The Fall of Thatcher & Major's Rise, 1987-1990 (AQA A Level History: Component 2: Depth study): Revision Note

Third-term problems

A third election victory, 1987

• The Conservatives won the June 1987 general election with a majority of 102

  • It was Thatcher's third successive victory

  • Her position appeared secure

• The result was built on a combination of Conservative strengths and opposition weaknesses

Why did the Conservatives win in 1987?

• Despite the strong position, problems began to build almost immediately after 1987

  • Economic overheating, the poll tax, divisions over Europe, and growing doubt over her style of leadership all weakened her position

  • None was enough on its own to bring Thatcher down

    • It was their combined effect that made her increasingly vulnerable by 1990

The Lawson Boom and the 1987 crash

• The stock market crashed in October 1987

  • Interest rates were cut to protect the economy

    • This added further momentum to the boom

• Chancellor Nigel Lawson cut the top rate of income tax from 60% to 40% in the 1988 Budget

  • Combined with easier credit after the Big Bang of 1986, this encouraged rapid growth

  • Consumer spending, borrowing and house prices all rose sharply

    • The period became known as the Lawson Boom

• Strong domestic demand also increased imports

  • By late 1989, the balance of payments deficit was running at an annual rate approaching £20 billion

Inflation and interest rates

• Inflation rose sharply as the boom continued

  • It reached 10.9% by 1990

  • This was still below the roughly 22% peak of 1980

    • However, it was politically damaging because low inflation had been one of Thatcher's central economic aims

• Interest rates were raised to control inflation

  • They reached 15% in October 1989

  • Higher mortgage repayments hit many of the homeowners the Conservatives had encouraged to buy during the 1980s

    • This threatened support among the voters the party had previously attracted

Approach: John Smith was Shadow Chancellor when he spoke in the House of Commons on 31st October 1989, only days after Lawson resigned

The source is useful for showing how Labour attacked the government’s economic record. Smith links the balance of payments deficit and high interest rates to the pressures facing businesses and homeowners

However, he was an opposition politician speaking during a period of growing economic difficulty, so he had a clear reason to emphasise the government’s failures. His claims should be tested against the economic figures themselves

Approach: John Major had become Chancellor of the Exchequer only days before his Commons statement on 31st October 1989

The source is useful because Major accepts that inflation and imports had become serious problems. At the same time, he defends the government’s wider record by presenting these difficulties as the result of unusually rapid growth rather than failed policy

Because he had just inherited the Treasury, he could acknowledge some of the problems without taking full responsibility for creating them. That makes the source useful for showing how the government tried to explain the economy after Lawson’s departure

Political warning signs

• The economic difficulties fed into a wider loss of political confidence

  • The Conservatives trailed Labour in the opinion polls during 1990

• A particularly serious warning came at the Eastbourne by-election in October 1990

  • The seat had been held by Ian Gow, who was assassinated by the IRA in July

  • The Liberal Democrats won the by-election

    • Conservative MPs concluded that if Eastbourne could be lost, very few seats could still be regarded as safe

The poll tax backlash

Why did the backlash grow?

• The poll tax (Community Charge) reached England and Wales on the 1st April 1990, one year after its introduction in Scotland

  • Many households received bills that were much higher than expected

  • The government had suggested that nobody would pay more than £3 a week above their old rates bill, provided their council stayed within Whitehall spending guidelines

• In practice, many councils set charges above the government's assumed level

  • The government had based its calculation on an assumed charge of £278

  • Both Conservative and Labour councils ended up setting higher charges in many areas

• The Transitional Relief Scheme did not fully solve the problem

  • Relief was calculated against the government's assumed charge rather than the actual bill

  • Anyone whose council charged more than that assumed figure received no relief for the extra amount

Approach: Bryan Gould was Shadow Secretary of State for the Environment when he spoke in the Commons on 26th March 1990, just before the first bills arrived in England and Wales

The source is useful because it captures Labour’s central criticism at the point when the policy was beginning to unravel. Gould argues that the government had made promises about the likely cost of the tax which it could not keep

However, he was speaking as the opposition spokesman and had a clear political reason to emphasise failure. His claims should therefore be tested against the actual bills being set by councils

Approach: David Hunt was Minister for Local Government and Inner Cities in the same debate on 26th March 1990

The source is useful because it shows how the government defended the policy once criticism intensified. Hunt argues that local councils, not central government, were responsible for much of the variation in charges

However, that defence also exposed a weakness in the policy. The government had presented the Community Charge as a clearer and more accountable system, yet ministers were now blaming councils for the high bills voters actually received

