Parliament and Politics: Lawson attacks role of Lamont in sterling crisis

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Indy Politics
THE Prime Minister's defence of Norman Lamont, the Chancellor of the Exchequer, for his 'brilliant' handling of the Black Wednesday sterling crisis, was undermined by Nigel Lawson, a former Tory Chancellor, yesterday.

With an unprecedented war of words being fought in the national press, this week's Conservative Party conference in Brighton threatens to give a platform to the most outspoken protagonists for and against closer European Community integration.

In an extract from his forthcoming autobiography, published in the Sunday Telegraph, Lord Lawson hinted that British incompetence, as well Bundesbank ineptitude, were contributory factors to the withdrawal of sterling from the exchange rate mechanism.

'Last month's traumatic events leading to 'Black Wednesday' and sterling's departure from the exchange rate mechanism, less than two years after it had joined, reflected credit on no one,' he wrote. 'Not on the UK authorities, who demonstrated all too clearly that they were still wearing their ERM 'L' plates; not on the German government, which so mishandled the consequences of German unification that the Bundesbank was obliged to take extreme and destabilising corrective action.

'Not on the Bundesbank, which was guilty not only of irresponsible talk but of a damaging reluctance to fulfil its intervention obligations.' Lord Lawson also blamed European federalists for undermining the credibility of the ERM, but he added: 'Whatever the merits of a floating pound, there is no merit in a sinking pound.'

But in spite of the former Chancellor's sideswipe against the British 'authorities', John Major repeated yesterday that Mr Lamont was not to blame for the crisis. In the Sunday Express, Mr Major defended his Chancellor against those calling for his resignation, saying: 'I do not think the strategic judgements that Norman Lamont made were wrong.

'The events that changed policy were not foreseen by anyone. They could not have been foreseen, they could not have been withstood . . . Norman Lamont handled the situation in a classic way - he handled it in exactly the same way any other Chancellor in this or any other government would have done. There was nothing else he could have done,' he said. Asked whether he had been disappointed with the response of the German government, he said: 'There has been no problem with the German government.'

But the Lawson memoirs, A View from Number 11, to be published next month, have created more controversy among the old guard in the Tory Party hierarchy.

In a section of the book published in Saturday's Daily Telegraph, Lord Lawson said that Norman Tebbit had in 1985 joined forces with other senior ministers in an early attempt to get Margaret Thatcher to put sterling into the ERM.

But Lord Tebbit said on Saturday that he had never advocated ERM membership.

He said: 'Commonsense suggests that if, as Nigel Lawson claims, Margaret Thatcher was completely isolated on this issue in November 1985, she would have been forced to give in to the pressure to join before October 1990.

'In fact, it was not until after Lord Whitelaw, Lord Ridley and I had left the Cabinet that Margaret Thatcher was isolated, dragged into the ERM and overthrown.'

The bitterness of the argument is likely to be aggravated during the party conference, which - on the fringe at least - threatens to be one of the bloodiest for many years.

Lord Howe, who was Mr Lamont's ally in the long struggle to persuade Baroness Thatcher to agree to ERM membership - accomplished by Mr Major after Lord Howe had been sacked from the Government - yesterday accused Lord Tebbit of being a 'turncoat'.

Without specifying the context of the term, he said in yesterday's Mail on Sunday that the Government was right to press ahead with the legislation to ratify the Maastricht treaty. 'The difficulties would not be solved just by waiting for the Danes. Or for the Euro-

divisions in our party to disappear. On the contrary. They could just as easily get worse, on Norman Tebbit's turncoat terms.'

Warning against the crude anti- Germanism and misplaced nationalism of 'such people' as Lord Tebbit, he urged his readers to 'Remember Sarajevo'.

If the terms of the 'Europhobes' were accepted, Lord Howe said: 'The result for Britain would be the marginalisation and decline to impotence that most of us have fought so hard to avoid.'