Nigel Lawson

Lawson began his career as a financial journalist and progressed to the position of editor of The Spectator before becoming a Member of Parliament in 1974. While in opposition[?], he co-ordinated tactics with government backbenchers Jeff Rooker[?] and Audrey Wise to secure legislation providing for the automatic indexation of tax thresholds to prevent the tax burden being increased by inflation (typically in excess of 10% per annum during that parliament).

On the election of Margaret Thatcher's government, Lawson was appointed to the position of Financial Secretary to the Treasury. Although this is the third-ranking political position in the British Finance Ministry, Lawson's energy in office was reflected in such measures as the ending of unofficial state controls on mortgage lending, the abolition of exchange controls (October 1979) and the publication of the Medium Term Financial Strategy[?]. This document set the course for both the monetary[?] and fiscal[?] sides of the new government's economic policy, though the extent to which the subsequent trajectory of policy and outcome matched that projected is still a matter for debate.

In the cabinet reshuffle of September 1981, Lawson was promoted to the position of Minister for Energy. In this role his most significant action was to prepare for what he saw as an inevitable full-scale strike in the coal industry (then state-owned since Nationalization by the post-war government of Clement Atlee) over the closure of pits whose operation accounted for the coal industry's business losses and consequent requirement for state subsidy.

Lawson was a key proponent of the Thatcher Government's privatization policy. During his tenure at the Department of Energy he set the course for the later privatizations of the gas and electricity industries and on his return to the Treasury he worked closely with the Department of Trade and Industry in privatizing British Airways and British Telecom.

After the government's re-election in 1983, Lawson was appointed Chancellor of the Exchequer in succession to Geoffrey Howe[?]. The early years of Lawson's chancellorship were associated with tax reform. The 1984 budget reformed corporate taxes by a combination of reduced rates and reduced allowances. The 1985 budget continued the trend of shifting from direct to indirect taxes by reducing National Insurance[?] contributions for the lower-paid while extending the base of Value Added Tax.

During these two years Lawson's public image remained low-key, but from the 1986 budget (in which he resumed the reduction of the standard rate of personal Income Tax from the 30% rate to which it had been lowered in Geoffrey Howe[?]'s 1979 budget), his stock rose as unemployment began to fall from the middle of 1986 (employment growth having resumed over three years earlier).

The trajectory taken by the UK economy from this point on is typically described as 'The Lawson Boom' by analogy with the phrase 'The Barber Boom' which describes an earlier period of rapid expansion under the tenure as chancellor of Anthony Barber[?] in the conservative government of Edward Heath. Critics of Lawson assert that a combination of the abandonment of monetarism, the adoption of a de facto exchange-rate target of 3 Deutschmarks to the Pound (ruling out interest-rate rises), and excessive fiscal laxity (in particular the 1988 budget) unleashed an inflationary spiral.

Lawson, in his own defence, attributes the boom largely to the effects of various measures of financial deregulation[?]. In so far as Lawson acknowledges policy errors, he attributes them to a failure to raise interest rates during 1986 and considers that had Margaret Thatcher not vetoed the UK joining the exchange-rate mechanism in November 1985 it might have been possible to adjust to these beneficial changes in the arena of microeconomics with less macroeconomic turbulence. Lawson also ascribes the difficulty of conducting monetary policy to Goodhart's Law.

Lawson opposed the introduction of the poll tax as a replacement for the previous rating system for the local financing element of local government revenue. His dissent was confined to deliberations within the cabinet, where he found few allies and where he was overruled by the Prime Minister and by the ministerial team of the responsible department (The Department of the Environment).

The issue of exchange-rate mechanism membership continued to fester between Lawson and Thatcher and was exacerbated by the re-employment by Thatcher of Alan Walters[?] as personal economic adviser. Lawson's conduct of policy had become a struggle to maintain credibility once the August 1988 trade deficit revealed the strength of the expansion of domestic demand. As orthodox monetarists, Lawson and Thatcher agreed to a steady rise in interest rates to restrain demand, but this had the effect of inflating the headline inflation[?] figure. After a further year in office in these circumstances Lawson felt that public articulation of differences between an exchange-rate monetarist, as he had become, and the views of Walters (who continued to favour a floating exchange rate) were making his job impossible and he resigned. He was succeeded in the office of Chancellor by John Major.