‘Popular capitalism’ was Thatcherite shorthand for three separate revolutions in British economic life: wider home-ownership, wider share-ownership and an ‘enterprise economy’ characterised by more small businesses and more people becoming self-employed. The first revolution was well under way in Mrs Thatcher’s first term, with half a million council houses already sold before the 1983 election. But the second and third took off only in the second term. The first was simple and irreversible, a major social change. The second turned out to be rather less significant than was pretended at the time, at least so far as individuals were concerned. The third was economically by far the most important: though stimulated by the Government’s supply-side reforms and initially associated with the unsustainable euphoria of the Lawson boom, it represented the British reflection of universal trends – globalisation and computerisation – and an irresistible transformation of economic attitudes and behaviour, which long outlasted Mrs Thatcher and carried on vertiginously until it suddenly collapsed in the ‘credit crunch’ of 2008.sale of council houses was a specifically British social revolution which reflected the national obsession with home-ownership. From a mixture of prejudice and principle Mrs Thatcher believed that public-sector housing should really be abolished. She was convinced that council estates were breeding grounds of socialism, dependency, vandalism and crime. She had no interest in trying to improve them because she believed in principle that housing was not a commodity which the Government ought to provide, except for special categories like the elderly and disabled. In her memoirs she wrote unambiguously that the state should withdraw from the building and management of housing ‘just as far and as fast as possible’.33 She could not, when in office, act on this principle as decisively as she might have wished; but she certainly did everything she could to shrink the public sector and very little to help those compelled by circumstances to live in it.Thatcher thought the sale of council houses an unalloyed good, both social and economic. She made a point of attending the handover of the millionth house to be sold. By the time she fell in 1990, the number sold was up to nearly 1.5 million, and the total proceeds had accrued £28 billion to the Treasury, which counted them – ‘duplicitously’, in Simon Jenkins’ view34 – against public spending. Spread over eleven years, this was the biggest privatisation of them all, bigger than British Telecom, British Gas and electricity put together. But the blessings were not so unmixed as she believed.one thing, some of those families who were persuaded to buy their houses, particularly towards the end of the decade, tempted by the easy mortgages on offer from banks falling over themselves to lend, soon found themselves, when inflation rose and the recession of the early 1990s bit, committed to payments they could not keep up. As prices fell back to more realistic levels, many found that their houses were worth less than their mortgages – the phenomenon of ‘negative equity’. Many bright dreams of ownership ended in the nightmare of repossession five years later., it was naturally the best and most desirable houses that were sold – very few flats – and the more prosperous and upwardly mobile tenants who bought them, leaving the less salubrious high-rise estates to become sinks for the unemployed and problem families. The effect of Mrs Thatcher’s sell-off was to leave the social mix narrower than before, with a much higher proportion of tenants dependent on benefit. Her belief that there were no good estates was therefore self-fulfilling., the non-replacement of the houses sold and the consequent decline in the stock of council housing, combined with the late 1980s explosion in house prices in the private sector, at a time when there were still nearly three million unemployed, left an absolute shortage of affordable housing and led by the end of the decade to the shocking appearance of a tribe of homeless people sleeping on the streets of London and other major cities. This was the most serious negative consequence of a popular policy to which Mrs Thatcher resolutely closed her eyes.family silversecond ‘crusade’ of popular capitalism was privatisation. It had, of course, been under way, from cautious beginnings, since 1979. But it only really took off as a rolling process in Mrs Thatcher’s second term, when it quite suddenly became the Government’s ‘big idea’, the central pillar of Thatcherism, both the symbolic embodiment and the practical realisation of the reversal of socialism which she had been talking about since 1975. Now, starting with British Telecom, the Government moved on to the major state-owned corporations which had supplied the nation’s essential services since 1945, services which only a few years earlier no one but a few free-market fanatics had imagined could be run by anyone but the state: the telephone system, gas and electricity, the national airline, the airports, even water