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The Historical Journal, , (), pp.

Cambridge University Press



University of Cambridge

A B S T R A C T . After , neo-liberal thinkers and think-tanks in the US and UK outlined different

state welfare systems for the poor, such as Milton Friedmans negative income tax. These were
underpinned by a rational, economistic conception of human nature. Between and ,
Thatchers Conservative party abandoned attempts to develop comprehensive, state-led, paternalistic
schemes to tackle poverty. Thatcherites focused instead on creating what they saw as a rational tax/
benet system which would provide a safety-net for the poor, but encourage effort and thrift. They
attempted to marginalize the importance of state welfare for the middle classes, to re-invigorate the
bourgeois virtues which had ourished in Victorian Britain. A family-centred, moralistic
individualism underpinned Thatcherite policies; this individualism was not precisely congruent
with that of neo-liberal theorists. Its roots lay in personal sources (particularly Methodism), as well as
home-grown discourses on poverty and a Hayekian fear of the state. Though Thatcherites took ideas
from diverse sources, their political project had a single guiding purpose: the moral (and, secondarily,
economic) rejuvenation of Britain. Thatcherism was, thus, an ideology in the sense used by Michael

To the casual voter, political products look very similar. Unfortunately, this is
virtually inevitable as they are being formulated to deal with the same
problems . . . Imagine a motor car. It requires fuel, it has brakes, instruments and a
steering wheel for control. All political parties are vying to drive the same car. Their
differing destinations will result from, and on, the tuning of the engine, the fuel they
use, the route they choose, whether they can stick to it, the personality and
determination of the driver and the way he drives . . . That destination is a different
kind of society. But . . . [t]he car always looks the same to all but those who work in
the pits. Differentiation cannot be observed at the level of policy by the casual voter.

St Catharines College, Cambridge CB RL fas@cam.ac.uk

* Many thanks are due to Dr Jon Lawrence, Professor Peter Mandler, James Stafford, the two
anonymous referees, and to the organizers and participants at the Neo-liberalism and British
Politics workshop in Oxford, June , for their extremely helpful comments on earlier
drafts of this article.


Differentiation has to be obtained at the level of ideology the normative view of


Dening Thatcherism its nature and its components; its relation to neoliberalism and traditional Toryism is problematic. At the heart of the difculty
lies the tension between traditional, conservative values and neo-liberal free
markets. Daniel Bell identied the conict between asceticism and acquisitiveness as one of the key cultural contradictions of capitalism, and many
commentators, from some Tories themselves, to libertarian free-marketeers and
academic analysts, have agreed. The New Left painted Thatcherism as an
unholy alliance of neo-liberal economics with resurgent Conservative rhetoric
in a power-grabbing project with hegemonic pretensions. Political scientist Jim
Bulpitt argued that monetarism was a mere secondary instrument in powerhungry Thatcherite statecraft. These studies have fostered a pervasive sense
that Thatcherism cannot add up to a coherent and consistent ideology. Some
historians have, therefore, analysed it in the context of the abiding Conservative
impetus for power. This perspective sees Thatcherism as moulded by the
economic pressures, political manoeuvres, and electoral imperatives of its time,
and hears its distinctive rhetoric as a stitch-up of incompatible policies and
platitudes designed to appeal to the rich, to middle England, and to Essex
man. Hence Richard Vinens recent study of Thatchers Britain focuses on the
contingent and vnementiel.
Close analysis of events is certainly important; but ideology needs to be taken
seriously. I use the term not in the pejorative sense bestowed on it by wet
Tory opponents like Ian Gilmour, but in the Freedenite sense of ideologies
as exible intellectual frameworks that aggregate and prioritise a number
of political concepts, both rational and non-rational. As Freeden has
urged, ideologies need interpreting and decoding, to reconstruct and
amplify the unarticulated. Because economic policy was central to

N. Strauss, Document for Steering Committee on Communications Strategy, the papers

of Baroness Thatcher LG, OM, FRS, Churchill Archives Centre, Cambridge, THCR, ///
(hereafter THCR).

D. Bell, The cultural contradictions of capitalism (London, ), p. xx; J. Grey, Is Conservatism

dead?, qu. E. H. H. Green, Thatcher (London, ), p. ; S. Brittan, Capitalism and the
permissive society (London, ); R. Levitas, ed., The ideology of the New Right (London, ).

S. Hall, The great moving right show, Marxism Today (), pp. ; R. Samuel,
Mrs Thatchers return to Victorian values, Proceedings of the British Academy, (),
pp. ; J. Bulpitt, The discipline of the new democracy: Mrs Thatchers domestic statecraft,
Political Studies, (), pp. .

R. Vinen, Thatchers Britain: the politics and social upheaval of the Thatcher era (London, ),
p. .

I. Gilmour, Dancing with dogma: Britain under Thatcherism (New York, NY, ); B. Jackson,
Equality and the British left: a study in progressive political thought, (Manchester, ),
pp. ; M. Freeden, Ideologies and political theory: a conceptual approach (Oxford, ), pp. ,
, .


Thatcherite propaganda, much analysis has focused on monetarism and supplyside economics. I re-evaluate Thatcherism by looking instead at social policy
and social doctrine, taking as a case-study the tax/benet system. This article
does not consider the other key thrust of Thatcherite social policy: the attempt
to create a property-owning democracy. Matthew Francis has examined the
policies adopted by Thatcherites to promote wider property-ownership the
right to buy council houses and privatization arguing that they lay in an
evolving Conservative tradition, but that Thatcherite choices were profoundly
inuenced by neo-liberal discourses current in the s and s. The
present article examines a less-studied aspect of social policy. It falls into
three parts: in the rst I examine the policy prescriptions of key neo-liberal
thinkers and think-tanks. In the second, I look at the development of
Thatcherite policy on poverty in opposition. Historians who have relied
primarily on the vague manifesto as evidence have suggested that
Thatcher had pseudo-radical rhetoric but few real plans on entering ofce. In
fact, a distinctive set of policies was eshed out in opposition. The key shift was
from paternalistic, state-centred policies to a radical scepticism about the virtues
the state can inculcate. Thatcherites absorbed the analysis of some neo-liberal
thinkers (particularly Friedrich von Hayek), paying less attention to others
whose work did not t their vision of social policy (like Milton Friedman, who
was so inuential on monetary theory). In the third section I examine the
individualistic and moralistic ideology that underpinned the shift from
paternalism to small-statism. Thatcherite individualism differed subtly but
importantly from the economistic individualism of the neo-liberal thinkers.
And it is the precise contours of this individualism which allowed Thatcher and
her allies to reject paternalism, and reconcile a free economy and traditional

Ben Jackson has shown that at the genesis of neo-liberalism in the s and
s, many thinkers wanted a strong state as well as a free economy, because
they were concerned to show that they had learned the lessons of the failures of
capitalism in the hungry thirties. But when Hayek wrote The road to serfdom,

M. Francis, A crusade to enfranchise the many: Thatcherism and the property-owning

democracy, Twentieth Century British History, () (rst published online on Aug.
. doi: ./tcbh/hwr).

Both Hayek and Friedman, the two thinkers examined, resisted classication as neoliberal, but projecting the term back on to them seems a useful shorthand.

D. Kavanagh, The making of Thatcherism, , in S. Ball and A. Seldon, eds.,

Recovering power: the Conservatives in opposition since (Basingstoke, ), p. ;
N. Timmins, The ve giants: a biography of the welfare state (London, ), p. .

