Chancellor of the Exchequer (Resignation) (Hansard, 26 October 1989)

§ The Lord President of the Council and Leader of the House of Commons (Sir Geoffrey Howe)
rose——

Hon. Members
On a point of order, Mr. Speaker.

§ Mr. Speaker
What is the point of order?

Mr. Eric S. Heller (Liverpool, Walton)
On a point of order, Mr. Speaker. I understand that we are going to hear a statement from the deputy Prime Minister. Have you been informed of why the Prime Minister is not present?

§ Mr. Speaker
Who makes statements from the Front Bench has never been a matter for the Chair.

§ Sir Geoffrey Howe
With permission, Mr. Speaker, I wish to make—[Interruptionl]

§ Mr. Speaker
Order. These are grave matters.

§ Sir Geoffrey Howe
With permission, Mr. Speaker——

§ Mr. Malcolm Bruce (Gordon)
On a point of order, Mr. Speaker.

§ Mr. Speaker
What is the point of order at this stage of the proceedings?

§ Mr. Bruce
In view of the seriousness of the situation, is it really fit, when the City may be in crisis, for this statement to be made in the absence of the Prime Minister? Could she not be in the House?

§ Mr. Speaker
The hon. Gentleman evidently did not hear what I said—that it is not for me to state who makes statements from the Government Front Bench.

§ Sir Geoffrey Howe
With permission, Mr. Speaker, I wish to make a brief statement to the House. As the House will be aware, my right hon. Friend the Member for Blaby (Mr. Lawson) has resigned as Chancellor of the Exchequer. My right hon. Friend the Prime Minister learned of his intention to resign just before 2.30, immediately before she went over to the House to prepare for Questions and her statement on the Commonwealth Heads of Government meeting. In the course of a subsequent conversation between them following her return to No. 10 Downing street, the Prime Minister was unable to dissuade my right hon. Friend. The decision was therefore announced at about 6 pm and the letters that have been exchanged have since been published.
My right hon. Friend the Prime Minister has decided to appoint my right hon. Friend the Member for Huntingdon (Mr. Major) as Chancellor of the Exchequer, my right hon. Friend the Member for Witney (Mr. Hurd) as Secretary of State for Foreign and Commonwealth Affairs and my right hon. and learned Friend the Member for Ribble Valley (Mr. Waddington) as Secretary of State for the Home Department. There is no change in the successful economic policies—[Interruption.]—that the Government have pursued in the past and will continue to pursue in the future. In due course the House will no doubt wish to return to the business on which we have just been voting.

§ Mr. Frank Dobson (Holborn and St. Pancras)
I thank the deputy Prime Minister for his statement. The Chancellor's resignation clearly resulted from the Prime 1122 Minister's high-handed, intolerable and disloyal treatment of Cabinet colleagues. Her subsequent decision to shift the newly appointed Foreign Secretary to be the new Chancellor showed a great office of state being cast off and passed around like an old coat. It undermines confidence in the Prime Minister's claim to be fit to conduct the nation's affairs. More important, it may undermine confidence in our economy, our currency and our country.
The underlying problems of the economy cannot swiftly be resolved, but changes in the personalities involved will not restore confidence. Changes in policy are required. It is imperative that, at the earliest opportunity, the Government put before the House their proposals to deal with the deepening economic crisis which they have ignored for far too long. The Government must answer to the House. In so doing, they will answer to the people of this country. Tonight, our people, all our people, must wonder what lies ahead for their homes, their jobs, their families and their future. They have already paid too high a price for the consequences of public squabbles between the highest in the land. The Prime Minister must accept responsibility for what has happened. She must answer to the House and to the country, and she must answer soon.

§ Sir William Clark (Croydon, South)
Will my right hon. and learned Friend take it from me that we on this side of the House very much regret the resignation of the Chancellor of the Exchequer? May I press my right hon. and learned Friend to take no notice of the obvious glee with which the Opposition received that news, culminating in the singing of "The Red Flag"? Does he agree that the basic economy of the country is still sound despite the resignation? We welcome my right hon. Friend the Member for Huntingdon (Mr. Major) to his job as the new Chancellor of the Exchequer, because we know that the sound policies that the Government have pursued over the years will continue. Consequently, there is no necessity for the City or the markets to get panicky.

