Wednesday 25th February 1981
M + GH [Sir Geoffrey Howe] (with Douglas Wass?) met as M was packing. GH said he had thought about Budget and need to reduce PSBR towards what M wanted (i.e. about £10 Bn) and best way was No Rooker Wise [i.e., no automatic inflation uprating of personal tax allowances]. M apparently wants NO-ONE to know (i.e. not DW [David Wolfson], JH [John Hoskyns] or me). But DW discovered results of the meeting - JH, DW and I think it is stupid politically, indefensible morally and economically. [Different pen used from this point] - but at least the PSBR will be about right and we shall avoid funding, sterling crises etc.