supply. The expectation was successfully created that, as Nigel Lawson had asserted in 1981, ‘No industry should remain under State ownership unless there is a positive and overwhelming case for doing so.’35 A momentum was established which led on – after Mrs Thatcher’s own fall – even to the two great behemoths of the public sector, coal mining and the railways. This was a huge and unexpected transformation of the economic landscape. Each successive privatisation was fought tooth and nail by both opposition parties, by the unions and most of those who worked in the affected industries, and opposed by the public as a whole, as measured by opinion polls. But each was accepted once it had happened, even by the Labour party, as an irreversible fait accompli. More than that, the privatisation process itself, to ministers’ amazement, actually generated a wave of popular excitement, fanned by an enthusiastic press. The key was the sale of shares, at knockdown prices, directly to the public., John Redwood, then head of the Downing Street Policy Unit, recalled, the issue was not ‘will the public buy it?’ but ‘how can we do it technically?’36 Lawson remembers a dinner with merchant bankers, all of whom – with one exception – ‘roundly declared that the privatisation [of BT] was impossible: the capital market simply was not large enough to absorb it’.37 The answer was to by-pass the bankers and sell the shares direct to the public by mail order, television and newspaper advertisements. Mrs Thatcher ‘became excited by the possibilities’ and gave Redwood the backing he needed to convince the Treasury and the City.38response exceeded all expectations: two million people applied for a prospectus, and when the first instalment went on sale in November 1984, the offer was four times oversubscribed. More than a million small investors applied for shares, including 95 per cent of BT employees, defying the advice of their union; most of these had never owned shares before, but the sale was weighted to favour those who applied for the smallest number. The price was kept deliberately low – 130 pence – for political reasons, since from the Government’s point of view the sale simply had to succeed. The result was a bonanza for the lucky applicants; the price rose 90 per cent on the opening day, as many buyers sold on immediately. The second instalment in June 1985 was similarly oversubscribed. In the end the sale – of just 51 per cent of the company at this stage, in three instalments over eighteen months – raised nearly £4 billion. The company’s profits jumped spectacularly and by the end of 1985 the share price – for those buyers who had retained them – stood at 192 pence.39the success of the BT sale became clear, Mrs Thatcher was impatient to repeat it.40 The obvious next candidate was British Gas. ‘For sheer size, prodigality of advertising, and the opportunity to involve small punters and large investing institutions alike in the calculation of a quick profit’, the Annual Register wrote, ‘the launch of British Gas in the private sector made history.’41 With the whole City now keen to get a share of the action, Rothschilds won a ‘beauty contest’ to handle the sale; four and a half million rushed to buy the shares. Once again they were deliberately undervalued and once again they were hugely oversubscribed: on the first day of trading the price leapt by 50 per cent. Labour furiously condemned the Government’s cynical underpricing of a national asset in order to bribe the public with their own money: in his first front-bench job as a Treasury spokesman Tony Blair alleged that the sell-off would cost the taxpayer £20 – 30 per household.42 But the Government had achieved its aim of making shareholding popular as never before.third high-profile privatisation of the second term – though in revenue terms much smaller than British Telecom and British Gas – was British Airways, which had been successfully brought into profit by one of Mrs Thatcher’s favourite businessmen, Sir John King, and was sold off in February 1987. ‘The World’s Favourite Airline’ was now a successful international leader which investors were keen to buy into; this time the shares were eleven times over subscribed, and the price jumped 82 per cent on the opening day. Just before the election another glamorous name, Rolls-Royce – controversially nationalised by the Heath Government in 1971 – was also returned to the private sector. The only hiccup in this stage of the programme came with Britoil, which was floated in 1985 just when the oil price was falling. Millions of shares were not taken up; but the loss was the underwriters’, not the Government’s, and the political embarrassment at least did something to counter the charge that the share price of the assets sold was always set too low.the success of privatisation Mrs Thatcher had stumbled on an ongoing narrative which gave a central theme to her Government, and she was keen to keep the momentum going. British Steel, drastically slimmed down and restored to profitability by Ian MacGregor, was already well down the road. The 1987 Tory