4 graphs on Thatcher’s legacy: a richer but more unequal nation.

by Stephen Tall on April 11, 2013

A generation on, the Thatcher legacy continues to provoke and divide. One of the questions it poses for liberals is one this government is still wrestling with: does inequality matter if everyone’s getting richer?

Margaret Thatcher’s answer was that it did not — as she famously illustrated in one of her last Commons performances in response to a question from Simon Hughes:


(Click here to watch on YouTube.)

Here are three graphs which show the post-war record of governments, including Mrs T’s…

Yes, earnings did go up for everyone, including the poorest

thatcher - earnings_1
(Graph from Channel 4 FactCheck.)

And the UK’s wealth grew faster than in other countries

thatcher_gdp_2
(Graph from John Van Reenen on the LSE Politics and Policy blog.)

But the poor were actually worse off if you include housing costs

Thatcher-income_2
(Graph from Jonathan Jones at The Spectator.)

And inequality widened dramatically

Thatcher-Gini_3
(Graph from Jonathan Jones at The Spectator.)

These are just four snapshots of Margaret Thatcher’s economic legacy. But they tell a story — of a nation which got richer but more unequal.

The poor were better off in absolute terms, worse off in relative terms. That’s a fact which gets to the heart of the dilemma which still causes friction in the Lib Dems: the tension between equality of opportunity and equality of outcome.

Does the job of government stop at offering the former (which is more or less the post-Thatcher consensus), or should it also try actively to deliver the latter?

* Stephen Tall is Co-Editor of Liberal Democrat Voice, a Research Associate for the liberal think-tank CentreForum, and also writes at his own site, The Collected Stephen Tall.