Opinion Articles

Margaret Thatcher, individualism and the welfare state

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There is a pervasive idea that Margaret Thatcher brought about an increase in individualism in British society; in the eyes of many on the left, a selfish, materialistic individualism. She is often seen as ushering in the era of the yuppie and 'loadsamoney', epitomised by Harry Enfield. In an article written for The Guardian in 2003 (and printed on the paper's front page on her death) Hugo Young identified a change in the 'temper of Britain and the British' in the 1980s, as Thatcherism fostered a mood of 'materialistic individualism'.

Thatcher is frequently portrayed as an implacable enemy of the welfare state, which, along with full employment, formed the heart of the 'post-war consensus' against which she railed as Leader of the Opposition in the late 1970s. Ken Loach's recent film, The Spirit of '45, sees Thatcher as leading an assault on the welfare state and collectivism. But her attitudes to the welfare state were more complex, and her reforms were driven by a belief in an individualism which cannot simply be caricatured as greed and selfishness. This is illustrated by a closer look at Thatcher's attitudes to and policies on social security, particularly 'the dole'.

Increases in unemployment benefits had roughly kept pace with increases in average earnings in the years after 1948, but the two diverged dramatically from the mid-1980s, with benefits falling further and further behind. For all Thatcher's professed commitment to cutting state spending on welfare, however, the proportion of GDP absorbed by the welfare state increased significantly during her first term and much of her second term, largely because of the huge increases in unemployment, which topped three million in 1982. As the Institute of Fiscal Studies has pointed out, spending on welfare fell briefly towards the end of Thatcher's second term, as the British economy began to grow, but by the time of her fall from power in 1990, there was no real change in the proportion of GDP devoted to social security compared with 1979, with social security absorbing just over 10 per cent of national income in both years. If the aim had been to cut the size of the state, Thatcher's welfare policy was a failure.

But this was not her main aim. In the late 1970s, Thatcher's fears about the welfare state were twofold. First, she and her advisers thought that generous collective provision for unemployment and sickness was sapping some working-class people's drive to work. Second, they feared the corrupting influence of what Thatcher's close ally Keith Joseph called 'the Father Christmas state' on the middle class, who were thought to be in danger of relying increasingly not on their own hard work and thrift, but on collective action through trade unions and state hand-outs. Thatcher wanted to re-establish an economic and legal framework and a cultural ethos which rewarded what she saw as the 'Victorian' or 'bourgeois' values of thrift, self-reliance and charity among all classes.

Thatcherites were therefore determined to reduce taxes and slice away at the value of benefits relative to work. They were also determined to tax short-term unemployment and sickness benefits, removing an anomaly which enabled some workers to make a profit from short spells of unemployment. Thatcher also opposed the idea of a unified tax-benefit system giving tax credits to the poor; a private memo in 1978 reported that she would 'fight like a tiger' against any attempt by the Labour government to introduce such a scheme. As Nigel Lawson (Chancellor between 1983 and 1989) explained in his memoirs, unifying taxes and benefits would blur the 'important distinction between what individuals earn by their own efforts and what they receive from the State.' Finally, Thatcherites wanted to cut the ties that attracted the middle classes to the social security system; hence the abolition in 1980 of the earnings-related supplement for unemployment and sickness benefit.

Political scientist Paul Pierson called Thatcher's social security policies 'death by a thousand cuts.' The aim was not to abolish the welfare state entirely, but to chip away at it, leaving social security as a last resort for the very poorest minority, and making it irrelevant to those on middle and high incomes, who would choose private provision instead. In this, Thatcher was successful. When journalist Nicholas Timmins started his 'biography of the welfare state,' in 1993, the welfare state seemed so attenuated that many of his friends 'joked that I had better be quick about it before the thing disappeared'. The contention that Thatcher failed to achieve her mission to destroy the welfare state starts from a false premise; she never intended to do so. However, she was largely successful in residualising welfare, and efforts to do so went along with an increasingly harsh rhetoric about those reliant on social security.

Thatcher saw individualism as a fact of life; her adviser Alfred Sherman (the first director of the new Thatcherite think-tank the Centre for Policy Studies) wrote in a speech draft for her in 1977 that 'we simply recognise the force of self-interest in human affairs, particularly economic affairs. We neither praise it nor denigrate it.' Thatcher's brand of individualism was profoundly marked by the self-help and charity stressed in her Methodist upbringing in interwar Grantham. It was far from selfish or greedy, but it was rooted in the values of self-reliance and independence ingrained in Nonconformism and Liberalism (Thatcher's father, Alfred Roberts, was a Liberal Alderman). When Thatcher famously said there was 'no such thing as society,' she was arguing that individuals had to take responsibility for their own lives, and that it was fruitless to blame something as nebulous as 'society' for one's problems. She went on to say: 'It is our duty to look after ourselves and then also to help look after our neighbour...' If the government took over providing for families and communities, people would have less incentive to do so themselves: government should therefore get out of the way, and allow natural self-reliance and charity to flourish.

When David Cameron won the Conservative Party leadership, he declared that 'there is such a thing as society, it's just not the same thing as the state.' This was a clever piece of rebranding, appearing to distance himself from Thatcher, by now associated with an uncaring individualism that had contributed to the Conservatives' reputation as the 'nasty party'. In fact, he was delivering much the same message as Thatcher in a more soundbite-friendly way. Thatcher was an individualist, but did not endorse the selfishness, materialism and greed that now characterise the 1980s in our historical memory. Rather, these were an unexpected and unwelcome by-product of the government policies pursued in the 1980s, as well as social and cultural changes with longer roots in post-war Britain.

Please note: Views expressed are those of the author.


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