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By Root 3084 0

nation’s saving has been channelled into bricks and mortar, too little into industry. This I never found convincing. First, it overlooks the fact that many people whose main means of saving is by buying their house on a mortgage would probably not otherwise invest their money in shares or set up businesses: however pervasive an enterprise culture is, most people are not born entrepreneurs. Indeed, buying a house is for many people the gateway to other investments. Second, the idea that British industry has fallen behind in recent decades because of a lack of investment is at best a half-truth. The fact is that much of the investment has been of the wrong sort and wrongly directed. What Britain lacked in the past was the right opportunities to make use of the investment available — because of low productivity, poor labour relations, low profits and bad management. What is true is that a high level of home ownership does need to be complemented by a sufficiently large private rented sector, as ours is not. On this score we were only half successful and the private rented sector is an area in which, given time, I would have liked to do more.

It was a different story with deregulation of business. Year after year — and with a further boost from David Young when he went to the Department of Trade and Industry in June 1987 — unnecessary regulations on business were identified and duly scrapped. David Young also shifted the emphasis of the assistance received from the DTI towards job creation, small firms and innovation. It was not just a piece of gimmickry when what had principally been a sponsoring Department for state-owned industries and heavy manufacturing was rechristened the ‘Department for Enterprise’. The importance of a continuing drive for deregulation is that otherwise reregulation is never far behind. All the pressures of modern living (or at least of modern politics) are for more controls — to protect consumers, to protect investors, to protect the environment and, increasingly, to protect powerful lobbies in the European Community. But the general truth gets lost that more regulation means higher costs, less competitiveness, fewer jobs and thus less wealth to raise the real quality of life in the long run.

All of these areas — trade union power, training, housing and business regulation — were ones in which in varying degrees we made progress in strengthening the ‘supply side’ of the economy. But the most important and far-reaching changes were in tax reform and privatization. Tax cuts increased incentives for the shop floor as well as the board room. Privatization shifted the balance away from the less efficient state to more efficient private business. They were the pillars on which the rest of our economic policy rested.

TAX CUTS AND TAX REFORMS

Nigel Lawson’s tax reforms mark him out as a Chancellor of rare technical grasp and constructive imagination. We had some differences — not least about mortgage tax relief which he would probably have liked to abolish and whose threshold I would certainly have liked to raise. But Nigel did not generally like to seek or take advice. Doubtless he felt he did not need to. His was precisely the opposite of the collegiate style which Geoffrey Howe before him practised. Nigel preferred to take me through his budget proposals when he already had them well worked out and without any private secretary present to take notes. He liked to do this over dinner at No. 11 one Sunday towards the end of January. Had I restricted informing myself of his plans to these formal occasions it would have been difficult for me to have any real influence; for to digest issues of such complexity over after-dinner coffee would put a strain on anyone’s system. But in fact, Treasury spies, realizing that this was an impossibly secretive way of proceeding with someone who after all was ‘First Lord of the Treasury’, furtively filled me in — with the strictest instructions not to divulge what I knew — before Nigel proudly announced to me his budget strategy. This at least put me in a better position