It usually comes back to inflation. Study any period of British history from 1945 onwards, and there’s a good chance you’ll spot ministers making strange and sometimes desperate decisions in the name of taming – or often to avoid taming – rapidly rising prices.
Nigel Lawson’s time at the top was no exception. Lawson, who has died aged 91, was chancellor from 1983 until 1989. He was known for the deregulation of the City of London (the ‘big bang’) as well as his shock resignation (incredible behind-the-scenes BBC footage here), which in retrospect did almost as much to destabilise Margaret Thatcher’s government as Geoffrey Howe’s departure one year later.
But it is fiscal policy for which Lawson is perhaps best remembered, or reviled. His 1988 Budget, which slashed the top rate of income tax from 60 per cent to 40 per cent, was later blamed for fuelling the so-called Lawson boom. That expansion swiftly became a bust which sent inflation and interest rates up to double-digits while unemployment approached three million.
But Lawson, never lacking for intellectual ballast, wanted to do something about inflation. Britain was suffering greater price increases than the US and much of Europe. And so in November 1988, he wrote to the prime minister advising that the government grant statutory independence to the Bank of England. It was surely no coincidence that the Federal Reserve, Bundesbank and the National Bank of Switzerland all enjoyed operational independence.
Of course, it didn’t happen, taking a further nine years and a New Labour government to do it. Instead, the UK entered the European Exchange Rate Mechanism, a forerunner to the single currency, essentially as a substitute for central bank independence.
Unfortunately, the nation went in at a vastly inflated rate (£1 = 2.95 Deutsche Mark) and famously fell out on 16 September 1992, known as Black Wednesday, after which what was then John Major’s Conservative Party never recovered economic credibility.
That’s the history, but Lawson retained a huge influence over the Tories long after his departure from the House of Commons in 1992. He became a peer, a fierce proponent of Britain’s exit from the European Union and an enthusiastic climate denier. Still, he was admired by subsequent Tory chancellors including George Osborne and Rishi Sunak, who hung a picture of Lawson in his Treasury office.
Interestingly, despite Liz Truss’s Thatcherite cosplay, Lawson endorsed Sunak in last year’s leadership election as the candidate who understood Thatcherite economics.
Notwithstanding being perhaps the single most important minister across Thatcher’s three administrations and a torchbearer of the Tory right for a further 30 years, Lawson may ultimately go down in history as Nigella’s dad. Bequeathing several chancellors and a national treasure – there are duller legacies.
Elsewhere in the paper, Finland’s flag is set to be raised at Nato’s headquarters in Brussels as the country formally becomes a member of the alliance. Finland applied to join alongside Sweden, following Russia’s further invasion of Ukraine last year.
In the comment pages, Defence Editor Robert Fox reckons Vladimir Putin is suddenly looking less in control of Russia’s destiny. As Donald Trump faces his day in court, Anne McElvoy warns not to bet against a rematch with Joe Biden. While Business Editor Jonathan Prynn says the City needs a fresh champion like Lawson.
And finally, modern air travel raises some unexpectedly metaphysical questions. For example, is marmalade a liquid or a solid? What about peanut butter? At least the 100ml rule has been scrapped at everyone’s favourite airport, London City, thanks to the installation of new CT scanners.
