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After 1945, neo-liberal thinkers and think-tanks in the US and UK outlined different state welfare systems for the poor, such as Milton Friedman's negative income tax. These were underpinned by a rational, economistic conception of human nature. Between 1975 and 1979, Thatcher's Conservative party abandoned attempts to develop comprehensive, state-led, paternalistic schemes to tackle poverty. Thatcherites focused instead on creating what they saw as a rational tax/benefit system which would provide a safety-net for the poor, but encourage effort and thrift. They attempted to marginalize the importance of state welfare for the middle classes, to re-invigorate the ‘bourgeois virtues’ which had flourished in Victorian Britain. A family-centred, moralistic individualism underpinned Thatcherite policies; this individualism was not precisely congruent with that of neo-liberal theorists. Its roots lay in personal sources (particularly Methodism), as well as home-grown discourses on poverty and a Hayekian fear of the state. Though Thatcherites took ideas from diverse sources, their political project had a single guiding purpose: the moral (and, secondarily, economic) rejuvenation of Britain. Thatcherism was, thus, an ‘ideology’ in the sense used by Michael Freeden.

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St Catharine's College, CambridgeCB2
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Many thanks are due to Dr Jon Lawrence, Professor Peter Mandler, James Stafford, the two anonymous referees, and to the organizers and participants at the ‘Neo-liberalism and British Politics’ workshop in Oxford, June 2011, for their extremely helpful comments on earlier drafts of this article.

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1 N. Strauss, ‘Document for Steering Committee on Communications Strategy’, the papers of Baroness Thatcher LG, OM, FRS, Churchill Archives Centre, Cambridge, THCR, 2/6/1/247 (hereafter THCR).

2 Bell D., The cultural contradictions of capitalism (London, 1979), p. xx; J. Grey, Is Conservatism dead?, qu. E. H. H. Green, Thatcher (London, 2006), p. 50; Brittan S., Capitalism and the permissive society (London, 1973); Levitas R., ed., The ideology of the New Right (London, 1986).

3 Hall S., ‘The great moving right show’, Marxism Today (1979), pp. 1420; Samuel R., ‘Mrs Thatcher's return to Victorian values’, Proceedings of the British Academy, 78 (1992), pp. 929; Bulpitt J., ‘The discipline of the new democracy: Mrs Thatcher's domestic statecraft’, Political Studies, 34 (1986), pp. 1939.

4 Vinen R., Thatcher's Britain: the politics and social upheaval of the Thatcher era (London, 2009), p. 5.

5 Gilmour I., Dancing with dogma: Britain under Thatcherism (New York, NY, 1993); Jackson B., Equality and the British left: a study in progressive political thought, 1900–1964 (Manchester, 2007), pp. 34; Freeden M., Ideologies and political theory: a conceptual approach (Oxford, 1996), pp. 4, 2930, 33–4.

6 Francis M., ‘“A crusade to enfranchise the many”: Thatcherism and the “property-owning democracy”’, Twentieth Century British History, 23 (2012) (first published online on 31 Aug. 2011. doi: 10.1093/tcbh/hwr032).

7 Both Hayek and Friedman, the two thinkers examined, resisted classification as ‘neo-liberal’, but projecting the term back on to them seems a useful shorthand.

8 D. Kavanagh, ‘The making of Thatcherism, 1974–1979’, in S. Ball and A. Seldon, eds., Recovering power: the Conservatives in opposition since 1867 (Basingstoke, 2005), p. 219; N. Timmins, The five giants: a biography of the welfare state (London, 2001), p. 364.

9 Jackson B., ‘At the origins of neo-liberalism: the free economy and the strong state, 1930–1947’, Historical Journal, 53 (2010), pp. 129–51.

10 K. Tribe, ‘Liberalism and neoliberalism in Britain, 1930–1980’, in P. Mirowski and D. Plehwe, eds., The road from Mont Pèlerin: the making of the neoliberal thought collective (London, 2009), pp. 68–97.

11 von Hayek F. A., The road to serfdom (London, 2002), pp. 14, 25, 60–1, 117, 81.

12 Idem, The constitution of liberty (London, 1960), pp. 254, 262.

13 Oakeshott M., On human conduct (Oxford, 1975), p. 184.

14 H. Arendt, The human condition (Chicago, IL, 1958), p. 39 and passim.

15 Hayek, Road to serfdom, p. 39.

16 Idem, Constitution of liberty, pp. 257–8.

17 Ibid., p. 302; idem, Road to serfdom, p. 39.

18 Friedman M., Capitalism and freedom (London, 1962), p. 191.

19 Ibid., pp. 192ff.

20 B. Chiplin, ‘Professor Dennis Lees: industrial economist who was a staunch believer in the free market’, Independent, 27 Feb. 2008.

