Focus: Chancellors and their crises
Sunday 11 October 1998
A chance remark to a journalist from the Star in November 1947 led to the resignation of Attlee's chancellor. Dalton inadvertently leaked elements of his fourth emergency budget, which included a penny on beer, on his way to the Commons. John Carvel, the journalist, managed to slip details of the budget into the early edition of the London evening paper, which appeared while the chancellor was still in the chamber. Relatively few copies hit the streets, but Dalton resigned the next day.
Credited with Britain's economic recovery after the Second World War. But his reputation was shattered in 1949 when he devalued the pound shortly after telling the Commons this would not happen. The crisis partly had its origins in 1947 with a fuel crisis, run on the pound and sterling becoming fully convertible under the terms of the loan agreement with America. The cabinet decided on devaluation in August 1949, but withheld the decision until September. Cripps resigned on 20 October and died six months later.
The future prime minister insisted he should leave the treasury in 1967 after he was forced to devalue the pound. Speculation against sterling (at the time of fixed exchange rates) had proved more protracted than envisaged by Callaghan, who the year before had been arguing against devaluation. Sterling went from $2.80 to $2.40 and Callaghan swapped jobs with the home secretary, Roy Jenkins. Although he "lost", Callaghan retained the view that earlier devaluation would have not have been wise.
Harold Wilson's chancellor was preoccupied with negotiating with the International Monetary Fund over loans. The 1976 sterling crisis led to Britain borrowing pounds 2,300m from the IMF. The pound fell from $2.02 to $1.64, and Healey advocated a pounds 3bn reduction in public sector borrowing to meet IMF conditions. The crisis led to a "monetarist" strategy, tight restrictions on public spending and pay policy, and, ultimately, the 1978-79 winter of discontent and Labour's 1979 election defeat.
On 26 October 1989 Nigel Lawson resigned as Margaret Thatcher's chancellor over the role played by Sir Alan Walters as her personal economic adviser and political confidant. She was under the hair-dryer when she received the message that Lawson wanted to see her. In her memoirs, Baroness Thatcher said Lawson told her that either he or Sir Alan would have to go. But she refused to sack Sir Alan, saying, "If Alan were to go, that would destroy my authority." Lawson resigned later that day.
Black Wednesday - 17 September 1992 - saw the UK devalue the pound and pull out of the exchange rate mechanism after a vain attempt to halt the slide of the pound against the German mark. The Bank of England raised interest rates from 10 per cent to 12 per cent and then to 15 per cent. At least $8bn of Britain's currency reserves (more than twice the cost the Gulf war) was spent in the process. Lamont stayed on, fatally wounded, until the following spring.
Compiled by Marie Woolf
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