I agree that Thatcher would never have won, Conservative-wank TLs aside. Who seriously thinks that Conservative voters would turn out en masse to elect the United Kingdom's first female Prime Minister? I'm cynical enough to think that's why they elected her in the first place; they knew they weren't going to win in 1979 so they chose that as a year to give her a chance at the leadership and have her fail so that the party could put someone more credible, i.e. male, in power. The Conservative Party has long been much more ruthless than Labour in deposing failed leaders; no wonder it wasn't long after Thatcher lost when the knives came out and the Heathites sailed back in.
The idea of Thatcher winning is sufficiently far-fetched that there are plenty of even more far-fetched notions floating around in this discussion. Avoiding the single currency? God, I wish so, but that certainly wouldn't have happened in an ATL with a more successful Conservative Party. The Conservatives are far more wrapped up with pan-European-nationalist idealism than Labour are, or indeed any of the other parties big enough to be worth mentioning; it's always been that way and it always will be. Are all of you too young to remember Harold Wilson and the EC referendum?
A Thatcher Conservative government would be, well, a Conservative government, not the Referendum-Party-before-the-Referendum-Party fantasy that some people seem to have. We've had Conservative governments before; we know exactly what they're like. They aren't the sort of people who would stand against the EU, any more than they would stand up for trade unionism against the bosses.
It would be great if it could somehow have happened, though. That's the root of the troubles Pericles was talking about. It's honestly hard to know who to blame. Poor Hague [1] was just trying to comply with the terms enforced by the troika; the huge budget cuts were disruptive, no doubt, but from his perspective he had no choice in order to keep the country afloat and prevent another catastrophic default and decline in living standards due to lack of cooperation with the lenders and the punitive dissatisfaction of the IMF, ECB et al. It's difficult to fault the strikers either; they were doing naught but trying to protect the wages they rightly earned by their work. The true villain of the story is of course the EU itself, vehicle for the imposition of neoliberalism that it is—if we were able to have our own central bank and set our own interest rates rather than being forced to follow an institution which doesn't really help anyone except the German economy, the Great Collapse wouldn't have hit us anywhere near so hard and we'd be in the same boat as Switzerland and Norway, not the same boat as Italy, Portugal and Greece—but that's far too abstract for most people.
That's why Hague fell, really. He was stuck in an impossible balancing act between remorseless usurers of international capital trying to take their pound of flesh and public anger at those demands. Perhaps apathy was worse than any of it; so many people have lost hope that anything will ever get better. Redwood may be one hell of a public speaker and the Referendum Party may have been strong enough to turn an electoral defeat into an electoral massacre for the Conservatives, but everyone knows we're too entangled with the eurozone to pull out of it now (how would we do it? Say that euros being traded in the United Kingdom are somehow different from all the other euros floating around the continent, and we'll exchange these but not others?). The low turnout in the election was because people have lost hope that their votes can ever change anything, since no matter who they vote for they'll just get more austerity enforced upon them by wealthy greedy bankers from Europe and America. [2]
OOC:
[1] That was quite an interesting portrayal; I've never seen Hague as Ted Heath 2.0 before.
[2] For a party to go from 325 seats or more (able to form a government) to under 200—especially in the circumstances of a big strike harming public order, which is normally the sort of thing which would make people fearful and make Conservative voters turn out in droves, i.e. pretty much circumstances tailor-made for the benefit of a Conservative government—is, well, let's say, surprising. This is an attempt at rationalisation: the Conservatives were being bled white on their right flank by a rival party, so the right-wing vote was really heavily split. (Alternatively it may have been the supposition that, if not for the black magic of Thatcher ruining the inevitable march of progress, people who are right-wing in the real world wouldn't be right-wing, but I'll make a more generous assumption as to authorial intent.)