Introduction

The budget which Nigel Lawson delivered to Parliament as Chancellor in the spring of 1988 was his most spectacular; it was also his most controversial. ‘A provocative budget’ was how he described it in his memoirs. ¹ The centrepiece of his programme was daring, even by the standards of a radical Conservative administration. Sweeping tax reforms, aimed at slashing the top rates of income tax and reducing the basic rate, lay at the heart of the government’s fiscal message. The Chancellor’s defence of his strategy was characteristically robust. His parliamentary speech was a hymn to Britain’s new-found economic puissance. The strength and durability of the upturn in the country’s economic fortunes, he proclaimed, had exceeded every post-war record. Outstripping all competitors, the nation was poised to enter its eighth successive year of sustained growth. Prudent financial policies had given business and industry the confidence to expand, while public finance had secured a virtuous circle. The plain fact was, Lawson concluded, that the economic life of the country had been transformed. ²