Lamont considered resigning over ERM (CORRECTED)

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The Independent Online

NORMAN LAMONT, the Chancellor, considered resigning when the pound fell out of the ERM on Black Wednesday, but was dissuaded by John Major.

The admission came as Mr Lamont said there were 'many encouraging signs' of economic recovery. Growth could exceed his 1 per cent forecast for this year, he said, with British economic performance outstripping that of Germany, which was still hampered by high interest rates.

Pressed by Sir David Frost on BBC TV's Breakfast with Frost programme over whether the 'green shoots' had become 'whole stems', Mr Lamont said: 'There is a rise in confidence and I think people are generally more optimistic.'

The Chancellor said in the wake of Black Wednesday on 16 September last year that he 'of course' considered his position, but was never close to resigning. 'John Major made it very clear to me that he strongly wanted me to carry on,' he said. Describing the decision not to bow out as the 'right and honourable thing', he said: 'I felt that I owed it to sort out the situation, establish the framework for a new policy, which I believed I could do.'

Gordon Brown, the shadow Chancellor, attacked Mr Lamont for failing to mention unemployment during the interview. 'Failure to act on jobs shows him insensitive, complacent and lacking in understanding that tackling unemployment and the fear of unemployment is the key to any form of sustained recovery.'

Mr Lamont disclosed that the tune he sang in his bath after the ERM debacle was an approximation of 'Oh What a Beautiful Morning' from Oklahoma, which includes the line 'everything's going my way'.

Mr Lamont said he did not believe a dirty tricks campaign was being waged against him over his overspent Access account, details of which were leaked, and 'Threshergate'. But he rejected last week's Commons call by John Smith, the Labour leader, to repay the pounds 4,700 of public money paid by the Treasury to help meet legal fees connected with the discovery that a sex-therapist was the tenant of a flat at his London home.

'These fees paid to my lawyer were for dealing with the press. That was what the money was paid for,' he said.

'This started as a private matter but because of allegations made at the time, it became a matter that refected on me in my job.

'It was the judgement - not of me but of the head of the civil service (Sir Robin Butler) and of the Treasury Permanent Secretary (Sir Peter Middleton) and his successor (Sir Terence Burns) that it was appropriate . . . I did not ask them to make this decision.'

The all-party Commons Members' Interests Committee is today set to criticise Mr Lamont for failing to consult the registrar of members' interests over pounds 18,414, received via Conservative Central Office from an anonymous donor, to meet eviction costs.

The powerful Public Accounts Committee also meets today to decide on the witnesses it will question in its investigation into the Treasury pay-out.

Further falls in consumer confidence in the last three months are likely to undermine the Chancellor's hopes of recovery, writes Peter Rodgers.

The January Gallup/BSL Consumer Confidence Survey showed particularly severe declines in Scotland and Yorkshire, contrasting with the previous survey when the South was gloomiest.

The slide in confidence was blamed on expectations of higher inflation and unemployment. Bridget Rosewell, joint managing director of Business Strategies, said consumers may become more confident as the effects of bad news last autumn evaporates. If not, there would be no recovery.

A Labour survey published today says Autumn Statement measures allowing councils to boost home-building by spending some of their capital receipts will release millions of pounds less than promised by Mr Lamont.