Bang!: A History of Britain in the 1980s (84 page)
The breaching of the rules and traditions that had long constrained and demarcated financial institutions provided an enormous stimulus to the property market. Yet, contrary to popular myth, the
eighties was not a
period of continuous house price rises. Only if sale prices are taken at face value, without regard to intervening inflation, does this misconception
appear to be true. In reality, property values, like so much else, were depressed by the early eighties recession and (once inflation is factored in) the average price of a house was still lower in
1984 than it had been in 1979.
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It was only with economic recovery and the accompanying relaxation of lending terms that property prices returned
to their long-term trend. Only in the last three years of the decade did they sharply exceed that trend, ensuring that when the bubble burst at the end of 1989 those who were most over-leveraged
suddenly found themselves holders of ‘negative equity’, because their outstanding mortgages were greater than the worth of their homes. Thus, the decade ended with the revelation that
bricks and mortar, like stocks and shares, were not the one-way bet they had for so long seemed. House prices fell by 18 per cent between 1989 and 1995, which, when adjusted for inflation,
represented a real decline of more than one third.
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By 2007, twelve years of growth had made home-owning seem once again almost a prerequisite
for personal financial security, the proportion of Britons pursuing the dream having at last caught up with that of the United States. And it was across the Atlantic that the same desire to widen
property ownership beyond the middle class brought about the debt crisis that in 2008 threatened to bring down the major financial institutions of the Western world. The over-exposure of lenders to
‘sub-prime’ borrowers, whose means were not equal to the costs, left in its wake an unprecedented level of indebtedness. In Britain, vast liabilities would accompany what Nigel Lawson
had outlined to the Conservative Party conference in October 1987 as the legacy of a property-owning democracy – the creation of ‘a nation of inheritors’.
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Ten More Years! Ten More Years!
‘After a decade of achievement let us herald the decade of hope,’ announced Thatcher in her New Year message on the eve of 1990. ‘And let us do so in the
knowledge that never since the Second World War have hopes – indeed expectations – for peace and progress in the world stood so high. Why? . . . The short answer lies in the 1980s
– in the resolution of the West to defend our freedom and justice and the dawning realization in the communist bloc that their system simply could not compete with ours.’
1
The dramatic fall on 9 November 1989 of the Berlin Wall and the Christmas overthrow of the Ceauşescu regime in Bucharest neatly aligned the end of the eighties with a great historic turning
point – the collapse of Marxism–Leninism in Europe. Having formed her outlook through the prism of forty-three years of Cold War, and apparently lived to see her standpoint vindicated,
what looked like the West’s triumph in Berlin and the other capitals of Eastern Europe might have provided the fitting moment for the ‘Iron Lady’ to announce that there were no
more crusades to go on and that she was hanging up her breastplate. But while the American neoconservative thinker Francis Fukuyama gained immediate traction for his essay positing that the global
triumph of liberal–democratic ideals represented ‘the end of history’, the British prime minister continued to see countless campaigns to mount. The task for the nineties, she
continued in her New Year epistle, would necessitate ‘assistance’ to those turning towards freedom and, concomitantly, ensuring that the European Community was led ‘towards the
free trading, open, flexible and diverse group of nations’ (and not, by implication, towards a tight, centralized union). Trumpeting what she saw as the economic achievements of the eighties
at home, which had ended with unemployment falling rapidly and even manufacturing output 12 per cent higher than it had been in 1979, Thatcher sketched out a domestic agenda for the new decade that
would be dominated by improving
the quality of schools and hospitals, and the ‘huge task’ of ‘protecting the global climate’ (she surprised many by
joining those expressing the new concern about global warming). Yet ‘our prime task now’ remained disappointingly similar to what it had been ten years earlier – ‘damping
down the fires of inflation . . . the only basis for improving the whole quality of life in British society in the 1990s’.
2
The next day,
Thatcher won the Radio 4
Today
programme listeners’ vote for international ‘Woman of the Year’, an accolade she picked up eight times in nine years.
Was there any stopping her? When she strode on to the platform at the Conservative Party conference in Blackpool in October 1989, delegates broke into an ecstatic roar of ‘Ten more years!