B. Jackson, At the origins of neo-liberalism: the free economy and the strong state,
, Historical Journal, (), pp. .


uppermost in his mind was not the great depression, but Nazi Germany.
Hayek stressed that minimal government would ensure the highest level of
liberty, or toleration. Big, socialist government reduces each citizen to
(quoting Tocqueville) a mere agent, a mere number. Socialist governments
see themselves as directing an enterprise, but the goal the common good is
ill-dened. It is as if a group of people have agreed to take a journey together
without having decided where they want to go. To ensure there are no disputes
over the destination, socialist governments have to impose on society, via
fascistic methods of propaganda, a Weltanschauung, a set of values which can
mediate between such pressures as more milk for children or better wages for
agricultural workers.
By , the enterprise of socialist governments seemed to have changed
from doctrinaire socialism to a woolly egalitarianism, so that the greatest
danger to liberty now appeared to Hayek to come from the efcient expert
administrators exclusively concerned with what they see as the public good.
But political limits on individual freedom were still the principal target of
Hayeks analysis. It is interesting to note the similarities with Michael
Oakeshotts argument that a polity should be only a civil association,
concerned with setting a framework of order, not an enterprise association,
concerned with goals like the award of recognition or advantage in the pursuit
of individual or corporate purposes or . . . ushering in the new Jerusalem.
Hannah Arendt, also writing in the shadow of Nazism, harboured similar
fears of an intolerant mass society, which prioritizes abundance over
freedom. Anti-statism resonated across the political right in the decades
after the Second World War, though the planners seemed to have the upper
Despite his anti-statism, Hayek saw a role for an extensive system of social
services. Welfare needed to be generous enough to equip people with the
material resources and psychological security to strive to better themselves. The
propensity for people to do so was something Hayek took for granted: his
conception of human nature was highly individualistic, and his view of human
incentives was rational and economistic. Hayek thought government may,
usefully and without doing any harm, assist or even lead in welfare provision.
But his profound fear of government coercion of individuals and seizure of
national resources meant that Hayek argued that government should only

K. Tribe, Liberalism and neoliberalism in Britain, , in P. Mirowski and

D. Plehwe, eds., The road from Mont Pe`lerin: the making of the neoliberal thought collective (London,
), pp. .

F. A. von Hayek, The road to serfdom (London, ), pp. , , , , .

Idem, The constitution of liberty (London, ), pp. , .

M. Oakeshott, On human conduct (Oxford, ), p. .

H. Arendt, The human condition (Chicago, IL, ), p. and passim.

Hayek, Road to serfdom, p. .

Idem, Constitution of liberty, pp. .


provide basic welfare: provision above the minimum should be left to

competitive and voluntary efforts.
Like Hayek, Milton Friedman assigned an important role to social security,
and endorsed government provision of welfare. For Friedman, the basic reason
to alleviate hardship was that poverty has negative externalities (what he called
the neighbourhood effect). Poverty may cause crime, vandalism, and other
material problems, and it pains most people to see their fellow citizens in need.
Private, charitable provision of welfare was the ideal, but whereas in small
communities, public pressure could ensure the rich contribute to charity, [i]n
the large impersonal communities that are increasingly coming to dominate
our society, it is much more difcult for it to do so. So governments needed
to intervene to ensure that all contribute to the welfare from which all benet.
Because the market was the most efcient method of allocating goods, and
because he thought that people were driven by the prot motive above all,
Friedman prescribed a particular form of social security which would best
maintain the free functioning of the market and personal effort. He called it
negative income tax. It worked as follows: an income line is set, somewhere
under the average income for the nation; those above the line pay tax; if a
persons income falls below the line, it is topped up by a benet payment of
some proportion of the difference between their income and the set line,
avoiding a disincentivizing high marginal tax rate.
In , British economist Dennis Lees visited the University of Chicago
and met Friedman. He brought back the negative income tax model, setting
out a scheme for Britain in a article. Lees set the ideal income line for a
household at the level of their collective tax allowances, and the rate of the
negative tax payment at per cent. For example, a family with three children
and a net (earned) income of would have total tax allowances (personal
and child tax allowances, plus the two-ninths earned income allowance) of
. Their actual income is thus below their ideal income line; they
would receive a payment of per cent of this (), bringing their total
income to . Three years later, the Institute for Economic Affairs (IEA),
the independent neo-liberal think-tank founded in on the advice of
Hayek, convened a group of economists, political scientists, and a social
scientist, Barbara Sheneld, to compare the Friedman/Lees model with three
other forms of reverse income tax. Their starting assumption was that the
income of the poor should be raised to an adequate minimum not a bare
minimum, but a level appropriate to British society in the s which they

Ibid., p. ; idem, Road to serfdom, p. .

M. Friedman, Capitalism and freedom (London, ), p. .

Ibid., pp. ff.

B. Chiplin, Professor Dennis Lees: industrial economist who was a staunch believer in the
free market, Independent, Feb. .

D. Lees, Poor families and scal reform, Lloyds Bank Review (Oct. ), pp. , at
pp. .


took as supplementary benet levels, with long-term additions and occasional

payments. The authors, like Friedman, thought that the provision of a basic
standard of welfare was vital to [secure] the external benets to the
community at large. Society and the economy would benet if all were
equipped to contribute to the best of their ability.
The authors considered rst a social dividend system, as proposed by Liberal
(latterly Conservative) politician Lady Rhys-Williams in , and taken up in a
recent pamphlet from the left-leaning think-tank Political and Economic
Planning (PEP). In this system, the state pays a prescribed minimum income
(the social dividend) to all families regardless of income. Income tax is levied
on all private income, at a rate of per cent, so that the net benet of the
social dividend decreases as income rises. The social dividend for a family with
two children based on supplementary benets plus rent allowance was .
Such a family with a private income of would pay tax, and then
have the social dividend added, making an end income of , raising
them well above the minimum income line. The break-even point, where a
familys nal income is the same as their private income, comes at , just
over three times the minimum income level. Even in a modied version which
levied extra taxes to reduce the benet to families who were not in poverty to
start with, a large spill-over still existed. This would mean a high tax burden,
which, the authors felt, was likely to weaken incentives among the general body
of taxpayers. For this reason, these schemes were ruled out.
Next, the authors examined a Friedmanite system. This worked just as Dennis
Leess scheme, but the income line was set at supplementary benet levels
(instead of at the level of tax allowances). Negative tax was paid at per cent. A
family with two children and an income of would have it topped up by
per cent of , to . This was the cheapest system, but it was cheap
because it did not raise the incomes of the poor to the minimum level, and for
this reason, it was summarily dismissed.
Finally, the authors considered a minimum income guarantee, where the
state tops up the income of all those below the minimum prescribed line to that
level. This was less costly, as it was entirely selective, and it eradicated poverty. All
families with two children who had an income of less than would have it
topped up to that level. The authors were relatively unconcerned about the
per cent marginal tax rate on those receiving income support:
The depressing effects of poverty may themselves be more important than the
marginal rate of tax, and relief from the struggle to make ends meet may have a

A. Christopher, G. Polanyi, A. Seldon and B. Sheneld, Policy for poverty: a study of the
urgency of reform in social benets and of the advantages and limitations of a reverse income tax in
replacement of the existing structure of state benets (London, ), p. .

Ibid., pp. , ; see Lady Rhys-Williams, Something to look forward to (London, ); C. V.

Brown and D. A. Dawson, Personal taxation incentives and tax reform (PEP broadsheet , ).

Christopher et al., Policy for poverty, p. .


stronger effect in encouraging self-reliance and the will to independence than that
of the high marginal tax rate in the opposite direction. The people concerned are
mainly old and either unoccupied or in part-time employment and the disincentive
effect will apply only to those whose earnings potential does not substantially exceed
the poverty-line minimum income . . . the potential loss of work effort due to a high
marginal tax effect on people with the lowest incomes is likely to be small.

