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The Thatcher–Blair consensus is a set of economic policy prescriptions for the UK economy based on neoclassical economics. The set of policies constitutes the neoliberal agenda. All UK governments since 1979 have followed this agenda. The policies were intended to be pro-growth and produce a higher GDP per capita. This has happened, but there has been an increase in inequality. The group of people with a property income have become much richer, whilst families dependent on state benefits and wages have experienced a decline in living standards.

Overview
A useful summary of the policy agenda of the Thatcher–Blair consensus, and its theoretical justification is in paper What Washington means by policy reform written by John Williamson, an economist from the Institute for International Economics, an international economic think tank based in Washington, D.C. In this document he coined the term the Washington Consensus. The core agenda of the Thatcher–Blair consensus and the Washington Consensus are identical. The prescriptions of the agendas encompassed policies in such areas as macroeconomic stabilisation, economic opening with respect to both trade and investment, and the expansion of market forces within the domestic economy. The term Washington consensus has acquired a broader meaning, and has come to be accepted as the description of the standard neoliberal agenda.

In the thirty years following the Thatcher election victory in 1979 the UK economy has been transformed. The variant of capitalism used in 1945–79 was a development of the war economy of the Second World War. It was a managed market economy, rather than a free market economy. Prices in essential markets were determined by government regulations and subsidies, rather than competitive markets. In this era, the Keynes–Beveridge consensus defined the role of government and it was held that democratically elected governments, not markets, were and should be the controlling factor in the economy.

The outcome of implementation of the prescriptions of Thatcher–Blair consensus in the UK economy is general interest as it provides a test for the validity of neoclassical economic theory. The indications are, that the theory has been falsified rather than supported.

An area of contentious debate concerns whether the standard of living in the UK, now that the policy prescriptions of neoclassical economics have been implemented is higher or lower than it was at the end of the era Keynes–Beveridge consensus. It is not disputed that the wealth of those with a property income is now far higher than in 1979. There is evidence however, that the standard of living of families whose incomes derive from wages and state benefits is now far lower than it was at the end of the era the Keynes–Beveridge consensus. There are measurement difficulties in determining the true extend of the fall in living standards of this section of the UK population.

History
During the Second World War, Churchill's coalition government took control of the UK economy, and replaced the free market system with a government controlled economy. Prices and wages were controlled, goods were rationed, and the government took powers to direct labour resources. One of the consequences of these changes was unemployment of the depression years of 1930s ended.

In 1942, to improve the morale of UK citizens the government published a report on a proposed post war economic system. The report was the work of an inter departmental committee of civil servants, chaired by an economist, William Beveridge (1879–1963). The Beveridge Report, proposed that there would be no return to the pre-war free market system. Instead there would be a welfare state, and the government would provide cradle to grave welfare support for those in need.

Prior to the war, the British economist John Maynard Keynes (1883–1946) had published a theory that the free market system is inherently unstable, prone recessions, which cause high rates of unemployment, and resource under utilisation. Keynes's theory prescribed that the government had the responsible for preventing shortage of money causing a recession. It was to do this by creating money when this was necessary to ensure sufficient effective demand. It took the war to convince governments of the merits of Keynes's theory. The USA provided the best example. The war ended the Great Depression. The USA government created the money needed for war expenditure and this grew the economy from $(2005) 1.1 trillion in 1939 to $(2005) 2.0 in 1945 (see ). A doubling time for real GDP of about seven years (annual growth rate 8.5%). A rate of growth for the USA economy which had never been seen before, and has never been equalled.

Post-war UK governments up until 1979 followed the policy prescriptions of Keynes and Beveridge. This was the era of the Keynes–Beveridge consensus.

In the UK, the late 1970s was a period of high inflation, industrial strife and falling real GDP. These problems were subsequent to the oil price shock of 1973. The formation of an effective cartel of oil producers, OPEC, led to the real price of oil increasing sixfold between 1973 and 1979.

In 1979 the Conservative Party won the election, and Thatcher (1925–2013) became Prime Minister. Thatcher believed that the UK's economic problems could be solved if the prevailing Keynes–Beveridge consensus was rejected, and policies prescribed by neoclassical economics adopted. In her first cabinet there was a balance of views, those who continue to believe in the Keynes–Beveridge consensus were known as wets, and those who believed neoclassical economics were known as dries. In the UK the Prime Minister has unrestricted power to appoint ministers. In successive cabinet reshuffles, dries were promoted, and wets not reappointed. By the time of the second Thatcher government in 1983–87 there was no cabinet opposition to neoclassical economic policies. Although previous conservative Prime Ministers from the era of the Keynes–Beveridge consensus, Edward Heath (1916–2005) and Harold Macmillan (1894–1986), continued to express opposition in Parliament.

In 1980, Ronald Reagan (1911–2004) was elected President of the United States. President Reagan was also a believer in neoclassical economics, and with his election there was the final act in the Keynesian displacement. Those appointed to lead the controlling institutions of global capitalism – the IMF, the World Bank, the Federal Reserve – were all believers in neoclassical economics.

The 1992 general election was won by the Conservatives under John Major. In this election the Labour Party advocated a return to the policies of the era of the Keynes–Beveridge consensus. The UK's largest circulation newspaper, owned by Rupert Murdoch, the Sun, ridiculed the Labour party leader, Neil Kinnock, and Labour policies.

After the election the Sun printed a headline "It's The Sun Wot Won It", whether this was true or not is debatable, what is important though it was accepted by the Labour Party elite. Following the election defeat Tony Blair was elected leader of the Labour Party. It is widely believed that Tony Blair and Rupert Murdoch reached an understanding: Blair would change Labour Party policy to conform with the prescriptions of neoclassical economics, and Murdoch would support Labour at the next election. At the Leveson Inquiry however, both parties denied this happened.

Tony Blair, together with Peter Mandelson, and Gordon Brown changed the Labour party from a socialist party to a neoliberal party. The party was rebranded New Labour. In the 1997 general election Murdoch's newspapers and TV channels supported New Labour, and Blair became Prime Minister.

The "New" Labour governments from 1997 to 2010 under Tony Blair and Gordon Brown continued with the policies started in the Thatcher governments. And took the agenda forward by implemented neoliberal policies that Thatcher had been to cautious to attempt. In particular the Beveridge Social Security system was dismantled, and the process of developing a welfare to work system started.

Thatcher recognised the importance of the Thatcher–Blair consensus. At her last conference, when asked what her greatest achievement was, she said, "Tony Blair and New Labour. We forced our opponents to change their minds". The view on the left, is that the Labour party leadership changed its mind, in order to obtain power, and not due to the evidence supporting neoclassical economic theory. It is argued that "neoliberalism succeeded (and continues to succeed, in spite of its failures) because it is supported by a series of overlapping and powerful interests – the transnational elite, the financiers, the major stock holders of the largest corporations."

The Nine Neoliberal Policy Agendas
In 1989 John Williamson presented a paper which gave, what he suggested was the consensus view amongst neoclassical economists, as to the policies that a the government of a country should adopt to ensure continuous economic growth. The paper was intended to offer advice to the IMF on what policies Latin American countries 'submitting to strong conditionality' should be forced to adopt to obtain an IMF loan. In the paper nine policies proposal were outlined these have come to provide a summary of the neoliberal agenda, and the term Washington Consensus has acquired the broad meaning of the pro growth policies that neoclassical economists believe are needed for a country to have continually rising real GDP per capita. Williamson objected to broader meaning of the term. However he notes: "A striking fact about [the policies in the Washington consensus]... is that they all stem from ... mainstream [i.e. neoclassical] economic theory."

The extend to which countries have implement the Washington consensus, varies. The core agenda of the Thatcher–Blair consensus and the Washington consensus are identical. This is a consequence of them both being deriving from books by Nobel laureate Friedrich Hayek, Individualism and Economic Order, and The Road to Serfdom in which the theoretical concepts of neoliberalism are developed. Thatcher was also influenced by Nobel Laureate Milton Friedman (1912–2006) who had further developed neoclassical theory. And also wrote accessible books, such as Capitalism and Freedom and Free to Choose, in which the policies prescribed by neoclassical economics were described. In these books, and talk shows and lectures to promote them, Friedman made clear, and precise predictions as to consequences of implementing the neolliberal policy agenda.

The nine policy agendas of the Thatcher–Blair consensus which have been implemented since 1979 and the consequences are described below.

Fiscal Discipline (Balanced Budgets)
According to neoclassical economic theory, capital expenditure is derived from savings. If Government expenditure exceeds revenue, the savings of an economy are used by the government. For Hayek and neoliberals government borrowing will prevent capital being allocated efficiently by market mechanisms, and this will lead to economic failure. Williamson stated, "I would maintain that there is very broad agreement in Washington that large and sustained fiscal deficits are a primary source of macroeconomic dislocation in the forms of inflation, payments deficits, and capital flight".

In the era of the Keynes–Beveridge consensus it was not believed that capitalist enterprises following the signals from market prices would make better borrowing decisions than democratically elected governments. In the UK local governments are called councils. In the Keynes–Beveridge era councils had unlimited borrowing powers. They used this power to borrow the funds to build council housing. During the thirty years of the era of the Keynes–Beveridge consensus about 200,000 new council houses a year were built. And councils never had balanced budgets as due to housing construction a council's expenditure always greatly exceeded its revenue. See graph: History of house building by purchasing sector.

