to extrapolate from the particular to the general. Thus the astonishing success of council house sales and the privatisation of state-run services, which happened to meet the social, budgetary and political needs of the moment, were generalised in the principle that the state provision is bad and private provision good.

And the truth is that the political limits of this doctrine were reached and effectively settled by the Conservative Government at the height of its success, in 1988-89. It would never make electoral sense to drive the privatisation revolution into the "core" public services of health and education - that fact was recognised by Kenneths Clarke and Baker respectively, and endorsed by the Cabinet majority. The trouble was that the minority included the Prime Minister herself, and hence the thesis of betrayal was born.

It was the same thesis as that which drove the Labour Party into madness and exile: that the ideological cause had been sold out by the parliamentary leadership. That the Prime Minister was a mere prisoner of the Cabinet traitors was confirmed when they dumped her in 1990. True, she was increasingly in a minority in her own cabinet on the issue of Europe, but most of the thesis was nonsense, blithely ignoring the realities of the poll tax and her sheer, grinding stridency.

As Donald Macintyre wrote in these pages yesterday, the Tory Party is like someone traumatised in childhood by the fact that they witnessed - indeed, took part in - a terrible act of regicide nearly a decade ago.

For those ordinary Britons not psychologically damaged by the palace coup of 1990, however, her legacy is more prosaic, although significant nevertheless. Privatisation of state-owned industries, even water supplies, produced huge efficiency gains that have been for the benefit of all. But it was an accidental policy, driven more by the Treasury's desperate need for cash than by anything else, and Labour would probably have done it too, as its sister parties in Australia and New Zealand did, if it had stayed in power - albeit in a more hesitant fashion.

More important was the taming of the trade unions, and the change in public attitudes towards profit and entrepreneurialism. It is hard to recall now how, in the Seventies, the trade unions distorted not just the economy but parliamentary democracy too; how serious Labour politicians talked of a "maximum wage" enforced by 100 per cent income tax; how profit really was a dirty word.

She changed all that, and rightly so - but at a terrible cost. The problem of the mass unemployment of the Eighties was not simply that it was unnecessary, but that it left a legacy of social division that weighs heavily in the balance against the positive achievements. "Trickle down" did not work in America and it did not work here.

The great weakness of her reign is that she left the leviathan of the tax-funded state bigger and heavier than she found it, while the record on the health service was indifferent and on education frankly disastrous. Despite the former minister Geoffrey Robinson's comparison of Mr Blair to her, which we report today, her failure gave Mr Blair his strongest foundation on which to build a rival monument more soundly based on the centre ground of British politics. His most devastating criticism is that, under the Tories, the "bills of social failure" acted as a drag anchor on the nation; if he succeeds in healing social division, 1997 may yet be added to the roll-call of epoch-making elections this century.

Even her proud claim to have put the Great back into Great Britain has boomeranged against both party and country, by linking British nationalism with anti-Europeanism, a negative and destructive force.

In the end, though, there is nobody else in contemporary British history about whom a leading article could be written without naming its subject. That is the most striking measure of her legacy.