More importantly, lower taxes would be imposed on the majority as the scheme
was cheap. The authors concluded that a minimum income guarantee may be
the most advantageous form of reverse income tax (though they were alive to
possible dangers). They insisted that a safety-net for the poor was vital: poverty
sapped the potential strength of poor citizens, and the government must
therefore stamp it out. But equally important to the IEA were incentivizing tax
breaks for the majority, and an increase in private, competitive provision of
health, education, and insurance-based social security for those at mid- and
upper-income levels. Competition would bring with it efciency and greater
choice. The IEA thus echoed Hayeks enthusiasm for private welfare in this and
many other publications from the late s onwards.
The slightly different justications for state welfare offered by these neoliberal writers, and the varying policies they endorsed, demonstrate a common
set of preoccupations which justies the common label. The comparison
between the IEAs and PEPs treatment of the social dividend scheme is
instructive. PEP emphasized the social nature of wealth, and might even have
been happy to see a large spill-over of benets: by tying in a large body of
afuent and middle-class beneciaries, welfare schemes are rendered less
politically vulnerable. The IEA authors, by contrast, emphasized the individual,
and the disincentive effects of high taxation. They agreed with Friedman that
crushing poverty could itself be more of a depressing factor than monetary
disincentives. And like Hayek, they wanted those on higher incomes to choose
private welfare, removing state monopolies. But the policy they endorsed the
minimum income guarantee was not one which would gain traction with
Thatcherites. The variety of theories about state welfare and policies on offer
demonstrates that there was exibility within the neo-liberal project to
emphasize different ends and to choose different means.

As suggested by the interest of both PEP and the IEA, wholesale change in the
tax/benet system was attractive to both ends of the political spectrum in the

Ibid., p. .
Ibid., p. .
E.g. A. Seldon, Pensions in a free society (London, ); idem, Choice in welfare (London,
); R. Harris and A. Seldon, Choice in welfare, (London, ); on the editorial line of
the IEA, see R. Desai, Second-hand dealers in ideas: think tanks and Thatcherite hegemony,
New Left Review, (), pp. , at p. .


late s and s, and reverse income taxes looked like the frontrunners.
Left and right were driven by different motives. Their differences stemmed
from each partys historic position on selectivity and universality. Labour had
built its identity around the Attlee governments universal, cradle to grave
welfare, which tended to stabilize incomes over an individuals lifetime, and
which, along with full employment, also had a small redistributive effect on
society as a whole. The Tories had developed an alternative model which
favoured a smaller state, selective benets, and greater choice in selfprovisioning for the better off. But both were under threat from the s
onwards. Universality looked wasteful, particularly as economic growth faltered.
The poverty lobby, centred on organizations like the Child Poverty Action
Group (CPAG), rediscovered poverty in the midst of the welfare state in the
mid-s, focusing attention particularly on the plight of low-income working
families. And it was found that the middle classes beneted disproportionately from the welfare state, particularly from free healthcare and education,
as well as from loopholes in the tax/benet system. But selectivity too seemed
problematic: means-testing was unpleasantly associated with the Poor Law and
the hungry thirties; and there was a new focus in the s on the poverty
trap, the term coined by Frank Field and David Piachaud to describe the
powerful disincentives created by the reduction or withdrawal of whole groups
of linked means-tested benets as income increased. Both main parties were
attracted to the idea of a unied tax/benet system which could evade the
problems of means-testing and universality, and tackle the issues of the working
as well as the non-working poor in one fell swoop. British policy-makers were
aware of similar trends across the Atlantic: proposals for guaranteed income
schemes along the lines of a social dividend or Friedmanite negative income tax
came from President Nixon (the Family Assistance Plan), Democratic
presidential candidate George McGovern (the Demogrant), and President
Carter (the Program for Better Jobs and Income), though ultimately all faltered
faced with the entrenched distinction in American minds between the
deserving and undeserving poor.
Edward Heaths Conservative party developed a tax credit scheme during the
detailed policy-making process undertaken in opposition, set out in a

H. Jones, The Conservative party and the welfare state, (Ph.D. thesis,
London, ), p. .

B. Abel-Smith and P. Townsend, The poor and the poorest: a new analysis of the Ministry of
Labours family expenditure surveys of and (London, ).

H. Glennerster, British social policy since (Oxford, ), p. ; R. Titmuss, The role

of redistribution in social policy, in P. Alcock, H. Glennerster, A. Oakley, and A. Sineld, eds.,
Welfare and well-being: Richard Titmusss contribution to social policy (Bristol, ).

F. Field and D. Piachaud, New Statesman (Dec. ), qu. Timmins, Five giants, pp. .

Christopher et al., Policy for poverty, p. ; J. Cowie, Stayin alive: the s and the last days of
the working class (New York, NY, ), p. ; B. Steensland, The failed welfare revolution: Americas
struggle over guaranteed income policy (Princeton, NJ, ), pp. ff.


Green Paper. This planned to replace tax allowances, as well as some benets,
most signicantly family allowances, with tax credits. They would cover those
with income over a week from a job, National Insurance or pension
entitlements. Those within the scheme would have a credit calculated: for a
single person, for a married man, for a child. They would inform their
employer, or the body paying their pension or insurance payments, and this
body or employer, in making the payment, would deduct tax at the rate of
per cent, then offset against this the credit. If the amount of the credit
exceeded the amount of tax, the excess would be paid to the individual. A man
earning a week (about a year) would pay tax; if he was married
with two children, he would receive a credit, giving a nal income of
(or a year). The scheme would help pensioners and tackle poverty
among working families, without using the hated means-test. But it would still
target payments at those in need. By working through the tax system, the stigma
of state payments would be lessened. The system was simpler, easier to
understand, and automatic. It would not have problems with take-up. It would
bring short-term benets from National Insurance within the tax system. And it
would remove the anomaly that those with low incomes were unable to take full
advantage of their tax allowances. But the scheme was never intended to offer a
complete solution: supplementary benet (means-tested) would remain.
Nevertheless, in Geoffrey Howe called Heaths tax credit scheme the
greatest step forward in welfare provision since Beveridge. Howe still felt, on the
cusp of Thatcherism, as he had in , that a tax credit system was the best
form of welfare as it made all payments selective, while tempering the harshness
of the means-test.
Practical constraints meant Heath was unable to implement his scheme
(always presented as a long-term goal), but under Wilson and then Callaghan,
Barbara Castle led the charge for child benet, the rst step in a gradual move
towards a Heath-style tax credit system. Due largely to the poverty lobby, child
benets were introduced even after Callaghan sacked Castle (though the
benet was set at a low level). They were to be followed up in theory by a
move to pensioner credits, and then a full system of tax credits once powerful
enough computing systems were in place. Heaths plans had faltered, but his
technocratic, managerialist solution seemed to be surviving even after he was
ejected as prime minister in and then as leader of the Conservative party
in .
Given this political context, in the early years of Thatchers leadership the
party had little choice but to say that it remained committed to the evolution of

Proposals for a tax-credit system, Cmnd (London, ), pp. , ; Timmins, Five

giants, pp. .