Consequences
The first Thatcher government removed the councils borrowing powers and council house building came to a virtual end.

One of the theories as to why there has been house price inflation, is that as councils have ceased building new dwellings, a housing shortage has developed and this has led to real rise in house prices.

Believers in neoclassical economics credit the ending of the high inflation of 1970s to reduction in the UK public sector borrowing. An alternative theory is inflation was reduced as there was fall of the real price of oil, from $(2015) 117 in 1979, to $(2015) 30 in 1986.

Eliminate subsidies
Elimination subsidies was expected to improve the efficiency of the economy. This might have happened, but there have been other consequences. In particular the ending of subsidies for building new dwellings for the bottom half of the income distribution could be a cause of the housing crisis.

According to neoclassical economic theory the result of subsidies 'is not just a drain on the budget but also much waste and resource misallocation'. In the era of the Keynes–Beveridge consensus subsidies were regarded as an efficient, none bureaucratic means of reaching all members of a group requiring assistance. Council house rents were subsidised, by the council from property taxes, and the by central government from the public purse. For home buyers there were subsidies from central government. In the course of the era of the Thatcher–Blair consensus subsidies for housing were reduced, and by 2001 they had all been eliminated.

Williamson stated "subsidies to cover losses of state enterprises ... are regarded as prime candidates ... for ... elimination." In the era of the Keynes–Beveridge consensus subsidies to loss making state enterprises were regarded as acceptable, and used to develop the nations infrastructure and to improve the quality of life of low income families. Council owned and run water utilities, were subsidised and charged far less than it cost to connect housing to main drainage. The state owned electricity utility was subsidised and the charge for connecting a remote farm house to grid was far less than it cost. Council owned and run public transport companies provided subsidised services to rural areas, helping those who did not own cars. During the course of the era of the Thatcher–Blair consensus all these subsidies were eliminated.

Consequences
The ending of subsidies for building new dwellings has had the greatest long term effect. In the 1950s, under Conservative governments, half of the capital expenditure on housing was on purchasing new dwellings by local government. By the 1990s, 93% capital expenditure on housing was private, mostly on purchase of second hand dwellings.

One of the theories as to why real UK house prices have increased is that as private capital expenditure was on mainly on existing dwellings not new built This has resulted in a shortage of housing causing a rise in real house prices,

The rise in real house prices the during era of the Thatcher–Blair consensus has causes a decline in affordability of housing (proportion of average earnings that has to spend on housing). In the era of the Keynes–Beveridge consensus there was a small rise in real house prices, but affordability improved as earnings increased faster house prices. During this era house prices were between 2 and 2.5 times average annual earned income. In the era of the Thatcher–Blair consensus house prices have risen faster than earnings, and by 2010s house prices were 8 to 10 times average annual earnings (See graph History of real UK house prices).

According to neoclassical economic theory the increases price of housing should have stimulated entrepreneurs to build more houses. This did not happen, see graph above: History of house building by purchasing sector.

One of the theories for failure to build enough houses, is that UK planning laws meant that land was not released for new dwelling construction. This has meant that increased demand, due to population growth has let to house price inflation rather than an increase in supply.

An alternative explanation is that subsidising the building of new dwellings had the beneficial effect of creating a mass market for new budget homes, which enabled builders to achieve economies of scale. This theory is supported by comparing the cost of building a house in the two eras, In 1951, building a three-bedroom council house cost between, in historic prices £1,162 to £1,657, or in real prices £(2014) 32,600 to £46,480. During the era of the Keynes–Beveridge consensus building costs increased in line with inflation. Building costs increased at more than the rate of inflation during the era of Thatcher–Blair consensus. In 2016 real building costs had increased about fourfold, and the cost of building a three-bedroom house from £(2014)120,000 to £(2014)180,000.

Tax/welfare reform
The theory of human behaviour which underlies neoclassical economics is that economic man makes rational choices as to how to spend his money, what investments to make, and how hard to work. According to this theory a person will consider marginal taxation rates, in making choices as to, how hard to work, how much to save, and how much effort to expend in making investment decisions. This theory leads to the 'principle [of neoclassical economics] that marginal tax rates should be ... moderate'.

The tax/welfare policy in the era of the Keynes–Beveridge consensus era was determined in World War II. During the war few people were behaving as the theory of rational economic man predicts. And it was believed that marginal tax rates had no motivation effects. The top rates of tax were on what was called unearned income, that is income from savings and inherited wealth. For unearned income the top marginal rate was 99%. The top marginal rate for earned income was around 90%.

Progressively during the era of the Thatcher–Blair consensus marginal tax rates on income have been reduced. The greatest reduction is on income from property. This is no longer called unearned income, but income from savings and investments. For savers/investors the basic rate of income tax in 2015 is 20%, and the top rate, for incomes above £150,000, 45%. For employees, marginal tax rates have not fallen to the same extent as there are additional deductions for National Insurance and student loans of around 21%.

As well as reducing marginal tax rates, following the theory of economic man tax reliefs have been introduced to motivate particular groups. In neoclassical economic theory an important group are entrepreneurs. In World War II, entrepreneurs were regarded as profiteers, but according to neoclassical economic theory they are wealth creators. In the UK tax code, to motivate this group, the first New Labour government allowed them to pay less tax, through Entrepreneur's Relief.

Outside believers in neoclassical economics, the theory of economic man and entrepreneurial wealth creators has not achieved traction. In literature the theory has been ridiculed, notably in Joseph Heller's fictional character Milo Minderbender in Catch 22

In the Keynes–Beveridge era it was held that the UK government had a duty to ensure that all UK citizens were free from want. To this end benefit levels were set to ensure that recipients were not in any want. According to the theory of rational economic man setting benefit rates at this level lowered output of the economy. As the rational choice would be for a man to claim benefits rather than work. The theory of Economic man prescribes that the criteria for benefits is that they must provide a lower income than the lowest paid worker. This was also principle for welfare in the Victorian age. It was implemented in the workhouses created by the Poor Law Act 1834.

The Conservative governments under Thatcher and Major did not attempt welfare reform, in fact benefits improved under Thatcher ministries, long term unemployed, and long term sick were given increased benefits. New Labour governments started the welfare reform process prescribed by neoclassical economic theory. This continued under subsequent governments.

Consequences
By 2015 the real income of those dependent on state benefits was less than it was at the end of Keynes/Beveridge era, and substantial number of families depending on state benefits were in housing want, and at times of crisis, food want.

It is generally accepted that tax/welfare reforms implemented in the era of the Thatcher–Blair consensus have contributed to the growth in inequality in the UK. Believers in neoclassical economics hold that growth inequality is, if anything, desirable, as if there are more wealthy people in a country more money will trickle down to the poor. Peter Mandelson said, "We [New Labour] are intensely relaxed about people getting filthy rich as long as they pay their taxes". in 2008, John Hutton, business and enterprise secretary in the New Labour government, said "Rather than questioning whether huge salaries are morally justified, we should celebrate the fact that people can be enormously successful in this country."

Interest rates (Control of Borrowing/Lending)
According to neoclassical economic theory interest rates provide a market mechanism for regulating lending and borrowing. On the question of how to set interest rates Williamson summarised the consensus view of neoclassical economists which is:"... that interest rates should be market-determined. The objective of this is to avoid the resource misallocation that results from bureaucrats rationing credit according to arbitrary criteria (Polak 1989). The other principle is that real interest rates should be positive, [which] according to [the theory of economic man] will increase savings. Many ... would qualify this statement to say that interest rates should be positive but moderate, so as to promote productive investment."The systems for control of borrowing, lending and also money creation in the era of the Keynes–Beverage consensus were developed in response to the Wall Street Great Crash of 1929 and the subsequent Great Depression. In response to failure of classical economics to predict these events Keynes wrote The General Theory of Employment, Interest and Money in which he developed Keynesian economics.

In the Keynes/Beveridge era the government set the interest rate, not the market, and banks were only allowed to lend to approved sectors of the economy. For example, UK banks were not permitted to provide mortgages, but they were permitted to lend to councils help fund the building of council houses. Mortgages could only be provided by building societies, who were only permitted to lend to UK citizens who would be owner/occupiers, lending for second homes, and to buy to let landlords was not permitted.

The justification for these controls, was Keynes's observation that there are occasions when the price of a financial asset on the free market provides no accurate information as to its value. Instead it was held that on a free market there could be arbitrary prices determined by a mechanism called the Keynesian beauty contest. According to this theory, prices on a free market can fluctuate randomly, regardless of the underlying supply and demand situation, because they are determined by the balance of hope over fear of speculators in the market. Although Keynes's General Theory can be regarded as falsified by its failure to predict the stagflation of the 1970s, his beauty contest theory of prices on speculative markets is still a potentially valid theory.

In Catch 22 Joseph Heller gave an amusing and more comprehensible explanation of the beauty contest theory of prices than Keynes. The antidote of Milo Milbinder's unfortunate speculation in Egyptian cotton market illustrates how a free market can produce a in boom price, a crash in price, and unproductive investment. John Kenneth Galbraith (1908–2006) in his book on the economic history of speculative bubbles, the Great Crash, showed that beauty contest theory of prices applied from the outset of capitalism, and how it let to unproductive investment, booms in prices, and great crashes.

