22 November 1990
In June 1987 Margaret Thatcher became the first British prime minister in more than 150 years to win three successive elections. But things quickly started to go wrong.
By 1988 an economic boom, stoked by cheap credit and tax cuts, was already creating inflation, which hit 10.9% by August 1990. To bring prices under control the government raised interest rates to nearly 15%, pushing the economy into recession.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Thatcher also decided, against the advice of many civil servants and ministers, to replace the property-value based system of local taxation with a fixed charge per person.
The "poll tax" meant all but a handful of people including many on modest incomes saw their council tax bills leap, leading to huge protests and nonpayment. Conservative support dived: a string of byelection defeats followed, culminating in the loss of the safe seat of Eastbourne to the Liberal Democrats.
Discontent within the party prompted the resignation of both the chancellor Nigel Lawson and foreign secretary Geoffrey Howe.
Howe's resignation was the fatal blow, prompting a leadership challenge from Michael Heseltine. A majority of MPs supported Thatcher in the subsequent ballot, but she was denied outright victory. She resigned the next day.
Chancellor John Major succeeded her, and the Conservatives won the 1992 election. But the divisions created by her departure played a big role in their landslide defeat five years later.
Drive away with dividends from this insurer
This dividend champion is benefitting from multiple tailwinds that could boost its bottom line and shareholders' returns in the years ahead.
By Rupert Hargreaves Published
Revealed: Where are sellers cutting asking prices the most?
The top 10 areas where home sellers are slashing asking prices, according to Zoopla figures.
By Pedro Gonçalves Published