G. Howe, Tax credits: why and how? A Conservative policy paper, Oct. ,
Conservative party archive, Bodleian Library, Oxford, CRD // (hereafter CRD);
Timmins, Five giants, pp. .


a satisfactory Tax Credit scheme. Thatcher and her key supporters, men like
Keith Joseph and Alfred Sherman (Thatchers speechwriting guru at the Centre
for Policy Studies (CPS)), were initially enthusiastic about tax credits. They
thought they could even save money, if no attempt were made to improve the
general standard of living, though like Heath, they soon realized that it would
be electoral suicide to make large groups of people worse off.
However, even in , the band of romantics about tax credits was
dwindling, and by , Thatcherites had turned against tax credits. Such
schemes were now seen as an engine to transfer more and more national
income into the hands of bureaucrats. This argument owed little to monetarist
theory and more to a Hayekian fear of the state. Such fears were fuelled in the
s by the public choice theory developed at the Virginia school of political
economy, another strand of American free-market thought imported into
Britain in the s by the IEA, among others. Noel Thompson has described
in detail the profound attack on the Keynesian settlement made by the public
choice schools analysis of the power-grabbing pretentions of managerialist civil
servants. The critique was even more damaging as it chimed with home-grown
denunciations of over-mighty bureaucratic lethargy which came from across the
political spectrum in the s and s (the image of a mindlessly
obstructive, establishment-run bureaucracy presented in Yes, Minister in the
s drew inspiration from, among other things, the diaries of Richard
Crossman and Barbara Castle). The fear was that, regardless of the level tax
credits were set at, a unied tax/benet system arrogated control of the ow of
national resources in the hands of the bureaucracy; and that from there it was a
slippery slope, for self-interested civil servants and pressure groups would
progressively enlarge the scope of the welfare system. An ex-civil servant advised
of his fear that Tax Credits might fall into the hands of the Welfare Staters.
Ralph Howell, a backbencher particularly exercised by the topic of taxation and
benets, sat on several of the relevant committees in opposition, arguing that

The right approach, Oct. , Margaret Thatcher Foundation website, www.

margaretthatcher.org/document/, MTF (hereafter MTF).

K. Joseph, Stranded on the middle ground: reections on circumstances and policies (London,
), p. .

Leaders Consultative Committee (Shadow Cabinet), Aug. , THCR ///;

see meeting on social security policy, Sept. , THCR ///.

C. Patten to K. Joseph, July , the papers of Keith Joseph, Conservative party archive,
Bodleian Library, Oxford, KJ / (hereafter KJ).

E.g. T. Balogh, The apotheosis of the dilettante, in H. Thomas, ed., The establishment: a
symposium (London, ); W. A. Niskanen, Bureaucracy and representative government (Chicago,
IL, ); idem, Bureaucracy: servant or master? Lessons from America (London, ); the latter
was published in Britain by the IEA.

N. Thompson, Hollowing out the state: public choice theory and the critique of
Keynesian social democracy, Contemporary British History, (), pp. ; S. Granville,
Downing Streets favourite soap opera: evaluating the impact and inuence of Yes, Minister and
Yes, Prime Minister, Contemporary British History, (), pp. , at pp. .

Further development of Conservative tax reform policy, Nov. , CRD //.


tax credits enshrined high income tax levels and low tax thresholds. This
transferred power to bureaucrats, and disincentivized citizens, creating a treadmill society. Late in , Joseph summarized Thatchers objections to tax
credits: reinforcement of the transfer machine . . . further socialization of
income . . . further entrenchment of expectations and the removal of the motive
to personal thrift. Tax credits were no longer a serious option in the
foreseeable future. Thatcher declared she would ght like a tiger against
any Labour plans to introduce pensioner credits.
Nevertheless, tax credits lived on in a strange half-life throughout Thatchers
opposition period. Patrick Jenkin, who took over the Department for Health
and Social Security brief in late , still believed that with a Heathite tax
credit system, we can look forward to ending the Two Nations of which
Disraeli spoke so powerfully a century ago. Because of the devolved nature of
the policy-making process (developed in conscious contrast to Heaths detailed,
centralist programme), Jenkin had considerable latitude to pursue tax credits,
and was aided by particular ofcials at the Conservative Research Department
(CRD), whose crusading zeal in favour of child benet and tax credits Nigel
Lawson challenged angrily in . But Jenkin became aware that [m]any
voices in the Shadow Cabinet had been raised against Tax Credits. Unable to
hammer out any agreement (or, indeed, to force Thatchers hand as he did
when he got Howes agreement to pledge publicly to meet Labours planned
increases in NHS spending), plans to present the country with a document on
The right approach to social policy had to be dropped. [W]ith the doubts now
hanging over tax credits, rued Jenkin, I do not believe that we could usefully
publish anything. Nevertheless, to drop tax credits from the manifesto would
expose the party, as one MP put it, terribly to parody. Gordon Reece,
Thatchers inuential publicity adviser, also urged her to maintain the
continuity of appearance. So the manifesto equivocated, claiming that
the party will wish to move towards tax credits, but that progress will be very
difcult in the next few years, both for reasons of cost and because of technical
problems involved in the switch to computers. (Chris Mockler, the chief CRD
crusader in favour of tax credits, had pointed out during the manifesto drafting

R. Howell, paper on taxation and benets, May , CRD //.

Idem, Why work? A radical solution (nd edn, London, ), p. .

Taxation and social security meeting, Dec. , KJ /.

C. Mockler to C. Patten and A. Ridley, July , CRD //.

Conservative Central Ofce press release, extract from a speech by Patrick Jenkin, central
council meeting, St Andrews Hall, Norwich, Mar. , CRD //.

N. Lawson to G. Howe, July , CRD //.

Social Services General Policy Group, June , THCR ///.

P. Jenkin to K. Joseph and A. Maude, June , CRD //; see J. Campbell,

Margaret Thatcher, I: The grocers daughter (London, ), p. .

M. Portillo, note on manifesto, Jan. , KJ /; see taxation and social security

meeting, Dec. , KJ /.

G. Reece to M. Thatcher, Sept. , THCR ///.


process that it was not entirely true to claim that the implementation of a tax
credit system was impossible for technical reasons, and demanded the language
be toned down.) Norman Fowler (new secretary of state for social services)
equivocated in the same manner in the run-up to the election, claiming
the party was still interested but was grappling with the cost. But in fact, tax
credits had been written off at least ve years previously. Nicholas Timmins
identied continuity in tax credits as a policy goal for Thatcherites; but this was
just PR. Nigel Lawson foreclosed the possibility of any unied tax-benet
system after the election when, as chancellor, he refused to allow Fowler to
consider taxation in his review of the social services. In his memoir, Lawson
explained that he saw a philosophical difference between tax and social
security. Any basic income or social dividend scheme would saddle a large
part of the population with disincentivizing high taxation, and blur the
important distinction between what individuals earn by their own efforts and
what they receive from the State.
As we have seen, Thatcherites thought tax credits nationalized income and
reduced incentives to work. Taxpayers were overburdened and infantilized by
the nanny state which took with one hand and gave back with the other.
Disincentives hit the rich (the brain drain), but were perhaps worst for the
poor. The problem was that, as Peter Cropper, CRD ofcer and founder
member of the Conservative free-market philosophy group Longbow, put it:
the nation has willed the level of unemployment and supplementary benets
up to a level which is dangerously close to (or in some cases actually above) the
remuneration available at work. Ralph Howell coined the term wont work
to describe the problem. It had two elements: because of the loophole which
left short-term sickness or unemployment benets untaxed, some workers
might choose periods of idleness which left them actually in prot; others would
not take a job which offered them little or no material advantage over
unemployment, and would live entirely on benets. To tackle the rst problem,
short-term benets must be taxed. To tackle the second, income differentials
between the employed and unemployed must be increased.
Cropper argued that the best way to increase differentials was [s]traight cuts
in direct taxation. Wont work was given a higher priority than the poverty
trap, meaning that the removal of the means-test, while still desirable, was no

Conservative party general election manifesto, Apr. , MTF ; C. Mockler to

P. Jenkin, Mar. , CRD //.

N. Fowler, general election press conference, health and welfare, May , MTF

Timmins, Five giants, p. .


G. Howe, Ministers decide: a personal memoir of the Thatcher years (London, ), p. ;

N. Lawson, The view from No. : memoirs of a Tory radical (London, ), pp. .

P. Cropper, Note on the tax credit debate, Jan. , CRD //; see R. Cockett,
Thinking the unthinkable: think-tanks and the economic counter-revolution, (London,
), p. .

