Daily catch-up: Nigel Lawson back in his old office at the Treasury

To the Treasury last night for a special seminar in the "History of the Treasury since 1945" course at King's College, London. Nigel Lawson was the guest speaker, in his old room. He said he didn't use it much, preferring his office at 11 Downing Street, but sometimes met ministers there when he wanted to intimidate them. The room is large and long, with a door at one end and the Chancellor's desk was at the other, so any visitor would have to walk the whole length before speaking to him.

Nick Macpherson, the current permanent secretary to the Treasury who co-teaches the course with Jon Davis, recalled his surprise at being asked, as a junior official, for his opinion by Lawson as Chancellor (1983-89). Lawson said that in other departments junior civil servants were not supposed to offer opinions except through their superiors, but that the Treasury always had a more open and meritocratic culture.

Ed Balls, also a visiting professor at King's, asked about Gordon Brown's decision to make the Bank of England operationally independent. "It was the best thing he ever did," said Lawson. "I won't comment on the rest."

Lawson also praised the current Chancellor, saying that he, Lawson, had changed his mind on the Office of Budget Responsibility. What had changed his mind was last month's Autumn Statement. "No one would have believed George Osborne if he had said the forecast gave him £27bn extra just four months after the previous forecast," he said. The OBR made the change credible.

He was less polite about the Prime Minister, saying his renegotiation demands of Donald Tusk, the EU President, "range from the inadequate via the vague to the meaningless". He repeated his view that the renegotiation would be inconsequential, and that Britain should therefore leave the EU.

Reviewing his own time as Chancellor he defended his record, saying that he, Margaret Thatcher and Geoffrey Howe had "transformed" the British economy. He was interesting on the liberalisation of financial services, the Big Bang of 1986. "There is just one thing I regret about that – and my own excuse is that nobody mentioned it to me ever – which is that we failed to keep high street banking separate from investment banks." Before the Big Bang, retail banks were safe and boring, while merchant banks had a different culture but because they were mostly partnerships it was their own money that was at risk. "I just assumed – wrongly, stupidly – that this model would continue."

The pace of change was set by American banks, he said. They were prevented by the Glass-Steagall Act in the US from merging deposit-taking and investment banks, but after the Big Bang they could operate as universal banks in London even though they could not do so in the US, which helped them to persuade President Clinton to repeal Glass-Steagall. "Culture is very important, and in the universal banks the investment bankers' go-go culture prevailed because they were cleverer."

Since the crash, huge fines have been imposed by regulators on banks. Lawson said: "Bankers should be made to pay the fines. If you punish the banks all you are doing is reducing the banks' capital, which you want to increase, and punishing shareholders, who have done nothing wrong."

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• On last night's debate, if you haven't seen Hilary Benn's speech and want to be reminded what oratory is like, it is here. He made the case for the principle of military action in Syria brilliantly, although I still felt not for this military action in practice.

One of the things I have learned from Superforecasting, by Philip Tetlock (buy it for yourself for Christmas), is that you should examine your predictions and see what you can learn from how they differ from the outcome. So let me go back to my estimate at the weekend of last night's vote. I suggested 379 for and 201 against. The actual vote was 397 for and 223 against. My main error was to overestimate the number of abstentions. I thought 50 Labour MPs might abstain: in the end only five did so, including Rosie Winterton, the chief whip, as would be expected on a free vote, with a further five "unable to attend". I thought Labour MPs might resolve the differences in their party by taking no position, but MPs don't tend to do that: an abstention is hard to defend to party members and constituents. Only seven rather than 10 Conservatives abstained, but they included Kenneth Clarke, who I had down as a supporter of military action.

The most significant group was the Labour supporters of air strikes: there were 66 of them where I had predicted 60.

The other main error was to assume that the Liberal Democrats would vote against. Instead, they decided on Tuesday night that their official position was in favour, although two of the eight rebelled and voted against: Norman Lamb and Mark Williams. Of the other minor parties, Douglas Carswell, Ukip, voted in favour (I thought Ukip's position was against), and so did Sylvia Hermon, the independent Unionist.

Lessons learned: MPs tend not to abstain; and look out for the Lib Dems.

Posted on 3 December 2015.