The National Archives have released declassified Cabinet papers from 1984 explaining the rationale behind the ‘Big Bang’ deregulation of financial services in the late 1980s.
The papers, released last week under the 30-year rule, reveal how former Prime Minister Margaret Thatcher’s government wanted to open up financial markets to small investors.
John Redwood, now a Conservative MP but then head of the Number 10 Policy Unit, used a fairytale analogy.
He said: “Outside the Stock Exchange castle lived a great population of subject people and peasants. They were all forced to send their savings, the results of their labours, to the institutional barons.”
Redwood said a wise leader would approach the Stock Exchange to reform the closed castle and bring in the peasants, saying: “Excuse me but would you mind very much just lowering your drawbridge a little so that a few other people can get into your castle and enjoy some of the feasting and jousting?
“And do you think it would be at all possible if you could just lower a few of your taxes and not do quite as much pillaging?”
Highclere Financial Services partner Alan Lakey says: “The problem with the Big Bang was it created a surge in business which sowed the seeds of later problems.”