There have been many speculative bubbles, the first famous one was the tulip mania in Holland in the 1630s. In this bubble, the prices one tulip bulb rose to ten times annual wage of skilled worker, in modern terms about £300,000 or about the price of small apartment in London. The first speculative bubble of English capitalism was the South Sea bubble of the 1720s. Nobody knows when there will be another speculative bubble in the UK. Though there are some who say that London property prices, as at 2015, are result of a bubble and their will be a crash, and there are others who say house prices are sustainable.

In the Keynes/Beveridge era there was consensus, that bankers and financiers, as the market price of assets could be arbitrary, were not in a position to make the best decisions for the productive use of borrowed money. Instead civil servants, acting under democratic elected governments, should by means of regulations and guidelines directed borrowed money to were it would be used productively. Many believe that in housing they were largely successful. There was no increase in house prices in the UK after the Second World War, when there was a severe housing shortage, and investment funds were directed to building new dwellings rather than increasing price of the existing housing stock. As noted above, during the Keynes/Beveridge era the real price of a house remained stable at about 2.5 times an average annual male earnings (see graph above, History of house building)

Consequences
At the start of the era Thatcher–Blair consensus, controls on lending to purchasers in the housing market were removed. Buy to let landlords, second home owners, foreign citizens were all allowed mortgages to buy UK property. One of the theories as to why real house prices have increased, is removal of controls on lending to property speculators. After this happened, the property market started to show the boom bust cycles typical of a free market containing speculators (see graph above, History Real UK house prices).

Exchange rates and Trade Policy
Williamson in his summary for the Washington consensus of the views neoclassical economists, wrote:"Like interest rates, exchange rates [are preferably] determined by market forces, [though other methods for achieving a competitive exchange rate are possible]""A competitive real exchange rate is the first essential element of an 'outward-oriented' economic policy, where the balance of payments constraint is overcome primarily by export growth rather than by import substitution. There is a very strongly held conviction [amongst neoclassical economists] that outward orientation and expanding exports—essentially growth in 'nontraditional exports' are necessary for ... recovery (see, for example, Balassa et al. 1986)."For most of the era of the Keynes–Beveridge consensus there was a fixed exchange for the pound set by the government. In the era of the Thatcher–Blair consensus era exchange rates have been determined by market forces, except for a short period(two years) when the UK was in the European Exchange Rate Mechanism.

It is not clear why export growth is preferable to import substitution, and why outward-oriented economic policy is desirable. On the left, it is believed that the Thatcher administrations were in favour of an outward-orientated economic policy as it provided means of reducing the.power.of organised labour.

In the 1970s the UK was dependent on domestically mined coal. In 1972 the National Union of Mineworkers (NUM) organised an effective strike, a state of emergency had to be called, and there were rolling planned four-hour power cuts across the country. The miners were victorious, and got a better deal. There was a further strike in 1974. To conserve coal stocks, the Conservative government of Edward Heath, reduced the working week to three days, organised power cuts, and called a general election on the theme of, 'who governs Britain'. Heath lost this election. The Labour Party under Harold Wilson (1916–1995) formed a government, and again the miners were victorious, and were given a 35% pay increase.

At the start of the 1980s, due to North Sea oil the pound sterling became a petrocurrency. Market forces meant that the value of sterling rose, making imports cheaper than domestically produced goods. It became unprofitable to mine coal, make steel, weave cloth, and make clothes etc. Imported goods substituted for domestically produced goods. Keynesian economists believed that it was this that caused a recession and unemployment.

During the era of Keynes–Beveridge consensus the unemployment rate had never exceeded 6% and averaged about 4%, At the start of the era the Thatcher–Blair consensus, in 1984, during the 1979–84 recession, it increased threefold, to 12%.

Initially the miners were protected from cheap imports. In 1981 the government proposed closing unprofitable mines but backed down under the threat of strike action from the miners. At the start 1984 coal, including imported coal, was secretly stocked at power stations. In spring of 1984, at a time low coal demand due the coming summer, the Government announced the planned closure of 20 pits, and the termination of the agreement which had ended the 1974 industrial action. This provoked the miners strike of 1984–85 which the miners lost.

Consequences
Thatcher called the miners 'the enemy within'. The 'outward orientated' trade policy, is believed to be important factor in enabling Thatcher governments to obtain victory over organised labour.

In 1981, 364 Keynesian economists in a letter to The Times wrote '... present policies will deepen the depression and erode the industrial base of the economy'. The outcome is as the Keynesian economists predicted. In the era of the Keynes–Beveridge consensus, the UK designed, built and exported: ships, planes, trains, cars, turbines and generators. And was self-sufficient in clothes, shoes and electronic goods. In 2015 in all these sectors there was a dependence on imports. It is not certain which of policies of the Thatcher governments caused the erosion of the UK's industrial base, but allowing the exchange rate of the pound to be determined by market forces when sterling became a petrocurrency is a candidate.

Foreign Direct Investment (Free Movement of Capital)
In the era of the Keynes–Beveridge consensus there was economic nationalism, as foreign control of key sectors of economy was feared. For example, during this era the UK had a large merchant navy, Most UK trade was on British ships. The ships were, owned and managed by British companies and crewed by unionised British seamen. At times of war, the Government would requisition British Merchant ships and compelled them to enter dangerous waters. Without its merchant navy Britain would have lost World War II.

In his summary of the views of the Washington-based neoclassical economists Williamson wrote:"... a restrictive attitude limiting the entry of foreign direct investment (FDI) is regarded as foolish. Such investment can bring needed capital, skills, and know-how, either producing goods needed for the domestic market or contributing new exports. The main motivation for restricting FDI is economic nationalism, which Washington disapproves of, at least when practiced by countries other than the United States."Thatcher governments removed capital controls but were initially cautious about FDI and placed restrictions on it. They would often retain, a 50% stake or a golden share in a company, and there were restrictions on repatriating profits.

The UK joined the European Union in 1973. The founders of the European Union, opposed economic nationalism, not just of grounds of efficiency, but out of fear of it leading to military conflict. Beginning with Maastricht Treaty and continuing adoption on Lisbon Agenda with the Lisbon Treaty the EU adopted a neoliberal agenda. Any form of economic nationalism was outlawed. The free movement of capital across by EU borders was enshrined in EU law, and restrictions on FDI made illegal.

According to neoclassical economic theory, FDI allows foreign owners to bring 'skills and knowhow', to improve the efficiency of an enterprise, and this can explain why so many of the business which supply goods and services to the UK population are foreign owned. An alternative view is that FDI is driven by tax avoidance.

FDI, by using complex investment vehicles, and obscure transactions, can allow income from a business to flow out the country un-taxed. This can make foreign owned business more tax efficient than a UK owned company. A UK financier wishing to invest in a business supplying goods and services in the UK provided by UK workers, can avoid tax by transferring the capital abroad, and making the investment through foreign banks so that it appears to be FDI.

Consequences
By 2010, by the end of the last Labour government, nearly all trade with the UK used foreign owned ships. Ports, and airports, were foreign owned and controlled, as where water and electricity utilities, and gas pipeline infrastructure.

From 2008 to 2015 in the UK, the sector receiving largest amount of FDI funds,was the London property market. One of the theories as to why there has been a tenfold increase in real price of housing in London since the Keynes/Beveridge era is foreign buyers. The Bow group, which has claims to be the UK's oldest neoliberal think tank, and was instrumental in promoting the policies of the era Thatcher–Blair consensus has started to question the consequences of FDI. In a discussion paper entitled, "Solving the UK housing crisis", it was suggested that: Commenting on the report Ben Harris-Quinney, chairman of the Bow Group said: "Whilst a strong free market foundation is essential, foreign and corporate influence on the UK market has hurt UK citizens, and will continue to do so without intervention".
 * Investment buyers provoke (house) price inflation because they are prone to herd behaviour and have considerable buying power. Foreign buyers exacerbate this situation because of their dependence on intermediaries and "experts" who aggressively market UK housing as an investment opportunity.
 * London [has emerged] as the second-home capital of the world ... [and] up to 85% of prime property [is] sold to a foreign buyer.
 * The future of UK housing is very grim unless investment money is restricted.

Interestingly, even the IMF has started to question the value of FDI. In a paper entitled, "Neoliberalism: Oversold?" the authors claim that 'instead of delivering growth some neoliberal policies have increased inequality'. In particular they note the large capital flows associated with FDI can cause booms in asset prices and crashes.

An indication that it is FDI, that has contributed significantly to the house price inflation in London, is provided by looking at states which have retained capital controls. The English Channel Isles are a crown dependency, and not part of the United Kingdom, or a member of the European Union. Consequently, EU law on the free movement of capital does not apply there. The governments of the channel isles have created a two tier housing market. Some houses are classified as in the local market, and these can only be sold to locals who have resident rights; other houses are on the open market and can be sold to anybody in the world. Houses on the local market are around half the price of those on the open market. Under this scheme local residents who are property owners have lost out as they are permitted to sell on the open market, but local residents, forming new families wishing to become owner/occupiers benefit, as house prices are far cheaper for them.

