Burnham’s attack on Thatcher ignores the rot she inherited, and the transformation delivered
In his first speech as Labour leader on Friday, Andy Burnham trained his fire on Margaret Thatcher.
Framing the 1980s as a period that harmed ordinary people and northern communities, he declared that Britain took "a series of wrong turns" when "political power was centralised and economic power privatised".
This path, he claimed, had failed working-class areas such as his Makerfield constituency for the past 40 years. His alternative? Devolution, reindustrialisation, greater public control of utilities and housing, and the biggest council house-building programme since the post-war era – a pointed contrast with all of Thatcher's policies such as privatisation and the Right to Buy.
It is a familiar narrative, spread by many on the Left. But its premise is profoundly misleading. The deindustrialisation Mr Burnham laments was not primarily Thatcher's doing. It was the inevitable reckoning for industries that had been propped up by taxpayer subsidies and state control for decades.
Post-war heavy industry in Britain – coal, steel, shipbuilding, cars, utilities – operated as a series of protected monopolies. Shielded from competition and bailed out by the taxpayer, there was no incentive for them to innovate, raise productivity, improve customer service or control costs.
Powerful trade unions, like the NUM and TGWU, called the shots, not the politicians nominally in charge (and certainly not the public who supposedly "owned" these industries).
Union bosses, often "elected" late at night by a show of hands from activists, acted as the real managers, enforcing restrictive practices, overmanning and wage demands untethered to economic reality. Strikes were endemic: nearly 30 million working days were lost in 1979 alone.
Chronic inefficiency became the norm. British Leyland and British Steel were serial loss-makers requiring repeated bailouts. By the late 1970s, Britain had earned the grim title "the sick man of Europe", plagued by high inflation, stagnant growth, and the winter of discontent.
Global competition laid bare the truth: Japanese and German manufacturers, South Korean shipyards and many others were vastly more efficient. It was cheaper to import coal from Australia than to extract it from this country's deep, geologically challenging coal mines.
Thatcher's government did not cause this decline. It merely called time on the futile policy of artificially prolonging the life of loss-making, badly managed industries through ever-larger subsidies that drained resources from more productive parts of the economy.
Yes, it was painful, but Britain had to be brought up to date. And out of the transition, new industries sprang up and modernised. Manufacturing productivity, the lowest in the G7, became the highest. Britain shifted towards services and light industry, playing to its strengths.
Thatcher brought Britain up to date. Mr Burnham faces daunting challenges of his own - Bettmann
Blaming Thatcher for the visible disruption ignores the deeper rot she inherited. You cannot save dinosaurs from a changing world. Delaying the inevitable for decades, as Labour and Conservative governments did through the 1960s and 1970s, only magnified the eventual shock. The scale of the pain is down to Thatcher's predecessors, who kicked the can down the road. She managed the necessary correction.
And she did what she could to help those displaced by change, with the Manpower Services Commission's retraining programmes, enterprise allowances and support for those starting and growing small businesses. Thousands transitioned into self-employment and growing sectors.
The results speak for themselves. Under Thatcher, Britain was transformed. The top rate of income tax was cut from 83 per cent to 40 per cent, and the basic rate from 33 per cent to 25 per cent. These reductions, far from starving the Treasury, broadened the tax base as entrepreneurship flourished and high earners were incentivised to stay and invest.
Inflation fell dramatically from a peak of 21.9 per cent in 1980 to 2.4 per cent by 1986. The number of days lost to strikes plummeted from 29.5 million in 1979 to 1.9 million in 1990. Real take-home pay for the average earner rose by a third.
Thatcher, seen handing over council house deeds to a family in Milton Keynes in 1979, helped fuel the rise in home ownership - Keystone/Hulton Archive/Getty
Meanwhile, home ownership increased from just over half to two thirds (67 per cent) as more than a million council tenants bought their homes under Right to Buy. They gained assets, security, and the ability to borrow and invest, but their first step was to fix the roofs, windows and doors that the council owners had neglected for years.
The democratisation of capital brought by home ownership was reflected elsewhere. The number of individual shareholders surged from three million to 11 million, thanks to privatisation. And people really did own the industries that were once held in their name but controlled by vested interests. Britain became a "capital-owning democracy".
Living standards improved markedly under Thatcher. The number of foreign holidays roughly doubled. The proportion of homes with a telephone rose from two thirds to nearly nine in 10, thanks again largely to the privatisation of a sclerotic telephone system that, remarkably, was owned by the Post Office (the people who brought you "first class" mail).
Pensioners' real incomes rose by around 30 per cent and, at the other end of the age range, infant mortality fell by almost 40 per cent. Real GDP grew by nearly a third, outpacing France, Germany, and Italy. The number of self-employed people rose from 1.9 million to 3.5 million. Foreign investors arrived: Nissan in Sunderland, Toyota in Derby, Honda in Swindon. Britain became a net oil exporter and the City of London was restored to its place as a global financial centre.
Fiscal discipline returned to government. The Thatcher administration ran budget surpluses for three years, repaid debt and reduced national debt as a share of GDP from 47 per cent to 28 per cent. State spending fell as a proportion of GDP and the Civil Service was slimmed down from 732,000 to 565,000.
Corporation tax was cut from 52 per cent to 35 per cent (and the small firms' rate from 42 per cent to 25 per cent). Personal allowances were raised by more than 25 per cent in real terms, higher tax rates were simplified and exchange controls were scrapped after 40 years.
Privatisation was a cornerstone of the turnaround. More than 40 nationalised businesses were moved to the private sector, taking 600,000 employees with them. Some were transferred to their workforce, some were sold by shares, a few ended up with more efficient and productive private companies, but taxpayers benefited in every case.
The 33 major state industries went from absorbing £500m in subsidies in 1980 to contributing £8.4bn to the Exchequer by 1987. British Steel turned from world-record losses to healthy profits. BT and British Gas delivered enormous share offers that gave ordinary people a stake in the economy. British Airways transformed from a loss-making national carrier into "the world's favourite airline".
Thatcher announces the ceasefire in the Falklands conflict in 1982. She made a significant impact in her foreign policy - AP
Thatcher's foreign policy achievements were equally significant. The liberation of the Falklands in just 10 weeks. Securing budget rebates from the EU. Early support for Mikhail Gorbachev's reforms in the Soviet Union and Boris Yeltsin's in Russia. Partnership with Ronald Reagan winning the Cold War.
And don't forget, three consecutive election victories – making Thatcher the longest-serving prime minister of the 20th century. Bit different from today, don't you think?
Mr Burnham's speech recycled a comforting but false history. The "wrong turns" were taken long before 1979, when governments of both parties sustained a failing economic model at taxpayers' expense. Thatcher faced reality, delivered results that raised living standards across the board and left Britain more optimistic, stronger and again respected in the world.
Romanticising the pre-Thatcher era and promising a return to greater state control will simply reincarnate the mistakes of the past. Britain thrived when it embraced enterprise and competition. It suffered when it did not. The evidence of the 1980s is clear for those willing to see it. Curly-edged British Rail sandwich, anyone?