Nigel Lawson's great triumph was to show cutting taxes works
Why ‘Britain’s bank manager’ was the most brilliant politician of his generation: Nigel Lawson’s great triumph was to show cutting taxes works. What a tragedy, says DANIEL JOHNSON, that it’s a lesson the Tories seem to have forgotten
Back in the summer of 2020, Rishi Sunak made a kind of pilgrimage to Lord Lawson’s home in Sussex. Though in frail health, Sunak’s great predecessor as Chancellor was ‘clear-eyed’ and ‘instructive’, Sunak later said, as he discussed tax reform.
The admiration was clearly mutual. The grand old man was so impressed by Sunak — less than half his age — that when Sunak announced his Tory leadership bid two years later, Lawson declared he was ‘the only candidate who understands Thatcherite economics’.
This week, following Lawson’s death at 91, Mr Sunak paid tribute to ‘a transformational Chancellor who was an inspiration to me and many others’.
He recalled that the first thing he did when he himself became Chancellor three years ago was to hang a portrait of Lawson above his desk. No wonder: this was a man who cut taxes more than any post war occupant of No 11, yet turned a deficit of £10.5 billion into a surplus of £4.1 billion. To many of us who lived through the Thatcher revolution, Nigel Lawson was simply the most brilliant British politician of his generation.
For more than a decade, he sat on the editorial board of Standpoint magazine, of which I was the founding editor. From time to time he also contributed articles. As a result, I came to know him: not well, but well enough to enjoy his dry sense of humour and occasionally mordant judgments of others.
Nigel Lawson was simply the most brilliant British politician of his generation (Pictured: Nigel Lawson, former Chancellor of the Exchequer, with his wife)
When Sunak announced his Tory leadership bid two years later, Lawson declared he was ‘the only candidate who understands Thatcherite economics’
It was Lawson, of course, who gave the Conservatives their low-tax, pro-enterprise reputation — a reputation they are now in danger of losing.
For, despite his admiration for his predecessor, as Prime Minister Rishi Sunak has presided over the highest levels of taxation in peacetime and a crushing burden of public debt. Lawson called himself ‘a Tory radical’ — and justly so. Nobody before or since has done as much to bridge the gap between ‘the two nations — the rich and the poor’, in the words of Disraeli, another Tory radical.
Whether it was enabling people to own their own homes or to grow their own share portfolio, Lawson was on their side.
For millions who had never dreamt of ownership, he became Britain’s bank manager. By the time he left office, mortgages and private pensions were within the reach of almost everyone.
His background as a financial journalist equipped him with a firm grasp of economics and the confidence to become a reforming Chancellor.
His portly image exuded prosperity, just as his intellectual robustness reassured the markets.
He believed not only in low taxes, but in sound money, cutting red tape and a smaller, leaner state.
Lawson pioneered the key Thatcherite policy of privatisation, liberating industry from the dead hand of Whitehall. Most memorably, his bonfire of regulations in 1987 (known as ‘the Big Bang’) transformed the City of London from a cosy club run by public schoolboys into the meritocratic engine-room of the global economy.
Nigel Lawson married beautiful heiress Vanessa Salmon in 1955 when she was aged 23 (Pictured: Nigel Lawson with wife Vanessa and their two daughters)
Unlike many Conservatives of his era, however, Lawson was a social liberal. In matters of personal morality, he thought the Government should mind its own business.
Above all, Lawson instinctively understood what his boss, Margaret Thatcher, was trying to achieve. And, having steeped himself in monetary economics, he had the technical knowledge to make it happen.
Such ambition and financial astuteness clearly ran in the family.
Lawson’s grandfather Gustav Leibson came to Britain from Latvia in 1914. The family name was anglicised to Lawson, and Nigel’s father, a tea merchant, established a company in the City. His mother came from a wealthy stockbroking family, and the Lawsons enjoyed a comfortable home in Hampstead.
Like his father, Nigel was sent to Westminster School and won a mathematics scholarship to Christ Church, Oxford. Undaunted by snobbery or anti-Semitism, he took a First and did national service in the Royal Navy, commanding a torpedo boat with the improbable name of HMS Gay Charger.
Having married in 1955, aged 23, the beautiful Vanessa Salmon, heiress to the Lyons Corner House firm, Lawson made his name as a City journalist while also gravitating to the Conservative Party.
In 1956 he joined the Financial Times, and later became the first City editor of the Sunday Telegraph.
When Lawson was editor of The Spectator in the late 1960s, my father-in-law, J.W.M. Thompson, was his deputy. He remembered Nigel as the most loyal of colleagues, but one who did not suffer fools gladly — including one of the magazine’s proprietors, who promptly sacked him.
Like his father, Nigel was sent to Westminster School and won a mathematics scholarship to Christ Church, Oxford
Lawson took such mishaps in his stride. ‘I’m always on the alert when there’s a consensus,’ he would insist. ‘There is no debate. That’s lazy.’
In 1970 he stood for the marginal seat of Eton and Slough. I remember that election as bitterly fought: when then-prime minister Harold Wilson came to speak, Tory activists bombarded him with eggs. Nigel lost, only to be elected for Blaby in Leicestershire in February 1974.
Though he was over 40 by the time he entered Parliament, he was always destined for the top. A fearless political warrior, he saw the Left as the enemy of enterprise.
In fighting the militants who controlled many of the trade unions, he took no prisoners.
