Former Tory leader SIR IAIN DUNCAN SMITH rented a chilly bedsit to save for his first home

Sir Iain Duncan Smith led the Conservative Party from 2001 to 2003, helped to set up the Centre for Social Justice think tank in 2004 and then served as the Secretary of State for Work and Pensions from 2010 to 2016, writes York Membery.

Born into a forces family, he trained at Sandhurst and was in the Scots Guards for six years before going into business and then becoming the MP for Chingford in 1992.

The 71-year-old has been married to his wife Betsy, daughter of the 5th Baron Cottesloe, since 1982 and they have four children.

What did your parents teach you about money?

I was one of five children and had a happy childhood. My father, Group Captain WGG Duncan Smith, was a wartime Spitfire pilot, winning five gallantry medals – he was a real war hero – and my mother Pamela was a ballet dancer before starting a family.

Dad stayed on in the RAF after the war, serving everywhere from the US to West Germany, so we had a peripatetic but comfortable upbringing.

He urged me to 'neither a borrower, nor a lender be', and though we all have to borrow money from a bank when we take out a mortgage to buy a house, I think Shakespeare's famous advice still holds true. We all know people who've lent money to friends and relatives that wasn't repaid, resulting in family disputes.

Have you ever struggled financially?

Money was tightish when I left the Army and married Betsy.

We lived in a bedsit, with a single bed, in a rundown Victorian house in Hackney, London, for six months while we were saving up the deposit to buy a flat.

If we ran out of coins for the gas fire meter in winter it could get pretty chilly.

Have you ever been paid silly money?

No, I wish [chuckles]. I'd done reasonably well before politics financially but being an MP for more than 30 years, and a government minister, doesn't pay 'silly money'.

What do I think about MPs' salaries? I've got no complaints, but the truth is we get paid less than MPs in most comparable countries, and less than MEPs. Much as I admired Mrs Thatcher, I don't think she fully got this – you have to be prepared to pay MPs decent money to attract good calibre people into Parliament or you end up with the abortive 'expenses scandal'.

What was the best year of your financial life?

I can't think of any one year that stands out as being particularly lucrative. Yes my 2003 thriller, The Devil's Tune, did reasonably well, selling out in hardback, but it wasn't a huge money-spinner. Who knows, perhaps one day I'll get around to writing another novel...

The most expensive thing you bought for fun?

An ex-demonstration Triumph Trident 660 motorbike, which I bought for a few thousand pounds.

People are always telling me that riding a bike is 'dangerous' but being on it gives one such a sense of freedom – and it is great for getting into London during Tube strikes.

What's Betsy think about me riding a motorbike at my age? You'll have to ask her!

What is your biggest money mistake?

Investing around £20,000 in a hygiene business ten to 15 years ago. Sadly, shortly afterwards the company's share price plummeted, and I was left holding shares that were pretty much worthless.

An eighth-hand BMW I bought for a few hundred pounds in the 1970s was a bad buy too: the speedometer conked out when I was on a motorway.

Best money decision you have made?

Besides property, my Morgan Plus 4 – the last wholly British car in my mind – which I bought a number of years ago for around £20,000, but which has since gone up in value. It's been pretty reliable but isn't the best car to drive in winter when it's pouring with rain.

Will you pass your money down or spend it all?

Yes, I'll do all I can to help my children when they want to buy their own place and have children. Everybody wants to help out the next generation.

Do you have a pension?

Yes, I'm eligible for the state pension and a parliamentary and ministerial pension when I eventually step down as MP, though I've no plans to do so right now.

I'm a great believer in saving for pensions and worked closely with the then pensions minister, Steve Webb, when the coalition government rolled out employee auto-enrolment in 2012.

I think it was right to introduce the 'triple lock pension' in 2011 to help tackle pension poverty at the time, but this government, or the next one, is going to have to look at how we reconcile keeping pensioners out of poverty with the ever-growing cost of the state pension.

Read More

Do you own any property?

My first property was a little flat in Fulham that Betsy and I bought for around £15,000 in the early 1980s. A few years later we traded up to a £95,000 terraced house in the same area, but we subsequently sold that and bought a house in Chingford when I became the local MP.

If you were Chancellor, what would you do?

I think Rachel Reeves made a major mistake in increasing employers' National Insurance and reducing the point at which employers pay National Insurance on salaries to £5,000 – that hit the creation of new part-time jobs in small businesses.

I'd want to reverse that and try to reduce the tax burden down on both businesses and people in the middle-income bracket.

I'd also increase defence spending to 5 per cent of GDP to counter the twin threats posed by Russia and the rise of China.

What is your number one financial priority?

To not be a burden to my children in my later years, and to also be able to help them out financially from time to time.

• This year's Conservative Party conference is in Manchester. (conservatives.com/conference)