Geoffrey Howe, Margaret Thatcher's first finance minister, dies at age 88

In this file picture taken on Sept 28, 1988 British Foreign Secretary Geoffrey Howe gestures as he addresses the 43rd assembly of the United Nations in New York.
In this file picture taken on Sept 28, 1988 British Foreign Secretary Geoffrey Howe gestures as he addresses the 43rd assembly of the United Nations in New York.PHOTO: AFP

(Bloomberg) - Geoffrey Howe, the U.K. Conservative minister who imposed controversial austerity measures in 1981 and provided the trigger for Margaret Thatcher's political demise by resigning nine years later, has died. He was 88.

Howe died at his home in Warwickshire, England, Friday night after attending a jazz concert with his wife, according to BBC News.

His time as Britain's finance minister was "vital in turning the fortunes of our country around, cutting borrowing, lowering tax rates and conquering inflation," Prime Minister David Cameron said in a statement Saturday on Facebook.

"He was the quiet hero of the first Thatcher government."


Howe's passing comes a week after the death of Denis Healey, one of his Labour opponents in Thatcher-era ideological battles and his predecessor as Chancellor of the Exchequer.

As the longest-serving minister in Thatcher's cabinet, Howe played a leading role in shaping the key policies of her 11-year tenure. As her first chancellor, he cut the budget deficit, aiming to lower inflation, and removed exchange controls. The unemployment rate more than doubled as the government broke the power of trade unions and ended state subsidies for large manufacturers.

Thatcher's Nemesis Later, as foreign secretary, he became a nemesis to the "Iron Lady" by advocating increased integration with Europe on economic and monetary affairs. His stance cost him his job in 1989 and he was given the largely symbolic post of deputy prime minister.

Howe delivered a resignation speech in November 1990 that took the prime minister to task for her refusal to allow the U.K. to enter the exchange-rate mechanism, a convergence measure designed to smooth the path to membership of the euro currency. Thatcher stepped down two weeks later as support for her government crumbled. John Major replaced her.

"We have done best when we have seen the Community not as a static entity to be resisted and contained but as an active process which we can shape," Howe said in the House of Commons, referring to the European Community, the forerunner to the European Union. "The European enterprise is not, and should not be seen like that, as some kind of zero-sum game."

Monetarist Approach

A lawyer by training, Howe developed a monetarist approach to economic management while watching consumer prices surge under Labour governments in the 1970s. When he cut billions of pounds from the 1981 budget and raised taxes during a recession in order to bring down interest rates, 364 economists protested in a letter to the London-based Times that Howe was making a mistake. He later said his strategy was vital to a recovery.

"On the face of it, they were wrong," Philip Booth, a professor at the Institute of Economic Affairs, wrote in the Telegraph newspaper in 2006, on the 25th anniversary of the letter. "The economic recovery that the 364 said would not happen began more or less as soon as the letter appeared." Richard Edward Geoffrey Howe was born on Dec. 20, 1926, in Port Talbot, Wales, a town known for its steelworks and as the birthplace of film actors Richard Burton and Anthony Hopkins.

Howe's father, Edward, was a Welsh lawyer and his mother, Lili, came from Liverpool. She was politically conservative and made her views known to her sons, according to Howe's 1994 book "Conflict of Loyalty."

Law Career Howe attended Winchester College, where the English boys teased him for his Welsh accent. Near the end of World War II, Howe signed up with the British Army, serving with the Royal Signals Corps. He stayed in the army for three years before studying arts and law at Trinity Hall, Cambridge, graduating with second-class honors in 1951. There he met Douglas Hurd, who would later succeed Howe as foreign secretary.

Howe became a barrister in 1952. He married Elspeth Shand, a secretary, the following year, and joined the Bow Group, a Conservative Party think tank open to university graduates.

"I did not, as I often said, want to spend the rest of my life sorting out other people's messes," he wrote in his book. "I wanted to set my own agenda. That meant politics." He unsuccessfully ran twice as a Conservative candidate in Wales in the 1950s before changing seats to Bebington, south of Liverpool, where he entered Parliament in 1964 but was beaten in 1966 in a general election. He won the seat of Reigate in 1970 - - the year he was knighted by Queen Elizabeth II - and Surrey East in 1974, where he remained until 1992.

Cabinet Minister Howe became solicitor general in Edward Heath's government in the early 1970s, helping draft the Industrial Relations Act, which targeted trade unions. He joined the cabinet as minister for trade and consumer affairs in 1972.

He listed the removal of tax burdens on enterprise and investment, and his Medium-Term Financial Strategy to regain control of public finances, among the Thatcher government's main achievements under his watch. He said the eight years that followed the tough 1981 budget produced "record economic growth, low inflation, rising productivity and falling public sector debt." He regretted his failure to recognize the problems faced by U.K. manufacturers, he said.

Howe, who joined the House of Lords in 1992, said he had no regrets about his decision to force Thatcher's hand on government policy and the unintended consequences.

"I wanted to change the policies, not the leader," he wrote in his book. "But if that meant the leader had to go, then so it had to be."

His wife, Elspeth, became Baroness Howe of Idlicote in 2001. They had two daughters, Cary and Amanda, and a son, Alec.