manifesto earmarked electricity and water as the next targets. Both posed special problems: nuclear energy on the one hand, and the public-health implications of commercialised water on the other. Still she was determined to press ahead. At the same time, however, she had not abandoned her habitual caution. She was no ideologue, but a canny politician, and she foresaw only trouble in trying to privatise the railways. Nicholas Ridley,Transport Secretary from October 1983 to May 1986, accepted the Prime Minister’s veto. But his successors were all keen to grab a share of the privatisation glory. There is no better example of Mrs Thatcher’s shrewd political instinct than the fact that she persistently warned them off. She was happy to see British Rail forced to sell off its profitable assets – hotels, ferries, hovercraft and acres of undeveloped trackside property – which only made privatisation of the rest of the business harder; but she had the good sense not to try to sell the track or the trains.somewhat similar reasons she would not touch the Post Office, pleading the Queen’s attachment to the Royal Mail as an excuse, or the remaining coal mines that were left after the trauma of the miners’ strike. In fact, with her usual mixture of timing and luck, Margaret Thatcher triumphantly rode the first wave of privatisation, accomplishing all the easier sell-offs where public opinion, though initially sceptical, was fairly quickly persuaded of the benefits, while leaving the really hard cases to her successor.single phrase in a characteristically nostalgic speech by Harold Macmillan did more damage to the idea of privatisation than all the outraged anathemas of Neil Kinnock. Speaking to the Tory Reform Group in November 1985, the former Prime Minister was said to have likened privatisation to a once wealthy family fallen on hard times ‘selling the family silver’.43 Despite the remoteness from most voters’ experience of the aristocratic world he conjured up, Macmillan’s words touched a chord. In vain the Government’s supporters retorted that the industries being sold off were not assets at all, but liabilities which the Treasury was well rid of. Six days after the original speech Macmillan himself explained in the House of Lords that he was not against the principle of transferring loss-making public utilities to more efficient private ownership.‘I ventured to criticise the fact that these huge sums were used as if they were income.’44 In other words, what he was warning against was not privatisation itself, but the way the proceeds were being spent on consumption, not investment. In this he was voicing a critique that was beginning to be widely shared.privatisation yielded real benefits, to the consumer and to the Treasury. The level of service to the customer undoubtedly improved. Arguably this reflected the spread of a more commercial culture generally and the loss of power by the unions, rather than simply the change of ownership. The major efficiency gains in both British Steel and British Airways, for instance, occurred while they were still in the public sector. But the privatisers would argue that the crucial factor was the removal of the safety net hitherto provided by the bottomless public purse.result was that the Treasury, instead of endlessly subsidising losses, now actually drew revenue from the profits. As Mrs Thatcher boasted at the 1989 party conference: ‘Five industries that together were losing over £2 million a week in the public sector [are] now making profits of over £100 million a week in the private sector.’45 Beside this, the argument that the shares had been sold too cheaply paled into irrelevance.The real criticism of Lawson and Mrs Thatcher is that they blew this windfall on a short-term consumer boom, instead of investing it on long-overdue repairs to the crumbling national infrastructure.Government’s other great boast – that privatisation had created a nation of small capitalists – also turned out to be something of an illusion. On paper the number of individuals who owned shares certainly rocketed, from around three million in 1980 to eleven million in 1990. But few owned very many; and this was anyway a smaller number than appeared to have been lured into the stock market in the heady days of 1984 – 6. Many of these new investors immediately cashed in their allocation for a quick profit; others proudly retained their original small purchase of BT or British Gas shares but bought no more. The number who went on to build up portfolios of shares in different companies was disappointingly small, so that the proportion of shares owned by private individuals actually fell., disappointment with privatisation, particularly among those who had most supported it, focused on the failure to promote real competition in most of the newly privatised industries, and on the fact that prices were still not properly subject to the market but regulated by a succession of unaccountable bodies appointed by the Government and still in practice sensitive to political pressure. This was perhaps an inevitable function of the way