page_title: Margaret Thatcher
section_title: Economy and taxation
hierarchical_section_title: Margaret Thatcher / Prime Minister of the United Kingdom: 1979–1990 / Domestic affairs / Economy and taxation
caption_attribution_description: Margaret Thatcher on a visit to Salford. From the University Archives and Special Collections. www.ils.salford.ac.uk/library/resources/special/
context_page_description: Margaret Hilda Thatcher, Baroness Thatcher, LG, OM, DStJ, PC, FRS, HonFRSC was a British stateswoman who served as prime minister of the United Kingdom from 1979 to 1990 and leader of the Conservative Party from 1975 to 1990. She was the longest-serving British prime minister of the 20th century and the first woman to hold that office. A Soviet journalist dubbed her the "Iron Lady", a nickname that became associated with her uncompromising politics and leadership style. As Prime Minister, she implemented policies known as Thatcherism.
  Thatcher studied chemistry at Somerville College, Oxford, and worked briefly as a research chemist, before becoming a barrister. She was elected Member of Parliament for Finchley in 1959. Edward Heath appointed her secretary of state for education and science in his 1970–74 government. In 1975, she defeated Heath in the Conservative Party leadership election to become leader of the Opposition, the first woman to lead a major political party in the United Kingdom.
context_section_description: Thatcher's economic policy was influenced by monetarist thinking and economists such as Milton Friedman and Alan Walters. Together with her first Chancellor, Geoffrey Howe, she lowered direct taxes on income and increased indirect taxes. She increased interest rates to slow the growth of the money supply and thereby lower inflation, introduced cash limits on public spending, and reduced expenditure on social services such as education and housing. Cuts to higher education led to Thatcher being the first Oxford-educated, post-war incumbent without an honorary doctorate from Oxford University, after a 738–319 vote of the governing assembly and a student petition.
  
  Some Heathite Conservatives in the Cabinet, the so-called "wets", expressed doubt over Thatcher's policies. The 1981 England riots resulted in the British media discussing the need for a policy U-turn. At the 1980 Conservative Party conference, Thatcher addressed the issue directly, with a speech written by the playwright Ronald Millar, that notably included the following lines:
  To those waiting with bated breath for that favourite media catchphrase, the "U" turn, I have only one thing to say. "You turn if you want to. The lady's not for turning."
  Thatcher's job approval rating fell to 23% by December 1980, lower than recorded for any previous prime minister. As the recession of the early 1980s deepened, she increased taxes, despite concerns expressed in a March 1981 statement signed by 364 leading economists, which argued there was "no basis in economic theory ... for the Government's belief that by deflating demand they will bring inflation permanently under control", adding that "present policies will deepen the depression, erode the industrial base of our economy and threaten its social and political stability".
  By 1982, the UK began to experience signs of economic recovery; inflation was down to 8.6% from a high of 18%, but unemployment was over 3 million for the first time since the 1930s. By 1983, overall economic growth was stronger, and inflation and mortgage rates had fallen to their lowest levels in 13 years, although manufacturing employment as a share of total employment fell to just over 30%, with total unemployment remaining high, peaking at 3.3 million in 1984.
  During the 1982 Conservative Party Conference, Thatcher said: "We have done more to roll back the frontiers of socialism than any previous Conservative Government." She claimed at the Party Conference the following year that the British people had completely rejected state socialism and understood "the state has no source of money other than money which people earn themselves ... There is no such thing as public money; there is only taxpayers' money."
  By 1987, unemployment was falling, the economy was stable and strong and inflation was low. Opinion polls showed a comfortable Conservative lead, and local council election results had also been successful, prompting Thatcher to call a general election for 11 June that year, despite the deadline for an election still being 12 months away. The election saw Thatcher re-elected for a third successive term.
  Thatcher had been firmly opposed to British membership of the Exchange Rate Mechanism (ERM, a precursor to European Monetary Union), believing that it would constrain the British economy, despite the urging of both Chancellor of the Exchequer Nigel Lawson and Foreign Secretary Geoffrey Howe; in October 1990 she was persuaded by John Major, Lawson's successor as Chancellor, to join the ERM at what proved to be too high a rate.
  Thatcher reformed local government taxes by replacing domestic rates (a tax based on the nominal rental value of a home) with the Community Charge (or poll tax) in which the same amount was charged to each adult resident. The new tax was introduced in Scotland in 1989 and in England and Wales the following year, and proved to be among the most unpopular policies of her premiership. Public disquiet culminated in a 70,000 to 200,000-strong demonstration in London in March 1990; the demonstration around Trafalgar Square deter
caption: Thatcher during a visit to Salford University in 1982
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