Ten more years!’ Everyone in the hall was standing, chanting, clapping, foot-stomping the bouffant blonde, 64-year-old sovereign of the Empress Ballroom. It had clearly occurred to her that
she might dominate the coming decade as totally as the one that was drawing to its close. To
The Times
she expressed her intention to fight for a fourth term and then, less cautiously,
assured a radio interviewer that if she stood and won that fourth term: ‘I am quite prepared to go on to the fifth election.’
3
Displaying hubris on this scale was not clever politics, for the surest way to lose support was to take it for granted, and also because the signal it sent out to her Cabinet colleagues was that
their ambitions to succeed her would be blocked for years to come unless they could engineer a way of securing her downfall in the meantime. At the end of 1988, by which time she was already the
longest-serving prime minister of the twentieth century, it was her husband, Denis, who gently put it to her that she should stand down and thereby leave on her own terms. Fleetingly, she appeared
to see the wisdom of his advice, only for Willie Whitelaw to confirm her suspicion that to stand down at that moment would divide her party.
4
Given
the likelihood that the uncompromisingly pro-European Michael Heseltine might fill the vacancy, there seemed to be some wisdom in Whitelaw’s advice. At any rate, convincing her to stay on
proved a far easier task than persuading her to step down. The loyal and personally disinterested Whitelaw aside, the advice of political colleagues could easily be dismissed as self-serving. More
useful might have been the counsel of long-serving personal – rather than political – colleagues, such as her media advisers Tim Bell and Gordon Reece. They shared her husband’s
view, but could not bring themselves to challenge her instinct for survival. When Bell beseeched Reece, ‘You must tell her,’ Reece replied, ‘I can’t. I love her.’ At
which point Denis interjected, ‘Steady on. She’s my wife.’
5
One problem was that those who most wanted to succeed her seemed least committed to carrying on her legacy. And whatever her obvious unpopularity with a large section of the electorate, the
inescapable fact remained of her record in garnering the votes where and when it mattered. On 11 June
1987, she had become the first prime minister in democratic times to be
returned to office in three successive general elections, and the only one to have won two landslides in the twentieth century. With three quarters of the electorate voting in the 1987 poll,
Labour’s share of the vote increased to 30.8 per cent, from 27.6 per cent in 1983, while the SDP–Liberal Alliance slid by almost the same amount, from 25.4 to 22.6 per cent, leaving the
Conservative vote shaved by a mere 0.2 per cent down to 42.3 per cent. The new Parliament duly assembled with 229 Labour MPs, 22 Alliance members and 376 Conservatives (down by just 21), leaving a
government majority of 102.
6
The landslide was a blow to Neil Kinnock, three and a half years into his leadership of the Labour Party, whose
presidential-style campaign had sought to contrast him favourably with the haphazard demeanour of his predecessor. As
The Times
pointed out: ‘Eight years of the most vilified prime
minister of modern times; three million unemployed and a country apparently enraged by the condition of its health service . . . In the end [Kinnock] still won only about a score or so extra seats
than the hopeless Mr Michael Foot.’ The problem, summarized the editorial, was as much the Labour Party’s failings as the Conservatives’ successes: in having become a refuge for
single-issue activists claiming to speak for their chosen minority-interest group, Labour was simply unappealing to the bulk of ‘ordinary’ voters.
7
In inner-city areas, Labour at least retained the foundations upon which to build. Beyond its age-old Liberal-held seats in Scotland and the West Country, the Alliance struggled to sustain such
a boast. No nearer to ‘breaking the mould’ of British politics, the Liberals and SDP duly began the process of a formal merger, resulting – after understandable acrimony and
horse-trading – in the creation of the Social & Liberal Democrats in March 1988. While managing to avoid adopting the hallucinogenic connotations of LSD, the SLD developed little brand
awareness and the party was ridd the Liberal Democrats in October 1989. Three of the Gang of Four joined it – but not David Owen, who led his own ‘continuing’ SDP group into
the wilderness: after its candidate polled fewer votes than Screaming Lord Sutch of the Official Monster Raving Loony Party at the Bootle by-election in May 1990, the party finally bowed to reality
and was disbanded by its national executive. So ended with a whimper a remarkable experiment. As the authors of the SDP’s definitive history concluded: ‘Someone who returned to Britain
in the mid-1990s after having lived abroad (and been out of touch) throughout the 1980s would find very little difference in the British party system – and almost no trace of the
SDP.’
