NB: On economic arguments, if you were giving me a choice between moving more in the French or Swedish direction and moving more to an American direction I wouldn't want to go in either direction. If I'm forced to choose between the current Republican Party and the policies on which they ran in the recent elections and the Obama administration, while I can criticise many of the things the Obama administration has done and, even more, all the things that it hasn't done, I know absolutely the one which is closest to the modern Conservative Party policy: the Obama administration.

DH: I wonder if that's really true. One of the things that strikes me, watching the Republicans now, is that a lot of the issues they were campaigning on five or ten years ago have been substantially de-emphasised or dropped. You don't often hear them talking about guns, or abortion, or gays, or immigration. All they're really talking about now is tax cuts and the level of debt. In other words, they've become a narrowly fiscally conservative party. 

NB: They have not. That is absolutely not true. They are not fiscally conservative because they have not in any way, unlike us here, grappled with what it actually means to be fiscally conservative. To preach tax cuts at the same time as you have a huge and ballooning deficit is not being fiscally conservative.

DH: They're preaching spending cuts as well.

NB: They're not. Name me a spending cut, name me a national security cut they want to make. They are being the worst of oppositions, just like, I'm afraid to say, in times gone past we were in that they are proposing a whole lot of entirely mutually incompatible things. They are not willing to take the hard choices which George Osborne did — and lots of people attacked him for it — when he said we had to have fiscal balance before we can start looking at tax cuts. We can't have any unfunded, upfront tax cuts. 

DJ: You're right that the coalition has been brave in cutting expenditure, but now it's got to boost growth. It's got to come up with supply-side policies which will soak up some of the unemployment. In your book, you strike me as slightly old-fashioned on this in that you praise Michael Heseltine, you favour industrial policies, you talk about hard-nosed pragmatism. Is that going to be enough? Don't we need now a really radical free-market explosion of activity?

NB: I was tweaking the tail of Daniel and others in that. My argument really is that Margaret Thatcher was much more of an interventionist than she's given credit for or even perhaps she herself has latterly claimed, and much less of a purist. My key example is the North Sea. She put the full weight of government behind ensuring that North Sea oil and gas became a huge industry for Britain. She identified this source of unique competitive advantage for the country and anything that needed to be done by government to make it happen she was going to do. When I propose, therefore, that we have an industrial policy, God knows there's no money, so I'm not talking about subsidies and certainly not picking out particular firms. I picked three sectors, just as examples, where we are well placed to dominate the world, where we have a huge competitive advantage: education, financial services and entertainment. Those are the things that the new middle classes of China and India and everywhere else will want more of because they don't get them at home and we are very well placed to supply them. What I want is this government to pick a few sectors and do everything in its power to clear away the regulatory obstacles in that particular area.