Another state which has retained capital controls is Switzerland. Although surrounded by EU members, Switzerland is not a member of the EU, and it has restrictions on FDI. The system that many Swiss cantons use to prevent FDI causing house price inflation, is to allow Swiss citizens to sell their house to anybody in the world, but foreign owners of Swiss property have to sell a Swiss citizen. A foreign owner is not permitted to sell a foreign buyer. This prevent the price of a property rising to above what a Swiss citizen can afford. The restriction on FDI have prevented speculation in Swiss property.

Privatisation
Central to neoliberal agenda is privatisation. The justification for privatisation stems from the theory of economic man. In his Washington consensus document Williamsons explains why believers in neoclassical economics hold that privatisation of state owned assets is desirable. He wrote:"... the main rationale for privatization is the belief that private industry is managed more efficiently than state enterprises, because of the more direct incentives faced by a manager who either has a direct personal stake in the profits of an enterprise or else is accountable to those who do ... This belief in the superior efficiency of the private sector has long been an article of faith in Washington."There is an alternative view, which was widely believe in the era of the Keynes–Beveridge consensus, namely that a nationalised industry can produce a product more efficiently than competing private enterprises supplying a market, as wasteful competition is avoided, duplication of effort is eliminated, co-operation is enabled, and co-ordination becomes possible.

From the start of the era of the Thatcher–Blair consensus there was an additional reason for privatisation of state assets, namely funding for tax cuts. The most important source funding for this purpose was the sale of council houses, which raised £35 billion.

In addition to the nationalised industries and council houses, during the era of the Thatcher–Blair consensus public property sold include: school playing fields, libraries, old peoples homes, community centres, council chambers, nurses homes, hospitals, barracks, ports, and airports.

Consequences
In considering the consequences of the UK's privatisation program it has to be recognised that not all citizens have been effected equally. This makes uses of an average, such as GDP per capita misleading. The winners and losers have to be considered separately.

From its inception there was debate about the consequences of the sale public property. Sir Harold Macmillan famously said of the Thatcher Government's privatisation program that they 'were selling off the family silver'. Macmillan predicted that treating funds from the sale of capital assets as income, would lead to an age of austerity.

In 2010 the out going New Labour, Chief Secretary to the treasury, Liam Byrne left a note for his successor saying 'there is no money [left]'. In one sense, the government can never run out of money because it can always create it, but in the sense of having an adequate revenue stream to fund public expenditure, the UK had run out of money. It would seem Macmillan's fears had been justified, privatisation receipts had enabled cuts in property taxes, income tax, and various complex tax reliefs of benefit to those who can afford help in tax planning. This had shrunk the UK tax base. Further, revenue from publicly owned property, rents and profits etc., had become insignificant. In the June 2010 budget the age of austerity was announced. In 2014 the Treasury extended the proposed austerity period to at least 2018.

It appears that what Macmillan predicted would happen, has happened. In the UK, national and local government's shrunken revenue stream is no longer sufficient to fund the quality of public services which were the norm in the era of the Keynes–Beveridge consensus. The main losers from the age of austerity have been those who made greatest use of council provided public services, Elderly care services, and public libraries have been particular badly hit.

There is evidence in a paper entitled Privatization: the record to date from the World Bank research unit that a privatised industry can be more efficient, and that there may be macro economic benefits from privatisation, provided certain conditions are met. An essential condition is transparency, so as to enable taxes to be collected from the revenue stream flowing from privatised assets. There is no evidence, that in the UK, this condition has been met. Control and ownership many of the privatised assets have passed to foreign governments, and investment vehicles that hide the beneficial owner, making transparency impossible.

There is not much doubt that the group of UK citizens which have lost most from the countries privatisation program are working-class families. In the era of the Keynes–Beveridge consensus a working-class family could rent a three-bedroom house with garden from the council The rent was around 7% of average male earnings, subsidised gas, electricity, and water meant that a husband on unskilled labourer's wage could provide for the family, and the wife could work as a full-time home maker and not have need to seek paid employment. Preschool children of the family could go to play in their garden, and school children play soccer in the lunch break on school playing fields. In 2015 both husband and wife would have to find paid employment to pay the rent and bills for a small apartment which provided no outside play area. Money the family pays in rents and utility bills could flow via tax havens to landlords and foreign governments.

A group which has done particularly well from the sale of nationalised industries and the senior managers in the privatised companies. In the era of the Keynes–Beveridge consensus the pay of senior management team of a nationalised industry was transparent, it would just be a fixed salary, on which full tax would be paid and net take home pay would be less than ten times median earnings. During the course of the era Thatcher–Blair consensus real incomes of top management of privatised industries has increased and become opaque. Top management now receive complex tax efficient executive compensation packages, with Golden hellos, golden handcuffs, executive stock options, and guaranteed and conditional bonuses. In addition to money, executives can receive perks, such as free private health care for extended family, free private schooling, free use of company jets. In practice it is impossible to discover the income of senior managers of privatised companies, but it is many millions. In 2015, a successful senior executive in a privatised company can expert to receive more income in a month, than an unskilled labourer will receive in a lifetime.

Probably the group which has done best from the sale of publicly owned property are those at the top of the government. In the era of the Keynes–Beveridge consensus the income of successful politicians and top civil servants on retiring would just be their pensions. From the outset of the era of the Thatcher–Blair consensus this group learned how to monetise their contacts. On retirement they collect multiple part-time directorships, and consultancy fees, in an area they helped privatise. Well connected families have also done from an understanding of opportunities presented by privatisation.

Deregulation
A core belief of neoclassical economics is that provided goods and services are exchanged on competitive free markets, the market will be self-regulating. Further, market mechanisms will enable profit seeking enterprises to efficiently allocate the resources of a state. Believers in neoclassic economics hold the consequence of government regulation of a market is inefficiency at best, corruption at worst. To make this case Williamson in the paper proposing the Washington consensus quotes Balassa, et al.:"Most of the larger Latin American countries are among the world's most regulated market economies, at least on paper. Among the most important economic regulatory mechanisms are controls on the establishment of firms and on new investments, restrictions on inflows of foreign investment and outflows of profit remittance, price controls, import barriers, discriminatory credit allocation, high corporate income tax rates combined with discretionary tax-reduction mechanisms, as well as limits on firing of employees ... In a number of Latin American countries, the web of regulation is administered by underpaid administrators. The potential for corruption is therefore great."In the era of the Keynes–Beveridge consensus the UK had all the 'economic regulatory mechanisms', which the neoclassical economists believed would lower growth. It was believed at the time however, that these controls were essential as market prices can be unfair, and profit seeking businesses can on occasions allocate resources inefficiently. The 'web of regulation' was however administered by reasonably paid civil servants, and local government officers on fixed salaries. In UK though, since the implementation of the recommendations of the Northcote–Trevelyan Report in 1855, the UK civil service has been largely free of corruption.

In the era of the Keynes–Beveridge consensus there were price control mechanism to prevent price rises in areas of shortage. For example, to stop landlords profiteering from a housing shortage, by raising rents to the free market level there was legislation to provide security of tenure and rent controls. There was a national rent officer service which employed rent officers to inspect properties and set fair rents for them.

In the era of the Keynes–Beveridge consensus, as well as priced control mechanisms to stop what was considered profiteering, ie.charging the free market prices at times of shortage; there were mechanisms, to prevent what was regarded as exploitation, i.e. only paying the free market price, when this had fallen due to surplus supply. For example, farmers could sell their produce at an agreed price to a government agency, marketing boards, rather than in to a market. One such board, was the Milk Marketing Board, which paid farmers what considered to be the fair price for milk, which at times of a milk surplus, would be much higher than the free market price. In sectors where there potential surplus of labour there wage control mechanisms to prevent employers exploiting labour. Wage councils set what were considered fair wages, The fair wage was higher than the free market wage, and the fair terms and conditions, much better than free market terms and conditions.

In the era of the Keynes–Beveridge consensus there was 'discriminatory credit allocation' and this was considered essential. It was believed that as bankers and financiers are driven by the profit motive they would sometimes in pursuit of short term profits, borrow foolishly and lend recklessly. Keynesian's economists believe that the great crash and subsequent great depression were caused by banks lending foolishly to speculators. Keynes was one of the first people to understand how the banking sector creates money by making loans and how when these loans fail a bank can collapse and money vanishes. According to Keynesian theory, when money vanishes, effective demand falls, and this can cause a recession.

In the system for controlling banking implementing Keynesian concepts, banks had to operate under the guidance and direction of civil servants, who it was believed had better judgement as to the public interest than bankers, and were better placed to ensure that the revenue stream available from bank loans was used for the public good. Most people would consider the system used to regulate financial sector confused and bureaucratic. For example, building societies, were not allowed to offer current accounts but only saving accounts for local residents. Banks would provide current accounts, but could not give mortgages, this could only be done by building societies who where only permitted to lend to owner occupiers, not for second homes or to landlords. Under reserve requirements, banks, could in effect be directed to issue loans to councils to fund their house building programs. Clearing Banks were not allowed to purchase or own other financial institutions such as stock brokers or merchant banks.

In 1986, the second Thatcher government, abolished all the Keynesian inspired regulatory structure of the financial sector. This was big bang financial market deregulation. Liberating banks, from civil service control was held to be safe as the government had come to believe the explanation from neoclassical economics for the Great Crash and Great Depression.