§ Sir Geoffrey Howe
I join my hon. Friend in paying tribute to the long and magnificent service to the Government and the country given by our right hon. Friend the Member for Blaby. I join him also in expressing confidence in his successor, our right hon. Friend the Member for Huntingdon. I shall respond to the shadow Leader of the House by saying that the reasons for the changes are exactly as stated in the letters of integrity exchanged between my right hon. Friends. The economic policies of the Government will remain unchanged, effective and sensible, exactly as set out by my hon. Friend. The one thing that will enable the people of the country to continue to sleep soundly is the certainty that there is no prospect of our economic policies being replaced by those of the Opposition.

§ Mr. Paddy Ashdown (Yeovil)
I suspect that many hon. Members feel a good deal of sympathy for the right hon. Member for Blaby (Mr. Lawson) whose job has been made impossible, whose position has been made untenable and who has taken the only honourable course open to him. Does the Leader of the House not realise that what is at stake is not the position of the Chancellor of the Exchequer but the integrity of the Government and of a Prime Minister who has shown herself to be arrogant, dictatorial and isolated? We have been told for the last 10 years that there is no alternative. There is an alternative. She must go.

§ Sir Geoffrey Howe
The integrity of the Government is well maintained by the quality of the appointments that I have just disclosed to the House. Each one of my right hon. Friends moving into these important offices of state has long and substantial experience in those fields. The House may rest assured that the integrity of the Government is in good hands and will remain so.

§ Mr. Norman Tebbit (Chingford)
Does my right hon. and learned Friend accept that, in what might have been for him the difficult moment of making his statement, he had the great advantage of the hon. Member for Holborn and St. Pancras (Mr. Dobson) coming to his aid—in the same way as the Leader of the Opposition normally comes to the aid of the Prime Minister? Will he take it from the House, from all of us I believe, that we wish my right hon. Friend the Member for Blaby (Mr. Lawson) well in whatever activities he engages in ? [Interruption.] At least we on this side of the House appreciate the work that he has done. Will my right hon. and learned Friend also convey our best wishes to those who have now taken over the heavy burdens of high office that he listed in his statement? Will he take to the Prime Minister a message of thanks that we have been assured that the economic policies of the Government will not change one jot?

§ Sir Geoffrey Howe
I will certainly convey those sentiments, firmly expressed by my right hon. Friend, not only to the Prime Minister but to the country. The policies remain unchanged, and the Government remain confidently in charge.

§ Mr. Tony Benn (Chesterfield)
Is the Leader of the House aware—he must be—that the Prime Minister is also First Lord of the Treasury, and that this afternoon she made a statement of confidence in her Chancellor knowing full well that it was his intention to resign? Therefore, she misled the House and her absence to explain that is another sign of her failure to take responsibility for actions that are hers and hers alone.

§ Sir Geoffrey Howe
As is clear from the statement that I have made, my right hon. Friend the Prime Minister, together with the rest of her colleagues in government, plainly regrets her inability to dissuade my right hon. Friend the Member for Blaby from resigning, but that resignation did not become effective until the conclusion of that discussion. There will be ample opportunities for discussion of these matters in the days, weeks and months ahead-opportunities that the Opposition have available to them in the ordinary way. I have no doubt that, throughout those opportunities, the country's confidence in the competence of my right hon. Friend the Prime Minister will reman undiminished and fortified.

§ Dr. David Owen (Plymouth, Devonport)
Since confidence in sterling tomorrow is the most crucial element, and since the Government have already stated that it is their policy to enter the exchange rate mechanism when the time is appropriate, will the Leader of the House convey to the new Chancellor, who carries all our best wishes for restoring confidence, that it would be wise to enter the exchange rate mechanism in the next few days and to announce it publicly?

§ Sir Geoffrey Howe
I am grateful to the right hon. Gentleman for his good wishes to my right hon. Friend the Chancellor of the Exchequer. The position of the 1124 Government on the question that he has raised remains as stated by my right hon. Friend the Prime Minister at the conclusion of the Madrid summit.

