LYCOS RETRIEVER 
Margaret Thatcher: Policies
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The big theme of Lady Thatcher's second term was reducing the power of the trade unions with a series of measures that a number of unions reacted to with industrial action. In particular the National Union of Mineworkers led by Arthur Scargill. The Tories had prepared for the strike by building up coal reserves and the deploying well paid police units fitted out with new riot gear brought in after the disturbances of 1981 who taunted the strikers by waving fivers at them. The miners responded with bricks and very ugly scenes developed on picket lines that split the country. Scargill's failure to hold a ballot for the strike undermined public support and the striker's chant of 'vote with your feet' calling miners to join the strike was turned on them as more and more returned to work over the year of the strike.
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Thatcher’s policies succeeded in reducing inflation and budget expenditures, but at a cost of cuts in spending on social services and rising unemployment. The policies, which ... included privatization measures and reduced subsidies to businesses, hit many employers hard, especially manufacturing industries. In 1981, despite a severe recession, Thatcher’s government further increased taxes, driving up unemployment to its highest level since World War II. Unemployment only began to fall in 1986, when Thatcher’s policies were credited with bringing down interest rates, curbing inflation, and forcing British industries to become more competitive internationally.
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Thatcher started to lose popularity in 1989, as the economy suffered from high interest rates imposed to stop an unsustainable boom. She blamed her Chancellor, Nigel Lawson, who had been following an economic policy which was a preparation for monetary union; Thatcher claimed not to have been told and did not approve. At the Madrid European summit, Lawson and Foreign Secretary Geoffrey Howe forced Thatcher to agree the circumstances in which she would join the Exchange Rate Mechanism, a preparation for monetary union. Thatcher took revenge on both by demoting Howe and listening more to her adviser Sir Alan Walters on economic matters. Lawson resigned that October, feeling that Thatcher had undermined him.
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[T]he case against Thatcher is a strong one. She was a divisive leader, as on the issues of the poll tax and European integration. Her strident attitudes on social issues upset many people. Economic inequality increased under Thatcher, as did homelessness, and many social services deteriorated. She was accused of weakening basic civil liberties. Her foreign policy, though defined by a spectacular victory over Argentina in the Falklands War in 1982, was marked by Cold War rhetoric which seemed increasingly outdated by her third term in office.
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Thatcher's government continued its policy of reducing the power of the trade unions. Sympathy strikes and the closed shop was banned. Union leaders had to ballot members on strike action and unions were responsible for the actions of its members. The government took a firm stand against industrial disputes and the miners' strike that began in 1984 lasted for 12 months without success.
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As a monetarist, Thatcher started out in her economic policy by increasing interest rates to slow the growth of the money supply and ... lower inflation. She had a preference for indirect taxation over taxes on income, and value added tax (VAT) was raised sharply to 15%, with a resultant actual short-term rise in inflation. These moves hit businesses -- especially the manufacturing sector -- and unemployment quickly passed two million, doubling the one million unemployed under the previous Labour government.
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