The Conservative government’s first Budget after returning to office in May 1979 was highly regressive in its effects. Higher allowances on income tax and the reduction in the basic rate from 33 to 30 per cent was more than wiped out by the massive rise in value added tax and petrol duty. Almost certainly it was only top earners with incomes over £15 000 per annum who gained in net terms because of the considerable reduction in the top rates of tax. The average wage earner lost out, and the lower paid worker was dramatically worse off. Apart from the redistribution of net money incomes, a high rate of inflation and unemployment further reduced living standards. Although the previous Labour government had reluctantly adopted monetarist policy (with severe effects upon the public and private housing sectors), the Conservatives’ Budget of June 1979 applied:
monetarism with a vengeance. In practice it [was] the most class based and socially divisive budget since the war, ridden with not only the threat of grave social tensions, but also the probable failure of even its basic economic objectives.
(Mr Stuart Holland, MP, 1979).