The Heath ‘Failure’ and Thatcherism

Edward Heath was once asked if it was true that on Margaret Thatcher’s resignation he shouted “rejoice, rejoice!” Heath responded, “No, of course not. I said it three times, rejoice, rejoice, rejoice.” Mrs Thatcher was equally dismissive of Edward Heath. But there was more to this difficult working relationship than a clash of personalities. 

To Thatcher and her acolytes the Heath Government was a complete failure. The Thatcherite interpretation of the Heath years goes something like this: They started out with good ‘proto-Thatcherite’ intentions. However in 1971 economic growth faltered and unemployment exceeded One Million. The Heath Government ‘panicked’ and began spending money. However the ‘Dash for Growth’ resulted in inflation which soared from 6.4% in 1970 to over 25% in 1975. Shortly after growth plummeted and unemployment rose sharply. Meanwhile the Government’s huge Industrial Relations Act provoked hostility from the trade unions thereby scuppering both the Act as well as attempts to hold inflation by negotiating with the unions over wages. Industrial conflict ensued and Heath lost the February 1974 General Election.

At the time Thatcher confided that she’d “had no end of a lesson.” Indeed to an extent Thatcherism can be viewed as a reaction to this particular version of events. It is a version often repeated by Thatcherites in their memoirs and recollections of the 1970s. There is much to suggest that they perceived the 1980s as a re-run of the early 1970s – what Heath should have done. 

In 1981 against a backdrop of recession of rising unemployment Thatcher famously told her audience, “The Lady’s Not for Turning”. It was a direct message to those in her cabinet who wanted her to spend money to reflate the economy. At a pivital Cabinet meeting Geoffrey Howe, Chancellor of the Exhcequer, announced even tigher spending plans to reduce inflation. The Cabinet threw their hands in the air with one shouting ‘No More!”. Thatcher with ice-cold dertermination purged her cabinet of ‘Wets’ and refused point-blank to reflate the economy. Inflation was the undoing of Heath and history was not about to repeat itself. 

Working on a number of fronts Thatcher’s approach to the trade unions was cautious but comprehensive. Heath had wined and dined the leaders of the Trade Union Congress at Number 10, their support tirelessly sought. However with the burden of controlling inflation now falling on public expenditure, wage controls were banished and the unions were debunked from their privilaged position in economic policy making. Rising inflation in the 1970s had been a powerful recruiting agent for the unions as workers demanded (understandably) above-inflation wage settlements. Falling inflation in the 1980s removed the primary reason why people joined trade unions in such numbers during the previous decade. On the legislative front eleven small Industrial Relations Bills were introduced between 1979 and 1993 which slowly did the work of Heath’s ill-fated Industrial Relations Act. For the Thatcherites, the set-piece battle against the Miners in 1984 was a re-run of Heath’s humiliating defeat at the hands of the Miner’s Union back in 1972. 

The Heath Government had pledged in 1970 to free the economy from State intervention or ‘Disengagement’. The Thatcherites had been disappointed with Heath’s progress here and his increasing reliance on Keyenesian demand-management techniques to stimulate growth. In reaction the Thatcher government placed ‘supply-side reform’ at the centre of its economic strategy. In a way there was no choice. Tight fiscal policy to keep inflation and wages under firm control, meant that ‘old-fasioned’ demand-induced expansion was out of the question. The result was wide-ranging financial services deregulation, extensive privatization, and a shift in the tax burden from earnings to consumption. 

This in a nut-shell is Thatcherite political economy and a comprehension of the Heath Government is vital in terms of  understanding it. Indeed the election of Margaret Thatcher herself as Conservative leader in 1975 can only be understood in the context of the Heath years. As far as the Thatcherites were concerned, Heath was naive and un-Conservative. As far as the Heathites were concerned, the Thatcherites were dogmatic Monetarists, brutal and uncaring. The divide between these two titans of Conservatism was formative for the Conservative party, dividing it into ‘Wets’ and ‘Dries’ for a generation.

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35 thoughts on “The Heath ‘Failure’ and Thatcherism

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    4. Book Award Tickets Early—and On-line

    Since airlines allocate only a small percentage of their seats for award travel, it’s smart to book months in advance. Just to be safe, book 330 days in advance—when most airlines load award fares. Also, reserve those seats on-line: American, Northwest, and Continental all charge $5 for booking award travel over the phone and $10 for doing it in person—but nothing for on-line reservations. (United charges more to book award travel by phone than to book paid tickets by phone: $15 versus $5.) If you do get lucky and are able to reserve an award seat only a week or two before you travel, unfortunately you could get slapped with a high “expediting fee.” For instance, Delta charges $50 within two weeks of travel; Continental charges non-elite frequent fliers $75 for booking within three days of flying (elites pay $50).

    5. Book Through an Airline’s Web Site

    If you’ve found the same low fare on an on-line booking agent like Orbitz and an airline’s own Web site, it makes more sense to reserve on the latter to avoid paying the $10 or so service fee booking sites now charge. By booking on an airline’s site, you’ll also avoid the service fees the airlines themselves have begun to charge: $5 for booking over the phone, and $5 to $10 for booking at ticket offices and airport counters.

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    If there’s a chance that you’ll need to change your flight, book directly with the airline. Orbitz and Travelocity (but not Expedia) charge a $30 fee to change a flight, which is on top of the $100 change fee the airlines assess. Low-cost airlines have much lower change fees. JetBlue charges $20 ($25 on the phone) plus the fare difference, Song charges $25 plus the fare difference, and Southwest has never had a fee—it charges only the difference in fare. But there’s some good news from the major airlines: in January, Delta decreased its change fee to $50 from $100. And though the other major airlines hadn’t followed suit when this went to press, we expect they will.

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