When Nigel Lawson cut the top rate of income tax

Kwasi Kwarteng copied an unpopular measure that caused ‘grave disorder’ in parliament, writes John Rentoul

The chancellor isn’t doing anything that hasn’t been tried before (Reuters)

We have been here twice before. Once in 2012, when George Osborne announced a cut in the top rate of income tax from 50 per cent to 45 per cent; and once in 1988, when Nigel Lawson cut the top rate from 60 per cent to 40 per cent.

In neither case was the cut popular, and in neither case was there any evidence of any long-term benefit to the economy. Osborne’s cut seemed hard to justify at a time of economic stringency in which the chancellor’s message, as he sought to cut government borrowing, was that we are “all in this together”. But it was overshadowed by the term “omnishambles Budget” because of the row over VAT on hot pasties, on which Osborne U-turned a few days later.

Lawson’s cut was more controversial, coming after years in which the gap between rich and poor had grown wider, partly as the result of the Thatcher government’s policies. It prompted a spontaneous protest in the House of Commons. Lawson had got to that part of his Budget speech in which he said: “I propose to abolish all the higher rates of tax above 40 per cent. This major reform will leave us with one of the simplest systems of income tax in the world, consisting –” According to Hansard, Dave Nellist, the Labour MP who was a leading light of the Militant tendency, tried to intervene and refused to sit down when the deputy speaker told him to. Other Labour MPs, members of the Socialist Campaign Group, were also standing and refusing to sit down.