The election of the Tory government in 1979 marked a seachange in postwar British history, and resulted in a drastic reshaping of the British working class. The new Tory administration under the premier Margaret Thatcher was committed to policies of monetarism, deregulation, privatization of nationalized industries and services, the crushing of trade union power, and virulent anti-Communism. This was a ‘New Right’ philosophy which saw the ‘market’ and ‘market forces’ as sacrosanct, and which believed that the role of the state was to unfetter laissez-faire capitalism from the socialist restrictions of workers’ rights and state planning. Adam Smith's ‘invisible hand’ (under its new soubriquet ‘trickle down’) would redistribute wealth from the haves to the have-nots. The Tories set about undoing not just the reforms of the postwar years but the whole socialist heritage of the last 150 years. The British working class was to be returned to a condition in which there was no right to job security, no right to organized self-protection, and in which the discourse of social relations was ruthlessly commodified: the ‘cash nexus’ became the primary signifier of the value and quality of the social fabric. ‘Thatcherism’, as this ideology has come to be known, based its appeal on the mentality of the entrepreneur, the owner of a small business, and the self-employed artisan and skilled working-class sector (ironically, the latter were often the backbone of radical movements in the last century). Thatcherism managed skilfully to divide the working class: it rewarded its supporters with lower direct taxation and the right to buy their council home at huge discounts, and gave access to quick profits from the purchase of shares in privatized industries; at the same time, Thatcherism demonized any organized resistance to its policies as the ‘enemy within’, and used the power of the state to punish its traditional class enemies.

The Thatcher government also had historical accident on its side. For the first few years of its office, there was something of a popular backlash against its cuts in public spending and bullish Cold War rhetoric. In 1981 a series of youth riots swept through Britain's inner cities, and in the same year the miners forced a government U-turn on a programme of pit closures.