Trouble on the government's own benches

• Opposition inside the Conservative Party became increasingly public

  • Emma Nicholson told ministers that in one of what she called the "lowest-spending boroughs in England", almost nobody would qualify for relief

  • Sir Rhodes Boyson warned that the arrangements did not go far enough for pensioners or for Conservative voters in high-spending boroughs

• This criticism mattered because it came from Thatcher's own MPs

  • Backbenchers were worried not just about the design of the tax but about the electoral damage it would cause

  • By 1990, some Conservatives were beginning to question whether Thatcher could still lead them to victory at the next election

Trafalgar Square, 31 March 1990

• A national anti-poll tax demonstration in central London ended in serious rioting

  • Police estimated the crowd at 40,000 while organisers claimed 200,000

  • 339 people were arrested

  • Hundreds of police officers and members of the public were injured, although the exact totals vary between accounts

• The political effect was more important than the disorder itself

  • The riot made the poll tax appear not just unpopular but increasingly unworkable

  • Government support in the opinion polls fell sharply afterwards

The political cost

• Ministers responded by using charge capping to limit what councils could set

  • This created a contradiction at the heart of the policy

    • The tax had been sold as a way of making councils more accountable to local voters, yet the central government was now intervening directly in local charges

• Thatcher still refused to abandon or fundamentally redesign the tax

  • Her refusal was increasingly interpreted by some Conservative MPs as evidence that she would not change course even when a policy was causing serious political damage

• By late 1990, the poll tax had become one of the strongest arguments used by Conservatives who wanted a new leader before the next general election

Divisions over Europe

The Bruges Speech, 1988

• Thatcher's government had agreed to the Single European Act in 1986, but she became increasingly concerned about the direction of European integration afterwards

  • She argued that the Act was being used to move power away from national governments and towards Brussels

• She set out her position in a speech at the College of Europe in Bruges on the 20th September 1988

  • Thatcher rejected federalism, instead arguing for a Europe based on strong nation-states

  • The speech was aimed partly at Jacques Delors, President of the European Commission, who wanted deeper integration

Approach: Thatcher gave this speech publicly at the College of Europe in Bruges on 20 September 1988

The source is useful because it sets out her European position clearly. She does not argue that Britain should leave the Community. Instead, she argues that European cooperation should not come at the expense of national sovereignty

Because this was a major set-piece speech, it was intended to influence opinion both at home and abroad. It therefore shows how Thatcher wanted her position to be understood, but it also helped deepen divisions with ministers and European partners who favoured closer integration

The political effect of Bruges

• The speech sharpened divisions inside the Conservative Party

  • It encouraged the formation of the Bruges Group in February 1989, with Thatcher as its president, and the group quickly became a focus for Eurosceptic opinion among Conservatives

    • Conservative Eurosceptics associated with it included Bill Cash, Norman Tebbit and Nicholas Ridley

  • Ministers, including Geoffrey Howe and Nigel Lawson, became increasingly uneasy because Thatcher appeared to be retreating from positions they had previously agreed on

• Europe, therefore, became a Cabinet issue as well as a foreign policy issue

  • Disagreement over Europe now divided senior Conservatives openly, although the Westland affair of 1986 had already exposed tension over Britain's European ties

Madrid and the resignation of Lawson

• At the Madrid summit in June 1989, Howe and Lawson pressed Thatcher to agree on the conditions under which Britain might join the Exchange Rate Mechanism (ERM)

  • Thatcher agreed to conditions rather than a fixed date

  • Soon afterwards Howe was moved from the Foreign Office

• Thatcher increasingly relied on her personal economic adviser, Alan Walters, who opposed ERM membership

  • Lawson believed he could not run economic policy while Walters had the Prime Minister's ear

    • He resigned on the 26 October 1989

    • Walters resigned on the same day

• John Major then moved from the Foreign Office to the Treasury after only three months as Foreign Secretary

Approach: Lawson explained his resignation to the House of Commons on 31 October 1989

The source is useful because it shows that the dispute was not only about technical economic policy. Lawson presents it as a problem of Cabinet government, arguing that ministers could not work effectively if the Prime Minister relied on outside advisers against them

However, Lawson was defending his own decision to resign. His account should therefore be compared with Thatcher’s explanation of the dispute and with the wider arguments over ERM membership

The Meyer challenge and entry into the ERM

• Thatcher's weakening position became clearer in December 1989 when Sir Anthony Meyer challenged her for the Conservative leadership

  • He was widely regarded as a stalking horse candidate rather than a serious alternative

  • Thatcher won comfortably, but around 60 MPs either voted for Meyer or abstained

