Margaret Thatcher expressed an ambition to 'break the mould' of British politics and that phrase (much used at the time) has often been applied to her government by commentators (for example, Dransfield and Dransfield (2003): 143). But whether it broke the mould of fiscal squeeze is debatable. Following the pattern of earlier chapters, we conclude with an assessment of the two Thatcher squeeze episodes in the light of the three sets of issues about the politics of fiscal squeeze that we raised in Chapter One.
Tax and Spending, Depth and Duration, Blame and Control
As we have seen, the Thatcher fiscal squeeze episodes comprised a short but deep revenue squeeze associated with rising expenditure in a deep recession and a longer 'soft' squeeze on both revenue and expenditure, accompanying economic growth. And to the extent that the metrics of squeeze from reported financial outcomes are meaningful for these episodes, they do not indicate that the Thatcher squeezes were 'off the map', as is so often implied by those who consider the 'Iron Lady's' Government to have been a unique one-off political era. Politically painful as it undoubtedly was at the time, the early 1980s revenue squeeze was not the most severe such squeeze in peacetime over the century (it was exceeded by the squeeze of 1919-21, and that was not able to draw on oil). And though the soft squeeze on spending in the later 1980s was comparatively long, the annual reductions it involved were not greater than the spending squeezes of 1953-55, 1977-78, or 2013 and are dwarfed by the spending squeezes of 1919-21,1923-25, and 1946-49. Indeed, if we take out the proceeds of privatization, the annual average fall in spending relative to GDP is 1.3 per cent rather than the 1.6 per cent shown in Chapter Two, roughly similar to the spending cuts enacted in the 2010s, to be described in Chapter Ten. In short, those Thatcher Government squeeze episodes appear in comparative perspective to lie in the upper to middle range. But they are not off the scale.
When it comes to handling the blame for fiscal squeeze, too, the Thatcher Government chose, like its Labour predecessor, to keep direct control of the levers of fiscal and monetary policy rather than to deflect blame by delegating such functions to others (though it did so in other domains, such as regulation of utilities). Again like its Labour predecessor, it was inventive in the way it presented and packaged figures, and made much of blaming the previous incumbent for creating the need for its first-term fiscal squeeze, as well as world political and economic events such as the OPEC oil price hike and the war with Argentina. But that too seems more normal than exceptional.