8
Having launched their appeal with such high hopes in 1981, the most discernible long-term consequence of the SDP’s brief life was
that it brought about the demise of the Liberal Party after 129 years of independent existence. Not that the Liberal Democrats proceeded to do better as a new unitary force, spending
most of 1989 and 1990 ranging between 4 and 10 per cent in the opinion polls. It was small comfort that among extremist parties the performance was even more risible: out of over 32
million votes cast in the 1987 general election, the National Front and the British National Party between them received less than one thousand votes nationwide (settled immigration had by 1987
sunk to its lowest levels since the introduction of controls in 1961), while the Communist Party, the ‘Red Front’ and the Workers’ Revolutionary Party could not quite collectively
muster eleven thousand votes. For all the talk of divisive politics and a divided decade, the electorate showed scant inclination to endorse alternatives to the constitutional mainstream.
Yet divided the country clearly was between the two main parties, with the 1987 election confirming the geographically polarized nature of party support. Dominant in Scotland, Wales, the
northern cities and the deprived boroughs of London, Labour struggled to claim a presence elsewhere. Outside the capital, the party only won three seats south of an imaginary line between the
Severn and the Wash. With sixty-three seats in northern England, the Conservatives could make a better claim to being still a national party, but their failure in inner-city areas was laid bare. In
Scotland, they lost ten seats from their 1983 total, though they retained eleven and were still the second-largest party, claiming the allegiance of almost one quarter of Scots voters. Much as
Scottish Tories would subsequently blame the legacy of Thatcherism for their annihilation in 1997, they still did far better with the honourable member for Finchley as their leader than any of her
five successors in the twenty years after 1990. Despite the simmering resentment at Thatcher’s blanket refusal to discuss devolution, it did not translate into a swing towards the parties of
Celtic independence. In terms of MPs returned and share of the vote, Plaid Cymru and the Scottish Nationalists were only the fourth-largest parties in their respective nations, in 1987 winning just
three seats each and 7.3 and 14 per cent of ballots cast, respectively.
9
Apart from a fleeting by-election triumph by ‘Big Jim’ Sillars in Glasgow Govan in 1988, the eighties were barren years for the Scottish Nationalists. Failure to secure even the
modest devolution proposed in the 1979 referendum had checked the SNP’s momentum, and the party was further debilitated by an internal split which ensured the temporary expulsion of (the
future leader) Alex Salmond and fellow members of his 79 Group, who argued for a campaign of civil disobedience to create a ‘Scottish socialist republic’.
10
The party encountered other problems, too. The economic case for Scotland’s viability as an independent state was predicated upon gaining control of the revenue from
North Sea oil. This was an argument that the oil price crash of 1986 went some way towards undermining. The Scottish economy, indeed, was going through as rapid a transformation as that of any
region of the UK. In 1976, almost 30 per cent of Scotland’s labour force
worked in manufacturing. By 1990, only just over 20 per cent did so. Clydeside was once the
world’s greatest shipyard, yet during the eighties income from salmon fishing came to outstrip that from Scotland’s shipbuilding industry. Amid this deindustrialization, the survival of
the vast Ravenscraig steelworks at Motherwell assumed totemic status, and though it outlived the decade it was ultimately to close in 1992. Elsewhere, there were encouraging signs of adaptation and
new growth. Nearly half of all UK computers for export were being made in the so-called Silicon Glen belt of central Scotland.
11
Over 45,000 Scots
were employed in the sector. Scotland made one in eight of the world’s semi-conductors and nearly a third of Europe’s personal computers. Computerization also facilitated
Edinburgh’s rise as a centre for fund management, for Big Bang’s introduction of the SEAQ electronic share-monitoring technology
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made
it easier for securities trading to be carried out outside the City of London. Scottish-based firms managed £50 billion of funds in 1986 and £211 billion by 1994 – by which time
they represented the majority of Scotland’s top twenty companies.
12
Thatcher did her best to trumpet such achievements, but what should have
alarmed her philosophically was the manner in which her secretaries of state in both Wales and Scotland defended the party’s record (and the case for maintaining the United Kingdom) by
attributing the success stories to the role of subsidies and development agencies. To counter this, Michael Forsyth, the Scottish Conservative chairman between 1989 and 1990, endeavoured to win
over the nation of Adam Smith to the benefits of market economics. His endeavours were not rewarded with conspicuous success.