    • The results showed that an open challenge to her leadership was now possible

• Britain eventually joined the ERM on the 8 October 1990

  • Major and Douglas Hurd had pressed for entry

    • Thatcher accepted the decision reluctantly

Rome and the Commons statement, October 1990

• Tension over monetary union was already visible in July 1990, when Nicholas Ridley resigned from the Cabinet after calling it "a German racket designed to take over Europe"

• At the Rome European Council in October 1990, European leaders agreed on a timetable for further economic and monetary union

  • Thatcher found herself increasingly isolated from other member states

• On the 30 October 1990, she reported back to the Commons and rejected the proposals in uncompromising terms

• Her outright rejection went further than the Cabinet's agreed position, which had offered the hard ECU as an alternative to a single currency

  • Geoffrey Howe resigned on the 1 November 1990

The fall of Thatcher, 1990

Howe's resignation speech

• Sir Geoffrey Howe had served Thatcher continuously since 1979 as Chancellor, Foreign Secretary and Deputy Prime Minister

  • His resignation on the 1 November 1990 removed one of the last senior figures from Thatcher's original team

• Howe then made a resignation speech in the Commons on the 13 November 1990

  • He argued that Thatcher's increasingly hostile approach to Europe was damaging Britain's ability to negotiate effectively

  • He ended by inviting other MPs to consider their own response

    • This was widely interpreted as an invitation to challenge Thatcher's leadership

Approach: Howe delivered this speech publicly in the House of Commons on 13 November 1990, less than two weeks after leaving the government

The source is useful because it shows how far relations inside the Cabinet had broken down. Howe had been one of Thatcher’s longest-serving and most loyal ministers, so his public criticism carried far more weight than an attack from the opposition

However, this was also a resignation speech. Howe was explaining and defending his own decision to leave, so his account should be read as a case against Thatcher’s leadership as well as evidence of genuine Cabinet division

The Heseltine challenge and the first ballot

• Michael Heseltine announced his leadership challenge on the 14 November 1990

  • He had resigned over the Westland affair in 1986 and had remained one of Thatcher's most prominent Conservative critics

• The first ballot took place on the 20 November

  • Thatcher won 204 votes to Heseltine's 152

  • However, Conservative leadership rules required her to secure:

    • a majority of votes cast

    • and a lead of 15% of those entitled to vote

  • She fell four votes short of the required margin

    • A second ballot was therefore deemed necessary

• Thatcher was initially determined to continue

  • She publicly stated that she would fight on

The Cabinet and Thatcher's resignation

• Thatcher returned from a summit in Paris and met senior Cabinet ministers individually

  • Most told her that she was unlikely to win the second ballot

• The private meetings were important

  • Ministers did not have to oppose her collectively in front of their colleagues

  • Thatcher therefore heard the same warning repeatedly from some of the people whose support she needed the most

• She announced her resignation on the 22 November 1990

  • This allowed other Cabinet ministers to enter the leadership contest

  • While Thatcher remained a candidate, they would have found it much harder to stand against her

Approach: This extract comes from Thatcher’s final speech to the House of Commons as Prime Minister in November 1990

The source is useful for showing how Thatcher defended her record at the moment she left office. She presents her European policy as consistent with parliamentary democracy, economic freedom and British national interests.

However, this was a final public defence of her premiership. It is therefore stronger evidence for how Thatcher wanted her record remembered than for why she had actually lost the support of senior ministers and Conservative MPs

Major's rise

• John Major and Douglas Hurd entered the second ballot against Heseltine

  • Major had been Thatcher's preferred successor and was generally seen as closer to her politically than Heseltine

• The second ballot took place on the 27 November 1990

  • Major won 185 votes

  • Heseltine received 131

  • Hurd received 56

• Major was still two votes short of an outright majority

  • Heseltine and Hurd withdrew rather than fight another round

    • Major, therefore, became Conservative Leader and Prime Minister

Why did the fall happen so quickly?

• Howe's resignation did not create all of Thatcher's problems

  • The poll tax, economic difficulties, and divisions over Europe had already weakened her

• What changed in November 1990 was that those problems became a leadership crisis

  • Howe made public the depth of Cabinet discontent

  • Heseltine provided MPs with an alternative candidate

  • The first ballot showed that Thatcher could no longer rely on enough of her own MPs

• Her fall was therefore not an electoral defeat

  • She had won three general elections in a row

  • She was removed because Conservative MPs and ministers no longer believed she could unite the party and win again

Thatcher's legacy

What had changed by 1990?

