Economy: Alan Walters diary [meeting with PM and Howe over NIS/NIC][released 2012]

Thursday 21st October 1982

Meeting PM + GH [Sir Geoffrey Howe] on NIS/NIC [National Insurance Surcharge/National Insurance Contributions]. GH was suggesting consolidation of NIS at 2 and NIC emp[loy]ees +0.25% emp[loy]ers +0. Cost £750m - but we could get NIS at 1½% and NIC [employ]ees 0.25 [employ]ers 0.25 for only £50mn more - this would preempt demands for additional NIS reductions - PM very keen on my suggestion

GH said in Mansion Ho Speech tomorrow he was going to say that reducing PSBR in MTFS [Medium Term Financial Strategy] is not “rigid” and should be varied according to consequences and circumstances. PM said that it would be reported as a softening and everyone would be chasing him for handouts.

PS [Private Secretary] Lunch

Peter M [Peter Middleton] - do good by stealth in PSBR (electricity) decreases in April in prices) - no announcements

MTFS set whole tone - stick to spirit - Peter gone to check the [sic]

Bank put on £400m on IG [Indexed Gilts] 2009 in morning and sold out by 3.00 pm with a yield of 2.53%! Also bought in about £230 more longs. Institutional buying in a big way. EG [Eddie George] very pleased with himself.

PM said “Buy British - if quality and price is right” and told Foot that it would be stupid for Britain to [sic]

Dinner PTB [Peter Bauer] - Discussed mtg with PM. He could advise her on my successor.