We are all Thatcherite now

April 10, 2013

By Laurence Copeland. The opinions expressed are his own.

As we remember the second greatest prime minister of the Twentieth Century, we quite rightly think first of her achievements. There is no need for me to recap those when they are being well covered in the Conservative press. They are best summarised by acknowledging, as some of the left wing press does, that we’re all Thatcherite now, and however much some folk might have their fun dancing on her grave, it’s a bit late now – she won, and their celebrations are in the end a tribute to the strength of the forces she overcame almost single-handed.

On the negative side, it has to be admitted that we are still haunted by her two big failures.

The first is the over-centralised government she saddled us with. In her struggle to control local government spending, which was running amok (deliberately so in Liverpool), she made a temporary power grab which, as is the way in Westminster and Whitehall, has never been reversed and indeed has got worse. The result is that we are left with completely emasculated local authorities, with no power, no budgets, and no independence, and who, not surprisingly, are routinely ignored by the electorate.

Her second failure was the result of an enthusiasm she had which, though it goes very much with the grain of the country, continues to hobble our economy to this day. Though she alone did not make us a nation of owner-occupiers – in fact, against her own inclination, she allowed the tax relief on mortgage interest to be eaten away by inflation – she certainly supported the growth of home ownership in every other respect, at a point when, as inflation was finally brought under control, it might have been possible finally to put a stop to this self-destructive British obsession. It was a big opportunity missed to restore a more sensible balance between private sector rental and owner occupancy.

Instead, the long-overdue financial deregulation in the mid-Eighties had the unexpected side-effect over succeeding decades of turning the middle class from savers into real estate speculators. The result has been a series of crises, as house prices started to behave like share prices, with the difference that every blip in the housing market directly, palpably affected millions of real live voters, for whom it was almost their only asset. A decade ago, it was common to get people pointing proudly to their home and saying: “There’s my pension”.

No wonder that nowadays economic policy is more than ever fixated on the housing market, with every proposal being viewed through the prism of its possible implications for the supply of mortgages, the number of new houses built and, heaven help us, the price of property. Before Maggie, economists had tended to blame Britain’s inflexible labour market on its high level of owner occupancy, but in recent decades its other damaging effects have been far more important, most obviously the limits it sets on interest rates, the “financialisation” of real estate and the consequent penalisation of saving and investment in everything other than housing.

Ironically, Mrs T saw owner occupancy as essential to her model of a nation of self-sufficient savers. Instead, under her successors, the middle class turned into welfare-dependent property speculators, something that must surely have appalled her.

These are big failings. Those who celebrate her passing cannot appreciate the colossal scale of her achievements to set against them, in most cases because they are too young to remember and too dim to imagine how bad things were before 1979, and for some of my own generation, because they have wilfully forgotten. Those of us who do remember are simply grateful.

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