Baroness Thatcher was a leader of exceptional determination and willpower, driven by an absolute conviction that she knew what was best for Britain. But if David Cameron's tribute to her is correct, that was not all she could be admired for. "Margaret Thatcher didn't just lead our country – she saved our country," the Prime Minister claimed. The second half of that statement is worth examining. If Lady Thatcher saved Britain, what did she save us from, and where are we now?
Inflation and strikes
It is not really disputed that the UK was in bad shape in 1979. Trade unions are often blamed, because of the prevalence of strikes during the 1970s, but what people forget is that there was a reason for their militancy.
Inflation, which affected everybody, ate into the value of people's pay. It took huge pay rises just to keep up with prices. Inflation was rapidly coming down before Lady Thatcher came to power but was still in double figures, at 10.3 per cent per year, in 1979. At first, the Thatcher government unintentionally pushed it right back up over 20 per cent, but then ruthlessly brought it down to 5 per cent in time to secure victory in the 1983 election.
Today, it is 3.2 per cent. So it can reasonably said that Lady Thatcher saved the UK from runaway inflation.
Thatcher's government introduced a series of laws to curb union militancy, but when inflation was out of the system, employees had less reason to strike for higher wages, regardless of the state of industrial legislation. Instead, they faced the worse threat of being out of work. The major strikes of the 1980s, such as the year-long miners' strike, were over jobs, not pay. Every redundnancy of a union member weakened the union.
There were 1.4 million jobless in 1979, or 5.3 per cent of the workforce. That figure peaked at more than 3 million in 1986. Currently it is 2.52 million, or 7.8 per cent – so Lady Thatcher certainly did not save the UK from unemployment, though she did permanently weaken the unions. There were 12 million members of TUC affiliated unions in 1979. Now there are six million.
"We were the first country in the world to roll back the frontiers of socialism," Lady Thatcher claimed after she left office. If 'socialism' means state ownership of industry, the claim is undeniably true. In 1979, the electricity, gas, water, coal and steel industries, and British Telecom and BP, were all state owned. Now all are in private hands.
Those privatisations were popular and in practice irreversible, because they replaced state monopolies with private firms competing in the market, improving efficiency. The exception, the botched privatisation of British Rail, was not her doing.
In 1979, 55 per cent of the population lived in owner-occupied homes, and 42 per cent in council houses or other 'socially rented' accommodation. Today owner occupation is around 70 per cent, while 18 per cent are in council or housing association homes. So she helped to bring millions of working class families the benefits of home ownership – but at a cost of rising homelessness, because the council homes that were sold have not been replaced. In 1979, there were just over a million households on housing waiting lists, now there are 1.8 million – though most of that rise came after Lady Thatcher's time.
Public debt and spending
Lady Thatcher's government did a good job of driving down government debt, which was 43.6 per cent of Gross Domestic Product (GDP) in 1979, and 26.7 per cent in 1990. In 2009, after the banking crisis, it was back where Lady Thatcher found it as a proportion of national output, and rising. In gross figures, the debt was £88.6bn in 1978-79, and £1,103.6bn in 2011-12. But she had those one-off asset sales and tax receipts from North Sea oil to help pay off debt, which no other government has had.
Public spending actually went up in the early Thatcher years, from 45 per cent of GDP to 48.5 per cent, before she started to bring it down. It was back at the 1979 level in 1987, and carried on falling until 1999, after which Labour let it rise slowly until 2008, when the cost of bailing out the banks made it shoot up from 41 to 48 per cent. It should be back to its 1979 level next year.
Lady Thatcher believed in keeping the value of sterling high. The pound was worth $2.06 in 1979. It shot up to $2.42 by October 1980, then fell to $1.81 within a year. It was $1.96 when she left office and is now worth $1.51, so she did not 'save' sterling from depreciating internationally.
Freedom to borrow
In 1979 there were strict rules about mortgage lending, about how shares were bought and sold, and how much money could be taken abroad. Her government scrapped them all, allowing building societies to become banks and banks to lend for mortgages, though any other government might have had to do the same because computer technology was globalising the money markets. The changes made it much easier for a young couple to raise a mortgage, but much harder to stop banks behaving recklessly. Her policies also pushed up house prices. A house that cost £83,000 in 1979 would cost £163,000 now.
Lady Thatcher personally had a reputation for being authoritarian, yet during her time sexual freedom generally increased, along with divorce rate and the rate of abortions. This is not something she encouraged, but she generally did not try to interfere. And this is possibly not what David Cameron meant when he said she 'saved' Britain. On a more negative note, she presided over a frightening rise in the crime rate, from just over 2.5 million recorded crimes in 1979 to 4.5 million in 1990. Lately, the figures have been falling, so that by 2010 it was below the 1990 figure. Lady Thatcher did not 'save' Britain from crime.
Britain's place in the world
A large part of the pre-1979 British malaise was assumed to be the loss of the empire and the sensation that having been the world's third most powerful state in 1945, the UK was sinking down the league table. There had been colonial wars lost, and the debacle of the Suez conflict. Lady Thatcher raised the nation's morale through the victory in the Falklands. She is also often credited with ending military rule in Argentina, though actually all South America's military dictators gave way to civilian rule in the 1980s.
But that aside, not much has changed. In 1979, Lady Thatcher agreed to buy Trident from the US. Now, the government is preparing to update it. Then, western opinion was outraged when the USSR sent the Red Army into Afghanistan. Now the west is embroiled in a war in Afghanistan which has dragged on for over 10 years.
Then, Lady Thatcher was in a minority of one at an EU summit, when she battled for a reduction in the UK's contribution to the EU budget. Two months ago, David Cameron was rather less isolated as he battled to keep the overall EU budget down, something he could not have achieved alone
Overall, Lady Thatcher did not save the UK from losing its position as a premier league world power, but she made patriotic Britons feel less miserable about their lost status.
Then and now: UK statistics
Population: 56.27 million
Gross domestic product: £199.22bn
Average household income per week: £248.96
Average house price: £83,169
Life expectancy: men, 70.33 years; women, 76.41 years
Population: 63.2 million
Gross domestic product: £1,588bn
Average household income per week: £442
Average house price: £163,056
Life expectancy: men, 78 years; women, 82 years