There was predictions at that the time that the result of liberating the financial sector would be a crash. Sir Edward Heath used the analogy of golf game. He said that good golfer keeps lots clubs in his bag to be prepared for all circumstances. And accused the Thatcher government of being a one club golfer, as they were attempting to regulate the financial sector just by using control of the Bank of England base rate.

In the era of the Keynes–Beveridge consensus there was agreement that the employees should be treated fairly. ,and hence there were strong 'limits on firing of employees'. The Thatcher governments deregulated the labour market. Wage Councils were abolished, and restrictions on firing of employees lifted, and a flexible labour market was introduced.

In the housing sector rent controls were abolished. In the agricultural sector marketing boards were abolished. Except in London, public transport was deregulated and council's lost the powers to determine bus routes and set fares.

Thatcher had a Methodist background and did not deregulated gambling, this was done under New Labour governments.

Consequences
In ascertaining the consequences of deregulation there is the complication that at the same time the UK economy was being deregulated, due to computerisation, there significant technological change to systems of production and distribution. There are however, four substantial area of the economy which the change which has occurred can with reasonable confidence be attributed to deregulation. They are higher real rents, inferior terms and conditions of employment for unskilled and semi skilled labour, increased inequality, and the UK banking crisis of 2008. There are deregulated sectors of economy that have seen improvements, in which deregulation might have been a contributing factor the most important are, lower real prices for food, lower real prices for electronics, lower real prices for foreign holidays.

On rents
Since 1980, the start of the era Thatcher–Blair consensus rents have risen far faster than inflation rate as measured by the Retail Prices Index and faster than earnings. There is no agreement as to reason for the increase. One view is that it primarily due to deregulation of the rental market. An alternative view is that it is due to increase in demand due population growth, of which immigration has been a substantial part. .

The graph, History of real rents in England, shows how rents have risen expressed in 2014 pounds. The figure understates the rent increase as it compares average rents. At the same time as rents have been increasing the quality and size of average rented property has declined.

In 1980, before the implementation of neoliberal policies, a typical working class household could expect to rent a council three-bedroom council, with a garden on lifelong secure tenancy. They would pay £7.70 a week in rent, £29.50 in 2014 pounds, or about £(2014) 130 Per Calendar Month (pcm). This was 6.9% of average male earnings.

In the era of the Keynes–Beveridge consensus, council house rent subsidies were used to equalised rents across England. And London rents for a council house was about an eighth higher (12%) than the rest of the country. The free market in rental property has totally changed the position. In 2014 rents in London were double the national average at £1,516pcm compared with a national average of £655. A rent of £1,516pcm is over 60% of average male earnings.

The increase in real rents has also effected new families being formed from those in the top half of the income distribution but below the top decile. The group who in the era of the Keynes–Beveridge consensus could expect to buy their own home. The increase in house prices has meant that this is no longer possible.The group this has effected has been called generation rent.

One of the theories as to why UK house prices have increased is that house prices can be determined by the rental return from a property. According to this theory, the fivefold increase in UK rents has caused the fivefold increase in house prices.This increase in house prices has put getting on the property ladder beyond the means of 90% of generation rent. If the theory is correct it means a generation have been priced out of the property market by buy to let investors, who have been the beneficiaries of increase in rents.

A problem in accessing economic policies is that there are concurrent changes. One of the theories for the fivefold increase in real rents is that it has been caused by immigration not by deregulation. Coincidentally after rent controls were removed the UK experienced strong population growth, primarily due to immigration. From 2000 to 2013 the population of the UK increased by about 5.2 million from 58.9 to 64.1 million. At the same time insufficient new dwellings were being built (see graph above, History of house building). The failure to build dwellings for the increased population caused a housing shortage, and it was this that has led to the fivefold increase in rents.

However, there was an equally severe housing shortage in the UK after the Second World War, which did not lead to rent increases, as rent controls prevented this happening. It probably not contentious to conclude that immigration into the UK has aggravated the housing shortage, and removal of rent controls has allowed landlords to profit from the shortage.

This view is supported by what has happened in the English Channel Isles. As noted above, the Channel isles are not members of the EU. The governments of the Channel Isles and do not have to obey EU anti discrimination regulations, and they have developed system which discriminated in favour of locals. They have established different rental markets for locals, and the rest of the world. The landlord of a property designated as being on the local market has to be let to somebody with right to reside in the Channel Isles and not to anybody from the rest of world, including the.UK. The rents for property on the open market are about the same as for Central London, whilst those on local market are about half.

On terms and conditions of employment
For employees especially, those who are unskilled and semiskilled deregulation of the labour market has changed lives substantially. In the era of the Keynes–Beveridge consensus an unskilled worker could expect to have a job which offered: sick-pay, pension, paid holidays; guaranteed hours of work with additional payments for working anti-social hours and overtime; job security, with job termination only possible through proven gross miss conduct, or through redundancy, in which case the employer had to pay substantial redundancy payments. In the UK by 2014, for semi skilled labour such contracts were a rarity, more common were zero hours contracts. These offered no holiday, sickness, or overtime, or anti social hours pay, made no pension contribution, and provided no income security.

On income distribution
Neoclassical economic theory did not predict the increase inequality from removing wage controls and allowing the market to set remuneration. According to neoclassical theory, if there is surplus of labour in one sector leading to low wages, and a shortage of labour in another sector leading to high wages, then labour will move into the highly paid sector equalising wages. Eventually the fair wage and market wage will converge and everybody will be paid what they deserve. In practice wage differential of between fifty and hundredfold can be maintained. For example, commodity traders earn over fifty times what the night watch man for his office earns. But there is always a shortage of good commodity traders as very few people have the ability to acquire the skills required. Not many people could lean how to look at a screen of bids and offers and rapidly work out how to respond. On the hand, nearly all could learn how to be a night watch man. Those on the left believe there will always be sectors with surplus labour, and allowing free markets to set remuneration in these sectors, will inevitably lead to poverty wages.

On public borrowing
For twenty five years it appeared that Heath's fears where unjustified, and deregulation of financial sector had been successful. In 2006, Gordon Brown at the Chancellor Exchequer's annual Mansion House speech said: "The message [of the] success London's [financial sector] sends out to the whole British economy is that we will succeed if ... we advance with light touch regulation, a competitive tax environment and flexibility." Gordon Brown showed that New Labour had totally accepted the belief system of neoclassical economists, and had as an article of faith that the managers of a business over would invariably make better decisions than civil servants. In an introduction to a description of the financial regulatory system the Blair government had implemented he wrote:"[We have] not just a light touch but a limited touch. Instead of routine regulation attempting to cover all, we adopt a risk based approach which targets only the necessary few.""A risk based approach helps move us a million miles away from the old assumption—the assumption since the first legislation of Victorian times—that business, unregulated, will invariably act irresponsibly. The better view is that businesses want to act responsibly. Reputation with customers and investors is more important to behaviour than regulation."This neoliberal view was supported by David Cameron, at that time leader of the opposition Conservative Party.

The end of 2007 saw the start of first global financial crisis involving bank collapses since UK financial sector had been deregulated in the big bang. The crisis was triggered by the collapse of a USA housing bubble which revealed that the global financial markets had over valued mortgage backed securities (MBS) and this let to the sub prime mortgage crisis.

It has long been recognised that a responsible banker does not borrow short and lend long. As Brown noted, from the Victorian age governments and civil servants, believed that bankers, in pursuit of growth and greater profits would behave irresponsibly, succumb to temptation, and borrow foolishly and lend recklessly.

In the UK banks which provide current accounts, are called clearing banks. To reduce the risk of bank runs, clearing banks, prior to the big bang, were not permitted to offer mortgages. Mortgages had to be provided by building societies. These were Mutual societies which would only give mortgages to members, and the funds for mortgages could only come from the savings of members. These restrictions prevented building societies borrowing foolishly to lend recklessly in Thatcher's first government all these restrictions were lifted, and building societies were permitted to demutualise and allowed to become banks. And as a consequence of Blair's government's 'limited touch' regulation the business strategies of the ex-building societies were not examined

In 2007 the sub prime mortgage crisis spread to the UK. A UK bank, Northern Rock, formed from an ex building society, suffered the first run on a clearing bank in UK in a 150 years. The New Labour government, in order to prevent systemic failure banking system guaranteed all Northern rocks debts and nationalised it. This added about £100 billion to the national debt.

In a parliamentary investigation into the collapse of Northern Rock it was discovered that it had a business strategy, which involved it borrowing short term from the global money markets. Their report noted that Northern Rock had a 'high risk reckless business strategy'.

Northern Rock was not the only ex building society to fail. In 2001 the Halifax building society and Bank of Scotland merged to form HBOS. In 2008 HBOS collapsed and had to be rescued.

Prior to the big bang clearing banks were not permitted to own other financial institutions. In the era of the Keynes–Beveridge consensus it was held that a UK clearing bank as it was essential for the UK money transfer system must not be allowed to engage in any activity that could put its survival at risk. The system allowed, other financial institutions such as Merchant banks, to engage in high risk activities as if they failed the only losers would be shareholders and creditors.

Following the big bang, the Royal Bank of Scotland (RBS) grew from a small UK clearing bank to a global financial services company owning clearing banks, merchant banks, and insurance companies all over the world. The growth was funded by borrowing on the global money markets. In 2007 RBS further increased its debts when it was the lead member in a consortium which purchased a Dutch bank ABN Armo for £48.2billion.

