Insurance Post

How should the insurance industry view the Thatcher era?

Former British prime minister Margaret Thatcher

I have been mulling over whether to write anything about Margaret Thatcher following her death yesterday. As someone who was very active in politics throughout her time as leader of the Conservative Party and Prime Minister I have strong views born of frontline experience of fighting much of what she did. I have, however, decided to take the plunge and will contribute a few thoughts to the huge mountain of reflections on her era under three headings: her impact on the insurance industry, her broader political legacy and Post Magazine's own connection with her.

Did she do much for the insurance industry?
Inevitably, over such a long Premiership there were gains and losses but I don't think the industry will really look back on the 1980s with any fondness for her government.

One of her government's first acts was to abolish Life Assurance Premium Relief, instantly diminishing the appeal of protection products when compared to investment-based products. There was abuse of LAPR but its abolition was a crude and unnecessary way of dealing with those abuses and by changing the balance in favour of endowments in particular it laid the foundations for the huge abuse of those products, especially when sold alongside mortgages, that blew up in the industry's face a decade later.

Her government also heralded in the first wave of heavy-handed regulation when it commissioned Professor Jim Gower to review the Prevention of Fraud (Investments) Act which dated from the 1950s and was no longer effective when it came to dealing with newer financial products. Gower shocked the life assurance sector by proposing to include it in his new regulatory regime, a recommendation that the government accepted and which leads directly to where we are today with yet another new set of regulatory bodies that will place an even bigger financial burden on the industry.

Then came the introduction of personal pensions, another 'liberalising' reform that led to the second major mis-selling scandal born of the Thatcher era. It also started the process – driven to the extreme by Tony Blair and Gordon Brown – of undermining a very successful occupational pensions regime.

On the plus side she did sign up to the European Single Market, although over 20 years later we are still struggling to deliver the vision of cross-border selling that its advocates passionately believed in.

Her government also cut the Lloyd's insurance market an incredible amount of slack as it struggled first with the impact of a raft of major scandals in the early 1980s and then with the impact of crippling losses towards the end of the decade. A less benign stance by government could have seen Lloyd's closed down as much as it will protest otherwise.

On the wider financial front she did revitalise the City, although that has turned out to be a mixed legacy too as many commentators have observed.

Her broader political legacy
She was a political giant and the history books of the future will have to devote many chapters to her so I will only touch on a few issues here, those close to my own experiences and expertise.

On the plus side as far as I am concerned were the trade union reforms. No-one who lived through the strike-ridden chaos of the 1970s can surely think otherwise? I remember having to walk past rubbish sacks piled 10ft high in Leicester Square during the notorious Winter of Discontent. I also started working in an industry – publishing – where the trade unions were out of control. In my first job I wasn't allowed to so much as touch the lead blocks that arrived for the classified advertising pages for fear that I would bring the unionised printing presses to a shuddering halt.

There were many jobs in the publishing sector that were closed to non-union members – the so-called pre-entry closed shop – an outrageous form of discrimination and coercion.

I am also quite a fan of privatisation, although I agree with Lord Young of Graffam who said on Radio 4 this morning that it went too far when the water industry was sold off. Studying economics at school and university I could never accept the case for governments owning airlines, railway companies, car manufacturers, travel agents, mines, steel factories, phone companies and so on. All of these seem to me better sat in the private sector and all are better run as a result. Some of the excesses people point to are more to do with the culture of greed that grew up in the Thatcher era and the weakness of shareholders than with the mere fact of private ownership.

I was a councillor in the 1980s and saw at first hand how her government set about curtailing and undermining local democracy. She couldn't cope with opposition and local government was often a thorn in her side. The most high profile battle was her abolition of the Greater London Council but this was merely the tip of the iceberg. Her intense dislike of the freedom local authorities had over their budgets under the old property rating system led her to rashly promise to abolish the rates. Her replacement was the Community Charge – the hated and disastrous Poll Tax – which was one of the major contributors to her eventual downfall.

So, what was Post Magazine's connection?
As Post Magazine was in the run up to its 150th anniversary in 1990 I approached the Post Office to get a special stamp to celebrate the occasion as it was the very first magazine in the world sent by post, being launched just a few months after the Penny Post in 1840. The full history is on the Incisive Media website.

post-150-thatcher-introTo my intense annoyance the Post Office turned us down because we were "commercial", ie successful and still trading (a year or so later Punch got a stamp but had closed down by then). Despite lobbying of the Post Office bosses and board by myself and our chairman Timothy Benn we got nowhere so I wrote to the Prime Mininster and asked her to write for our 150th anniversary special issue instead, explaining how the Post Office refused to celebrate success. She readily agreed and so I drafted something, her office edited it and it came back with her signature on the bottom.

We presented her – via Sir Robert McCrindle who launched the All Party Group for us that year – with a special leather-bound copy of the issue and a few years after she ceased to be Prime Minister she eventually accepted one of my invitations to the then annual Post Magazine Parliamentary Reception. To say that heads turned and conversation stopped as she walked into the room would be an undersatement of the impact she had.

Impact. Not a bad word to sum her up.

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