privatisation happened – pragmatically, opportunistically and piecemeal. There was an aspiration, but never a clearly worked-out blueprint – any more than there had been for nationalisation forty years earlier. Nevertheless it turned out – at least in Mrs Thatcher’s time – to be an outstanding political success: the problems only revealed themselves over the following decade. Moreover, the idea had universal application. In the global retreat from socialism of which Thatcherism was merely the British reflection, it was Britain which pioneered both the concept and the techniques of moving state-owned industries into the private sector. As early as 1986 Mrs Thatcher was boasting that privatisation was on the agenda in countries as various as Turkey, Malaysia, Japan, Mexico and Canada. At home Thatcherism had many strands and different connotations; but around the world the word was synonymous with privatisation.enterprise society?, there were signs of real cultural change at all levels of the economy, from the City of London to every provincial high street, a tangible liberalisation of all those attitudes and practices which had held back the performance of the British economy for decades. In large part this was the deliberate result of the Government’s ‘supply-side’ strategy of cutting regulation, cutting taxes, increasing incentives, curbing the unions and generally freeing up the labour market. But equally important was the fact that all this coincided with an explosion of new technology, above all communications technology – the so-called ‘third industrial revolution’ – which was rapidly making the old ways obsolete by promoting small-scale consumer-driven service industries in place of the mass-employment heavy industry of the past. In this respect Thatcherism merely reflected and facilitated the march of global progress. Nevertheless the revolution in British life was palpable., there was ‘Big Bang’ which transformed the City in October 1986, sweeping away centuries of tradition by admitting foreign brokers and jobbers and switching to a global standard of regulation in place of the gentlemanly conventions – ‘my word is my bond’ – on which the Square Mile had hitherto prided itself. This was an overdue recognition of a technological imperative which was pushed through by Nigel Lawson in alliance with Cecil Parkinson during the latter’s brief time at the DTI. As with the abolition of exchange controls in 1979, of which ‘Big Bang’ was a natural corollary, Mrs Thatcher was initially cautious, worried that the Government would appear to be intervening to rescue its friends in the City while manufacturing industry went to the wall. But the political flak was short-lived and the outcome was a spectacular success, allowing London to join fully in the emerging computerised global economy by enabling it – just in time – to compete successfully with Tokyo, Frankfurt and New York.effect of ‘Big Bang’, combined with Lawson’s tax cuts and the bonanza of privatisation, which offered huge rewards not only to the merchant banks which bore the risk but also to an army of consultants, advertising agencies and public-relations companies which rode the wave of lucrative new business, meant that quite suddenly the City became glamorous. In the mid-1980s, as never before, it was in finance and related activities, not in industry or the professions, that big money was to be made. The new wealth was manifest in the rise of huge new glass and steel towers. But the phenomenon which caught the public imagination was the new class of computerised whizz-kids – dubbed ‘yuppies’, an acronym for young upwardly mobile professionals – who suddenly materialised to populate these palaces of mammon.it was not only in the City that money was being made. Out in the real economy too, things were changing. Deregulation, the easy availability of credit and the rapid proliferation of personal computers created a climate in which small businesses flourished, helping to create more than three million new jobs (mainly in the service sector) between 1983 and 1990 to make up for those lost in manufacturing at the beginning of the decade. More people than ever before left their employers – often involuntarily but in many cases voluntarily – to strike out on their own in small desktop enterprises which identified a gap in the market and set out to fill it. By 1989 three million people – 11 per cent of the workforce – were self-employed. Enterprise flourished not only in the south of England but in the north and Scotland as well, irrespective of politics.only yuppies had more to spend than ever before: everyone in work benefited. As income tax fell, average real wages rose by more than 20 per cent a year between 1983 and 1987. At the same time hire-purchase restrictions had been lifted in 1982, and financial deregulation led to an unprecedented credit boom as banks and building societies competed to offer ever easier loans; credit cards and hole-in-the-wall cash dispensers also took off in the middle of the decade, and shops stayed open longer too, so that opportunities to spend