Nigel Lawson as Chancellor destroyed the status quo of the mixed economy and replaced it with freedoms many of which were phoney

The tributes to Nigel Lawson have been mostly warm and that is only right as, viewed from today, (a time of political pygmies) he was in his day a giant. But the problem with the Thatcher years, and he was Chancellor of the Exchequer for six of them, was that the ideology was greater than the pragmatism. Much of value in our mixed economy was thrown away.

Modern democracies are mixed economies – national public/private partnerships if you like. The Attlee government (1945-51) had a clear vision to shift the balance towards public ownership and was happy to be called “Socialist”. It was a one-off shift and successive administrations of both parties up to 1979 undid little that Attlee and Co. did. They were pragmatic, Butskellite and firmly in the centre.

That changed in 1979 with the election of Margaret Thatcher who saw the balance to have shifted too far to the “Left” and in particular believed that Trades Unions had too much power. This was an ideological shift and many Conservatives, including former Prime Ministers like Macmillan and Heath, sought to restrain Thatchers’s ambition. Unsuccessfully.

Thatcher’s first Chancellor Geoffrey Howe pursued a radical supply side economic policy which reduced inflation and interest rates at the cost of high inflation. Despite the unpopularity of these policies Thatcher was re-elected in 1983 helped by the perceived success of the Falklands War. She then appointed Lawson to the Treasury, The driving force of economic policy was a belief in liberalising the system and deregulating. Economist Geoff Riley has described Lawson’s positions as follows:

  • Tax cuts: Lawson cut taxes across the board, including income tax, corporation tax, and capital gains tax. He argued that these cuts would stimulate the economy and encourage investment. The most significant tax cut was a reduction in the top rate of income tax from 60% to 40% in 1987.
  • Monetarism: Lawson was a strong believer in monetarism, which is the belief that the government should control the money supply in order to control inflation. He used interest rates to control the money supply, and he was often willing to raise interest rates sharply in order to keep inflation in check.
  • Privatization: Lawson was also a strong supporter of privatization, which is the sale of state-owned assets to private companies. He argued that privatization would make the economy more efficient and would raise money for the government.
  • Deregulation: Lawson also deregulated the economy, which meant reducing the amount of government regulation on businesses. He argued that deregulation would make the economy more competitive and would encourage investment.

These pillars of Thatcherite economic management are notable for making no mention of Growth or Employment. There is, perhaps, an assumption that these are outcomes rather than goals and that if you get each of them right the economy will grow and jobs will be created. There is also no mention of the growing reality that economies are interdependent across States, especially in Europe. It’s a very nationalistic set of policies.

John Major and Tony Blair succeeded Margaret Thatcher in Number 10. The former could not unravel his inheritance though he was far more of a mixed economy and internationalist person than she had been. Blair, and especially his Chancellor Gordon Brown, steered the ship of state back to some extent to the pre Thatcher days, though without unraveling any of the Thatcher/Major privatisations and deregulations. It is no exaggeration to say that our economic construct today was substantially created by Nigel Lawson.

On leaving office Lawson embraced two causes of the Right of the Conservative Party, Euroscepticism and a strongly anti Global Warming legislation position. The latter he pursued in an almost fanatical way. The interdependency of nations led to the growth of the European Union which is based firmly on principles of cooperation across nation states and some surrender of national sovereignty. Lawson was against this. And it was self evident that environmental management (especially global warming) required the same degree of cooperation. Lawson denied this – he called the descriptor “Climate Change” a “Propagandists’ term”

Rishi Sunak was nine years old when Nigel Lawson left office. This hasn’t stopped him from penning a panegyric to him. No doubt this is designed to appeal to hard core Conservatives who share Lawson’s nationalism, support for Brexit and obsessive anti Climate Change legislation position.

Lawson’s geriatric faux-nationalism can be dismissed as the rantings of a rather silly old man. But that his time in office was characterised by a dismissal of the post war tradition of a mixed economy cannot be dismissed so easily. That Sunak sees it as a golden age is disturbing to say the least. To be involved in the destruction of a whole industry (mining) without any plans to replace it with anything was scandalous. To create private sector monopolies (e.g. in the water industry) in order to enrich buddies with well paid sinecures likewise. To destroy traditional private sector final salary pension schemes in the worship of phoney freedoms was nonsensical and borderline corrupt. I could go on !

Liz Truss was something of an aspirant Lawson though without understanding and learning from Lawson that it takes time. Rishi Sunak’s core beliefs aren’t much different but he unlike Truss knows that politics is the art of the possible. Elect Sunak with a workable majority next year and you’ll get Lawson redux. You’ve been warned,

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