The making of Margaret Thatcher

Today is the 50th anniversary of Margaret Thatcher becoming the Conservative Party leader — her first step to the premiership, where she transformed Britain and initiated a global turn toward neoliberalism. 

Once again we live in a politically and economically tumultuous age where many people long to transform the status quo, a change that has so far proven elusive. Chronicling the last great transformation is the focus of my new book, Forging the Iron Lady: Margaret Thatcher, the 1970s, and the Origins of Neoliberalism (Routledge 2025). The rise of Thatcher and the emergence of Thatcherism must be understood in context. It did not just “happen”; it required certain preconditions to facilitate its emergence, which I describe as the “six P’s”: control of a major party; recognition of policy failure in previous governments; well-articulated alternative policies; poor economic performance; facilitating political conditions; and key personalities to carry out reform. 

Step one, apropos the anniversary, was her becoming Tory leader. We sometimes forget now how improbable that was. Sir Keith Joseph was the obvious challenger to then leader Ted Heath. Joseph’s very public “conversion to conservatism” elevated him as the voice of the disenchanted Tory right. Thatcher had only been Education Secretary, known to most only from the “milk snatcher” row. Alas, Joseph self-immolated with a speech questioning the health of “our human stock,”  and Thatcher stepped into the breach. The Economist described her as, “Precisely the sort of candidate that ought to be able to stand, and lose, harmlessly.” This was far from being the last time Thatcher would be underestimated. Heath was a three-time election loser, with an acerbic personality alienating many Tory MPs. Thatcher, meanwhile, articulated a new vision for the party, based on economic as well as political liberty, unapologetic support for capitalism, opposition to  aggressive egalitarianism, and demand for a smaller state. Come the day, it proved a more appealing offer than Ted Heath’s value-light moderation. 

She won the leadership, but the party was not yet hers. The majority of the Shadow Cabinet were One Nation Tories like Jim Prior and Ian Gilmour, and her position was insufficiently secure to see them off. The party thus bristled at recognizing the policy failures of the previous government in which they had served. For several years, this hindered getting to the third prerequisite: well-articulated alternative policies. On the most pressing issues of that decade — how to fight inflation and how to handle the unions — the moderates and Thatcherites fought for several years to a draw. The major policy documents of the time were studies in obfuscation. 

Success came by drafting outsiders, mainly through the Centre for Policy Studies, the think-tank set up by Keith Joseph. Among the notable figures to emerge from the CPS were John Hoskyns and Norman Strauss, who wrote the “Stepping Stones” strategy. Winning the next election was not enough; the Conservatives needed to induce a “a sea-change in Britain’s political economy.” This required convincing voters to reject socialism once and for all to open the pathway to reform. It also meant grappling with the main obstacle to reform: the unions. 

The rise of Thatcherism must be grounded in the context of the seventies

For the Conservative establishment, taking on the unions was madness. Harold Wilson and Ted Heath both suffered deep political wounds for trying just that. In their minds unions were unstoppable. Party Chairman Peter Thorneycroft was so distressed by what he saw as dangerous nonsense that he wanted every copy of Stepping Stones burned. Thatcher, Joseph, and crucially William Whitelaw, thought it brilliant, however, and it was integrated into Conservative policymaking. Resistance to these ideas from the Tory machinery remained strong, and progress in articulating policies was limited. When the crucial political moment came, though, Stepping Stones served to focus and clarify the Tories response.  

The rise of Thatcherism must be grounded in the context of the seventies. The long-term record of poor economic performance, the period of relative decline, Britain as the sick man of Europe, undercut support for the status quo. The maladies that produced that decline were masked during the long postwar boom. When global economic crisis emerged, all these problems were exposed, and hence the country lurched from crisis to crisis. A miners’ strike in 1972 saw the lights going out and industry put on a three-day week — before the government capitulated. Another miners’ strike two years later saw more blackouts, more three-day weeks, and finally a gambit by Heath — the snap “Who governs Britain?” election, which he promptly lost. Yet Labour fared no better. Their Social Contract promised industrial peace in exchange for increases in spending, which was pushed to its postwar peak. However, so was inflation, hitting 25 per cent in 1975. A financing crisis followed, necessitating a loan from the IMF in 1976. Labour, now led by Jim Callaghan, was forced into deep spending cuts. 

Inflation had fallen yet remained in the teens. Tightening the monetary supply to bring prices down was seen as an unacceptable threat to full employment, so Callaghan opted for an incomes policy, cajoling workers into capping wage growth at 5 per cent. With inflation over 10 per cent, this produced real declines in purchasing power. After two years of grudging cooperation, workers rebelled. The result was the Winter of Discontent, the wave of strikes sweeping the country in 1978-79. Strike followed upon strike throughout a frigid winter, the inconveniences, disruptions, and misery piling up upon the public. As those strikes were settled with increases well above 5 per cent, Callaghan’s economic policy was in tatters, and Labour’s electoral fortunes decimated for a generation.

Rightly remembered as a “conviction politician,” she was also a skilled pragmatist

The calamities of the decade provided political conditions amenable to transformative politics. Having the hardline approach to the unions advanced in Stepping Stones at hand proved most useful. Without it, the Tory Shadow Cabinet would likely have argued in circles over the appropriate response, as that is what they had done for the previous four years. 

Thatcher did not achieve greatness on her own; there were many key personalities in her supporting cast. Yet she is rightfully the central player. She was courageous, challenging Heath when no others in the party would. Rightly remembered as a “conviction politician,” she was also a skilled pragmatist, conceding when she could not win, while never losing sight of the goal. Courage and conviction were tempered with patience and persistence. While the chaotic decade created political opportunities, not just any politician could have recognized and exploited these openings. Voters were so dismayed in the 1970s precisely because no one seemed capable of managing the nation’s problems. When the Winter of Discontent hit, Thatcher demonstrated that she had the skill, acumen, and convictions needed to take advantage of the moment and assert control, which led her into Downing Street. 

Interrogating the past offers insight into the possibilities of the present, and there are obvious parallels between Mrs. Thatcher’s experience and the challenges facing Kemi Badenoch. Both took over a defeated and demoralized party in the aftermath of a failed government. Part of Thatcher’s success was an open recognition of Conservative failures in government and demonstrating to the voters that she was committed to transforming the status quo. Badenoch must do the same. Like Thatcher, this might prove a long, hard slog with a stubborn party, if she is even given the time to do it. But will she be made of the same stuff as the Iron Lady?