21 D. Lees, ‘Poor families and fiscal reform’, Lloyds Bank Review (Oct. 1967), pp. 1–15, at pp. 10–11.

22 Christopher A., Polanyi G., Seldon A. and Shenfield B., Policy for poverty: a study of the urgency of reform in social benefits and of the advantages and limitations of a reverse income tax in replacement of the existing structure of state benefits (London, 1970), p. 22.

23 Ibid., pp. 40, 45; see Rhys-Williams Lady, Something to look forward to (London, 1943); Brown C. V. and Dawson D. A., Personal taxation incentives and tax reform (PEP broadsheet 506, 1969).

24 Christopher et al., Policy for poverty, p. 43.

25 Ibid., p. 48.

26 Ibid., p. 50.

27 E.g. Seldon A., Pensions in a free society (London, 1957); idem, Choice in welfare (London, 1963); Harris R. and Seldon A., Choice in welfare, 1965 (London, 1965); on the editorial line of the IEA, see Desai R., ‘Second-hand dealers in ideas: think tanks and Thatcherite hegemony’, New Left Review, 203 (1994), pp. 2764, at p. 46.

28 H. Jones, ‘The Conservative party and the welfare state, 1943–1955’ (Ph.D. thesis, London, 1992), p. 245.

29 Abel-Smith B. and Townsend P., The poor and the poorest: a new analysis of the Ministry of Labour's family expenditure surveys of 1953–1954 and 1960 (London, 1965).

30 Glennerster H., British social policy since 1945 (Oxford, 1995), p. 11; R. Titmuss, ‘The role of redistribution in social policy’, in P. Alcock, H. Glennerster, A. Oakley, and A. Sinfield, eds., Welfare and well-being: Richard Titmuss's contribution to social policy (Bristol, 2001).

31 F. Field and D. Piachaud, New Statesman (Dec. 1971), qu. Timmins, Five giants, pp. 282–3.

32 Christopher et al., Policy for poverty, p. 41; Cowie J., Stayin’ alive: the 1970s and the last days of the working class (New York, NY, 2010), p. 96; Steensland B., The failed welfare revolution: America's struggle over guaranteed income policy (Princeton, NJ, 2008), pp. 13ff.

33 ‘Proposals for a tax-credit system’, Cmnd 5116 (London, 1972), pp. 29, 28; Timmins, Five giants, pp. 287–8.

34 G. Howe, ‘Tax credits: why and how? A Conservative policy paper’, 1 Oct. 1974, Conservative party archive, Bodleian Library, Oxford, CRD 4/4/134 (hereafter CRD); Timmins, Five giants, pp. 252–3.

35 ‘The right approach’, 4 Oct. 1976, Margaret Thatcher Foundation website,, MTF 109439 (hereafter MTF).

36 Joseph K., Stranded on the middle ground: reflections on circumstances and policies (London, 1976), p. 77.

37 Leader's Consultative Committee (Shadow Cabinet), 6 Aug. 1975, THCR 2/6/1/157; see meeting on social security policy, 30 Sept. 1975, THCR 2/6/1/34.

38 C. Patten to K. Joseph, 9 July 1976, the papers of Keith Joseph, Conservative party archive, Bodleian Library, Oxford, KJ 18/9 (hereafter KJ).

39 E.g. T. Balogh, ‘The apotheosis of the dilettante’, in H. Thomas, ed., The establishment: a symposium (London, 1959); W. A. Niskanen, Bureaucracy and representative government (Chicago, IL, 1971); idem, Bureaucracy: servant or master? Lessons from America (London, 1973); the latter was published in Britain by the IEA.

40 Thompson N., ‘Hollowing out the state: public choice theory and the critique of Keynesian social democracy’, Contemporary British History, 22 (2008), pp. 355–82; Granville S., ‘Downing Street's favourite soap opera: evaluating the impact and influence of Yes, Minister and Yes, Prime Minister’, Contemporary British History, 23 (2009), pp. 315–36, at pp. 327–8.

41 ‘Further development of Conservative tax reform policy’, 15 Nov. 1977, CRD 4/7/12.

