Former UK Prime Minister Margaret Thatcher passed away this week. The reactions were many and very disparate. Marc Antony’s statement in Julius Caesar about the good that man does being often buried with his bones, while the bad that one does lives after him, appears to be very apt.

Thatcher was Prime Minister from 1979 to 1990, the longest period a UK Prime Minister served in the 20th century. She was also the first woman PM in the UK, even though she herself had said that there would never be a woman Prime Minister in her lifetime.

Thatcher did commit a couple of gaffes during her term, including her refusal to agree to sanctions against South Africa for their policy on apartheid. What felled her was her insistence to introduce what was then called the ‘poll tax’, followed by the decision of most of her Cabinet not to support her.

These past five days she has been described as intransigent and divisive, adjectives that echo her nickname, the Iron Lady. However, as PM, she did leave a good legacy, especially in the management of the economy.

She inherited a country where inflation was running at over 20 per cent per annum.

Unemployment was rising and reaching alarming proportions. The UK had in the late 1970s sought a bailout from the International Monetary Fund in order to address the imbalances in its balance of payments.

Output was decreasing, while wages were rising to an unsustainable level. The trade unions were very much calling the shots as they had a big hold over the British Labour Party. Social benefits were so generous that they were serving as a disincentive to work.

State enterprises were increasingly relying on subsidies to keep going, irrespective of any economic justification.

By the time she resigned in 1991, she had addressed these issues successfully. She got the UK economy going again by creating new economic activity. She took the trade unions head on and made sure that trade union power was not abused of. Many state-controlled enterprises were privatised and social benefits were kept at a level such that they were not an alternative to work. Inflation and unemployment were both brought tumbling down. The North Sea oil helped her to sort out the balance of payments issue.

Maybe it is important to note that John Major and Tony Blair, who succeeded Thatcher as Prime Ministers, pushed forward her broad policies, even if not in such a divisive manner. That is testament enough of her good legacy. The following Prime Minister, Gordon Brown, followed a tax and spend policy that put Britain back into economic difficulties and lost the British Labour Party the elections.

There is one aspect in all of this that I believe stands out. Thatcher challenged very hard the concept that public goods – that is the services that are normally provided by the state because they are seen to be beneficial to society as a whole – should be totally funded on the ability-to-pay principle.

This means that public services are paid for through taxation to the full extent, as this would mean that those better off contribute more to their funding. Margaret Thatcher sought to introduce the beneficial principle whereby people who benefit from public services are made to pay for them. As with anything else, there is no clear-cut answer to this dilemma and the practice is that governments adopt both principles, depending on the public service involved.

This is not the sort of discussion that we have in this country as both political parties seem to want to outdo each other in their generosity regarding social welfare.

However, it is a discussion that people do have in private.

Taxpayers generally do object that not everyone pays the full tax amount one owes and that some segments of society have access to so many social benefits. Law-abiding people do believe that those who follow the straight and narrow path are penalised.

We do have general agreement that there needs to be a strong social welfare system – however, people generally believe that real entitlement and perceived entitlement need to be brought in synch with each other.

We need to have a proper debate as to which services provided by the state should be based on the ability-to-pay principle and which services should be based on the beneficial principle. It is this particular aspect that I find most intriguing in Thatcher’s legacy, which overall is a good one.