How public spending rose under Thatcher

Thatcher squeezed public services but high unemployment meant spending rose by an average of 1.1% a year.

Despite the rhetoric of "rolling back the state", Margaret Thatcher was less successful in cutting public spending than many of her supporters (and opponents) like to believe. As the IFS graph below shows, real-terms spending rose in every year of her premiership apart from two. Only in 1985-86 and 1989-90 did spending fall, by 1.1 per cent in the former and 2.3 per cent in the latter. On average, it increased by 1.1 per cent a year. Under the coalition, by contrast, it is forecast to fall by an average of 0.4% a year in real terms (departmental spending is being cut by 11% but debt interest and high unemployment mean the total reduction is far smaller). 

While Thatcher squeezed spending on public services such as health and education, mass unemployment and the consequent increase in spending on benefits (which, unlike the current government, she allowed to rise with inflation) ensured that total expenditure remained high. 

But while spending generally kept pace with inflation, it did fall dramatically as a share of GDP. When Thatcher entered office, total expenditure stood at 45.1%. It was briefly reduced - to 44.6% - in her first year before rising every year until 1982-83 when it peaked at 48.1%. Spending then fell in every remaining year, totalling just 39.2% in 1989-90 after the economy grew by an average of 4.7% between  1984 and 1988. 

Spending under Thatcher as a percentage of GDP

  • 1979-80 44.6%
  • 1980-81 47%
  • 1981-82 47.7% 
  • 1982-83 48.1% 
  • 1983-84 47.8% 
  • 1984-85 47.5% 
  • 1985-86 45%
  • 1986-87 43.6%
  • 1987-88 41.6%
  • 1988-89 38.9% 
  • 1989-90 39.2% 

Source: HM Treasury

Public spending then rose under John Major, largely as a result of the 1991-92 recession, peaking at 43.7% of GDP in 1992-93. It later fell to a modern low of 34.5% under Labour in 2000-01 before rising in every subsequent year until it reached 47.7% in 2009-10 (the surge was largely a result of the recession, which saw spending rise by 3.2% compared with 2008-09). Osborne's axe will see it fall to 44% in 2014-15 and, if the election goes the Tories' way, to 40.5% in 2017-18. 

Margaret Thatcher making a speech, 22nd May 1980. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Boris Johnson is out of control, but Theresa May is too weak to punish him

Her weary “Boris is Boris” remark after his intervention suggests she couldn’t care less.

Only younger Tory MPs asked last weekend: “Why did Boris do it?” Why did he write a 4,000-word essay on his demands for Brexit, just six days before Theresa May would make a definitive speech on the government’s plans? The older ones knew why: he hadn’t been the centre of attention for a while and wanted to remind people of his existence and that he remained in the game. A charitable fringe of pro-Brexit MPs thought he did it because he is a sincere Leaver, motivated by a desire to ensure the democratically expressed will of the British people is discharged. However, theirs was not a view widely shared.

Others thought they could trace the motivation for Johnson’s intervention back to the events of June 2016. “The reputation of Vote Leave at the moment is a pile of shit,” one told me, referring to the campaign whose figurehead Johnson had been. The metaphor became even more pungent: “Going back to the £350m is like a dog returning to his vomit.” The figure, plastered on Vote Leave’s battle bus, was the amount Johnson and his friends claimed would be available post-Brexit to spend weekly on the NHS. It was quickly rubbished, with Nigel Farage’s Leave.EU campaign dismissing it outright. It was a gross, not a net, figure; it included the EU rebate, which ceases to exist when our contributions stop. David Norgrove, head of the UK Statistics Authority, has repudiated the assertion; and there are many other institutions, such as our tertiary education sector, that will lose EU money and expect the government to make it up. That Johnson should mention this fantasy figure in his article has bemused even some of that dwindling band of MPs who still see him as a possible future leader.

Although the piece was in Johnson’s familiar idiom, others detected in it the influence of Vote Leave’s former director, Dominic Cummings. Further evidence came in a bout of aggressive tweeting from Cummings after the pack turned on Johnson. An MP who worked with Vote Leave told me, “Cummings has returned. He is a narcissist. If he can’t get his own way, then he prefers to destroy: that was how he operated all through the campaign.”

Cummings, a former aide to Michael Gove, is like Johnson a publicity addict: both thirst to see their names in the media. He disappeared from view after Gove’s failed leadership bid, when Gove had to promise supporters that Cummings would not work in Downing Street if he won, so toxic was Cummings’s reputation after Vote Leave. Gove was quoted as supporting Johnson’s “vision”, a further sign of Cummings’s involvement. Within 24 hours, Gove’s friends denied that he supported any such thing but then, as Cummings went into action, Gove confirmed his backing for Johnson.

Johnson’s intervention did not grate with everybody. Some Brexiteer Tories, such as Jacob Rees-Mogg, felt that after a party debate dominated by ministers favouring a Brexit that looks like continued membership of the EU by other means – notably Philip Hammond – it was time the Foreign Secretary spoke out for something representing a cleaner break. Some also felt that, given his office, he had a right to have a public say on the matter, after months in which May had done her best to ignore him.

Her weary “Boris is Boris” remark after his intervention suggests she couldn’t care less, and suggestions he might resign are unlikely to concern her unduly. His remarks were not against party policy, but MPs trusted by Downing Street were at pains to stress that his views would have no effect on the content of the Prime Minister’s Brexit speech, for there had “never been any chance of Theresa going off-piste”.

Johnson’s intervention was, however, unhelpful to him and to May. Colleagues saw it as the consequence of his having spent the summer steaming with frustration because he had lost ownership of the Brexit issue. He has also, according to friends, developed a thinner skin of late, and feels wounded by frequent attacks on him in the media pointing out his disengagement, his laziness, his ambition and his generally poor impression of a foreign secretary. For so long the goût du choix of many younger colleagues, he now finds they take him no more seriously than most of his older ones do. He once took for granted that in a leadership contest MPs would choose him as one of the two candidates for a plebiscite of the membership; now few think that likely.

Too many colleagues have taken the Telegraph article as further proof of his inability to be a team player, and of his unfitness for higher office – which was why Gove dropped him last year. Referring to Johnson’s time as mayor of London, a colleague says: “He was a good chairman, when he had seven or eight deputy mayors. But he can’t do what a minister is supposed to do, which is to grasp a policy and deliver it.” Another highlights his skewed sense of priorities and the lack of a deft political touch. “Isn’t it astonishing that just as he should be sorting out all consular and diplomatic help for our people in the West Indies after the hurricane, he finds time to write a 4,000-word newspaper article? As usual, it’s not about what’s good for the country. It’s what he thinks is good for him.”

Yet, as Ken Clarke swiftly pointed out, Boris Johnson has shown that however much he annoys May, she is too damaged and vulnerable to sack him. When Amber Rudd, the Home Secretary, started mocking him as a “back-seat driver”, May was seen to be presiding over a cabinet whose most senior members were squabbling. Johnson’s self-indulgence also meant that the expectation surrounding May’s Florence speech, already considerable as she struggled to rebuild her credibility and that of her Brexit policy, became even harder to satisfy. 

Simon Heffer is a journalist, author and political commentator, who has worked for long stretches at the Daily Telegraph and the Daily Mail. He has written biographies of Thomas Carlyle, Ralph Vaughan Williams and Enoch Powell, and reviews and writes on politics for the New Statesman

This article first appeared in the 21 September 2017 issue of the New Statesman, The revenge of the left