42 R. Howell, paper on taxation and benefits, 18 May 1977, CRD 4/4/134.

43 Idem, Why work? A radical solution (2nd edn, London, 1981), p. 7.

44 Taxation and social security meeting, 12 Dec. 1978, KJ 18/6.

45 C. Mockler to C. Patten and A. Ridley, 14 July 1978, CRD 4/7/78.

46 Conservative Central Office press release, extract from a speech by Patrick Jenkin, central council meeting, St Andrew's Hall, Norwich, 19 Mar. 1976, CRD 4/4/134.

47 N. Lawson to G. Howe, 29 July 1978, CRD 4/7/14.

48 Social Services General Policy Group, 30 June 1977, THCR 2/6/1/34.

49 P. Jenkin to K. Joseph and A. Maude, 22 June 1978, CRD 4/7/42; see J. Campbell, Margaret Thatcher, i:The grocer's daughter (London, 2000), p. 439.

50 M. Portillo, note on manifesto, 31 Jan. 1979, KJ 18/6; see taxation and social security meeting, 12 Dec. 1978, KJ 18/6.

51 G. Reece to M. Thatcher, 28 Sept. 1978, THCR 2/6/1/97.

52 Conservative party general election manifesto, 11 Apr. 1979, MTF 110858; C. Mockler to P. Jenkin, 12 Mar. 1979, CRD 4/7/78.

53 N. Fowler, general election press conference, health and welfare, 24 May 1983, MTF 105333.

54 Timmins, Five giants, p. 263.

55 Howe G., Ministers decide: a personal memoir of the Thatcher years (London, 1991), p. 209; Lawson N., The view from No. 10: memoirs of a Tory radical (London, 1992), pp. 597–8.

56 P. Cropper, ‘Note on the tax credit debate’, 5 Jan. 1978, CRD 4/4/135; see Cockett R., Thinking the unthinkable: think-tanks and the economic counter-revolution, 1931–1983 (London, 1994), p. 165.

57 R. Howell, paper on taxation and benefits, 18 May 1977, CRD 4/4/134.

58 P. Cropper, ‘Note on the tax credit debate’, 5 Jan. 1978, CRD 4/4/135.

59 ‘Personal tax policy – the alternative approach’, 18 Jan. 1978, CRD 4/7/12.

60 ‘Record of meeting held on Sunday 30th July 1978’, Third Fentiman Road meeting, CRD 4/7/14; taxation and social security meeting, 12 Dec. 1978, KJ 18/6.

61 D. Fullerton, ‘Laffer curve’, in S. N. Durlauf and L. E. Blume, eds., The new Palgrave dictionary of economics (2nd edn, Basingstoke, 2008); A. Laffer, ‘Economic study: prohibitive tax rates and the inner-city: a rational explanation of the poverty trap’, 27 June 1978, THCR 2/2/1/8.

62 M. Thatcher to G. Pepper, 1 Aug. 1978, THCR 2/2/1/8.

63 M. Thatcher, general election press conference, 25 Apr. 1979, MTF 104042; Thatcher, House of Commons, debate on the address, 1 Nov. 1978, MTF 103770.

64 N. Lawson to G. Howe, K. Joseph, J. Prior, and A. Ridley, 15 Feb. 1979, CRD 4/7/14; Lawson cited Benjamin D. and Kochin L., ‘Voluntary unemployment in interwar Britain’, The Banker, 129 (1979), pp. 33–6, which summarized idem, Searching for an explanation of unemployment in interwar Britain’, Journal of Political Economy, 87 (1979), pp. 441–78.

65 N. Lawson to G. Howe, 15 Feb. 1979, CRD 4/7/14.

66 N. Lawson to G. Howe, ‘The indexation of child benefit’, 3 Dec. 1977, CRD 4/7/14.

67 Finance Act, 1977, section 22, part 2.

68 Short-term benefits policy group, interim report, 18 July 1977, THCR 2/6/1/57.

69 ‘The taxation of short-term benefits’, 13 Apr. 1978, CRD 4/7/12.

70 D. G. Hutton, ‘The individual and society’, in A. Seldon, ed., Agenda for a free society (London, 1961), p. 17.

71 J. T. Murray to M. Thatcher, 7 Aug. 1975, THCR 5/1/2/29; highlighted by Thatcher.

72 A. Sherman, ‘Self-interest and public interest’, 23 May 1977, Centre for Policy Studies papers, London School of Economics archive, London, CPS 6/1 (hereafter CPS).

