Thatcher third term: Poll Tax, Lawson Boom, ERM entry

Doctrine — stated goals and content

Final Thatcher phase combining a decisive 1988 tax-cutting budget with deteriorating monetary control and a divisive local-finance reform that broke the government. Economic school: supply-side-right with Lawson's 1988 budget cutting top rate from 60% to 40% and basic rate to 25% — the high-water mark of supply-side income-tax policy in Europe. Left-right axis: right, but with visible strain as monetary discipline failed and poll-tax implementation mobilised mass opposition. Key content: (i) 1988 Lawson Budget March 1988 — top rate 60→40%, basic 27→25%, dividend imputation reform; (ii) Lawson Boom 1987-1989 with DM-shadowing producing overheating — RPI inflation rose from 3.3% (1987) to 9.5% (1990); (iii) Community Charge (Poll Tax) — Abolition of Domestic Rates (Scotland) Act 1987, Local Government Finance Act 1988 applied to Scotland 1989 and England/Wales 1 April 1990; March 1990 Trafalgar Square poll tax riot; (iv) Water privatisation December 1989 (10 regional companies, £5.2bn); (v) Electricity privatisation Act 1989 (National Grid + 12 RECs 1990, generators 1991); (vi) Employment Act 1988 and 1990 — further union restrictions including abolition of closed shop; (vii) NHS internal market (Working for Patients white paper 1989, NHS and Community Care Act 1990 — purchaser/provider split); (viii) Education Reform Act 1988 — national curriculum, GM schools, LMS; (ix) ERM entry 8 October 1990 at DM2.95 central rate — Lawson had resigned October 1989 over Thatcher's resistance, succeeded by Major; (x) Bruges Speech 20 September 1988 set Eurosceptic template. Popularity: 1987 election 42.2% and 376 seats; Conservatives led polls 1987-mid-1989, then Labour overtook them from mid-1989 onwards with double-digit leads after poll-tax billing; European elections 1989 Labour overtook for first time since 1974; November 1990 Howe resignation speech and Heseltine challenge led to Thatcher's resignation 22 November 1990. Coherence: the 1988 budget + utility privatisations + NHS/education quasi-markets extended the Thatcherite programme coherently; but monetary-policy incoherence (MTFS → DM-shadowing → ERM late) and political misjudgement on the poll tax produced the regime-ending crisis.