• Thatcher left office, having changed the direction of British politics and the economy

  • Many of her policies were not reversed by later governments, including Labour after 1997

    • This is why historians often describe her as creating a new consensus to replace the post-war consensus

• The role of the state in the economy had been reduced

  • Major industries such as British Telecom, British Gas and British Airways had been privatised

  • Share ownership had grown, as ordinary people bought shares in privatised companies

• Trade union power had been weakened

  • Laws introduced in the 1980s required secret ballots before strikes and restricted picketing

  • The defeat of the miners' strike (1984–1985) showed that the government would not back down to union pressure

  • Union membership fell from over 13 million in 1979 to under 10 million by 1990

• Home ownership had risen

  • Over a million council tenants had bought their homes under the Right to Buy

  • This helped build support for the Conservatives among working-class voters

• Taxation had shifted

  • The top rate of income tax had fallen from 83% to 40%

  • The government placed more emphasis on indirect taxes, such as value added tax (VAT)

• The political centre had moved to the right

  • By 1990, Labour's policy review had dropped nationalisation of privatised industries and accepted much of the market economy

  • New Labour later kept most of Thatcher's trade union laws and privatisations

What did she leave unresolved?

• Thatcher also left problems that her successor had to deal with

  • The economy was entering recession

    • The Lawson Boom had ended in high inflation and interest rates of 15%

    • Britain had joined the ERM only weeks before her resignation, leaving Major to manage its consequences

  • The poll tax remained in place

    • It was still deeply unpopular, and non-payment was widespread

  • The Conservative Party was divided over Europe

    • The Bruges Speech and the resignations of Lawson and Howe had exposed a split that continued under Major

  • Social and regional divisions had widened

    • Unemployment had stayed above 3 million for much of the mid-1980s

    • The decline of manufacturing hit northern England, Scotland and Wales hardest, deepening the north-south divide

A divided legacy

Why did Thatcher fall from power in 1990?

• This question weighs several factors against each other

  • None explained Thatcher's fall on its own, so the strongest answers should show how they reinforce one another

Economic problems

• The economic reputation that had helped Thatcher win in 1987 had weakened badly by 1990

  • Inflation reached 10.9%, undermining the government's long-standing claim to have brought it under control

  • Interest rates of 15% hit homeowners and small businesses particularly hard

  • The balance of payments deficit approached £20 billion a year

• The Lawson Boom, fuelled further by interest-rate cuts after the 1987 stock market crash, ended in overheating that damaged confidence in the government's economic management

The poll tax

• The Community Charge (poll tax) became one of the most unpopular policies of Thatcher's premiership

  • Its flat-rate structure was widely criticised because people on very different incomes could face the same basic charge

  • Mass non-payment made the tax increasingly difficult to enforce

  • The Trafalgar Square disorder of March 1990 turned opposition to the tax into a national political crisis

• Thatcher's refusal to abandon or fundamentally redesign the policy became part of the problem

  • Some Conservative MPs concluded that replacing Thatcher might be the only way to remove the tax before the next election

Divisions over Europe

• Europe increasingly divided Thatcher from senior members of her own government

  • Her Bruges Speech of 1988 sharpened disagreement over the direction of European integration

  • Nigel Lawson resigned in October 1989, partly due to Thatcher continuing to rely on Alan Walters, who opposed ERM membership

  • Geoffrey Howe resigned in November 1990 after further disputes over Europe

• These resignations were especially damaging because Lawson and Howe were major figures in Thatcher's governments

  • Their departure suggested that disagreement had reached the centre of the Cabinet

  • Howe's resignation speech then helped to trigger Michael Heseltine's leadership challenge

Leadership style and party self-interest

• Thatcher's increasingly dominant style created resentment inside the government

  • Ministers complained that decisions were being taken outside Cabinet

  • Her reliance on personal advisers added to the feeling that senior ministers were being ignored

• There were also signs before 1990 that some Conservative MPs were willing to challenge her

  • Sir Anthony Meyer's leadership challenge in December 1989 attracted support or abstention from around 60 MPs

• By 1990, electoral survival had become a major concern

  • Labour led in the opinion polls

  • The loss of Eastbourne to the Liberal Democrats in October 1990 showed that even apparently safe Conservative seats could be vulnerable

• Many MPs, therefore, judged Thatcher less by her past victories than by whether she could win the next general election

Approach: John Major published this account in 1999, nine years after Thatcher’s resignation and after serving as Prime Minister himself

The source is useful because Major rejects the idea that Thatcher was suddenly destroyed by a single act of betrayal. Instead, he identifies several pressures already weakening her position, including the economy, Europe, the poll tax and declining parliamentary support.

However, Major had benefited directly from Thatcher’s fall and became her successor. His account therefore has a personal stake in presenting the leadership change as the result of wider problems rather than simply the actions of ambitious Conservative MPs