R. Howell, paper on taxation and benets, May , CRD //.

P. Cropper, Note on the tax credit debate, Jan. , CRD //.


longer so important, and nding tax cuts was the principal goal. This was the
conclusion of the Fentiman Road meetings in the summer of ; and it
was endorsed by Keith Joseph and his economic advisers at the end of the year:
all our spare revenue resources should go into tax reliefs as a means of economic
rejuvenation. The belief that cutting tax rates would bolster economic
rejuvenation found ample support in the work of supply-sider Arthur Laffer. He
was best-known for his Laffer curve, sketched on a napkin in a Washington
restaurant in , which claimed that there is a point above which, as tax rates
are increased, tax revenues begin to decrease. He argued that the US and many
other Western nations were in this prohibitive region, and that tax cuts would
have wide-ranging effects, from drawing more capital into the economy, to
reducing unemployment and tackling the poverty trap inicted by high
marginal tax rates. Growth would create more government revenue in the
future, and more prosperity to be shared out. The implication was that all would
be winners, including the poor. Thatcher knew of Laffers economic arguments,
but though she believed Laffers basic theory is right within limits, she said she
darent use it. In presenting tax cuts to the electorate, it was more prudent
to refer to intuitive, homely explanations, and to concrete examples of low
taxation, high economic growth, and low unemployment under Tory governments from to , or on the continent, than to an American academic
theory. Laffers theory also focused on macro-economic efciency, leaving out
the moral argument for tax cuts that was so enticing to Thatcherites.
Though Thatcherites were aware of the electoral problems with reducing
benets, Nigel Lawson, for one, was not theoretically opposed to reducing
benets rather than cutting taxes on earnings. The new econometric history of
the late s, which blamed government relief programmes for high
unemployment during the s, gave Lawson evidence to support his
argument that a reduction in unemployment pay would actually reduce
unemployment. But he knew it would be unacceptable to the country and
many in the party. In the long run, proper tax and benet uprating policies
should ensure that the gap between unemployment benet and average

Personal tax policy the alternative approach, Jan. , CRD //.

Record of meeting held on Sunday th July , Third Fentiman Road meeting, CRD
//; taxation and social security meeting, Dec. , KJ /.

D. Fullerton, Laffer curve, in S. N. Durlauf and L. E. Blume, eds., The new Palgrave
dictionary of economics (nd edn, Basingstoke, ); A. Laffer, Economic study: prohibitive tax
rates and the inner-city: a rational explanation of the poverty trap, June , THCR //

M. Thatcher to G. Pepper, Aug. , THCR ///.

M. Thatcher, general election press conference, Apr. , MTF ; Thatcher,

House of Commons, debate on the address, Nov. , MTF .

N. Lawson to G. Howe, K. Joseph, J. Prior, and A. Ridley, Feb. , CRD //;

Lawson cited D. Benjamin and L. Kochin, Voluntary unemployment in interwar Britain, The
Banker, (), pp. , which summarized idem, Searching for an explanation of
unemployment in interwar Britain, Journal of Political Economy, (), pp. .


industrial earnings steadily widens. Taxes must be lowered, and benets and
taxes must both be uprated by the same measure of ination, to ensure that
benets did not creep up on earnings (as was the case in the mid-s,
because benets were uprated in line with prices or incomes, whichever was
higher). These twin policies were relentlessly pursued by the Thatcherites
once in power. Nigel Lawson made a start in by supporting the RookerWise amendment, which automatically uprated personal tax allowances in line
with the retail price index.
Thatchers opposition period also saw concerted efforts to develop a plan to
tax short-term benets, despite formidable administrative problems, and the
fact that about half the unemployed drawing benet that is, all those who
had no income other than supplementary benet would be completely
untouched. The CRD considered Beveridges original system, which meant
everyone required an individual tax return at the end of the year. Improved
administrative systems now made this possible as it had not been in the late
s. But the CRD rejected this option, as the long time lag meant, they felt,
that there would be little impact on the why work? problem. The moral
concern over why work? was driving policy.
Plans to tax benets and reduce income tax were not merely a play for the
hearts (and votes) of the middle classes and afuent workers. They stemmed
partly from a suspicion of the nationalization of income, as well as from the
monetarist imperative to reduce the Public Sector Borrowing Requirement
(PSBR). But underlying the policies on poverty and social security was a moral
imperative: Thatcherites thought their plans would make the tax/benet
system fair, re-incentivize British citizens and re-energize the British economy.
While the policy development process had links to neo-liberal theories and
think-tanks, and echoed some of their catch-phrases, Thatcherites had slightly
different aims, and so favoured different policies. Whereas the IEA authors were
willing to admit that poverty could be a depressing force, Thatcherites thought
that the poor needed to pull themselves up out of poverty, and that given
the right incentives (often punitive ones), they would do so. The roots of
Thatchers moralistic view of poverty and human nature lay not in pure neoliberal theorizing, but in conceptualizations of society and human nature
rooted in Thatchers formative years. It is to these that I now turn.

In , one IEA author noted that few modern students of the so-called social
sciences go back to rst beginnings. Partly it may be that our romantic,

N. Lawson to G. Howe, Feb. , CRD //.

N. Lawson to G. Howe, The indexation of child benet, Dec. , CRD //.
Finance Act, , section , part .
Short-term benets policy group, interim report, July , THCR ///.
The taxation of short-term benets, Apr. , CRD //.


irrational, emotional age does not want to seem like that of the great rationalists
in the Enlightenment, who insisted on going back to the noble savage. But
Thatcherites did sometimes go back to the origins of society. Thatcher, it
appears, agreed with a correspondent who wrote, [t]he truth is, as all the sages
and philosophers of history have agreed, that man is basically selsh.
Thatcherites, as Alfred Sherman wrote, simply recognise the force of selfinterest in human affairs, particularly economic affairs. We neither praise it nor
denigrate it. Self-interest was, in fact, the original basis for collective living:
All men are possessed of evil or anti-social instincts . . . It was to restrain such
instincts, and to provide channels for goodwill, that public order in the
community came into being. Its origins lie in the impulses of the individual.
Sherman argued that self-interest is not base selshness because people are
embedded in families and communities. Families were the key: he pointed out
that when Thatcherites talked of the individual, what they meant was the
family. Hence Thatchers famous, who is society? There is no such thing!
There are individual men and women and there are families. Individuals
working in the interests of their family would produce a prosperous but also a
moral society.
Thatcherites were condent in the s that the institution of the family
remained in good health. In this belief, Thatcher was bolstered by a list of
sociological works supplied by the House of Commons Library for use in the
preparation of a speech to the National Council for Women. As the research
ofcer put it, current sociology suggested that the family was stronger than ever
in the modern world. But the origins of these views on human nature and the
family can be traced back further, to Thatchers generation and her Methodist
upbringing. Robert Moores investigation of Methodism in a Durham mining
community in the mid-s described the stubbornness of Methodist
individualism among those whose religious foundations were laid in the prewar period: [m]en and women steeped in a religion based on the notion of
individual salvation, personal responsibility and self-help do not seem to accept
even mildly collectivist ideas very readily. They expressed deep misgivings
about the Welfare State, referring to people who wont work and to their own
efforts to overcome economic hardship. Thatcher called frequently on all
these tropes in her rhetoric. This instinctive reliance on beliefs moulded by

D. G. Hutton, The individual and society, in A. Seldon, ed., Agenda for a free society
(London, ), p. .

J. T. Murray to M. Thatcher, Aug. , THCR ///; highlighted by Thatcher.

A. Sherman, Self-interest and public interest, May , Centre for Policy Studies
papers, London School of Economics archive, London, CPS / (hereafter CPS).

