Taxbriefs Chancellors – 1 Denis Healey 1974-79

Denis Healey with the Budget Box, 1977

Denis Healey with the Budget Box, 1977

Taxbriefs first produced a Budget Summary in 1975 when the late Denis Healey presented his fourth Budget in his second year in the job. Founding Director Danby Bloch remembers stapling these unique documents together with his business partner George Stainton before posting them to advisers and accountants in envelopes.

We thought it might be fun and instructive to look back over the Chancellors and Budgets that we’ve seen come and go. So let’s start with Healey, famous above all for his eyebrows and uncensored wit.

When?

Denis Healey was Chancellor from 1974 to 1979 in James Callaghan’s Labour government. Inflation was high world-wide, the price of oil rocketing and he inherited a deep balance of payments deficit. Over the five years he delivered nine Budgets and mini-Budgets.

What did he do?

  • Introduced capital transfer tax (CTT) to replace estate duty in Finance Act 1975 (from 1974 generally).
  • Ended the ‘interest free loan’ loophole and introduced the 5% rule on investment bonds.
  • Started development land tax.
  • Introduced clawback of life assurance premium relief to counter abuse.
  • Introduced 98% income tax – 83% + 15% investment income surcharge.
  • Slashed VAT from 25% to 12.5% in April 1976.
  • Famously had to accept a bail out IMF loan of the end of 1976, with resulting cuts in public expenditure. In the lead up to agreeing the loan, interest rates rose to an unprecedented 15%. On his way to the IMF Healey was forced to turn back at Heathrow to go to the Labour Party conference and defend his policies in a three-minute speech from the floor as a delegate. He later characterised those months as “the worst of my life.” But a hard and unpopular road meant that by the end of 1978 the IMF loan had been repaid, what Healey dubbed “Sod-Off Day”.
  • Presented three Budgets in 1974 – March, July and November.
  • First Budget speech to be broadcast in March 1978 (in sound only).

Ever controversial, in the wake of Denis Healey’s death at 98 in October 2015, you could either read that he was the worst Chancellor of the Exchequer or alternatively one of the most consequential.

What did he say?

“There are going to be howls of anguish from the 80,000 people who are rich enough to pay over 75% tax on the last slice of their income” – Speech at Labour Party conference, 1973.

“… like being savaged by a dead sheep” – of an attack on him by Geoffrey Howe

“sado-monetarism” – on Mrs Thatcher’s devotion to the economic doctrine of Milton Friedman

“Healey and Benn are like Torvill and Dean – I can’t get the bugger off my back.” Campaigning for Tony Benn in 1984

Budget soundtracks

Denis Healey spoke Italian and loved opera. He may or may not have paid attention to what was in the charts for his nine Budgets. His last, in April 1979, just missed coinciding with Gloria Gaynor’s only UK No 1 ‘I will survive’:

March 1974 Paper Lace ‘Billy Don’t be A Hero’
July 1974 Charles Aznevour ‘She’
November 1974 David Essex ‘Gonna Make You a Star’
March 1975 Bay City Rollers with ‘Bye, Bye Baby’
April 1976 Brotherhood of Man ‘Save Your Kisses for Me’
December 1976 Showaddywaddy ‘Under the Moon of Love’
March 1977 Manhattan Transfer ‘Chanson ‘D’Amour’
March 1978 Kate Bush ‘Wuthering Heights’
April 1979 Art Garfunkel ‘Bright Eyes’

 

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