4 graphs on Thatcher’s legacy: a richer but more unequal nation.

A generation on, the Thatcher legacy continues to provoke and divide. One of the questions it poses for liberals is one this government is still wrestling with: does inequality matter if everyone’s getting richer?

Margaret Thatcher’s answer was that it did not — as she famously illustrated in one of her last Commons performances in response to a question from Simon Hughes:

(Click here to watch on YouTube.)

Here are three graphs which show the post-war record of governments, including Mrs T’s…

Yes, earnings did go up for everyone, including the poorest

thatcher - earnings_1
(Graph from Channel 4 FactCheck.)

And the UK’s wealth grew faster than in other countries

(Graph from John Van Reenen on the LSE Politics and Policy blog.)

But the poor were actually worse off if you include housing costs

(Graph from Jonathan Jones at The Spectator.)

And inequality widened dramatically

(Graph from Jonathan Jones at The Spectator.)

These are just four snapshots of Margaret Thatcher’s economic legacy. But they tell a story — of a nation which got richer but more unequal.

The poor were better off in absolute terms, worse off in relative terms. That’s a fact which gets to the heart of the dilemma which still causes friction in the Lib Dems: the tension between equality of opportunity and equality of outcome.

Does the job of government stop at offering the former (which is more or less the post-Thatcher consensus), or should it also try actively to deliver the latter?

* Stephen was Editor (and Co-Editor) of Liberal Democrat Voice from 2007 to 2015, and writes at The Collected Stephen Tall.

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  • if equality of opportunity were actually on offer then you might have a point, but the rich get vastly more opportunities than the poor and we all know it.

  • Al McIntosh 11th Apr '13 - 1:48pm

    I cannot allow Stephen to present something as a “fact” when it is actually in dispute. Many statisticians argue that the least well off were not only became relatively worse off but were absolutely worse off.

    In 1991 Professor Peter Townsend produced a report of a study of living standards from 1979 to 1989 called “The Poor are Poorer: A Statistical Report on Changes in the Living Standards of Rich and Poor in the United Kingdom 1979-1989”.
    It concluded that the average real household income of the poorest quintile fell from £3,442 in 1979 to £3,282 in 1989. Meanwhile the average real household income of the richest quintile rose from £20,128 to £28,124.

    The difficulty in reaching a firm conclusion is that there were many methodological changes in the production of government statistics over the period that some allege was due to political interference. It is therefore disingenuous to present either point of view as a “fact”.

    Stephen’s graph is a graph of full time weekly earnings. However, those of us who lived through the period will recall that the 1980s was a period of rising and then persistently high unemployment.

    On top of the official figures for unemployment were a large number of non-claimant unemployed that were not counted in the figures. A great many people then would have started off the period in full time employment and ended it unemployed or in part time employment and become absolutely worse off.

    The dogma of the time that the Liberal-SDP alliance and others fought against was that the market would mysteriously solve the problem without government intervention. Of course, when it didn’t we were then told that it must be because high unemployment was natural and that it was a mistake to attempt to reduce it because the market was our master and could not possibly be wrong. Whole communities were destroyed but the dogma held that that did not matter because there was no such thing as society.

    It is bad enough to eulogise the leader of that uncaring regime. It is however, quite offensive to attempt to airbrush the victims from history.

  • Tony Dawson 11th Apr '13 - 9:03pm

    It will be a true test of this government when the 2010-2012 Gini coefficients are published.

  • Martin Lowe 13th Apr '13 - 8:02pm

    When Margaret Thatcher first went to Downing Street as Prime Minister, she got there in a car made by a British-owned company (Rover, owned by BL).

    When she left Downing Street as Prime Minister, she departed in a car made by an American-owned company (Jaguar had been sold to Ford).

    Ted Heath’s comment on her policy to let industry wither at the expense of the service sector still applies. We can’t survive as a nation by taking in each others’ washing.

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