Greg Wright: Words of a 'forgotten politician' have returned to haunt us

STROLL through the churchyard at Gargrave and you will find a granite cross that marks the grave of a man who coined a phrase that sums up our turbulent times.

The Conservative politician Iain Macleod, who was born in nearby Skipton, has been credited with inventing the term "stagflation", which describes a period when the economy is cursed with stagnation and rising inflation.

Macleod first used the phrase in 1965, at a time when Britain's economy was heading for a bumpy decade which would culminate in it being forced to go cap in hand to the International Monetary Fund.

His words have an awful resonance as we face rising fuel, energy and shopping bills and an economy that seems to resemble a battered, spluttering Ford Cortina.

To consider the influence of this rather ugly phrase, you must understand the man who created it.

Sadly, Macleod, who was regarded as one of the greatest orators of his generation, is virtually forgotten outside the political cognoscenti.

Search for his name on the Internet and you will find almost as many references to his namesake, who apparently, is one of the best rollerbladers in the world. This is a shameful neglect, for Macleod was one of Yorkshire's most influential sons; he helped to oversee the decolonisation of Africa, opposed the 'Magic circle' of grandees who held sway over the Tory party, supported the abolition of the death penalty, expanded the still-fledgling NHS and was one of the founding fathers of 'One Nation' conservatism.

Macleod, who died in 1970 after serving as chancellor of the exchequer for just three weeks in Edward Heath's newly-elected Government, was a colourful, incisive, multi-faceted character who would have probably never made it into the Cabinet today. He was a passionate risk-taker who could remember a poem as clearly as a bridge hand.

As Edward Pearce relates in his book, The Lost Leaders, Macleod hardly fitted the template of the career politician. A professional card player in his youth, he became a wartime major who arrived on the D-Day beaches 40 minutes after the initial landings, having earlier breached protocol by cheekily looking at papers which described precisely where the invasion would take place.

Post-war he came into politics, and achieved rapid promotion following a blistering House of Commons attack on Labour's Nye Bevan, under the nose of an approving Winston Churchill. Entering the Cabinet in 1955 as minister of labour, Macleod's reputation was enhanced by stints as colonial secretary and leader of the House of Commons.

However, his cutting turn of phrase and willingness to confront those he regarded as reactionary dunces gained him a reputation for being "too clever by half". He refused to serve under the new Prime Minister Alec Douglas Home in 1963 after being incensed by what he regarded as the underhand way in which Home had "emerged" as leader.

He staged a remarkable comeback as shadow chancellor under the new leader, Edward Heath. His premature death robbed him of the chance to make a mark at Number 11. How he would have tackled the crises that followed remains one of the great "What ifs?" of British history.

So much for the man, but what of the phrase he produced? In 1965 Macleod's fears, in the long term at least, were not misplaced. Stagflation plagued a number of major economies in the 1970s and 1980s, as rapid rises in oil prices led to sluggish growth, or none at all. At the same time, politicians and the public believed that inflation would rise at a faster pace than before, and altered their spending behaviour and pay claims accordingly.

All this was a challenge to conventional wisdom, which held that unemployment and high inflation rarely co-existed. New approaches were applied to try and solve this problem, notably monetarism under Margaret Thatcher in the 1980s.

What can we learn from Macleod's generation, as, according to many pundits, we head towards hell on a handcart of tepid growth, rising prices and lengthening dole queues?

If you believe the pessimists, a recession is a done deal, with surveys suggesting that half of firms are considering redundan-cies and a cut in interest rates to 3.5 per cent will fail to stop us sliding into a long-term slump.

But it's still important to note how the world has changed since the 1970s. The labour market is far more flexible, lumbering industries have vanished or become lean and mean, and we are far more efficient in our use of energy. The thousands of people who have lost their jobs in recent weeks in the housing industry will give short shrift to those, who like me, believe that the doom-mongers may be protesting too much. But as Sheffield's Master Cutler Gordon Bridge said earlier this month many manufacturers have record order books and the danger of talking ourselves into a recession is a real one.

Let's not forget that the economy is still actually growing at a rate of 1.6 per cent a year, a respectable figure in historic terms.

The biggest threat lies in allowing inflation to get out of control, which is why, when the Bank of England next decides to change interest rates, the only way is up. Panic-stricken rate cuts will do nobody good in the long term. As a bridge ace like Iain Macleod knew, you need to calmly sort your cards before placing a winning hand on the table.