multiplied. Higher disposable incomes created demand for every sort of home improvement. Above all, big salaries and easy credit fuelled a boom in property. Average household indebtedness rose by 250 per cent between 1982 and 1989, and most of this borrowing went into mortgages. While it lasted everyone seemed a winner, and those who had bought their council houses at a discount did best of all. Former tenants who had bought their houses for £10,000 found a few years later that they were worth four times as much.this was exactly what Mrs Thatcher and her Chancellors had dreamed of. But at the same time a lot of people were left out. Unemployment went on rising inexorably until January 1986; and even when it began to fall the shadow did not suddenly go away. Not until 1989 did the headline figure drop below two million, and then it promptly started rising again, back to three million in 1993. The blight was heavily concentrated in the old manufacturing regions which were devastated by the loss of the mills, factories, mines and steelworks which had been their livelihood since the nineteenth century. The 1997 film The Full Monty – about a group of Sheffield steelworkers driven to stripping to survive – extracted comedy from one enterprising response to the desperation of long-term unemployment, but its defiant humour did not disguise the bitter sense of rejection felt by whole communities while the rest of the country prospered.addition to those officially registered as unemployed – and their families – there were many others trapped outside the virtuous circle of success: old people dependent on the shrinking state pension; single parents, mainly unmarried or abandoned mothers, struggling with low-paid part-time jobs to make ends meet; and a growing number of young, rootless dropouts, the victims of unemployment, homelessness, family breakdown, drugs or a self-reinforcing combination of them all: in other words all those dependent on state benefits, whose real value was steadily cut as the cost of living rose. While the average household saw its income rise by 36 per cent over the decade (and the top tenth by 62 per cent), that of the bottom tenth fell by 17 per cent. It was obvious to anyone who walked around any of Britain’s city centres at night that in the midst of rising wealth, poverty was also increasing, creating a new and permanently excluded underclass.Thatcher strenuously denied that poverty was growing alongside wealth, insisting that everyone benefited from the increasing prosperity. In one part of her mind she genuinely believed that her purpose was to spread the ownership of wealth more widely so as to create what she called in her memoirs ‘a society of “haves”, not a class of them’, and persuaded herself that council-house sales and wider share ownership were having this effect.46 But at the same time she also believed that inequality was not just inevitable but necessary, indeed positively beneficial, as a stimulus to enterprise, a reward for success and a penalty for failure or lack of effort. At heart she believed that no one remained poor for long except by their own fault: everyone could make a success if only they worked hard and showed a bit of gumption.truth was that she had very little understanding of people whose life experience was different from her own. She approved of those she called ‘our people’, the hard-working, home-owning, taxpaying middle class whom she regarded as the backbone of England and correspondingly disapproved of those so lazy, feckless or lacking in self-respect that they were content to live in subsidised housing or on benefits. But this strict moral framework founded on thrift and self-improvement also meant, paradoxically, that she was not comfortable with the culture of unapologetic greed that was popularly associated with Thatcherism in practice. In fact she was extraordinarily ambivalent about the consumerist philosophy which bore her name.the one hand she vigorously defended the urge to make and spend money as the essential motor of a thriving economy, and was irritated when sanctimonious church leaders condemned the Government for encouraging materialism. Yet she was personally puritanical about money. She did not really approve of the stock exchange, believing that wealth should be earned by making and selling real goods and services, not by gambling and speculation. For the same reason she refused to sanction a national lottery so long as she was Prime Minister; and she disapproved of credit cards, even as she presided over an unprecedented credit explosion.foundation of her political faith was moralistic, derived from the thrifty precepts of her father and her Methodist upbringing. Yet she also believed that the pursuit of wealth was a force for good in the world. ‘Only by creating wealth,’ she argued, ‘can you relieve poverty. It’s what you do with your wealth that counts.’47 She claimed that charitable giving – encouraged by tax relief – had doubled in the ten years since 1979. In this way she hoped that the shortfall in public funding of schools, hospitals, universities