The shock waves from the sub prime mortgage crisis continued to reverberate around world, revealing more bankers who had taken advantage of lax regulations to act recklessly and irresponsibly. In September 2008 the USA financial services firm Lehman Brothers filed for bankruptcy owing $613 billion.

In October 2008 RBS's global creditors feared that RBS, as it had bought overvalued MBSs, and paid to much for ABN Armo, was credit risk. They refused to refinance its debt and it looked as if RBS would default. Alistar Darling, the Chancellor of Exchequer in Browns's New Labour government was told that if RBS defaulted, as it was major clearing bank, it would lead to failure of the clearing system. This would mean that not just RBS customers, but all current account holders in UK banks would have their accounts frozen. The cash tills would run dry, cheques could not be cleared, BACS would fail, and nobody would be paid at the end of the month. Allowing RBS to file for bankruptcy, like Lehman Brothers, was not an option. Instead an emergency funding package for the UK banking system was arranged. This was a complex package, involving share purchases, loans, loan guarantees, and subsidised insurance policies against loan defaults. Altogether the rescue package was valued at £400billion. This money did not come out of current government expenditure, but was an addition to the public borrowing requirement, and thus added to the national debt.

The bankers, and hedge fund owners who had lent money to RBS to fund, what turned out to be an irresponsible expansion plan, got all their money back. As a consequence of the new government guarantees the investors and traders who bough and sold over valued MBSs did not suffer losses. UK citizens, on the other hand were left having to pay for an increased national debt. Many, including believers in neoclassical economics, were dissatisfied with this outcome.

The rights agenda
In the Washington Consensus Williamson noted: 'In the United States property rights are so well entrenched that their fundamental importance for the satisfactory operation of the capitalist system is easily overlooked'.

It is easy to overlook the importance of rights as the effect of changing rights is slow but profound.

A core belief of neoliberalism is that the role of government is to create fair and free markets. It is held, that a free market served by competing providers is the most efficient resource allocation method known. A suppler to the market has the right to decide how much to produce, and right to sell or not to sell at the market price, but has no right to collude with other suppliers to agree production quotas and prices. For neoliberals, the one essential role for the government, is prevent market manipulation by suppliers. Suppliers must not be allowed to prevent others entering the market, must be stopped from colluding to set production quotas, and forbidden from entering price fixing agreements.

Change to Labour rights
Believers in neoclassical economic theory hold that anti competitive practice laws should also apply to labour markets. Milton Friedman explained why:"When unions get higher wages for their members by restricting entry into an occupation, those higher wages are at the expense of other workers who find their opportunities reduced. ... But when workers get higher wages and better working conditions through the free market, when they get raises by firm competing with one another for the best workers, by workers competing with one another for the best jobs, those higher wages are at nobody's expense. They can only come from higher productivity, greater capital investment, more widely diffused skills. The whole pie is bigger—there's more for the worker, but there's also more for the employer, the investor, the consumer, and even the tax collector.""That's the way the free market system distributes the fruits of economic progress among all people. That's the secret of the enormous improvements in the conditions of the working person over the past two centuries."In the UK, in the era of the Keynes–Beveridge consensus a different narrative was believed. It was accepted that technology progress allowed an increase in productivity and the cake got bigger. But, it was held that before there were strong unions, the owners of business enterprises kept all this increase for themselves. Workers only benefited from productivity increases once laws were passed which gave workers who belonged to unions additional rights. This allowed effective strikes to be organised, and it was strikes and threat of strikes, that forced owners of a business to share the benefits of increased productivity with its workers. It was thus forceful industrial action, that led to the 'enormous improvements in the conditions of the working person' over the last century,

In the UK, the history text books of 1960s taught that the successful London Dock strike of 1889, was the turning point which led to improved conditions for the working class, as it showed that strikes could be effective in ending poverty wages.

From the time of the 1889 dockers strike to the 1970s, unions were given additional privileges, which helped them organise effective industrial action. Closed shops were legalised, an employer could not give a job on the shop floor to somebody not a member of the union. It was made illegal to dismiss workers because they were on strike. Secondary action, allowing a union to take action,to support an other union was allowed. Under laws to prevent discrimination against union members, dismissal because of refusal to assist in strike breaking was not permitted, .Picketing, including secondary picketing was permitted. Lockouts where made ineffective by allowing unemployment benefits to those who lost income due to industrial action.

By the 1970s, UK workers in unions probably had the most favourable labour rights in the industrial in the world. In the first two Thatcher governments these rights were lost. Those on strike lost rights to social security benefits. Closed shops were outlawed, as was secondary action. Primary picketing was severely restricted and secondary picketing make illegal. Employers were given the right to apply for injunctions to stop strikes. This meant, that those taking part on what a judge considered illegal industrial action could be subjected to unlimited fines or imprisonment under contempt of court proceedings.

On disruption due to industrial action
The Thatcher governments reduction in labour rights greatly reduced the power of the unions. It became very difficult organise effective industrial action. This meant that many workers saw little point in belonging to a union and paying union dues. Union membership, which had risen nearly eight-fold from the dockers 1889 strike to 1979, from 1.5 million 11.5 million, fell by nearly half to 6.8 million in 2011.

The fall in union membership and measures to prevent industrial action reduced the days lost to strikes by nearly twentyfold from average of 12.5 million days lost to strike in a year during the 1970s, to an average of 690,000 days a years in the 2000s.

The high level of industrial action in the 1970s did not just effect businesses, but caused disruption to most people in the UK. For example, strikes that caused planned power cuts, meant that people had to reorganise their lives around when power was available. Public transport strikes meant that people had reorganise their schedules. The decade ended with what has been called the Winter of Discontent. During this a grave diggers strike in Liverpool meant that factory had to be rented to store bodies, a waste collectors strike meant that parks had to be used to store waste.

After the curbing of union power, UK citizens ceased to be inconvenienced by strikes. Believers in neoliberalism hold that "Margaret Thatcher ... after [a] battle with [the] 'enemy within' curbed union power and saved the economy."

On remuneration
It was hoped that reducing days lost to strikes would significantly increase the output of the economy. Output fell during the recession of 1980s and rose afterwards. There appears to be no evidence that preventing industrial action increased output. This is not surprising, as in 70s, the decade of industrial strife, an average of 12.5 million days per year were lost, this only represents a loss of less than 2% of working days, The days lost through unemployment have always been far greater than this. In the era of the Thatcher–Blair consensus unemployment was on average 4% greater than in era Keynes–Beveridge consensus.

The noticeable change to the UK economy was in how the output of the economy was distributed. In the era of the Keynes–Beveridge consensus about 60% of the income from the economy was distributed as wages and salaries. After the curbing of the unions, this fell and in 2000s it was down to about 53%. Trade unionists and others, believe the loss of barging power by workers has enable an extra 7% of the national income to become property income, disturbed as: profits, loan charges, rents, royalties, and licensing charges. At the same time as property income was increasing, UK governments in the era of the Thatcher–Blair consensus were reducing tax on it (Lower taxes on profits, income from rents and investments, and capital gains), whilst increasing tax on spending (VAT, fuel duty), and wages(National Insurance). One of the theories as to why the UK has a public expenditure fiscal deficit is that the UK tax systems fails to fairly tax property income.

Believers in neoclassical economics hold that people ought to get good remuneration packages, not by unions exploiting monopoly power, but by firms 'competing with one another for the best workers'. This has happened and the remuneration packages set by the free market have benefited talented hard workers. Take for example the remuneration packages available to the best accountants, these are very talented people who have worked hard had to learn and understand manuals of accountancy regulation, and the UK tax code. The best can expect remuneration packages of worth around £2million a year. This though, is only about a quarter of what the most talented footballers can earn.

Those who believe equality is desirable hold that remuneration package determined by the free market for hard working talented workers are excessively generous. And further, that the free market set remuneration packages for ordinary workers are inadequate.

In considering workers pay, the advent of zero hours contracts has shown that the hourly rate of pay is by no means the most important factor in remuneration. In the era of the Keynes–Beveridge consensus unions negotiated complex remuneration packages for their members. Take for example typical union negotiated remuneration package for a semi-skilled worker doing deliveries. A typical package would involve a guaranteed working 38-hour week, in social hours, Voluntary overtime of time and half, in anti social hours, with double time on Sunday. Job security guarantees, no dismissal without proven gross misconduct. Generous redundancy payments depending on length of service.Twenty days paid holiday, paid sick-leave, and paid attendance of union meetings. And substantial employer contributions to an employees pension pot. Remuneration package of this quality enabled a semi skilled working man to be the bread winner, and provide the funds to pay the rent and feed the family. The wife could be a full-time home maker.

In the 2010s, a person doing delivery work can expect to be just paid for deliveries he makes, have no income security, no guaranteed pay, no overtime pay, no holiday or sickness pay, no redundancy pay and no pension contribution.

The consequence of the fall in value of ordinary workers remuneration packages is an increase in relative poverty, especially child poverty. And increased government expenditure on welfare. In 1984, before the curbing of union power, about one million UK children, living in household with a wage earner, were in relative poverty, by 2010 this had doubled to over two million, two out of five households.