A. Sherman, Freedom and morality, THCR ///.

A. Sherman, Nation, government, society, people, Houston, Sept. , CPS /.

M. Thatcher, interview for Womans Own, Sept. , MTF .

K. Andrews to M. Thatcher, Oct. , THCR, ///.

R. S. Moore, Pit-men, preachers and politics; the effects of Methodism in a Durham mining
community (Cambridge, ), p. .


Christianity is interesting in light of Callum Browns thesis that discursive

Christianity faltered in Britain in the swinging sixties. Though to offer a
conclusion about the vitality or otherwise of discursive Christianity in the s
is far outside the scope of this article, it is interesting to note that Thatcher felt
such currents were alive and well: I still believe that the majority of English
parents want their children to be brought up in what is essentially the same
religious heritage as was handed to me. To most ordinary people, heaven and
hell, right and wrong, good and bad, matter.
Thatcherites, then, conceived of human nature as self-interested, but not
entirely individualistic, for people were embedded in families and communities.
But we must delve a little deeper into Thatcherite understandings of the societal
inuences on behaviour, in particular, how they thought structure and culture
were related. It is generally assumed that Thatcherites emphasized culture in
explanations of poverty. It is also often implied that cultural and structural
explanations of poverty are mutually exclusive. Left-wing critiques of cultural
explanations of poverty going back at least to American sociologist/psychologist William Ryans critique of the Moynihan report (to which I will
return shortly) have suggested that to focus on culture effaces the iniquitous
effects of structural inequality, discrimination, and disadvantage. But in the
s, Thatcherites assigned a key role to structure: they assumed that
economic and legal frameworks had a long-term, formative effect on culture.
Socialist structures, particularly the punitive taxation and dependency-inducing
benet systems, had undermined Victorian virtues like thrift and hard work,
according to Thatcher (hence wont work). Union wage-claims replaced
individual effort. Asked by the Church of England to make child benet a
priority, Thatcher commented that the larger the child benet, the more
people look to the State to support the children for whom they are responsible
and whom they brought into the world. Socialism had thus caused economic,
but also moral decline. Reversing this moral decline lay at the heart of
Thatcherism. As Thatcher put it in , the main issue was not material but
moral . . . where the State is too powerful, efciency suffers and morality is
threatened. Sherman echoed her in arguing for the social market economy,
not primarily on economic grounds, but on moral grounds, because it entail[s]
the widest spread of responsibility. It has also proved economically most
benecial, but that is an added bonus. Milton Friedman too had argued that

C. G. Brown, The death of Christian Britain: understanding secularisation,

(London, ).

M. Thatcher, speech at St Lawrence Jewry, Mar. , MTF .

W. Ryan, Blaming the victim (London, ), pp. ff.

M. Thatcher, note on petition from Mr Dixon, General Synod of the Church of England,
THCR ///.

M. Thatcher, speech to social services conference dinner, The healthy society, Dec.
, MTF .

A. Sherman, speech draft, The politics of freedom, CPS /.


the production of wealth was a desirable by-product, not the main

justication of a free market. For him, the main issue was freedom. For
Thatcherites the main issue was morality and responsibility. They echoed the
rhetoric, but subtly altered the emphasis.
Thatcherites also echoed Friedmans analysis of poverty and charity. They
often cited the example of Victorian capitalists passing factory acts and
founding charitable institutions used by Friedman in Capitalism and freedom,
and in shorter articles which Thatcherites culled for ideas. Sherman cited
Disraeli and the Earl of Shaftesbury; Thatcher referred to Victorian capitalistphilanthropists, as well as to her own Methodist, small-capitalist upbringing.
But neither Friedmans analysis of negative externalities, nor of social change,
gured in the Thatcherite story, which still insisted personal provision and
private charity were superior to state provision. Thatcher favoured the Good
Samaritan, and the moral she drew from the biblical story was that you had to be
well-off to be able to give. The idea that poverty itself might sap the vigorous
virtues did not play a large role in the Thatcherite analysis; nor did the idea that
society might have changed radically since the days of Victorian charity,
rendering private philanthropy inadequate.
Though structure had a role to play, culture lay at the heart of Thatcherite
explanations of poverty. This is clearest in Keith Josephs cycles of deprivation
theory, which held that inadequately parented children become inadequate
parents, living irresponsible, chaotic, and unproductive lives. Sherman wrote
similarly about the moral inadequacies which often underlie poverty and what
is wrongly called deprivation. Thatcherites saw a culture of deprivation or
poverty as the reason that the poor were poor. This culture led them to have
poor housing, poor health, disorganized lives, low incomes, and irresponsible
spending patterns. What dened them as poor was their culture, not their low
incomes which were an outcome of that culture; this model of poverty turned
on its head the Labour/poverty lobby denition which said that the poor were
poor because they had low incomes, and the solution was to give them access to
more resources. There is clearly a tension between the Thatcherites cultural
explanation (and denition) of poverty, and the insistence that people are
rational economic beings, who will work if working brings proper monetary
gains. The economistic, rational conception of human nature and motivation

Friedman, Capitalism and freedom, p. .

M. Friedman, The line we dare not cross the fragility of freedom at %, Encounter,
, THCR ///, annotated.

A. Sherman, Freedom and morality, THCR ///; Thatcher, speech to Zurich

Economic Society, The new renaissance, Mar. , MTF .

M. Thatcher, speech to Conservative womens conference, May , MTF .

K. Joseph, The cycle of family deprivation, in Caring for people (London, ),

Conservative party archive, Bodleian Library, Oxford, PUB /; see Josephs article in
Womans Guardian, Jan. , THCR ///.

A. Sherman, The politics of freedom in honour of Sir Robert Menzies, probably ,

CPS /.


had clear roots in neo-liberal writing. The cultural explanation had parallels
with American debates in the s and s. But its deepest roots lay in
British discourses.
Thatcherite descriptions of poor peoples culture often suggested that the
poor had the shortest time-horizons and the least self-discipline, compared
with the middle classes further time-horizon and willingness to defer
gratication. Such statements lay in a long, home-grown tradition, going
back to the Edwardian middle-class philanthropists and proto-social workers
studied by Ross McKibbin. They also breathed new life into the division of
poverty into primary and secondary (the latter the result of improvident
spending), a division which entered public discourse via Rowntrees famous
studies of York. J. H. Veit-Wilson has shown that Rowntree in fact adhered to a
relative denition of poverty, not an absolute one; but that this had been
neglected by most people since, including Peter Townsend of the CPAG in his
arguments for a relative conception of poverty. The classication of the poor
as t and unt, respectable and hopeless, can be traced back to Charles
Booths surveys of the London poor in the s, and to debates in the National
Association for the Promotion of Social Science in the late s, and Booth
and other discussants were merely reinforcing the dominant prejudices of their
age, which were no doubt bound up with the Protestant ethic of capitalism.
If the poor were dened as those who had a culture of poverty, the middle
class should also properly be seen as a cultural group sharing a value-system.
Ferdynand Zweig, the Thatcherites most favoured sociologist in the s,
followed Weber and Tawney in calling it the Protestant ethic. Thatcher
called it Victorian virtues (though Victorian values circulated most widely).
Economist and Sunday Telegraph journalist Patrick Hutber, in a staunch defence
of the middle class, debated its denition. He was
tempted to say that a member of the middle classes is like an elephant one knows it
when one sees it. That, of course, is not good enough, which is why I would suggest

M. Thatcher, The path to power (London, ), p. ; K. Joseph, The politics of political

economy, address to the Economic Research Council, St Ermins, London, Jan. , in
Joseph, Reversing the trend: a critical re-appraisal of Conservative economic and social policies
(Chichester, ), pp. .

R. McKibbin, Class and poverty in Edwardian England, in McKibbin, ed., The ideologies of
class: social relations in Britain, (Oxford, ), pp. .

B. S. Rowntree, Poverty: a study of town life (London, ), idem, Poverty and progress: a
second social survey of York (London, ).

J. H. Veit-Wilson, Paradigms of poverty: a rehabilitation of B. S. Rowntree, Journal of Social

Policy, (), pp. .

E. P. Hennock, Poverty and social theory, Social History, (), pp. , at pp. ,

Joseph, Politics of political economy, pp. .


