Tuesday 10 Feb 1981
... had to leave after first two speeches, as discussion began, because David [Wolfson] and Alan [Walters] and I, increasingly worried about how Geoffrey’s [Sir Geoffrey Howe] Budget thinking was going, had conferred earlier, and David suggested to Margaret that we discussed the situation with her. Got to No 10 by 10 pm. Alan already there, David joined us at 10.30. A very good meeting. Our thesis was very simple: (1) Every time Treasury look at PE and PSBR [projections] they’re worse. (2) The penalties for being wrong through ‘underkill’ budget are much worse than those for being wrong on ‘overkill’ - easy enough to put the latter right. (3) So MT must say she absolutely refuses to accept GH’s [Sir Geoffrey Howe] forecast and wants to aim off. (4) We can present this as an ‘employment budget’ (which is what it is). She accepted it all very realistically. We left about 11.30 with plan to talk to GH, Douglas Wass, Terry Burns, tomorrow night at the House.