Economic history · Thatcher's Economic Policy
Six steps, about nine minutes, a question at each. You need no economics and no preparation, only a willingness to guess before you are told.
Governments had spent thirty years agreeing pay with the unions to hold prices down, and by 1979 that had failed. The government elected that year had decided not to bargain with them at all.
Britain lost more working days to strikes in 1979 than in any year since 1926, and by that winter the strikes had reached the services people cannot do without. Ambulance crews answered emergency calls only, for nearly a month. Between a third and a half of the hospital service was on emergency cover, and the government stood ready to send troops to drive London's ambulances.
The union laws of the 1980s were written because of that winter. In 1979 more than half the British workforce held a union card and unions had been protected from being sued since 1906, so a strike cost the union that called it almost nothing.
This module is what the government did about that and what followed: five Acts across ten years, taken one at a time, and a fall in strikes that no study has been able to attribute cleanly to the law.
What this module covers
Written for every level. Tap any underlined word for what it means, and open the boxes below for the economics behind each decision. If you already know the theory, skip both and the history reads straight through.
Step 1 of 6
A strike is easy to describe and hard to feel. It helps to know what stopped.
Public service unions went on strike through January and February 1979. Between a third and a half of the hospital service was reduced to emergency care only as a result.
The Labour government of the day, led by James Callaghan, had held public service workers' pay rises below price rises for three years. The unions refused a fourth year of it.
Ambulance crews had been answering emergencies only for nearly a month by 21 February. The government said it was ready to send troops to drive London's ambulances if it had to.
Some of England's 25,000 schools closed as well. In Barking every school was shut, and in Haringey all but two.
Take a guess. You are not expected to know the answers, and being wrong is what makes a number stick.
How many of England's 25,000 schools were shut by the strikes on 6 February 1979?
For scale. The Social Services Secretary was asked in the House of Commons, the elected part of Parliament, about a claim that 200 hospitals had closed. His answer was one word: five.
In 1979 more of the British workforce belonged to a than at any other time since the Second World War.
Union strength is measured by density, which is how much of the workforce holds a union card.
Margaret Thatcher became Prime Minister in May 1979. Union membership fell through the ten years that followed, and so did the number of days lost to strikes.
In 1979, how much of the British workforce belonged to a trade union?
For scale. 1979 was also the worst year for strikes in the period, at 29.5 million working days lost.
In 1906 Parliament gave unions , protection from being sued. No government since has taken it back from the unions themselves. It is now January 1982.
The Conservative Prime Minister of 1970 to 1974, Edward Heath, tried to replace the immunity with one law, the Industrial Relations Act of 1971, and failed. Your own 1980 Act took the protection only from strikers outside somebody else's workplace; the union's own protection stayed.
A strike works by imposing costs on the employer. Every one of those costs is money a court could order the union to pay back. Parliament took the view that a union which can be sued for the whole cost of a strike can never strike at all. So the right to strike and protection from damages, the money a court orders paid, are the same right.
Union density stood at 52.4% in 1979 and has hardly moved in the two years since. Days lost that year came to 29.5 million, the highest since 1926.
You are the government. What do you do about the immunity unions have held since 1906?
The Employment Act 1982 removed the protection from being sued for damages that unions had held since 1906, and set a ceiling of 250,000 pounds on what the largest unions could be made to pay.
What followedIt was the second of five Acts across ten years rather than one reform. Density fell from 52.4% in 1979 to 37.5% in 1989. Days lost averaged 10.5 million a year in the first half of the 1980s and 3.9 million in the second half.
Whether the law did that is argued, and the two readings use the same figures.
The Resolution Foundation The Resolution Foundation, a research institute, treats the five Acts as the cause, and says the government's whole plan for raising output per worker depended on unions being weaker.
Nicholas Crafts The economic historian Nicholas Crafts argues the loss of union power owed a good deal to rising competition. On that reading the law arrived alongside the loss of union power rather than causing it.
The government's union laws came one at a time, each modest, and each harder to fight than the last. The Employment Secretary, James Prior, introduced the cautious first Act in 1980. His successor Norman Tebbit introduced the 1982 Act that let unions themselves be sued.
Before 1984 a strike could be called on a show of hands at the factory gate, in front of the people counting.
A strike works by imposing costs on the employer. Every one of those costs is money a court could order the union to pay back. Parliament took the view that a union which can be sued for the whole cost of a strike can never strike at all. So the right to strike and protection from damages, the money a court orders paid, are the same right.
The turning point came in 1984: a new Trade Union Act, aimed at how a strike is called.
From 1984, what did a union have to do to keep a strike's legal protection?
For scale. The same Act made unions elect their governing committees by secret ballot every five years.
In 1979 a , a workplace where you had to join the union to work there, was ordinary across British industry. The law left an employer free to insist on one.
The Acts of the 1980s narrowed that freedom one step at a time.
From 1980 a person could refuse to join because of a genuine personal belief. Any new closed shop needed the support of 80% of the workers affected, in a vote.
By 1988 an employer who sacked somebody for refusing to join could be taken to court and made to pay, whatever the circumstances.
In 1990 a final law made it unlawful to refuse somebody a job. On what ground?
For scale. The same Act said that when members struck without the union's approval, the union had to reject the strike in writing or ballot its members on backing it.
Days lost to strikes fell from 29.5 million in 1979 to 1.9 million in 1990.
Striking cost a union money after 1982 in a way it had not before. The immunity that protected its funds was gone, and from 1984 a ballot had to come first.
Union membership fell over the same years, from a peak of 13.2 million in 1979.
No study has settled how much of that fall the five Acts of 1980 to 1990 caused. One review says the effect cannot be separated from the wider changes in what Britain made. Another finds the laws caused much of the fall.
