When Margaret Thatcher came to power in 1979 Britain was a paralysed country. It had just survived the so-called winter of discontent, and a decade when unions had held the country hostage, leading to power shortages so severe that the government officially reduced the working week to three days. Industrial action was seen as so endemic that it was called “the British disease”. Rubbish piled up in the street and even undertakers went on strike. Union power had to be undermined if Britain was to flourish. Likewise inflation, which reached 24% in 1975, had to be brought down.
Most people agree, but many also believe that the Thatcher cure was too harsh, too combative, too divisive and created resentments, scars and divisions that still plague the country now. But the Thatcher revolution had another effect. It created a country structurally wedded and culturally fixated with the quick fix. The consequences of this have been profound, and made Britain toxic for family businesses.
The first quick-fix was North Sea Gas, which should have been used to secure the UK’s economy for decades to come. Instead, the money was squandered on cutting borrowing and taxes. Norway, in contrast, set up a sovereign wealth fund whose income covers 11% of national expenditure, and which incidentally owns a big chunk of London’s Regent Street. But there was no thought for the future.
It’s often said that the great privatisations of the 1980s were ideologically driven, and partly they were, but they were also an attempt to keep borrowing down in the short-term – investment in telecoms, coals and so on would have counted as government debt. Tens of billions were raised from the sales, which again went on cuts. Again, the future could look after itself.
Then came Big Bang in 1986, the liberalisation of the City. It was necessary to shake up the fusty old boys’ club, but American and Japanese banks were welcomed in with too much relish and the investment banks that bought retail banks infected them with their quick-kill trading culture. It’s simplistic to blame this for the subprime crisis, but it didn’t help make HBOS or RBS any more solid.
Thatcherites believed in creative destruction but while they provided the destruction in spades, the market never stepped in with the second part. The Glasgow shipyards and the Midlands carmakers should have provided great raw material to create high-tech manufacturers. That happened, in some places, but too slowly, unevenly and haphazardly.
True, entrepreneurs were inspired and set free, and Britain has some great self-made businesspeople. With some nurturing, the old industrial cities could have come alive with spin-offs from the old industries and by now we would have a whole class of mature export businesses. A few individuals fought their way out, and we admire them, but possibly because they’re the only successes we’ve got.
The windfalls and the celebration of the wheeler-dealer, quick-buck attitude that define the Thatcher years combined to create the noxious, carpe-diem business culture that dominates the UK. It’s why businesses are built to be sold, why family businesses are widely considered second-class, and why the UK’s economy feels so fragile. Maggie was iconic, and she did much that was necessary, but one of her legacies is the get-it-and-spend-it culture that is the new British disease.