The woman who was always right

WHERE there was discord, she would bring harmony; where there was error, she would bring truth; where there was doubt, she would bring faith; where there was despair, she would bring hope. It was May 4, 1979, and as she stood on the steps of 10 Downing Street, quoting St Francis of Assisi, Margaret Thatcher, on her first day as Prime Minister, was ushering in a new era.

The year had begun with the Winter of Discontent, when bodies lay unburied and rubbish uncollected as the trade unions tightened their stranglehold on the economy. The Cold War was at its height, but Britain's standing in the world had never been lower, national pride weakened by a humiliating appeal for help to the International Monetary Fund, and a reputation as the sick man of Europe.

Eleven years later, when Mrs Thatcher left office after a brutal betrayal by former worshippers who had come to see her as an electoral liability, the world was a very different place. The Cold War was over and Britain once again was a nation to be reckoned with. The unions had been emasculated and strikes were no longer the norm. Unemployment was still rampant, but was now considered an acceptable by-product of a restructured economy.

"The fundamental thing she would regard as her achievement would be the reform of the economy, in such a way that it reformed, and she would say regenerated, society as well," says Dr Martin Farr, history lecturer at Newcastle University. "She felt that by making the economy more competitive, and breaking down trade union interests, she made it much more receptive to change in global markets."

Ironically, two policies now considered as embodying Thatcherism were very much peripheral to the original project. Privatisation became the backbone of economic strategy during the 1980s, making nationalised companies more competitive and reducing the burden of subsidy, but it was a distant aspiration in the 1979 manifesto. British Gas, British Telecom, British Airways, British Steel, water and electricity firms were among those privatised. To Harold Macmillan it was "selling off the family silver", but to the cohorts of Thatcherism it was rolling back the state.

Privatisation had the additional social aim of transforming Britain into a share-holding democracy, encouraging ordinary people to have a stake in the success of British companies. In the end, most of the shares found their way into the hands of the big financial institutions.

FAR more effective as a tool of social engineering, and just as central to Thatcherism, as well as just as much an afterthought, was the sale of council houses. "Council house sales was the most significant illustration of Thatcherism," says Dr Farr. "It was giving people more rights and breaking down state provision, and it targeted Labour voters and gave them a chance to own their own home, which they couldn't have done if they'd voted for their own party."

Indeed, it was Mrs Thatcher's appeal to traditional Labour supporters which proved pivotal to her success, combining a conservative, family-orientated social policy with a fierce patriotism. From handbagging European leaders and demanding, and winning, a rebate on Britain's EEC contributions, to her determination to recapture the Falkland Islands, she restored Britons' pride in their country.

"She was perhaps the most unpopular prime minister ever in the period before the Falklands," says Dr Farr. "She came into power in 1979 and within a year there were riots in the inner cities and unemployment was soaring.

"The Falklands gave the country a sense of confidence and a sense of pride, in stark contrast to what had gone on for the previous 20 years. That was the turning point electorally, and, faced with a divided opposition she went on to the 1983 election victory."

A year after her first triumph at the polls, Ronald Reagan was elected President, signalling a new phase in the often-derided special relationship between Britain and the US. United in ideology, and standing square-jawed against the Soviet Union, they formed an extraordinary partnership, tempered only by the US invasion of Grenada, a Commonwealth country, in 1983.

Fortified by this bond, and basking in the attention accorded as one of the few women leaders, Mrs Thatcher strutted the world stage, wielding her handbag abroad and bolstering her reputation at home. Typical of her foreign visits was an imperious, fur-clad walkabout in Moscow just before the 1987 election.

Back at home, her confrontation with the trade unions has provided one of the most lasting legacies of Thatcherism. It was no more beer and sandwiches at Number 10 for the union barons, as a series of laws put a stop to secondary picketing, mass pickets, strike without ballots and union leaders carrying on in perpetuity.

BACKED by a party with bitter memories of the collapse of Edward Heath's premiership in the face of the miners, and a public fed-up of the unrest and disruption of near-constant strikes, Mrs Thatcher took on and tamed trade unions. Although vehemently opposed by Labour at the time, most of that legislation remains in force now.

"She saw the breaking up of large interest groups as a way of making the economy more flexible," says Dr Farr. "Establishment groups like barristers, the medical profession and the universities were attacked as well as the trade unions."

One unintended consequence was to release future Labour leaders from their trade union chains, paving the way for the creation of New Labour and Tony Blair's seemingly inevitable three election victories. As the Conservatives sowed the wind, now are they reaping the whirlwind.

In common with all successful leaders, Mrs Thatcher enjoyed considerable luck. As Labour leaders, she faced Michael Foot and Neil Kinnock, both politicians who appealed to Labour stalwarts but had little attraction for the general public, and in General Galtieri and Arthur Scargill she had opponents who could be easily caricatured. She had the good fortune to be able to present herself as a positive alternative.

But eventually her luck run out. Her strident tone on Europe became increasingly out of touch with popular opinion, and the poll tax sealed her fate. In the end, the country had tired of her, and the Conservatives showed their pragmatism by dumping a leader who had won three elections, but was destined to lose a fourth.

Although it is now more than 13 years since her tearful departure from Downing Street, her influence lives on. Supporters claim today's economic stability is based on her foundations, and many of her reforms have proved enduring, but in some ways her legacy is more intangible than that.

"It was about firm leadership, the politics of conviction replacing the politics of consensus," says Dr Farr. "She felt you could earn genuine respect through being decisive, even if people didn't like you. Conservatism is characterised almost by the absence of ideology, but Mrs Thatcher was not a genuine Conservative - she was a radical. She was divisive and Conservatism was always about viewing the country as a whole, but the party was prepared to support her while she was winning."

But just as her ambition to roll back the state was largely a failure, with government spending as a proportion of national income virtually unchanged by the time she left office, so she did not make the inroads into the popular consciousness that she wanted.

ALABOUR government is courting popularity by promising increases in public expenditure, and just as there are no signs of a decreasing reliance on state handouts, nor is there any significant movement against state provision in health or education.

"More people use private schools and private health care, but fundamentally people still believe very strongly in the welfare settlement of the post-Second World War period," says Dr Farr. "But the economy certainly has been modernised in a way that perhaps would not have happened, and she cut 15 per cent of Britain's industrial base as a conscious act of policy, and it is that attempt to recognise the primacy of the market which is perhaps her most important achievement, along with the elevation of Britain's international profile.

"But in the end people were fed up of her and the belief that she was always right, a result of being in power for so long, and Labour was getting its act together. What were strengths at the start became weaknesses, but that should not detract from the many profound things her government did. Her achievements were very genuine and very significant, and we're still living with the legacy of these great reforms."

NEXT MONDAY

What Mrs Thatcher did for women.