This article surveys the Thatcher administration's approach to inner-city policy. It uses recently opened archives to reignite the debate over how far these years marked a radical break with past practices towards market-oriented approaches. The first part explains why inner cities became such a central issue for the Conservative party, running through all areas of domestic policy and taking up a vast amount of legislative time. The second part details some of the transatlantic neo-liberal ideas that blamed inner-city ills on government intervention, which were increasingly influential amongst senior Conservatives. The third section shows how little free market ideology actually succeeded in directing government policy, which more often than not saw an expansion of the role of the state. Antagonism with local authorities is revealed to have been a much more important and influential factor. These themes are expanded in the fourth section, which charts the Action for Cities policy drive of Thatcher's final term.