When Margaret Thatcher entered office in 1979, she had a personal conviction that the Civil Service needed to be changed. She had a huge majority to start with, and was in government for four successive terms, so she had ample time and ability to affect almost any change she wished. Against her ferocious assault, the Civil Service itself no longer had power enough to stay reforms, and in her period of office the Civil Service changed hugely and permanently.
Her general approach is fairly easy to sum up: she wanted Market mechanisms to extend to public institutions, including the Civil Service. She felt that free enterprise was beneficial to all aprts of society, as were business ideals such as competition and value for money. This led to her having to broad motives: to reduce the total role of Government, and to give value for money. She herself said she was focusing on the "Three Es": Efficiency, Effectiveness and Economy.
This approach, when applied to the Civil Service, involved dividing their role into two sections: "policy making" and "service delivery". She wanted to focus mostly on the second role, in order to give the public the best deal.
She began her actual changes very quickly, setting up an "efficiency unit" headed by Lord Rayner (a known business figure at the time), with a staff of six. They were to look at how the Civil Service was being run, and suggest improvements. They became known as "Rayner's Raiders", and completed one-hundred and thirty 'scrutinies' during their time, saving an approximated £170000000, and removing 16000 wasted jobs. At the same time, other bodies were also set up to scrutinise various other parts of Civil Service operations, with varying success.
The first concrete wide-spread change that Thatcher enacted was probably the Next Steps program.