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The Chancellors

      Steering the British Economy in Crisis Times

      Howard Davies

      polity

      Copyright © Howard Davies 2022

      The right of Howard Davies to be identified as Author of this Work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988.

      First published in 2022 by Polity Press

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      ISBN-13: 978-1-5095-4955-9

      A catalogue record for this book is available from the British Library.

      Library of Congress Control Number: 2021948546

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Abbreviations

AIFMDAlternative Investment Fund Management DirectiveB-DEMBespoke Dynamic Equivalence MechanismBEISDepartment for Business, Energy and Industrial StrategyCBIConfederation of British IndustryCCCCommittee on Climate ChangeCOPConference of the PartiesCPIConsumer Prices IndexCSTChief Secretary to the TreasuryDMODebt Management OfficeDTIDepartment of Trade and IndustryECBEuropean Central BankECJEuropean Court of JusticeEEAEuropean Economic AreaEMUEconomic and Monetary UnionERMExchange Rate MechanismESRCEconomic and Social Research CouncilESTEconomic Secretary to the TreasuryFCAFinancial Conduct AuthorityFCDOForeign, Commonwealth and Development OfficeFSAFinancial Services AuthorityFSRFinancial Stability ReviewFSTFinancial Secretary to the TreasuryGDPgross domestic productGFCglobal financial crisisGVAgross value addedHAMHigh Alignment ModelHMRCHer Majesty’s Revenue and CustomsICTinformation and communication technologiesIFSInstitute for Fiscal StudiesIMFInternational Monetary FundMOUMemorandum of UnderstandingMPCMonetary Policy CommitteeOBROffice for Budget ResponsibilityPFIprivate finance initiativePRAPrudential Regulation AuthorityPSAspublic service agreementsPSLprivate sector liquidityQEquantitative easingR&DResearch and DevelopmentRBSRoyal Bank of ScotlandRPIRetail Prices IndexSECSecurities and Exchange CommissionSIBSecurities and Investments BoardSMEsmall and medium-sized enterpriseSNPScottish National PartyTSCTreasury Select CommitteeWTOWorld Trade Organisation

Introduction

      In 2006, I edited and introduced The Chancellors’ Tales.¹ It included lectures given at the London School of Economics by the five former Chancellors of the Exchequer then alive: Denis Healey, Geoffrey Howe, Nigel Lawson, Norman Lamont and Kenneth Clarke (I excluded John Major who had served for a short period). Their brief was to reflect on the challenges of running the Treasury.

      The period covered ran from 1974 to 1997. Aside from