and libraries would be filled, as in America, by private benefactions. The trouble was that despite her wishful harking back to the Victorians, that culture of philanthropy did not exist on a sufficient scale in Britain. There were still not enough huge corporations and public-spirited millionaires to fill the gap. As a result over the last thirty years Britain has suffered from the worst of both worlds, with public services receiving neither European levels of public spending nor American levels of private finance. The Blair Government went further than Mrs Thatcher ever dared in trying to attract private money to build public projects; but the level of public resistance is still high, and the legacy is plain to see.central paradox of Thatcherism is that Mrs Thatcher presided over and celebrated a culture of rampant materialism – ‘fun, greed and money’ – fundamentally at odds with her own values which were essentially conservative, old-fashioned and puritanical. She believed in thrift, yet encouraged record indebtedness. She lauded the family as the essential basis of a stable society, yet created a cut-throat economy and a climate of social fragmentation which tended to break up families, and tax and benefit provisions which positively discriminated against marriage. She disapproved of sexual licence and the public display of offensive material, yet promoted an untrammelled commercialism which unleashed a tide of pornography, both in print and on film, unimaginable a few years earlier.all, she believed passionately in the uniqueness of Britain among the nations. She still believed that Britain had a mission to ‘teach the nations of the world how to live’.48 Indeed, she came close to believing that the individual’s duty was not to serve the general good by pursuing his own self-interest – the orthodox Adam Smith view – but rather to serve his country. ‘It is not who you are, who your family is, or where you come from that matters,’ she told the 1984 party conference. ‘It is what you are and what you can do for your country that counts.’49 Yet market forces respect no boundaries. While beating the drum for Britain, Mrs Thatcher presided over an unprecedented extension of internationalism – not only in the European Community, where she did try, in her last three years, to slow the momentum towards further integration, but rather in the explosion of American-led global capitalism, eliminating economic sovereignty and homogenising local identities, in Britain as across the world.Thatcher rode this liberalising tide and averted her eyes from consequences which offended her deepest values. She enjoyed huge political success by releasing the power of the middle class. Her revolutionary discovery was that the middle class – and those who aspired to be middle class – formed the majority of the population. Labour had assumed that the working class, if properly mobilised, was the majority. All previous Tory administrations had likewise taken it for granted that no Government could hope to be re-elected with more than a million unemployed. Mrs Thatcher demonstrated that, on the contrary, Governments could ignore the unemployed and still win elections so long as the middle class felt prosperous. On this analysis she was not a true liberal at all, but a class warrior who waged and won the class war on behalf of her own kind by using free-market policies tempered with blatant bribes like mortgage-interest tax relief as methods of social reward, switching the emphasis of society from collective provision to individual gratification. While she denied that individualism was merely a cover for selfish hedonism, she was helpless to dictate how the new middle class should spend its money; still less could she control the amoral power of international capital.paradox of Thatcherism is piquantly embodied in the history of her own family. Think back to Alfred Roberts in his Grantham grocery, the small town shopkeeper, patriot and preacher, husbanding the ratepayers’ pennies and raising his clever daughter to a life of Christian service, diligence and thrift. Then look forward to the future Sir Mark Thatcher, an international ‘businessman’ possessed of no visible abilities, qualifications or social conscience, pursued from Britain to Texas to South Africa by lawsuits, tax investigations and a persistently unsavoury reputation. Imagine what Alfred would have made of Mark. It is well known that Denis – a businessman of an older generation – took a dim view of his son’s activities.Yet for his mother Mark could do no wrong. The world in which he acquired his mysterious fortune was the world she helped to bring to birth: the values he represents are the values she promoted. Torn between pious invocations of her sainted father and fierce protectiveness towards her playboy son, Mrs Thatcher is the link between two utterly opposed moral systems which reflect not only the ambivalence of her own personality but the story of Britain in the twentieth century: Alfred Roberts to Mark Thatcher in three generations.
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