Thatcher resigns as PM 1990

• Poll tax

  Reforming 'the rates' system of local government taxation through the Local Government Finance Act of 1988 to introduce the Community Charge (a flat tax on every individual)
• Poll tax introduced

  Made Thatcher very unpopular
• Many people who did not own property or businesses (which the rates had applied to) suddenly found themselves paying tax they could not afford
• Massive demonstration against the poll tax in London, which ended in violence, with 300 people arrested and 400 police officers hurt


  31 March 1990
• Some members of Thatcher's cabinet tried to warn her that the poll tax would be hugely unpopular, but she was determined to press ahead, making many of her party colleagues think that she was becoming dictatorial and alienating voters
• This made some in her own party begin to seriously doubt her political judgement
• Stock market crash wiped 24% off share prices


  October 1987
• Chancellor Nigel Lawson worried stock market crash might cause a recession


  So in his 1988 budget he reduced income tax rates
• Reducing income tax rates

  Stimulated a spending boom which pushed up prices
• By 1989 inflation was running at 8.3%, its highest in years
• Lawson tried to control inflation

  By raising interest rates, which reached 15% by October 1989
• Interest rates reaching 15%

  Meant that home-owning mortgage payers, who had been big supporters of Thatcher and benefitted from her policies, suddenly found themselves paying heavily for the houses she had encouraged them to buy
• The fact that inflation was also rising again after Thatcher had set so much of her economic reputation on reducing it, damaged her economic credibility significantly
• Thatcher disagreed with key Cabinet colleagues, Chancellor Nigel Lawson and Foreign Secretary Geoffrey Howe, over plans to join the European Exchange Rate Mechanism (ERM)
• Thatcher reacted by demoting Howe to deputy PM in June 1989 and sidelining Lawson


  By increasingly relying on her unelected economic adviser, Alan Walters
• Both Lawson and Howe resigned, making Thatcher look like she was losing key supporters in her government
• Howe's resignation in 1990 was damaging, as his resignation speech to the House of Commons made it clear Thatcher's government was badly divided and indirectly called for a challenge to her leadership of the Tory Party
• A series of poor election results damaged Thatcher, 1989-90
• The Tories lost the Vale of Glamorgan by-election to Labour in April 1989, and the European elections that June saw the Tories win only 33.5% of the vote
• The mid-Staffordshire by-election in March 1990 was also lost to Labour
• Opinion polls also suggested that Thatcher's Tories were unpopular, by June 1990 Labour were 16 points ahead
• Many Tory MPs feared that if Thatcher remained as leader, the Tories would lose the next general election
• Following Howe's resignation speech in November 1990, Michael Heseltine launched a leadership challenge to Thatcher, and Thatcher was not able to defeat him at the first ballot
• A succession of her Cabinet ministers advised her to resign, which she did on 22 November 1990