History of The British Conservative Party - The Thatcher Years, 1975-1990

The Thatcher Years, 1975-1990

Heath remained leader of the party despite growing challenges to his mandate. At the time there was no system for challenging an incumbent, leader but after renewed pressure and a second general election defeat a system was put in place and Heath agreed to holding a leadership election to allow him to renew his mandate. Few both inside and out of the party expected him to be seriously challenged, let alone defeated. However Margaret Thatcher stood against Heath and in a shock result outpolled him on the first ballot, leading him to withdraw from the contest. Thatcher then faced off four other candidates to become the first woman to lead a major British political party. Thatcher had much support from the monetarists, led by Keith Joseph. The Conservatives capitalised on the Winter of Discontent and the growing inflation rate, not to mention the humiliating bailout of the UK economy by the IMF in 1976, and won the 1979 general election with a majority of 43. Thatcher, thereby became the UK's first woman Prime Minister.

Thatcher soon introduced controversial and difficult, but ultimately successful, economic reforms after two decades of decline. The Falklands War, the perceived extreme left nature of the Labour Party, and the intervention of the centrist SDP-Liberal Alliance all contributed to her party winning the 1983 general election in a landslide, gaining a majority of 144. Thatcher won the 1987 general election with another large, but reduced majority of 102.

The second and third terms were dominated by privatisations of Britain's many state-owned industries, including British Telecom in 1984, the bus companies in 1985, British Gas in 1986, British Airways in 1987, British Leyland, and British Steel in 1988. In 1984 Mrs. Thatcher also successfully concluded five-year long negotiations over Britain's budget to the European Economic Community. (See UK rebate.)

In 1989, the Community Charge (frequently referred to as the "poll tax") was introduced to replace the ancient system of rates (based on property values) which funded local government. This unpopular new charge was a flat rate per adult no matter what their circumstances; it seemed to be shifting the tax burden disproportionately onto the poor. Once again Thatcher's popularity sagged, but this time the Conservatives thought it might cost them the election. Michael Heseltine, a former cabinet member, challenged her for the leadership in 1990. She won the first round, but not enough to win outright, and after taking soundings from cabinet members, she announced her intention not to contest the second ballot. In the ensuing second ballot, the Chancellor of the Exchequer John Major beat Heseltine and Douglas Hurd.