F. Zweig, The worker in an afuent society; family life and industry (London, ), p. .

M. Thatcher, The Downing Street years (London, ), p. ; see K. Joseph, The

economics of freedom, in K. Joseph, A. Maude, and I. Percival, Freedom and order (London,
), p. .


an alternative denition, that of motivation. If a single word has to be found to sum

up the characteristic middle class virtues, middle class aspirations and middle class
attitudes, I would choose a relatively old-fashioned one: thrift.

Thatcherites thought this value-system had ourished in the economic and

legal framework of competitive capitalism: [h]istorically, bourgeois values have
rested on personal economic independence; but they were not a function just
of income but of class status and traditions. The way to solve poverty was to
extend the bourgeois value-system downwards. This prompted Thatcherite
interest in embourgeoisement.
The debate over whether afuent workers were becoming middle class (and
Tory) had convulsed the left throughout the s; but it had been put to sleep
for them by the magnum opus, The afuent worker in the class structure,
which dismissed embourgeoisement. Zweig, though a marginal gure in
the British sociological establishment (and originally a refugee from Poland),
kept the theory alive, using data from the Afuent worker study to argue for
embourgeoisement, ignoring the fact that the authors of that study had used
the very same data to argue Zweigs theory was wrong. To Thatcherites,
embourgeoisement promised the rejuvenation of Britain: Joseph called it the
objective for our lifetime. It was clear that a minority would remain
unreachable, but Thatcher hoped, along with Hutber, for the embourgeoisement
of the majority of the population. To achieve widespread embourgeoisement,
rst, the economic and legal framework that ensured incentives for success and
penalties for failure must be re-established, and second, charismatic leaders
and political parties should promote a new ethos, an heir to Protestant ethics;
values and life-styles generated by the tone-giving classes in society must be
internalised by all. Structure was subordinated to culture, but still played a
signicant part in the Thatcherite analysis.
But there was another battle to be fought. Thatcherites feared, as
right-wing journalist Edward Pearce put it, that for the Guardian-reading
lobby . . . years of a strong state has undermined private values, and
individual qualities. This was de-bourgeoisement. Ination, the welfare
state (the Father Christmas State as Zweig called it), middle-class trade
unionism and consumerism all created dependency, expectations, militancy,

P. Hutber, The decline and fall of the middle class, and how it can ght back (London, ),

Joseph, Politics of political economy, pp. .

p. .

J. H. Goldthorpe, D. Lockwood, and F. Bechhofer, The afuent worker in the class structure
(London, ).

Zweig, Worker in an afuent society, pp. , .

Joseph, Politics of political economy, p. .

The middle-class struggle, Aug. , THCR ///, summarizing Hutbers

book; highlighted by Thatcher.

Joseph, Politics of political economy, p. ; F. Zweig, The new acquisitive society

(Chichester, ), pp. , ; Sherman, The will-o-the wisp of the classless society, notes on
speech () Jan. , THCR ///.

E. Pearce, draft speech and cover note, May , THCR, ///.


solidarity, put-your-claim-in-and-spend-what-you-have-while-you-have-it, and

me-tooism as Joseph warned. This explains why Thatcherites celebrated
middle-class values, but simultaneously denigrated establishment elements of
the middle class those who would be eulogized by Noel Annan in Our age, the
big-staters and paternalists. The re-establishment of an economic and legal
framework, and a cultural ethos which rewarded proper bourgeois behaviour
was vital to ensure that middle-class corruption was reversed, as well as to
convert workers. This dual impetus drove the approach to social security
established in opposition. It meant Thatcherites opposed both selective and
universal benets, and focused relentlessly on reducing the tax burden for the
majority. It drove the obsession with increasing in-work and out-of-work
differentials, and rationalizing the tax/benet system, particularly the comparatively small anomaly of untaxed short-term benets. The crusade to save the
soul of the middle class drove the abolition in of the earnings-related
supplement for unemployment and sickness benet introduced in . It
lay behind the whole ethos of Thatcherite social security: death by a thousand
cuts. The aim was not to abolish the welfare state, but to make it irrelevant to
those on middle and high incomes; to push them towards market-based
provision (as Hayek and the IEA advocated). As Nicholas Timmins astutely
pointed out, Thatcher was so successful that many in these groups overestimated the scale of the attack, so that when he set out in to write his
history of the welfare state, many people joked that I had better be quick about
it before the thing disappeared. The contention that Thatcher failed to
achieve her mission to destroy the welfare state starts from a false premise. The
argument that Thatcher entered power in with little developed policy or
ideology is also incorrect. Most of the changes to income support enacted after
had been discussed, and often eshed out, in opposition, and they
stemmed from a distinctive vision of society and poverty.
Thatcherite conceptions of the individual and society drew on personal
sources Thatchers generational experiences and her Methodist upbringing
and were bolstered by sociologists like Zweig. Thatchers suspicion of the state
chimed with Virginia school thinking, but more profoundly with Hayeks
analysis, as channelled through Churchill. Thatcher absorbed The road to serfdom
early in her political formation, when in Churchill made it a centrepiece
of his election campaign. Thatcher idolized Churchill, and she and her team

Zweig, New acquisitive society, pp. ff, , ff, Joseph, Reversing the trend, pp. , .
N. Annan, Our age: portrait of a generation (London, ).

Hansard, HC Debs, Mar. , vol. , col. . Abolition took effect from .

The earnings-related supplement paid out on pensions was not abolished.

P. Pierson, Dismantling the welfare state?: Reagan, Thatcher, and the politics of retrenchment

Timmins, Five giants, p. xv.

(Cambridge, ), p. .

See E. H. H. Green, Ideologies of Conservatism: Conservative political ideas in the twentieth

century (Oxford, ), p. .


frequently turned back to Winston for inspiration. In the s, Thatcher

displayed a Hayekian fear of socialist structures, and a Churchillian faith in the
people: what did Winston Churchill say? she asked. He said, I do trust the
British people, if they are given the incentive, they will respond, they will be
responsible. She was condent that the vigorous virtues of family-centred
individualism would reassert themselves once socialism was smashed; that the
culture of dependency was a by-product of socialist interventionism.
This optimism declined during the s as the dismantling of socialist
structures did not bring about the expected moral rejuvenation. Thatcher came
to focus more heavily on the intractability of culture, and to blame the afuence
and permissiveness of the s, and particularly the Wilson government. Mark
Jarvis has suggested that these strands of Thatcherite rhetoric were present from
, but in fact they only really surfaced in , becoming dominant in the
later s. Thatchers growing pessimism culminated in her emphasis, in
her autobiography, on the importance of the church in supporting traditional
values, and her embrace of American analyses of the culture of poverty. The
phrase culture of poverty had roots in interwar African-American and urban
sociology, but was made famous by left-wing anthropologist Oscar Lewis in the
mid-s. His liberal ideas, however, were easily appropriated by conservatives
in search of a modern label for the undeserving poor. From the s, two
types of theory of the culture of poverty came into conict in America. One
theory held that poor people had an entrenched, pathological culture of
poverty, and were in need of individual interventions. William Ryan suggested
this appealed to many self-identifying liberals and humanitarian conservatives.
Both groups wanted to help the poor, but, at the same time, did not want to
alter radically the structures of a society which served them well; hence the focus
on individual interventions. Ryan saw D. P. Moynihans report, The Negro
family: the case for national action, as emblematic of this sort of theory of the
culture of poverty (though later commentators have stressed that Moynihan
did identify external social factors and economic conditions as the cause of

The index to Campbell, Grocers daughter, has a subsection under Churchill for MT
reveres, with ten page references, and a further two for MT quotes; see Daily notes
general election, . Points from Mr Churchills broadcast, THCR, ///, highlighted;
M. Thatcher, speech to Conservative rally in Newcastle, Apr. , MTF ; G. Howe,
memo to Stepping Stones group, Nov. , THCR, ///.

