Is it Thatcher’s fault for the state we’re in?

Like him or loathe him, Ken Livingstone is, almost, always good value-for-money with his comments. On the Andy Marr show this morning he laid the blame for the current banking crisis firmly at the feet of Margaret Thatcher and her policies of deregulation in the 1980s.

This proposal ties in with one of the themes in Simon Jenkins’ excellent study of our last four PMs, Thatcher and Sons. Jenkins lays plain the laissez-faire approach to banking in general, and the City in particular, that the Conservative government practised from their second election win in 1983. This era became notable for the advent, at least in modern terms, of the yuppies, London ‘barrow boy’ traders earning fortunes, mobile phones the size of house bricks and conspicuous consumption not seen since the premiership of Harold MacMillan in the late 1950s.

The inherent contradiction of a virtually unregulated financial services market allied to a firm government grip on the money supply that was fundamental to the monetarist policies pursued by the Thatcher administrations meant that the idea of ‘rolling back the frontiers of state’ was never fully realised. Should something have been done to tighten up the sharp practices of the money men or would the British economy have not been able to fight off competition from the strengthening challenges of the Western European financial powerhouses?

A new statute in the form of the Financial Services Act came into being in 1986, but far from stopping the onset of easier credit and the globalisation of financial services, it actually accelerated the process and allowed banks and the few remaining building societies to offer easier loans and mortgages, sometimes to people who could just about afford the repayments. The subsequent downturn of the economy in the late 1980s led to thousands of repossessions when unemployment rose. Sound familiar? 

Jenkins doesn’t spare Thatcher’s successors either and castigates Major, Blair and Brown for their continuation of these policies; according to him reform in almost every area of government except in the banking and finance industries were the hallmarks of successive governments from 1983 to the present term.

All this has led us to the situation we are in now where banks and financial institutions have been allowed to invest and offer services unchecked by any government intervention and without having to answer to our elected representatives. The recent appearance by the previous bosses of RBS and HBOS in front of the Treasury Select Committee could be seen as not just closing the stable door after the horse has bolted, but more in line with mucking out the stall after it ran in the 3:30 at Fakenham last July.

So, is Jenkins right and does the blame for the current problems lie at the feet of all of our governments from the 1980s or, as Ken thinks, is it all just Thatcher’s fault?

More excellent Politics moments on YouTube [20 Sep 2011]
My top 9 UK politics You Tube clips [19 Sep 2011]
Prime Ministers are not like you and me [14 Oct 2010]
The Labour years: out of the wilderness [25 Sep 2010]
UK political parties exam update - part one [8 Apr 2010]
Brown’s inner circle - AS exam update [6 Apr 2010]
The heat is on [17 Nov 2009]
Tories: defining times? [3 Oct 2009]
Labour: a summary of old and new Labour policies [2 Oct 2009]
Labour pains [27 Sep 2009]
Let battle commence [18 Sep 2009]
Bogdanor on the constitution [16 Sep 2009]
The battle over spending [15 Sep 2009]
Sunday roundup [14 Sep 2009]
Cabinet government is dead say officials [25 Aug 2009]
Brown v Cameron [2 Jul 2009]
It’s the economy, stupid! [1 Jul 2009]
US revision: comparing civil liberties [18 Jun 2009]
AS last minute updates [2 Jun 2009]
AS Revision: Constitutional Reform [26 May 2009]
Electing and connecting [25 May 2009]
AS revision: Parliamentary scrutiny [15 May 2009]
Ministerial perks [8 Apr 2009]
Gordomania? [12 Mar 2009]
Gordon’s ‘depression’ [4 Feb 2009]
The world’s most powerful man? [28 Jan 2009]
Brown and Mandy [15 Jan 2009]