The result of decline value of ordinary working people's remuneration packages, is that in order prevent absolute poverty the government has provide many families that have a full-time worker, with means tested benefits. At the end of the era of the Keynes–Beveridge consensus 28% working age households received more in benefits than they paid in taxes after thirty years of the Thatcher–Blair consensus this had increased to 38%. This was in spite of households having fewer dependent children.

Topping up wages with means tested benefits has led to families being caught in a poverty trap, any increase in earned income leads to reduction in benefit income.

The problem of a free market for labour setting an inadequate workers' remuneration leading to an increase in welfare expenditure is not new one. It was first noted in 1797 by Sir Frederick Eden in comments on the Spleenhamland system. This was a welfare system in English agriculture villages were farm workers were given means tested benefits paid for out a property tax. The system was criticised as subsidising rich employers by allowing them to pay below subsistence wages, and it was claimed, that low wages topped up by benefits had the effect of causing welfare dependency in poor families.

An alternative theory, to loss of union power, as to why wages and working conditions have deteriorated for unskilled and semi-skilled workers is immigration. In the 1970s there was no net migration into the UK. An area where immigration might be responsible for lower wages is agricultural work. In era of the Keynes–Beveridge consensus, farm workers remuneration was set by a wage council, and were far better than that of migrant labourers in 2015. It is claimed that the deterioration in remuneration packages for unskilled and semi skilled workers has occurred as there is in the EU a pool of poorly paid labour willing to work for poverty wages. The theory is, that as there are no restrictions on this group moving to UK under the EU free movement of labour principle, this forces down wages.

The theory that migrant labour has caused a fall in the remuneration of unskilled and semi-skilled workers is disputed. It is noted that in 1960s there was immigration into the UK from the poorly paid labour from the ex colonies of the British Empire, and this did not lead to falling wages. There is though a difference, in that 1960s, was the era of closed shop, and migrant labour often had to join unions. A possible explanation for the difference is that in 1960s strong unions prevented exploitation of migrant labour, and this stopped immigration lowering wages.

Changes to Landlord and Tenant rights
In the era of the Keynes–Beveridge consensus the owners of land and buildings had their property rights severely restricted. How they could use or modify their property was constrained by the local government plan. To implement its plans local governments had the power to compulsory purchase property.

Private landlords faced additional constraints, not only were there rent controls, tenancy agreements could only be terminated, by the tenant not the landlord. Tenants could only be evicted for none payment of rent which required a court case. There were health and safety, requirements for rented property. In addition, to prevent overcrowding, there were limits on the number who could live in a property. Council employed environmental health officers had considerable powers to inspected privately rented property. They could order improvements to meet health and safety requirements, or designate a dwelling as unfit for human habitation. If they found an over crowded property, they could order that tenants be relocated, and the council had a duty to end the overcrowding by rehousing the tenants in council owned property.

These public health measures were a consequence of tuberculosis being endemic in the UK in the 1930s, which resulted in councils being given wide ranging powers to demolish properties designated unfit for human habitation, or ones that posed a public health risk to the local community. These powers were used extensively at the start of the Keynes/Beveridge era to compulsory purchase poor quality property at nominal prices, and to develop on the land obtained, new council housing estates. Council houses were built to higher standard than the landlord owned rented accommodation they replaced. Regulations for council housing, notably the Parker Morris Standards, set space standards, which provided council tenants with dwellings which were not overcrowded or cramped.

According to neoclassical economic theory, there is no need for a nanny state. Regulations which compel an enterprise to supply products above a quality threshold are a restriction on the freedom choice of a customer. Customers should have the right to choose to save money by buying an inferior quality product. Neoliberals believe that market forces should determine product quality and governments should not interfere.

Throughout the era of the Thatcher–Blair consensus the belief that there is no need for a nanny state to protect tenants guided housing policy .The first change, in 1980, was that the Parker Morris standards ceased to be mandatory. In the course the era property owner's rights were enhanced and council powers reduced. Property owners could sub divide a dwelling without any minimum space requirements on the sub dwellings created. Quality standards for rental property were removed. If a tenant chose to rent a dwelling with dangerous stairs and damp that was his/her choice and not a council matter. Routine inspections of privately rented property by rent officers and environmental health officers ceased.

In 1988 the standard tenancy agreement was changed to a shorhold assured tenancy. This is a symmetrical agreement, which equal termination rights to landlord and tenants, Typical after a six-month period, the shorthold period, either party can terminate the agreement on a months notice.

Consequences
In London, in addition to tenfold real rent increase the quality of rented property has declined. In the era of the Keynes–Beveridge consensus a two children and one fulll time worker could rent a three-bedroom house with garden from the council on secure lifelong tenancy. Councils in Central London no longer have such property. The rents in private sector for such home is over £3,000pcm and tenancy are insecure.

Families with one working partner and two children have had to move into inferior accommodation. In London this is frequently into a terrace pre 1945 house, converted in flats. The quality of many of these conversions, is poor, with inadequate sound insulation causing neighbour disputes, inadequate heat insulation leading to condensation, damp and mould,

The sector of the population which has lost most, from the housing crisis, are children living in families dependent on wages topped up by benefits. In 2012 it was estimated that in London, one in four children were living in overcrowded accommodation, sufficiently overcrowded to effect their health and prospects.

Perhaps the most serious loss is that children in families at the bottom half of the income distribution have no longer have access to safe outdoor play areas. When housing for this group was designed and built by councils, ensuring children had access to outdoor play areas was in the design brief. Safe play areas have not been a consideration for landlords when converting houses into flats, and commonly the only access for flats on upper stories is on to a street unsafe for children under ten. It is becoming increasingly widely recognised that children learn through play, and need unstructured, out door play for physical and psychological development. Doctors have attributed the lack of out door play as one of the factors leading to the return of rickets to the UK, and the increase in childhood obesity.

The Evaluation of Outcome Controversy
Although other countries have also adopted the neoliberal agenda, the UK provides the one of the best countries to see the effects, as the change is greater in UK than elsewhere. There has been a nearly complete change from a government regulated market economy, to a free market economy.

Whether or not, implementing the neoliberal agenda in the UK has produced a successful economy is matter of contentious debate. One of the difficulties is that there is no agreed objective criteria as to how to measure the success or failure of an economy. Depending on a persons belief system different conclusions are made as to the state of the UK economy.

Increased GDP per capita
Believers in neoliberalism contend that UK economy is a success story. The purpose of the neoliberal agenda was to create economic growth. The economy as measured by GDP has grown, and the quality of life of UK citizens as measured by GDP per capita has also improved. An interesting question however, is whether or not this growth is a consequence of implementing the policies of the neoliberal agenda.

In Free to Choose, Milton Freeman, from the hypothesis of neoclassical economic theory, derived a clear prediction. Namely, that governments, when they interfere with the market, and reduce inequality of outcome, lower economic growth, which in the long run will make the pie smaller, and everybody poorer. Friedman claimed 'The fact is, life is not fair. It is important to realise how we benefit from things being unfair'. The governments of the era of the Thatcher–Blair consensus ended policies to make distribution of income fairer. Sufficient time has passed from these changes, to test the accuracy of the predictions of neoclassical economics.

Research by Angus Maddison (1926–2010) provides the data to allow comparisons GDP changes from different time periods and also between different countries.

In the era of the Keynes–Beveridge consensus the UK economy grew in the 29 years 1950 to 1979 from a GDP per capita, adjusted for inflation to 2008 dollars, of $(2008) 6,939, to in 1979 $(2008) 13,167. This is an annual growth rate 2.23% producing a doubling time of 31.3 years. During 29 years of the era of the Thatcher–Blair consensus from 1979 to 2008 GDP per capita growth was from $(2008)13,167 to $23,742. Giving an annual growth rate of 2.05% producing a doubling time of 34 years.

There is an unknown measurement error in the GDP statistics, especially with historic figures, which makes comparisons problematic. But it is probably safe to conclude that there is no evidence that growth rates were significantly, and substantially higher in the era of the Thatcher–Blair consensus compared with the era of the Keynes–Beveridge consensus. This is not what was predicted by neoclassical economic theory.

In mainstream scientific disciplines, theories which make erroneous predictions are rejected. The prediction from neoclassical economics that government intervention in a market to equalise outcomes lowers growth in GDP per capita, has been falsified rather than supported by historic data on the performance of UK economy. And on these grounds, mainstream scientists would contend the neoclassical economic theory should 'be thrown out'.

Believers in neoclassical economics have however, not thrown out the theory. Instead, rather than trying to falsify the theory, they have searched for evidence to support it. There has been a search of data for comparative rates of economic growth, and were the UK economy has grown faster than other states this is held to be evidence that neoliberal policies have been successful. For example, it is held that UK economy is a success story as in 2012–14 its GDP per capita was growing faster than in France where there is greater state intervention. This methodology of evaluation has been criticised for cherry picking the evidence.

