'Mr Chairman, ladies and gentlemen. I have this morning informed the Prime Minister of my resignation as Chancellor of the Exchequer. Let me say at once that this is my own decision. John Major has repeatedly said, privately as well as publicly, that I have his complete backing. And quite right, too. The decision to enter the ERM at what has now proved too high an exchange rate was his, not mine. I did my best, with him egging me on, to keep the pound in the ERM, even at the cost of lost jobs, failed businesses and repossessed houses. He is in this up to his neck. By rights, he should be the one to go. But if governments changed leaders every time their policies failed they would become - I use a comparison the Prime Minister will understand - like struggling football teams. On 25 September, I told Conservative MPs that John 'deserves the complete loyalty of the party'. I have since recognised that I can best show my loyalty by resigning.
'I have reached this conclusion for four main reasons. First, the Government needs an economic policy. Since Black Wednesday, nobody has had the faintest idea what it is supposed to be, least of all me. I believe - insofar as I can remember what I believe after all this time - that our future lies outside the ERM. Most of the rest of the Cabinet seem not to agree, though they don't seem too sure either. All we have managed so far is a 1 per cent cut in interest rates, which is neither here nor there. The exchange markets think we are going to cut them more, so they keep selling pounds. Businesses and consumers think we are going to put them up again, so they keep laying off workers and refusing to spend. We are getting the worst of all worlds. We have to decide on something soon but, whatever it is, my announcing it will do nothing to restore confidence. 'We are absolutely committed to the ERM,' I told journalists outside the Treasury on 26 August. 'It is at the centre of our policy.' That, as E J Thribb would put it, was my catchphrase. I cannot now adopt a new catchphrase and expect anybody to believe in it.
'MY second reason for resigning is that I have been reading Lord Carrington's memoirs. He was Foreign Secretary when the Argentinians invaded the Falklands in 1982. He recalls that he resigned because the national sense of anger and humiliation demanded a scapegoat. 'The nation feels that there has been a disgrace,' he wrote. 'Someone must have been to blame. The disgrace must be purged. The person to purge it must be the minister in charge.' The case of Lord Carrington applies in spades to my own. You cannot get much more disgraceful than putting people out of work in pursuit of a policy in which you don't believe. Then, when the policy collapsed, I failed to offer a
word of apology; worse, I sang in my bath. I know it is now too late to say I am sorry; I can only say that I am deeply ashamed of myself.
'Third, throughout my period as Chancellor, I have promised recovery. It was 'just around the corner', I said, or 'green shoots' were appearing. If politicians repeatedly fail to deliver what they promise, and still remain in office, electors will become cynical and democracy itself will be in danger.
'Fourth, when the game was up, I proved incompetent and undignified. I allowed the Bank of England to use about dollars 30bn of our foreign reserves in a doomed, last-minute attempt to prop up sterling by buying pounds. Because the value of those pounds has now fallen by at least 10 per cent, the net loss to the country will be about pounds 1.75bn. How can I, as a Chancellor embarking on a tough public spending round, deny people new hospitals and new schools and tell nurses and teachers to tighten their belts when they know that I have been spending taxpayers' money as though there were no tomorrow? Further, I have tried to blame everything on the Germans. I still think that the Bundesbank could have been more helpful but I should have kept quiet about it. I have looked like an errant schoolboy crying 'please, sir, it wasn't me'. I have also encouraged anti-German and anti-European feeling in the country. Naturally, electors have started to ask why on earth we are bothering to ratify the Maastricht treaty with a bunch of treacherous foreigners. I am thus threatening to bring down yet another pillar of government policy.
'I offer a few words of guidance to my successor. First, he should expect a long, hard slog. As a result of Nigel Lawson's notorious boom - we Tories keep going on about economic competence but never seem to find anybody remotely competent to run the Treasury - the country is in debt as never before. That is why interest rates are so important - but, even if we could cut them to 3 per cent, and let sterling go hang, recovery would still be slow. Second, he should shut his ears to calls for cuts in public spending - or, at least, in capital spending - and recognise that this country will never get on its feet again unless it invests in its neglected roads, railways, schools and industrial training. Third, if he is worried about the budget deficit and its inflationary consequences when the recovery begins (if he isn't, the currency markets will be), he should be prepared to raise income tax. That would be another U-turn, but then practice makes perfect.
'The only question that remains concerns my future. I have decided to return to the backbenches rather than accept another Cabinet post so that, pace Lord Carrington, disgrace may be properly purged. I have also decided not to accept any company directorships, partly because British industry is in a big enough mess without my adding to it, partly because people who have become impoverished during my term of office would be outraged if they saw me raking in directors' fees. I shall devote myself to protecting the interests of my constituents - and make a better fist of it, I hope, than I have of protecting the interests of the nation.'Reuse content