ABSTRACT
The Conservative government, like its predecessor, began with high ambitions to transform the economy. The government's philosophy was one of disengagement on the one hand and self-reliance on the other. The role of government was to provide a framework within which free enterprise could flourish. The Industrial Expansion Act was to be repealed and the Industrial Reconstruction Corporation and the Land Commission were to be wound up. The Regional Employment Premium was to be phased out. Wynne Godley, visiting the Organisation for Economic Co-operation and Development (OECD), 'put forward the 'preposterous' forecast of a massive deterioration in the terms of trade of Western countries with repercussions on real incomes and inflation. Relying on the experience of the past twenty years, OECD had dismissed this forecast'. The Conservatives had given much thought to fiscal policy while they were out of office and Iain Macleod in particular had prepared himself for a programme of extensive tax reform.