73 A. Sherman, ‘Freedom and morality’, THCR 5/1/3/3.

74 A. Sherman, ‘Nation, government, society, people’, Houston, 2 Sept. 1977, CPS 1/1.

75 M. Thatcher, interview for Woman's Own, 23 Sept. 1987, MTF 106689.

76 K. Andrews to M. Thatcher, 22 Oct. 1976, THCR, 5/1/3/20.

77 Moore R. S., Pit-men, preachers and politics; the effects of Methodism in a Durham mining community (Cambridge, 1974), p. 186.

78 Brown C. G., The death of Christian Britain: understanding secularisation, 1800–2000 (London, 2009).

79 M. Thatcher, speech at St Lawrence Jewry, 30 Mar. 1978, MTF 103522.

80 Ryan W., Blaming the victim (London, 1971), pp. 61 ff.

81 M. Thatcher, note on petition from Mr Dixon, General Synod of the Church of England, THCR 2/6/1/237.

82 M. Thatcher, speech to social services conference dinner, ‘The healthy society’, 2 Dec. 1976, MTF 103161.

83 A. Sherman, speech draft, ‘The politics of freedom’, CPS 6/1.

84 Friedman, Capitalism and freedom, p. 195.

85 M. Friedman, ‘The line we dare not cross – the fragility of freedom at “60%”’, Encounter, 76, THCR 2/6/1/173, annotated.

86 A. Sherman, ‘Freedom and morality’, THCR 5/1/3/3; Thatcher, speech to Zurich Economic Society, ‘The new renaissance’, 14 Mar. 1977, MTF 103336.

87 M. Thatcher, speech to Conservative women's conference, 21 May 1975, MTF 102694.

88 K. Joseph, ‘The cycle of family deprivation’, in Caring for people (London, 1972), Conservative party archive, Bodleian Library, Oxford, PUB 97/35; see Joseph's article in Woman's Guardian, 4 Jan. 1973, THCR 5/1/3/20.

89 A. Sherman, ‘The politics of freedom – in honour of Sir Robert Menzies’, probably 1978, CPS 6/1.

90 Thatcher M., The path to power (London, 1995), p. 544; K. Joseph, ‘The politics of political economy’, address to the Economic Research Council, St Ermin's, London, 15 Jan. 1975, in Joseph, Reversing the trend: a critical re-appraisal of Conservative economic and social policies (Chichester, 1975), pp. 56–7.

91 R. McKibbin, ‘Class and poverty in Edwardian England’, in McKibbin, ed., The ideologies of class: social relations in Britain, 1880–1950 (Oxford, 1990), pp. 167–97.

92 Rowntree B. S., Poverty: a study of town life (London, 1901), idem, Poverty and progress: a second social survey of York (London, 1941).

93 Veit-Wilson J. H., ‘Paradigms of poverty: a rehabilitation of B. S. Rowntree’, Journal of Social Policy, 15 (1986), pp. 6999.

94 Hennock E. P., ‘Poverty and social theory’, Social History, 1 (1976), pp. 6791, at pp. 77, 80.

95 Joseph, ‘Politics of political economy’, pp. 56–7.

96 Zweig F., The worker in an affluent society; family life and industry (London, 1961), p. 50.

97 Thatcher M., The Downing Street years (London, 1993), p. 627; see K. Joseph, ‘The economics of freedom’, in K. Joseph, A. Maude, and I. Percival, Freedom and order (London, 1975), p. 6.

98 Hutber P., The decline and fall of the middle class, and how it can fight back (London, 1976), p. 13.

99 Joseph, ‘Politics of political economy’, pp. 56–7.

100 Goldthorpe J. H., D. Lockwood, and F. Bechhofer, The affluent worker in the class structure (London, 1969).

101 Zweig, Worker in an affluent society, pp. 16–17, 26.

102 Joseph, ‘Politics of political economy’, p. 55.

103 ‘The middle-class struggle’, 24 Aug. 1976, THCR 2/6/1/173, summarizing Hutber's book; highlighted by Thatcher.

104 Joseph, ‘Politics of political economy’, p. 57; Zweig F., The new acquisitive society (Chichester, 1976), pp. 47, 72; Sherman, ‘The will-o-the wisp of the classless society, notes on speech (2)’ 18 Jan. 1977, THCR 2/6/1/173.