Working days lost to strikes. Which year was higher?
A tie counts as correct either way.
For scale. The 1980s averaged about 7 million days a year. The 1970s averaged about 12 million.
Module 5 of 13 in Thatcher's Economic Policy
Share of the workforce in a union, 1979 and 1989
52.4% then 37.5%What the 1982 Act removed, and what it capped
the 1906 immunity, damages at 250,000 poundsHow recently a strike ballot had to have been held
four weeksThe
ended in stages between 1980 and 1990English schools closed by the strikes on 6 February 1979
about 1,150 of 25,000, or 4.4%Working days lost to strikes, 1979 and 1990
29.5m, then 1.9mYou met three terms in this module
, ,
Days lost to strikes fell by nine tenths. Whether the five Acts or the changing economy did it is still argued.
[1] The decade in outline: House of Lords Library, The UK economy in the 1980s. Trade union density, meaning members as a share of the workforce, was at a post-war high of 52.4% in 1979 and fell to 37.5% by 1989. Days lost to strikes averaged 10.5 million a year in the first half of the 1980s and 3.9 million in the second half. The government legislated for a new system of industrial relations which set a series of limits on union activity.
[2] What each Act did: House of Commons Library, Trade union legislation 1979 to 2016, CBP-7882. 1980: picketing restricted to a worker's own workplace, and secondary action loses its protection unless it presses the employer directly. 1982: removed the immunity from actions in tort which had been enjoyed by trade unions since 1906, with damages capped at 250,000 pounds for the largest unions. 1984: a strike keeps its protection only with a simple majority in a secret ballot held not more than four weeks before the action. 1988: dismissal for refusing to join is unfair in all circumstances, and ballots go postal. 1990: unlawful to refuse a person employment because they are or are not a union member.
[3] Prior moves the 1980 Bill: Hansard, HC Deb 17 December 1979, Employment Bill, second reading. 'The Secretary of State for Employment (Mr. James Prior) I beg to move, That the Bill be now read a Second time.' The Bill became the Employment Act 1980.
[4] Tebbit moves the 1982 Bill: Hansard, HC Deb 8 February 1982, Employment Bill, second reading. 'The Secretary of State for Employment (Mr. Norman Tebbit) I beg to move, That the Bill be now read a Second time.' The Bill became the Employment Act 1982.
[5] Days lost to strikes: ONS, series BBFW, working days lost to strike action, UK, and Labour disputes annual estimates 1891 to 2018. Thousands of days: 29,474 in 1979, 11,964 in 1980, 27,135 in 1984, 1,903 in 1990, 273 in 2018, 2,660 in 2023 and 733 in 2024. NOTE, 16 August: 29.5 million is the CALENDAR YEAR 1979, not the winter of discontent. The winter began in December 1978 and 1978's whole-year total was 9.4 million; the biggest single month of 1979 for days lost was September, after the winter was over. ONS publishes a rate per 1,000 employees only from 1997, so no per-worker figure exists for 1979 from a source of record, so none is stated anywhere in these steps.
[6] What actually stopped: Hansard, HC Deb 19 January, 5 February, 6 February and 21 February 1979. Shirley Williams, 6 February: 'Today at lunchtime about 1,150 schools were closed mainly, but not entirely, as a result of industrial action by public service unions. That represents about 4.4 per cent. of the 25,000 schools in England', and 'about 900 of them are in the areas of just 10 local education authorities'. In Barking every school was closed, in Haringey all but two. David Ennals, 5 February: between one-third and one-half of the hospital service was on 'only essential and emergency services', the ambulance service was 'providing cover for emergencies only', and to a claim that 200 hospitals had closed he answered 'The figure is five'. Ennals, 21 February: 'most ambulance authorities have been able to provide only an emergency service for nearly a month'. Ennals, 19 January, on London: 'The Government are prepared to authorise the use of troops, if necessary.'
[7] How many members: Certification Officer, Annual Report 1999. 'The total membership of 7.8 million compares with 10.4 million in 1988 and a peak of 13.2 million in 1979.' The 1990 figure itself sits in the 1991 report, which is a scan with no text layer, so the 1979 peak is stated here and no 1990 membership figure is.
[8] Whether the law did it: Brown, Deakin and Ryan, The Effects of British Industrial Relations Legislation 1979 to 97, National Institute Economic Review 161, and Freeman and Pelletier, NBER Working Paper 3167. Brown, Deakin and Ryan: 'While legal intervention has had an impact on the institutions of industrial relations, most notably in reducing the power of organised labour, this cannot be isolated from wider structural changes in labour and product markets.' Freeman and Pelletier take the other side: 'the Thatcher government's labor laws caused much of the 1980s fall in British union density.' The Commons Library, CBP-9785, splits the difference and attributes the fall only 'partly' to the legislation.
[9] What actually raised performance: Nicholas Crafts, The economic legacy of Mrs Thatcher, CEPR. The average effective rate of protection for British industry fell from 9.3% in 1968 to 4.7% in 1979 and 1.2% in 1986. Subsidies to industry fell from 9 billion pounds at 1980 prices in 1969 to 5 billion in 1979 and 0.3 billion in 1990. Crafts argues the erosion of union power owed a good deal to increased competition.
[10] What it was for: Resolution Foundation, The Thatcher legacy. Five pieces of industrial relations legislation reduced union power, and the decline of that power underpinned the government's agenda for raising productivity. The paper also says the supposed cleansing effect of the recession has been exaggerated.
Country data from the World Bank (CC BY 4.0) and the UNDP Human Development Report (CC BY 3.0 IGO)
Games · Learn · Atlas · Privacy