He was equally intolerant of the ‘Wets’ who dominated Mrs Thatcher’s first Cabinet. They did all they could to undermine her and the Chancellor, Sir Geoffrey Howe, who had the unenviable task of bringing runaway inflation under control.
In his first ministerial job at the Treasury, Lawson helped Howe rein in public spending and force the Bank of England to limit the money supply to squeeze inflation out of the system. Thatcher identified his talent and made him a member of her inner circle, helping prepare her for Prime Minister’s Questions.
As unemployment hit a postwar record of three million in 1981 and 364 economists — in an infamous letter to The Times — protested against Howe’s deflationary Budget, Mrs Thatcher’s unpopularity plumbed the depths.
In the same year, Thatcher brought Lawson into the Cabinet as Energy Secretary. He built up the nation’s coal stocks to enable the Prime Minister to take on the hitherto invincible National Union of Mineworkers (NUM), led by far-Left extremist Arthur Scargill, who declared a miners’ strike in 1984.
Lawson built up the nation’s coal stocks to enable the Prime Minister to take on the invincible leader of the National Union of Mineworkers (NUM), Arthur Scargill
Without Lawson’s foresight and steady control of the public finances, Mrs Thatcher might never have survived the year-long strike, which proved to be her government’s biggest test — and led to the defeat of the union.
So, in 1983, Mrs Thatcher made Lawson her Chancellor. He continued Howe’s strict control of expenditure, but began to lay the groundwork for the fiscal reforms for which he is best remembered.
Lawson had the gift of making economics comprehensible to the layman. From 1983 to 1988, he turned his Budget speeches into opportunities to initiate the nation into the mysteries of the so-called ‘dismal science’.
Though possessed of enviable charisma, which his critics dismissed as showmanship, Lawson was a cautious custodian of the public purse.
He did not cut taxes until he had reduced borrowing, eliminated the deficits to which his Labour predecessors had been addicted, and seen the economy return to growth.
At his last Budget in 1988, he triumphantly slashed the higher rate of income tax from 60 to 40 per cent and the basic rate to 25 per cent, while balancing the books and simplifying the fiscal system.
With hindsight, what makes Lawson’s record so impressive was his ability to create prosperity in the midst of the Cold War, which was a huge burden on the Exchequer.
During his time in office, the UK was still spending up to 5.5 per cent of GDP on defence — nearly three times as much as today.
A believer in independent central banks, he had tried and failed to persuade Mrs Thatcher to give the Bank of England its independence so that it, rather than the government, could be held responsible for controlling inflation.
Without Lawson’s foresight and steady control of the public finances, Mrs Thatcher might never have survived the year-long strike
Instead, he tried to achieve the same result by shadowing Europe’s strongest currency, the Deutschmark. This undeclared policy led the PM and her Chancellor to fall out, as the ‘Lawson boom’ caused the economy to overheat.
By the time Lawson resigned in 1989, the golden era of Thatcherism was over.
The subsequent recession enabled Labour to accuse the Tories of being the party of ‘boom and bust’, while Gordon Brown got the credit for carrying out Lawson’s reform of the Bank of England.
In 1980 he and Vanessa divorced after 25 years of marriage. Together, they had one son, Dominic, a former newspaper editor and now a Daily Mail columnist, and three daughters — Thomasina, who died of breast cancer in her early 30s — Nigella, the celebrity chef, and Horatia, a television producer.
He married Thérèse Maclear, a Commons library researcher, soon afterwards, having met her in 1974 and asked her to ‘do some photocopying’ for him. They had two children: Tom, now headmaster of Eastbourne College, and Emily, a television producer.
Though Nigel enabled millions of his compatriots to make money, he was less fortunate in his own investments. His children, of whom Nigella and Dominic are both friends of ours, have inherited many intellectual gifts but have all had to make their own way in the world — just as he and his ancestors did.
As Lord Lawson of Blaby, he made two major contributions to public life. He founded the Global Warming Foundation, campaigning for better research on how to adapt to climate change.
Later, he championed Brexit as chairman of the Leave campaign. By now resident in France, Lawson was accused of ‘hypocrisy’ by diehard Remainers. Unfairly so: he was never anti-European, merely unwilling to let Britain be run from Brussels. ‘Most countries in the world are outside the EU,’ he said, ‘and they are doing very nicely, thank you.’
Celebrity chef Nigella Lawson and her father Lord Nigel Lawson
If Rishi Sunak is to make the most of Brexit he must not merely preach the gospel according to Nigel Lawson, but put his politics into practice.
If Lawson had been Chancellor during the pandemic, he would never have borrowed on such a grand scale, while allowing the Bank of England to continue printing vast sums of money (the wheeze known as ‘quantitative easing’).
Both these policies continued for far too long, with the result that inflation took off.
Not for Lawson the unfunded tax cuts that derailed the economy last autumn, destroying the reputations of Liz Truss and her chancellor Kwasi Kwarteng.
As his son Dominic warned last summer, Nigel never believed that tax cuts without spending cuts could pay for themselves.
Still, we are where we are. What would Nigel Lawson advise the Prime Minister to do now? He recognised some cows are sacred, famously saying: ‘The National Health Service is the closest thing the English have to a religion.’
However, I believe he would also be telling Mr Sunak to keep public spending apart from the NHS and defence under tight control, while cutting red tape and taxes. Though Nigel Lawson was not infallible, he had the courage of his convictions.
‘To govern is to choose,’ he wrote — and his choices were far more often right than wrong.
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