105 E. Pearce, draft speech and cover note, 6 May 1976, THCR, 5/1/3/2.

106 Zweig, New acquisitive society, pp. 45ff, 50–1, 55ff, Joseph, Reversing the trend, pp. 57, 64.

107 Annan N., Our age: portrait of a generation (London, 1990).

108 Hansard, HC Debs, 27 Mar. 1980, vol. 981, col. 1667. Abolition took effect from 1982. The earnings-related supplement paid out on pensions was not abolished.

109 Pierson P., Dismantling the welfare state?: Reagan, Thatcher, and the politics of retrenchment (Cambridge, 1994), p. 101.

110 Timmins, Five giants, p. xv.

111 See Green E. H. H., Ideologies of Conservatism: Conservative political ideas in the twentieth century (Oxford, 2002), p. 220.

112 The index to Campbell, Grocer's daughter, has a subsection under Churchill for ‘MT reveres’, with ten page references, and a further two for ‘MT quotes’; see ‘Daily notes 1951 general election, 10. Points from Mr Churchill's broadcast’, THCR, 5/1/2/29, highlighted; M. Thatcher, speech to Conservative rally in Newcastle, 23 Apr. 1979, MTF 104036; G. Howe, memo to Stepping Stones group, 10 Nov. 1978, THCR, 2/6/1/247.

113 M. Thatcher, speech to Conservative rally in Newcastle, 23 Apr. 1979, MTF 104036.

114 Jarvis M., Conservative governments, morality and social change in affluent Britain, 1957–1964 (Manchester, 2005), pp. 9ff; see Thatcher, speech to Conservative Central Council, 27 Mar. 1982, MTF 104905. Holden A., Makers and manners: politics and morality in postwar Britain (London, 2004), p. 263, notes that the critique of permissiveness took hold during the 1980s, though he also seems to suggest that Thatcher's critique of the permissive sixties was formulated during the 1970s, on p. 174.

115 Thatcher, Path to power, pp. 553–4, 561–2.

116 Welshman J., Underclass: a history of the excluded, 1880–2000 (London, 2006), pp. 187ff, 91.

117 Ryan, Blaming the victim; S. M. Lipset, ‘The prescient politician’, in R. A. Katzmann, ed., Daniel Patrick Moynihan: the intellectual in public life (Washington, DC, 1998), pp. 26–43, at p. 30.

118 Gans H. J., The urban villagers: group and class in the life of Italian-Americans (New York, NY, 1962).

119 Welshman, Underclass, p. 114.

120 Denham A. and Garnett M., Keith Joseph (Chesham, 2001), p. 219; Halcrow M., Keith Joseph: a single mind (London, 1989), p. 51; Joseph, ‘The cycle of family deprivation’, pp. 34–6; U. Bronfenbrenner, Two worlds of childhood: U. S. and U.S.S. R (London, 1971).

121 K. Joseph to C. Patten, 22 Mar. 1976, KJ 18/8 (I am indebted to Ben Jackson for drawing this reference to my attention); E. Banfield, The unheavenly city: the nature and future of our urban crisis (Boston, MA, 1970), p. 46.

122 D. P. Moynihan to M. Thatcher, 8 Jan. 1979 and 7 Feb. 1979, THCR 2/2/2/18.

123 Thatcher, Downing Street years, p. 627; Thatcher, Path to power, p. 544.

124 D. Seawright, ‘One nation’, in K. Hickson, ed., The political thought of the Conservative party since 1945 (Houndmills, 2005).

125 Evans S., ‘The not so odd couple: Margaret Thatcher and one nation Conservatism’, Contemporary British History, 23 (2009), pp. 101–21, at p. 106.

126 M. Thatcher, interview for the Catholic Herald, 22 Dec. 1978, MTF 103793; the claim was made consistently by Joseph, see ‘Moral and material benefits of the market order’, speech to Bow Group, 10 July 1976; ‘Equality: an argument against’, Observer, 22 Aug. 1976, both re-printed in Joseph, Stranded, pp. 61, 75.

127 M. Thatcher, speech to Greater London Young Conservatives, ‘Dimensions of Conservatism’, 4 July 1977, MTF 103411; see A. Sherman, ‘The new Tory radicalism’, Skeleton, 21 Jan. 1977, CPS 6/1.

128 M. Thatcher, speech to Conservative party conference, 10 Oct. 1975, MTF 102777.

* Many thanks are due to Dr Jon Lawrence, Professor Peter Mandler, James Stafford, the two anonymous referees, and to the organizers and participants at the ‘Neo-liberalism and British Politics’ workshop in Oxford, June 2011, for their extremely helpful comments on earlier drafts of this article.

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