What happened when the Conservatives last regained power with a majority Government?
We actually need to go back to 1979. We had just suffered the “winter of discontent” with industrial strikes, high unemployment and inflation. Mrs Thatcher had just been was elected the Prime Minister – although we didn’t necessarily know it at the time, we were entering the free market, monetarism and privatisation era.
Like the recent election, following the victory we quickly had a Second Budget on Tuesday 12 June. It was delivered by Sir Geoffrey Howe who described it as an “Opportunity Budget”. Like today, its aim was to cut government spending –it promised £4,000 million cut in public spending. The Budget was described as “radical” but most importantly it was viewed as credible and set the agenda for Mrs Thatcher’s government.
Looking back there were actually £4,500 million of cuts to direct taxes, but an increase of £4,100 million on indirect taxes – based on the pre-election pledges, it will be interesting to see if this gives Mr Osborne any ideas.
For those of us old enough to remember 1979, the basic rate of income tax was cut by 3% to 30% and the highest rate from 83% – yes, 83% – to 60% for income over £25,000. The personal allowance for a single person in 1979 was £1,165, which compares to the £10,600 today – times were very different. The average house cost £13,650, a loaf of bread 30p, and milk 15p a pint, and we had the season finale of Faulty Towers 😉