Oct. 29 (Bloomberg) -- Margaret Thatcher’s first Cabinet decided it needed a campaign to educate the British public about the “economic facts of life” to gain acceptance for spending cuts and pay restraint, according to documents released today.
“We have to dampen down the deeply entrenched expectations among the public at large that their money incomes increase each year and that there is an entitlement for pay in line with some concept of a going rate,” Industry Secretary Keith Joseph wrote in a briefing note to Thatcher in July 1979, less than three months after their Conservative Party was elected.
The document is among 200 pages of correspondence published by the National Archives in London. Thatcher came to power after the 1978-79 “winter of discontent,” in which public-sector labor unions staged widespread strikes to protest Labour Prime Minister James Callaghan’s attempt to cap pay.
Nine days ago, the current Conservative government under Prime Minister David Cameron announced details of cuts totaling 81 billion pounds ($129 billion) by 2015, the biggest since World War II, to slash the record budget deficit. A total of 490,000 public-sector jobs will be lost.
“The government are committed to a high quality of public services, but their provision must be in line with what the economy can afford,” a 1979 briefing note said. “Over-ambitious public spending plans can only damage the wealth-creating sector of the economy.”
The Thatcher government’s strategy was split in two, according to the documents. Firstly, there would be a quick campaign to influence the current round of pay negotiations, convince businesses that the government would attack inflation and “bringing home to trade unionists and the wider public the dangerous consequences of higher pay unrelated to higher output,” according to a memo.
Secondly, a “long campaign” would aim to gradually educate the public “in facts of economic life and the relevance of government policies to the country’s recovery.”
“Never in the whole of British postwar economic history -- not even in the oil crisis of 1974 -- has the economic outlook been so utterly bleak,” said one 31 year-old government memo.
In the third quarter of 1979, the economy shrank by 2.4 percent. That contraction hasn’t been equaled since then, with the drop in gross domestic product for the first quarter of last year having been revised up to 2.3 percent. The decline heralded the beginning of a slump that would last through the first quarter of 1981.
Though many in government delivered sobering assessments of the economy and the future, a Treasury special adviser, Peter Cropper, proposed offering optimism to the public.
“There is no hint of the reforming crusade that some of us think we are launched on,” he wrote. “No hint of the end goal of it all -- joy, wealth, national power, two acres and a cow, a second car in every garage, interesting jobs, leisure, comfortable trains, Channel Tunnels, atomic power stations, gleaming new coal mines, everyone a bathroom, patios for all etc., etc.,”
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