Increase in inequality
Believers in the importance of distributive justice hold that GDP per capita does not successfully measure the quality of life of citizens of a state. As, importantly, it ignores the consequences of income distribution. In an influential book The Spirit Level, by Richard Wilkinson, Kate Pickett present evidence that citizens in states in which there is greater equality of outcome have a higher standard of living than citizens in states were there is greater inequality. They provide epidemiological evidence that show income inequality is associated with lower life expectancy, higher morbidity, greater obesity, more crime and fear of crime. The graph (Share of Nation income to top 1%) shows how the income distribution, as measures by share received by richest 1% has changed in the UK since 1945. During the era of the Keynes–Beveridge consensus the share of the national income received by the richest 1%. halved, it fell from 12% to 6%. This decline would not have caused and significant fall in the real income of this group as the size of the economy nearly doubled in this period. The consequence of increasing income equality was the group of citizens dependent wages and state benefits saw their real incomes increase faster than the rate of growth in GDP per capita. In the era of the Thatcher–Blair consensus the richest 1% saw their share of the national income more than double from 6% to 15.4% in 2008.

The increase in share of the UK national income going to the richest 1% has come from the bottom 40%. The share of national income taken by the poorest decile fell from just over 4% to just over 1%. These figures mean that at the end of the era of the Keynes–Beveridge consensus a standardised person in the top 1% could expect to have income 15 times that of a person in the bottom decile, After twenty years of implementing the policies of the Thatcher–Blair consensus the top 1% person could expect an income around 150 times a bottom decile person.

Work by the British Economist Guy Standing shows that for low income groups, average income is poor measure of the standard of living, as it ignores the problems caused by income insecurity. Standing identified the growth of a new class since the start of the era of the Thatcher–Blair consensus, given the name the precariat. The hardship this class experience is a consequence of income, and housing insecurity. This class now is estimated in the UK to constitute about one person in six.

In the era of the Keynes–Beveridge consensus the social security system, tenants legal rights, and powerful labour unions, precluded the existence of the precariat. These safeguards have been removed. Those in the precariat, if their casual work does not provide income for the month, can not risk missing a rent payment, as their tenancy can be ended at a months notice. For the precariat the most flexible item in their budget is food expenditure, and this has let to rise of families requiring emergency food aid from charities operating food banks. Further, the welfare to work system, unlike the Beveridge social security system does not provide cash grants for emergencies such as delays to benefit payments, and this forces people to use food banks.

In addition to the increasing size of the precariat there are claims that there is a new injustice in how the nation's income is distributive. There is what has been called intergenerational equity. The claim is that while real incomes of generation rent are higher now than at the start of the era of the Thatcher–Blair consensus, because of increase rents disposal real income is lower, and generation rent are poorer than their parents. More people are concluding that property price inflation has let to intergeneration injustice, benefiting home owning pensioners, at the expense of those starting new families.

The sustainability of the UK economy
In the UK, all the main political parties, and most political commentators believe that increasing GDP per capita is desirable. If the size of economy, as measured by GDP falls for two successive quarters, as it did in the UK in 2008, there is talk of a recession. If the economy is not growing there is talk of stagnation, if growth returns, as it did in the UK in 2013, there is talk of recovery. There are however respected environmental commentators, such as George Monbiot, and Naomi Klein, who have argued that having a policy objective of continuous economic growth is inherently unsustainable.

For believers in environmentalism, although the neoliberal agenda has produced growth in GDP per capita, the UK economy is a failure as it has not created a sustainable system for producing and distributing the goods the population needs. They site as example the UK agricultural sector, food production has fallen, and UK is dependent on imported food produced unsustainable by clearing rain forests.

In a book by Richard Smith, entitled Green Capitalism: The God that failed, it is claimed that humanity is in the process of committing ecological suicide. And as a matter of urgency, if human civilisation is to survive, capitalism has to be replaced. Smith contends that there is no possibility of having a 'green' variant of the free market system, as if capitalist economy is not growing, it will stagnate and collapse.

There is a minority view, held by anti-consumerists, that the UK's economy, as measured by GDP, is too large. And that at at least the upper deciles of the UK population suffers from what has been called afluenza, This is an emotional condition caused by overconsumption. The consequences of affluenza and suggested treatments, are described in a book, Affluenza: the all consuming epidemic by John de Graaf, environmental scientist David Wann, and economist Thomas H. Naylor. The British Psychologist Oliver James in his book, Affluenza, compares emotional well being in countries which, like the UK, have implemented, the neoliberal agenda which those which have not done so. In the countries which had implemented the agenda, there was greater inequality and this was associated with higher levels of mental illness.

The anti-comsumerist position is that the UK economy is unsuccessful as it produces to much. That UK citizens would have a higher standard of living, it they worked less, produced less, and consumed less. In other words, a lower GDP per capita would lead to higher standard of living. As an example of how consuming less can lead to higher quality of life, John de Graff et al. discuss the problem of congestion. In a city higher levels car ownership invariably lead to greater traffic congestion, roads blocked with parked cars, more pollution, longer journey times, and unsafe streets for children and cyclists.

One of the paradoxes of using GDP per capita as measure of well being, is that as all consumption is considered positive, car drivers who consume fuel, while stationary in traffic jams, are polluting the air, but are also adding to GDP. In 2016 it was estimated that outdoor pollution in the UK, which mainly comes from motor vehicles, contributed to 40.000 early deaths a year. These deaths are concentrated in cities where there is heavy traffic congestion. London is particularity baddy effected, with an estimated 9,500 deaths a year. There is however, no provision when calculating GDP to regard as a negative, harmful consumption that causes death and sickness.

Anti-consumerists hold that there is a further defect in GDP per capita as a measure of the standard of living of the citizens of a state, as it attaches no importance to time spend with family and friends. The assumption is that the more goods and services sold on the market, the better, even if this means people working longer, and working more anti-social hours.

At the start of the productivity revolution brought about by computerisation, it was expected that increased productivity would lead to less labour producing the same amount goods and services, leading to an improved standard of living through more leisure time.

This did happen to some extend in the era of the Keynes–Beveridge consensus. Powerful unions were able to negotiated increased leisure time. Technologies which improved productivity of the workforce, allowed unions to negotiate early retirement, a shorter working week, land onger holidays. This meant that all could benefit from productivity improvements. More people are coming to believe that the neoliberalism has failed, that increasing GDP per capita has not let to higher quality of life for the majority, and now, in UK only the top 1% are benefiting from improved production technologies.

Believers in socialism hold that there is no longer any doubt that the outcome for the UK economy of implementing the neoliberal agenda has been a decline in the quality of life of the working class. In the book by Andrew Sayer,  Why we can't afford the rich, the case is made that the fall in living standards of the working class is a consequence of increase income of the top 1%. And this is unjust. It is possible a sign of changing times, that the book has received favourable reviews, not just from leftwing reviewers. Sayer says of top 1%, 'Their consumption is excessive and wasteful and diverts resources from the more needy and deserving. Their carbon footprints are grotesquely inflated'. Sayer presents evidence that for the rich, a 'high proportion of their income is ... unearned ... based on power rather than some contribution'.

Those who believe in socialism hold that the implementation of the policies of the Thatcher–Blair consensus has created an unjust and unsustainable economy. And hence the UK economy should be regarded as a failure rather than a success.

Selected bibliography

 * Affluenza: The All-Consuming Epidemic (2001) John de Graaf, David Wann, and Thomas H. Naylor. ISBN 978-1-57675-199-2. Presents evidence that over consumption lowers the quality of life.
 * The Beveridge Report (1942), Social Insurance and Allied Services, Parliamentary Paper CMND 6404. Presents proposal that the state should ensure no UK citizen is in want by providing welfare benefits and subsidised services.
 * Capitalism and Freedom (1962), Friedman, Milton ISBN 0226264211 Presents the theory that financial markets are self-regulating and it is government interference in the market which causes boom bust cycles.
 * Free to Choose: A personal statement (1980), ISBN 0156334607. Milton Friedman with Rose Friedman. Highly influential restatement of policy views.
 * The General Theory of Employment, Interest and Money pdf (1936) John Maynard Keynes, ISBN 978-0-230-00476-4. Notes that capitalism is prone to booms in assets prices followed by crashes leading to unemployment, and resource under utilisation. Claims that capitalism can fixed if the government, not banks, control the creation of money.
 * The Great Crash, 1929 (1955) Galbraith, John Kenneth, ISBN 014103825X. Explains how a capitalist banking system, by lending to speculators, creates a boom in asset prices which is followed by a crash. Predicts when institutional memory of crash of 1929 is lost, bankers will cause another crash.
 * Green Capitalism: The God That Failed (2015), Richard Smith, ISBN 1848902050. Claims that capitalism can not be fixed to produce sustainable economy as it requires continuous growth.
 * The Road to Serfdom (1944) Freidrich von Hayek, ISBN 0226320618. Presents the theory that free markets lead to optimum resource allocation and hence government interference in a market is an unnecessary restriction on freedom, leading eventually to serfdom.
 * The Shock Doctrine: The Rise of Disaster Capitalism (2007) Naomi Klein, ISBN 978-0676978001. Claims that ruling elites use disasters to impose the neoliberal agenda on a state. Cites as an example Mrs Thatcher use of her victory in the Falklands War.
 * The Spirit Level: Why More Equal Societies Almost Always Do Better (2009), Richard Wilkinson, Kate Pickett, ISBN 1-84614-039-0 Presents evidence that greater income equality can improve the quality of life of all citizens of a state.
 * Why We Can't Afford the Rich (2015) Andrew Sayer, ISBN 9781447320869. Claims that implementing neoliberal agenda has made the lower income deciles poorer because of the increased share of national income taken by the top 1%.