Today a new series of records has been released âÂ T 639,Â the Private Office of the Chancellor of the Exchequer Geoffrey Howe’s records (1979-1983) â which gives us a new perspective on Howeâs tenure as Chancellor
The Chancellorâs Private Office consists of his private secretaries and political advisers. It is at the very heart of the Treasury, where policy and practice come together. The papers bring together policy records, and show exchanges between the Treasury and the Prime Ministerâs Office and other government departments. The T 639 records also contain plenty of ‘marginalia’ – comments written in the margin in the Chancellorâs own hand – as well as the input and influence of ‘high flyers’.
In this blog, Iâm going to outline the political background and highlight elements of the papers that give insight into key events, such as the 1981 Budget and the general election in 1983.
In the mid-1970s when in opposition, the Conservative Party developed new economic strategies. Key elements included rolling back the role of the state, introducing more competition, reforming trade unions, and an emphasis on reducing inflation through control of the money supply (monetarism).
Geoffrey Howe was one of the first Conservative politicians to embrace the new thinking and became a close ally of Margaret Thatcher, who made him Shadow Chancellor, and then Chancellor when the Conservatives came to power in 1979.
There were marked differences in personality between Margaret Thatcher and Geoffrey Howe: Thatcher was very forthright and, sometimes, strident; Howe was softly spoken and invariably courteous.
The March 1981 budget was very tough: it increased income tax, by freezing personal allowances, and also imposed heavy tax increases on petrol, cigarettes and alcohol. Nigel Lawson later wrote that ‘to introduce a tax-raising budget on this scale in the depth of the recession was inevitably highly controversial’. 1
Thatcher and Howe were going against the mainstream economic orthodoxy of the time. On 30 March 1981, 364 economists wrote a letter to The Times which strongly criticised the strategy behind Howeâs Budget.Â From looking at the Prime Ministerâs Office records, one can detect just how beleaguered Margaret Thatcher and her ministers felt at times during 1981. A Sunday Times leader of 9 February was headlined âWrong, Mrs Thatcher, wrong, wrong, wrongâ and challenged a set of her economic pronouncements one by one, and the file PREM 19/423 shows that this caused concern at 10 Downing Street.
On 15 July, the Prime Minister was reported as saying ‘that almost every newspaper, with the notable exception of Daily Mail, was now attacking the Governmentâs economic policies.’ 2
However, by the end of 1981 a recovery was underway and inflation fell significantly by the end of 1982, paving the way for an economic boom in the mid-1980s (though unemployment remained troublingly high). Continue reading »