Whereas Denis Healey had repeatedly undermined his own policies as Chancellor in the late 1970s by blaming the IMF for the severity of his measures, Howe never distanced himself from what he was doing. It was an historically significant change.Or it would have been, were it not for the policies of Nigel Lawson. In his 1987 Budget, Lawson announced a set of rather cynical-looking pre-election tax cuts. Then with the election in the bag he surprised most people, including the Prime Minister, by announcing even larger cuts in the 1988 Budget.

The Chancellor’s claim was that lower taxes, especially on the higher paid, would encourage people to work harder and would hence raise economic growth. He concluded that his tax cuts would therefore reduce government borrowing over the medium term. The Conservative Party, the financial markets and a lot of the press believed him and went wild: here was a Budget that would deliver sustained growth in the economy and Conservative victories far into the future. Would Lawson be a plausible candidate to replace Thatcher when she eventually resigned? A lot of people thought that he might be.It was not to be The economy quickly began to overheat. In his 1989 Budget Lawson conceded his mistake and raised taxes and cut spending. The Prime Minister, annoyed by the disarray in policy, began to suspect the judgement of her Chancellor.

Shortly afterwards Alan Walters returned to Downing Street as her economic adviser. Few people fully realised it at the time, but the Conservatives had started to unravel.The threads really came apart in Norman Lamont’s 1993 Budget, which was not only deflationary at a time of poor economic performance ­ much like Howe’s 1981 effort ­ but which provided for additional tax increases in subsequent years. Since the tax rises came partly through cuts in mortgage tax relief and partly through the imposition of VAT on fuel and power, and since they were to be phased-in over three years, they seemed designed to create the maximum possible political offence to the maximum number of voters over the maximum period of time.Meanwhile, so severe was the recession in the economy, and so unpopular was the Government, that the financial markets became convinced that the Tories would not possibly raise interest rates. Yet with sterling struggling within the Exchange Rate Mechanism (ERM), higher interest rates seemed essential to maintain the Government’s currency policy. Something had to give, and the markets believed that it would be sterling’s ERM membership. The markets’ consequent currency sales made their predictions self-fulfilling, leaving Lamont with nothing much to do but carry on turning the handle on his fiscal mangle.Once again, however, it is the currency crisis that is remembered and not the see-saw expansionary-contractionary Lawson and Lamont Budgets.