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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.
Step 1 of 6
For thirty years, governments agreed pay rises with the trade unions to stop prices rising fast. By 1979 those pay deals had failed. The government elected that year decided not to bargain with the unions at all.
The question
Britain lost more working days to strikes in 1979 than in any year since 1926. 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.
What you'll be able to answer
Thatcher's Economic Policy · this module is lit
The union laws of the 1980s were written because of that winter. In 1979 more than half of British workers belonged to a union. Since 1906 the law had stopped employers suing a union for the cost of a strike. So a strike cost the union that called it almost nothing.
Over the next ten years the government passed five Acts of Parliament (laws) to make strikes cost unions more. The module takes them one at a time. Strikes fell afterwards, but no study has been able to say how much of the fall the laws caused.
Take a guess
Public service unions struck through January and February 1979. What did that do to the hospital service?
The official figures show what the strikes of early 1979 actually shut down.
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, led by James Callaghan, had kept public service pay rising more slowly than prices for three years. The unions refused to accept a fourth year of this.
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, an area of London, every school was shut. In Haringey, also in London, all but two were shut.
For scaleThe Social Services Secretary was asked in the House of Commons, the elected part of Parliament, about a claim that 200 hospitals had closed. He replied that only five hospitals had closed.
Take a guess
In 1979, how much of the British workforce belonged to a trade union?
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.
For scale1979 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. Since then, no government has taken that protection away from a union as a whole. It is now January 1982.
Edward Heath, Conservative Prime Minister from 1970 to 1974, tried to replace all of union law, immunity included, with one Act, the Industrial Relations Act of 1971, and failed. Your 1980 Act removed protection from strikers standing outside somebody else's workplace to support a strike. The union itself kept its protection from being sued.
A strike puts pressure on an employer by costing it money. Without protection, a court could order the union to pay all of that money back. Parliament judged that a union facing that risk could never afford to strike. So the right to strike only works if unions are protected from damages, the money a court orders them to pay.
Union density, the share of workers in a union, stood at 52.4% in 1979 and has hardly changed since. Days lost to strikes in 1979 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. It set a limit of 250,000 pounds on what the largest unions could be made to pay.
What followedIt was the second of five Acts passed over ten years. Density fell from 52.4% in 1979 to 37.5% in 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.
Experts disagree about whether the laws caused these falls. Both sides use the same figures.
The Resolution Foundation The Resolution Foundation, a research institute, says the five Acts reduced union power. It says the government wanted to raise productivity, how much each worker produces, and that this plan depended on weaker unions.
Nicholas Crafts The economic historian Nicholas Crafts argues that union power fell largely because British firms faced more competition. On this view, the laws were passed while union power was falling, but competition did more to cause the fall.
The government passed its union laws one at a time. Every Act was a small step, and each was harder for unions to resist than the last. The Employment Secretary, James Prior, brought in the cautious first Act in 1980. His successor, Norman Tebbit, brought in the 1982 Act that let unions themselves be sued.
Before 1984 a union could call a strike by a show of hands at the factory gate. Everyone there could see how each person voted.
A strike puts pressure on an employer by costing it money. Without protection, a court could order the union to pay all of that money back. Parliament judged that a union facing that risk could never afford to strike. So the right to strike only works if unions are protected from damages, the money a court orders them to pay.
The big change came in 1984. A new Trade Union Act set rules on how a union could start a strike.
From 1984, what did a union have to do to keep a strike's legal protection?
For scaleThe 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 for a certain reason. Which reason?
For scaleThe same Act covered strikes that members started without the union's approval. If that happened, the union had to reject the strike in writing, or hold a ballot of its members on whether to back it.
Days lost to strikes fell from 29.5 million in 1979 to 1.9 million in 1990. Days lost rose again in 1984, the year the miners went on strike.
After 1982, a strike could cost a union money in a way it had not before. The union's funds were no longer protected from claims for damages. From 1984 the union also had to hold a ballot first.
Union membership fell over the same years, from a peak of 13.2 million in 1979.
No study has settled how much of the fall in union membership the five Acts caused. One review says other changes also mattered: people were doing different jobs, and Britain was making different goods. It says the laws' effect cannot be separated from them. Another finds the laws caused much of the fall.
Which year lost more working days to strikes: 1990 or 2023?
A tie counts as correct either way.
Source: ONS, labour disputes, working days lost (BBFW)
For scaleThe 1980s averaged about 7 million days a year. The 1970s averaged about 12 million.
Thatcher's Economic Policy
Can you answer each one now? Tap to check.
What did the public service strikes of early 1979 stop?
How did the new laws change what a strike cost a union?
How much of the fall in strikes did the laws cause?
Can you remember each figure? Tap to check.
Share of the workforce in a union, 1979 and 1989
What the 1982 Act removed, and the limit it set
How recently a strike ballot had to have been held
The
English schools closed by the strikes on 6 February 1979
Working days lost to strikes, 1979 and 1990
You met three terms in this module
, ,
Days lost to strikes fell by nine tenths. People still argue over whether the five Acts or wider changes in the economy caused the fall.
[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.
[11] The episode chart: ONS series BBFW, labour disputes, working days lost, UK, annual. Open Government Licence v3.0. Retrieved 30 September 2026.
Country data from the World Bank (CC BY 4.0) and the UNDP Human Development Report (CC BY 3.0 IGO)
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