M. Thatcher, speech to Conservative rally in Newcastle, Apr. , MTF .

M. Jarvis, Conservative governments, morality and social change in afuent Britain,

(Manchester, ), pp. ff; see Thatcher, speech to Conservative Central Council, Mar.
, MTF . A. Holden, Makers and manners: politics and morality in postwar Britain
(London, ), p. , notes that the critique of permissiveness took hold during the s,
though he also seems to suggest that Thatchers critique of the permissive sixties was
formulated during the s, on p. .

Thatcher, Path to power, pp. , .

J. Welshman, Underclass: a history of the excluded, (London, ),

pp. ff, .


family instability and of poverty). The other interpretation of the culture of

poverty, pioneered by sociologists like Herbert Gans, saw it as an adaptation to
the structural situation the poor found themselves in, endowing it with greater
dignity and legitimacy. This interpretation suggested that the structural
factors needed tackling.
John Welshman has argued that in the early s Keith Joseph was
stimulated by British debates about the problem family . . . family planning and
deprivation to work on his theory of cycles of deprivation; American debates
were not inuential. Joseph may well have been aware of the US debates; he
had, after all, a voracious academic mind (he won an All Souls Prize
Fellowship), and when he rst publicly outlined his theory of cycles of
deprivation in , he organized a three-day seminar at All Souls, and the text
went through eleven drafts. But the four key pieces of research he cited were
British, and though he referred to one American work, it was far from a
statement of the conservative American theory of the culture of poverty; rather
it was a critique of American (and English) individualism, in favour of Soviet
child-rearing. Joseph and other Thatcherites started to engage with
American theories of the culture of poverty in the latter half of the s, as
part of the re-evaluation of Conservatism begun when Joseph negotiated from
Heath a roving brief to re-examine policy in the summer of . Joseph
encouraged a self-conscious engagement with foreign sources of intellectual
inspiration, particularly with iconoclastic American thinkers Friedman and
Hayek were, of course, the best known. In , Joseph urged Chris Patten,
director of the CRD, to read Edward Banelds update to The unheavenly city,
which created a storm of criticism, but which was of great value. This work set
out to turn American urban studies upside down. Baneld began by dividing
the population into four classes upper, middle, working, and lower based on
their possession of time-horizons of decreasing length, learned in childhood
and passed on as a kind of collective heritage. While the rst three classes were
all normal, the lower classs present-centred attitude was pathological.
Thatcher met Patrick Moynihan in early and they apparently had an
enlightening conversation about welfare, particularly the greater quantity of
charity in the Victorian period. Engagements such as these reinforced
Thatcherites theories about poverty, time-horizons, and charity. In the s,

Ryan, Blaming the victim; S. M. Lipset, The prescient politician, in R. A. Katzmann, ed.,
Daniel Patrick Moynihan: the intellectual in public life (Washington, DC, ), pp. , at p. .

H. J. Gans, The urban villagers: group and class in the life of Italian-Americans (New York, NY,

Welshman, Underclass, p. .

A. Denham and M. Garnett, Keith Joseph (Chesham, ), p. ; M. Halcrow, Keith

Joseph: a single mind (London, ), p. ; Joseph, The cycle of family deprivation, pp. ;
U. Bronfenbrenner, Two worlds of childhood: U. S. and U.S.S. R (London, ).

K. Joseph to C. Patten, Mar. , KJ / (I am indebted to Ben Jackson for drawing

this reference to my attention); E. Baneld, The unheavenly city: the nature and future of our urban
crisis (Boston, MA, ), p. .

D. P. Moynihan to M. Thatcher, Jan. and Feb. , THCR ///.


Thatcher noted that conservative thinkers like Michael Novak and Charles
Murray had reinforced her views. She was increasingly comfortable with
conservative American theories about intractable cultures of poverty as the
optimism of the s faltered. Thatchers condence in the s that
cultures of poverty would change if problematic structures (i.e. socialist
structures) were removed was closer in some ways to the liberal American
theorists (like Herbert Gans) but the latter wanted to eradicate structural
(classed) inequality, a project which would have horried Thatcher.
The Hayekian roots of Thatcherite analyses of socialism are important for a
proper understanding of the relationship of Thatcherism to One Nation
Conservatism. In the s and s, wet Tories like Gilmour seized the
One Nation label and made it their own, associating it with paternalism and an
extensive welfare state. Stephen Evans has recently argued that we need to reassess the relationship of Thatcherism and the One Nation tradition. He
suggests that Thatcher appropriated One Nation rhetoric as it allowed [her] to
speak to her party in an idiom they could understand and therefore support,
but focused on the patriotic themes of Disraelian One Nation Conservatism,
rather than the paternalistic strands emphasized by the middle way. In fact,
drawing on Hayek, Thatcher re-worked the concept of the Two Nations far
more powerfully than Evans suggests. She claimed that [n]owadays there really
is no primary poverty left in this country: hence there were no two nations in
Disraelis sense. The egalitarian socialist machine was the new danger to
social intercourse. The two nations were no longer poor and rich; rather,
socialism had ironically created not a classless society, not one nation, but the
most stratied of all societies, divided into two classes: the powerful and the
powerless; the party-bureaucratic elite and the manipulated masses.
Politicians and bureaucrats treated the second nation like numbers in a State
computer. The echo of Tocqueville via Hayek and Churchill is easily
audible. The radical updating of the two nations meant that when Patrick
Jenkin said in that with tax credits, we can look forward to ending the
Two Nations of which Disraeli spoke, he was using a language fundamentally
at odds with Thatcherite understanding of the two nations. To them, tax

Thatcher, Downing Street years, p. ; Thatcher, Path to power, p. .

D. Seawright, One nation, in K. Hickson, ed., The political thought of the Conservative party
since (Houndmills, ).

S. Evans, The not so odd couple: Margaret Thatcher and one nation Conservatism,
Contemporary British History, (), pp. , at p. .

M. Thatcher, interview for the Catholic Herald, Dec. , MTF ; the claim was
made consistently by Joseph, see Moral and material benets of the market order, speech to
Bow Group, July ; Equality: an argument against, Observer, Aug. , both reprinted in Joseph, Stranded, pp. , .

M. Thatcher, speech to Greater London Young Conservatives, Dimensions of

Conservatism, July , MTF ; see A. Sherman, The new Tory radicalism,
Skeleton, Jan. , CPS /.

M. Thatcher, speech to Conservative party conference, Oct. , MTF .


credits meant socializing even more national income, placing it in the control of
the efcient expert administrators, which, to Thatcherites, appeared to
reinforce the new two nations which socialism had created. Competition,
choice, low taxes, and self-provisioning were designed to combat the socialism
thought to be dividing Britain and dragging the country down.
Thatcherism was a coherent ideology: it was driven by a vision of moral
rejuvenation which involved appropriating monetarist economics but dismissing Milton Friedmans negative income tax. In developing and presenting their
project, Thatcherites drew on a range of home-grown traditions and discourses,
plundering neo-liberalism when it suited them. Hayeks early intervention in
was particularly inuential. But neo-liberalism was a complex and diverse
phenomenon, as suggested by the discussion of the different social policies
endorsed by Hayek, Friedman, and the IEA. This could be a source of strength
for the exible Thatcherites: in their ideology and rhetoric, they easily fused
and fudged elements of Hayeks fear of hot socialism with his later stress
on the tyranny of the bureaucrat and the social administrator. Replacing
socialist government with the free market would do away with this creeping
tyranny. Proper economic and legal structures would allow people to exercise
the virtues they naturally inclined towards, creating prosperity and morality. In
this way, the supposed tension between competitive markets and traditional
morals was resolved, at least to Thatcherites own satisfaction.

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