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It is in domestic policy, however, that Thatcher's government will differ most from its predecessor. In essence, her aim is to point Britain back toward a market economy by dismantling much of the apparatus of government controls and regulation built since the end of World War II. The means have already been made clear: curbing public expenditure, restoring personal incentives by cutting the income tax (a prohibitive 83% at the highest level of earned income), removing such restraints on private enterprise as wage and price guidelines and foreign exchange controls, redressing the balance of power between the unions and the rest of society by correcting the most flagrant abuses of organized labor.
Thatcher and her economic advisers are determined to reduce Britain's budget deficit by cutting public spending back by $9 billion. One area in which they hope to make substantial cuts is government support for industry. The Tories will not use the taxpayers' money to prop up ailing companies and industries—not even nationalized ones. Thatcher would like to return a number of nationalized industries to the private sector, but in light of their unprofitability, there would be few takers. Instead, she may try to introduce minority private shareholders into such government-owned enterprises as the British Steel Corp. and British Airways.
Just as it was for Labor, reducing inflation—currently around 10%—is a high-priority goal for the Tories. Thatcher is committed to free collective bargaining—meaning that there will be no attempt to impose a ceiling on pay rises sought by the unions. If heart conquered head, a Thatcher government would almost certainly welcome a showdown with the unions. But even the angriest Tories remember that Ted Heath's battle with the mine workers over his wage-restraints policy led to his defeat in the 1974 elections. Thus the new government's approach to industrial relations is likely to be more cautious than the campaign rhetoric. Instead of focusing on comprehensive legislation, the Tories will concentrate on outlawing specific abuses, like the picketing of businesses not directly involved in strikes, that irked many union moderates. The go-slow policy will appeal to middle-of-the-road Tories, who feel that an all-out attack on the unions will only make labor leaders and the rank and file more radical than they are today.
Even as the votes were being counted, Thatcher was given unmistakable warnings that her approach to the labor union issue might be the test of how long a honeymoon her new government would have. One of Britain's most respected business leaders, Sir Barrie Heath (no kin to Ted), advised the new Conservative government "not to rush in and try to bring in laws to restrict the unions. Such a course of action would be the death knell for British industry." The same day, Thatcher got a strong message from Terry Duffy, a moderate who heads the huge (1.2 million members) Amalgamated Union of Engineering Workers. Callaghan and the Trades Union Congress had worked out a "concordat" that laid down guidelines for wage claims and union self-discipline on wildcat strikes. That agreement, announced Duffy, was now a "dead document."