Major's dither cost UK billions, says Lamont

THE FORMER Tory Chancellor Lord Lamont of Lerwick has described in his memoirs how Britain lost billions of pounds while John Major and senior Conservative cabinet ministers dithered on Black Wednesday seven years ago.

He portrays Mr Major, whose own memoirs are to be published next month, as increasingly insecure, indecisive and, at times, irrational in the run-up to Britain's withdrawal from the European exchange-rate mechanism (ERM).

Lord Lamont, who as Norman Lamont acted as Mr Major's campaign manager in the 1990 leadership election and was appointed chancellor of the exchequer by the new prime minister, said he knew "the game was up" at 11am on 16 September 1992, when the morning rise of 2 full points in interest rates had no immediate impact.

He sought an immediate meeting with the prime minister, "conscious that we were losing hundreds of millions of pounds every few minutes", but there was no reply from Mr Major and no indication of when a meeting might be held. Lord Lamont grew increasingly frustrated as the afternoon wore on. "We were bleeding to death and all we were doing was talking," he writes in his memoirs, entitled In Office.

At lunchtime Mr Lamont told Mr Major that Britain had no choice about suspending its membership of the ERM. Mr Major astounded him by calling in the Cabinet's leading pro- Europeans, Douglas Hurd, Kenneth Clarke and Michael Heseltine, who all opposed leaving the ERM.

Mr Major referred to the humiliation of withdrawing from the ERM and said there would be demands for both his and the chancellor's resignation. He even passed Mr Lamont a note, saying: "I am not going to resign and you must not consider going either." Not until 5pm did Mr Lamont secure the agreement of Mr Major, Mr Hurd, Mr Clarke and Mr Heseltine to pulling out, but it was by then "hours too late".

In the summer of 1992 Mr Lamont raised the possibility of withdrawing from the ERM with Mr Major. But at a meeting to discuss the idea, Mr Major said: "Oh no, I don't want to discuss that at all, I want to discuss my speech for next week." Mr Lamont resolved to raise the subject again at the end of the year. "I was not to know that events would overwhelm us before then," he writes.

Lord Lamont denies reports that he sang in the bath the day after Black Wednesday, but adds that he did not anticipate that he would be sacked by Mr Major. "It is true that I had a strong feeling - indeed more than that, a certainty - that the economy would now turn," he writes. "I remember remarking to Peter Lilley as I went into Cabinet that morning: `Now I have got the economic policy I want, I don't see why I should resign'."

He writes that it is "completely without foundation" that Mr Major had a nervous breakdown on Black Wednesday, but that in the following weeks "his mood did become one of deep depression".

In an interview with Varsity, the Cambridge University student newspaper, Lord Lamont revealed his contempt for his former ally. He dismissed Mr Major's assessment of his premiership as "a Greek tragedy" by saying: "A Greek tragedy requires a hero."

He insisted that he was made a scapegoat for Black Wednesday. He said: "It would have happened had me, Major, John Smith, Gordon Brown or anyone been there."

He also disputed the conventional wisdom that the Tories' defeat at the 1997 general election stemmed from the ERM debacle. "Even in the six months after Black Wednesday the ratings weren't disastrous, but subsequently we fell by a further 30 per cent or so."

Lord Lamont cited other events, such as the ban on British beef exports and Mr Major's climbdown over accepting qualified majority voting in the European Union.

He also dismissed one of Mr Major's triumphs, Britain's opt-out clause in the Maastricht Treaty, which allowed the country to remain outside the single currency.

The former Chancellor praised Gordon Brown's handling of the economy over the past two years and said he did not agree with Tory criticism of the welfare-to-work measures.

He said the working families' tax credit was a very imaginative idea and that Mr Brown was right to give independence to the Bank of England on interest rates. His only criticism of Labour was for relying too heavily on the private finance initiative to raise money for public-sector projects.

He insisted he supported the European policy of William Hague, the Tory leader, but hinted strongly that he would like the Conservatives to rule out membership of the single currency for ever, and to consider pulling out of the EU.