When the Coalition government came to power in May it faced an unprecedented budget deficit of over more than £150 billion, at a time when Britain seemed to be on the verge of sinking back into recession.
Many feel that Prime Minister David Cameron and his Chancellor, George Osborne, confronted the toughest task of any post-war government. But Lord Lawson, Chancellor of the Exchequer from 1983-1989 under Margaret Thatcher, differs. He believes that, compared to the crisis facing the government in 1979, Cameron and Osborne have it easy.
Over coffee at the House of Lords, Lawson claims that Thatcher's administration smoothed the path for all of its successors, and that Cameron is reaping the benefits. "It is true that Cameron and Osborne have a bigger deficit problem than we had to deal with, but on the other hand they don't have the difficulties we had in other areas - a very high rate of inflation, trade unions who were at the time so much in the political sphere that they threatened to make the country ungovernable, unprofitable nationalised industries, a huge array of restrictions and government regulation on anything you care to name.
"All of these things meant we had a very poorly performing economy. British industry and business is now far more effective than it was then and is far better able to make the necessary adjustments. So although Cameron and Osborne have much to do, they are batting on a much better wicket than we were."
Lawson, now 78, and looking noticeably less gaunt than back in the '90s when he was peddling his own diet book, says he is fully behind the plans to cut the deficit as quickly as possible. "You can always find a reason to put off difficult and unpopular decisions, but it's always a mistake. Not only is it feasible to clear the deficit within the next five years, I think it is necessary."
Despite the global nature of the meltdown in 2008, Lawson considers, predictably perhaps, that Gordon Brown bears a large measure of culpability for the near collapse of Britain's banking system. He says: "I put in an improved system of supervision which he then dismantled and replaced with one that proved to be completely dysfunctional. There were countries like ours which had a bad system and they suffered. But there were also countries like Canada with a better system and they didn't suffer nearly as much.
Lawson concedes - with reservations - that Brown acted swiftly to prevent total oblivion when the magnitude of the disaster became apparent. "He did the right thing in taking over the banks but I would have taken them over under much tougher terms - let's face it, they were in no position to resist. This would have entailed sacking the top management. I would be much more worried about protecting the taxpayer than the bank's shareholders."
Although critical of Brown, he does not spare himself either. He does feel that there were areas in which he made important mistakes as Chancellor. The first was in announcing the end of mortgage interest relief payments six months before the measure was due to come into force, exacerbating the overheating and perhaps the subsequent collapse of the property market.
"The decision was a mistake. The Inland Revenue advised me that it would take six months to re-programme all the computers, and that if they were not given time it would be a shambles. It was bad advice but I accepted it."
His other admission concerns the economy. "I should have tightened monetary policy at an earlier stage. With the benefit of hindsight I would also have liked the Bank of England to have talked to individual bankers in order to get them to rein themselves in."
Lawson, who is father of Nigella and former Sunday Telegraph editor Dominic, is enjoying an active semi-retirement, sharing his time between homes in France and Britain, chairing his own climate change think-tank and enjoying life in the Lords.
He has also written a new concluding chapter for an abridged version of his political autobiography, Memoirs of a Tory Radical. As a former journalist he did not need a ghost writer. He wrote for the Financial Times and Daily Telegraph and was editor of the Spectator before standing for Parliament and being appointed to the Cabinet in 1981 as Energy Secretary.
He has never been afraid to make cuts, whether in public spending or in removing five stone from his own formerly portly physique, but the one area in which he does not think we should be cutting back is in carbon emissions. His attack on the established theory of climate change is something about which he feels passionate enough to break ranks with the government. "The policy of this government and the previous government is crazy and damaging. It is complete nonsense to say that carbon dioxide is a pollutant - it is not."
Lawson believes that not all climate change is bad. "A lot of the things we are told are happening are not happening, but we will adapt to whatever changes there might be. We use fossil fuels because they are far and away the cheapest and are likely to remain so for the foreseeable future. Replacing cheaper energy for more expensive energy will be very damaging for our economy."
I ask him how well David Cameron would have fitted into Thatcher's 1980s cabinet. It is clearly a question Lawson has already considered. "I think their characters are very different. They are both recognisably Conservative but of course that covers a whole spectrum. I think she would have had Cameron in her Cabinet. She would have recognised his ability."
Certainly, Thatcher was good at recognising the ability of Jewish MPs. Her government included an unprecedented number including Keith Joseph, Leon Brittan, Lord Young, Malcolm Rifkind and Lawson himself. Lawson feels that Jewish contingent was "a statistical blip", but agrees she felt an affinity with the community. "She did represent a constituency [Finchley] with a large Jewish population. But I think that was a minor issue. The bigger explanation is that she was completely untouched by antisemitism. She took individuals on their own merits and recognised ability where she found it."
Lawson considers himself Jewish only by ancestry. "I was not brought up in any Jewish culture but rather in the culture of this country. Of course, I thought everything through myself but by the time I was in my first year at Oxford I was certainly a committed unbeliever."
He is now happy to be on the periphery of British politics. "I had a very good innings. I was lucky to be at the right place at the right time. Now that's over and I'm a very old man. I like it here in the Lords," he says sipping his coffee and taking in the views over the Thames. "It's a very civilised place."