Labour has wiped out Thatcher's legacy

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2 days ago

The Thatcherite dream finally died this month. Margaret Thatcher's 11 years in office had a long afterlife, perhaps longer than that of any prime minister other than Clement Attlee.
She reimagined both her own party and indeed that of her Labour opponents. There would have been no Blairite interregnum in the socialist party's relentless 'egalitarianism before all else' philosophy without her. Even more significantly, Mrs Thatcher transformed British society – at least for a while.
But 35 years after leaving Downing Street for the last time, Thatcherism has finally expired. The Iron Lady's legacy has not managed to survive the vicissitudes of Keir Starmer's Government. With the renationalisation of South Western Railway as the next step towards the full state ownership of Britain's railways, that moment has come to an end.
Rail privatisation, only enacted in 1993 when John Major was prime minister and implemented amid the last gasps of 18 years of Tory rule, was a late flowering of the valiant attempt to roll back the frontiers of the state. Its implementation was bodged and the infrastructure soon fell back into public ownership in 2002.
The privatisation programme started slowly in Mrs Thatcher's first term with various sell-offs, most notably the flotation of 51pc of British Aerospace in 1981. It really took off and grabbed the public imagination with the float of British Telecom in 1984. Millions of people on ordinary incomes caught the bug for investing in shares and these sales were hugely oversubscribed.
Privatisation was not just an attempt to inject dynamism into the British economy, although it undoubtedly achieved this.
Thatcherism has been denounced by the Left as an attempt to transform the very ethos of the UK, to dismantle the collectivist assumptions that had taken hold since the Second World War. They pillory Mrs Thatcher for declaring that there is no such thing as society (she never said it) and that we owe our fellow citizens nothing in terms of social solidarity (she did not believe that either). The Left are wrong in this caricature, but they are right to say that Thatcherism was an attempt to fundamentally change our country's character. And privatisation – alongside council house sales – was a cornerstone of this mission.
At the 1985 Tory party conference Mrs Thatcher declared that she hoped a day would come 'where owning shares is as common as having a car'. She saw that by spreading the benefits of ownership, both of people's homes but also of the country's assets, Britain could become an entrepreneurial society; a country where bosses and workers saw themselves as in conflict could become one where all strived for affluence.
In short, Mrs Thatcher hoped Britain would have an American future, where the accumulation of wealth was seen as a virtue, not a sin.
She believed that once people have a proprietorial stake in the country – be that via owning their council house or possessing a few hundred shares in BP or British Steel – old class antagonisms would over time wither away.
The Left saw these privatisations as a bribe; just as council house sales were discounted, shares were deliberately underpriced so the public could make a quick buck. And they are right in this analysis, but it was not an electoral bung but rather a strategy to change public attitudes.
Perhaps the apotheosis of this was the 1986 'Tell Sid' advertising campaign for the sale of British Gas. Its message was unapologetic: these flotations are for everyone. And it worked, those owning shares directly rose from around three million people in 1979, or around 7pc of adults, to over 12 million, or nearly a quarter of adults, when Mrs Thatcher left office.
This was further augmented by the big demutualisations of the late 1990s – Abbey National in 1989, Northern Rock in 1997 and Standard Life in 2006.
This trend has reversed. The proportion of UK-listed shares directly owned by UK-resident individuals was 10.8pc at the end of 2022, down from 12pc just two years earlier.
Today 57.7pc of UK shares by value are owned by overseas investors, a record high. If you go back to the 1960s, those figures are reversed with 54pc of shares owned by British individuals. This had fallen to 28pc by 1981. Mrs Thatcher did not reverse the overall trend in a declining percentage of the stock market being directly owned by individuals, but did vastly increase the number of people owning those shares.
The long-term decline is not an entirely negative one. The days when the well-off would buy, say, £10,000 of Marks & Spencer shares and then hold them for 40 years are gone. And that is not a bad thing; pooled investment funds are clearly a far wiser and less risky route for investment for most people than simply buying individual blue chip stocks and holding them for the long term.
Additionally, it is inevitable as so many of the privatised and demutualised companies have been taken over, bought by private equity or are no longer with us for other reasons.
But more broadly, the agenda of popular capitalism has been reversed. The decline has been long and gradual, but has been vastly accelerated by Starmer's Government. One of its early actions in office was to hugely cut the discount that council tenants receive on buying their home. In London the maximum discount was reduced in November from £136,400 to £16,000.
Mrs Thatcher's 1980s dream of making Britain more laissez-faire and more American in attitude is now sadly dead. Labour has deliberately extinguished it.
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