The media coverage of former Prime Minister Margaret Thatcher’s death has focused on her political achievements but also on the way she polarised opinion.
Perhaps Baroness Thatcher should have been better known as the Marmite Lady rather than the Iron Lady for her ability to split opinion – you either loved her or you hated her.
Despite the different perceptions, the legacy of the Thatcher era has revealed a mix of good and bad policy decisions.
The Manufacturer has canvassed the opinions of a number of manufacturers and business leaders. Overall the taming of the unions was seen as her finest contribution to competitive business while the privatisation of state assets has resulted in mixed fortunes – largely successful when it comes to rail system and largely unsuccessful with regards to the energy sector.
However, in some people’s opinion, Thatcher’s long term vision for Britain’s economic structure was never properly realised. The idea that national interest was best served by competition and free markets opened up the financial markets to unfettered competition and foreign ownership.
While the attempt followed the markers of capitalism to a tee, other countries failed to follow suit and retained their protectionist policies, disadvantaging the UK. Furthermore, her Big Bang financial deregulation helped cement London as a global finance centre but as some have said, her vision was hijacked in later years by “financiers and bankers with a get rich quick mentality”.
Taxes were right at the heart of Thatcherism although the overall burden of taxation did not fall very much – just 1% over the period of her tenure. But the structure was altered dramatically. From 33% in 1979, the headline basic rate of income tax fell to 23% in 1997/8. More importantly, the top marginal rate was cut heavily from 60% to 40%.
There was one major Thatcher tax failure, the poll tax. It was deeply unpopular and was eventually replaced with Council Tax. The revival of interest in flat taxes, which will be the focus of the lead article in our May magazine, is clearly in the Thatcherite tradition.
The adoption of flat taxes in Eastern Europe and Russia and their apparent success is putting pressure on EU members to flatten their tax systems. As Roger Bootle of The Telegraph wrote: ‘The Thatcherite agenda for the tax system is not dead and buried.’