§ Mr. Robert Sheldon (Ashton-under-Lyne)
Is the Leader of the House aware that the right hon. Member for Blaby (Mr. Lawson) was in an impossible position? He had the responsibility for running the economy without the powers for so doing. Will the right hon. and learned Gentleman ensure that, if the Prime Minister is to remain long in her job, she does not subvert from next door the policies of the new Chancellor?

§ Sir Geoffrey Howe
There is no question of that. The circumstances surrounding this matter are as set out by my right hon. Friend the former Chancellor of the Exchequer in his letter of resignation. The matter will now proceed on the basis that not only he but also Professor Sir Alan Walters have resigned, and under the confident guidance of my right hon. Friend the Member for Huntingdon.

§ Mr. Alex Salmond (Banff and Buchan)
Is this a case of the Chancellor of the Exchequer losing his grip on the economy, or of the Prime Minister losing her grip on reality? Did the Prime Minister have no confidence in the Chancellor or did the Chancellor have no confidence in the Prime Minister? Either way, is it not time to test whether the country has confidence in the Government?

§ Sir Geoffrey Howe
This is the place in which to test the continuing confidence of the country in the Government, and we may have no doubts about the competence of my right hon. and hon. Friends in this Administration—[Interruption.]

§ Mr. Speaker
Order. Will those on the Liberal Democrat Bench please listen to what is going on?

§ Mr. Joseph Ashton (Bassetlaw)
Surely it would have made much more common sense and benefited the economy if the ex-Chancellor could have been persuaded to resign on Saturday or Sunday. Was not resigning now an act of deep vindictiveness, which showed the depth of the split within the Cabinet and the shambles to which he has reduced the economy?

§ Sir Geoffrey Howe
That is a totally wrong-headed view of the situation. If my right hon. Friend the former Chancellor of the Exchequer had reached the conclusion that he had and sustained it after the discussion that took place, it would be wrong of him to do anything other than resign at the end of that conversation.

§ Mr. Gerald Bermingham (St. Helens, South)
The Leader of the House said that this is the place to test the confidence of the country in the Government. Will he make time available in the next few days for a motion of confidence to be debated?

§ Sir Geoffrey Howe
The Opposition have their own time available for whatever motion they care to table.

§ Mr. Martin Flannery (Sheffield, Hillsborough)
Is it not clear to all of us—I am sure that Conservative Members agree, whether they say this or not—that the Government are economically and politically in a deep mess from which they do not know how to extricate themselves? At a time like this, surely we have the right to expect a Prime 1125 Minister to have the courage to come here and speak to us herself instead of being such a coward about it and not coming.

Hon. Members
Oh!

§ Mr. Speaker
Order. That is a reflection on the honour of the Prime Minister. Will the hon. Gentleman please withdraw the word?

§ Mr. Flannery
I will change the word. To quote the Prime Minister, she is "frit". Therefore, is it not time for us to test the atmosphere by having a general election?

§ Sir Geoffrey Howe
There are ample opportunities, and there will he ample opportunities during the months and years ahead, for my right hon. Friend the Prime Minister to answer whatever questions are put. I have no doubt that she will do so with the continuing confidence of the House.

§ Mr. Stuart Bell (Middlesbrough)
Will the deputy Prime Minister accept that there will be loud groans from one end of the country to another not because the Chancellor of the Exchequer has resigned but because the Deputy Prime Minister has said that the same policies will continue, with the same high interest rates, the same high balance of payments deficit and the same high unemployment? There will be no hope for the people of our country until the Government go.

§ Sir Geoffrey Howe
The Government's policies will continue. The real disaster for the people of this country would be if the Labour party were to come into office.

§ Mr. Heffer
The right hon. and learned Gentleman said that not only has the Chancellor of the Exchequer resigned, but so has Professor Walters. As I am one of those who believe that people should resign from Governments on the basis of principle, could he explain what the principle is? Is it that the right hon. Member for Blaby (Mr. Lawson) cannot stand the Prime Minister because of her interference in everything or is it because they now know that the economy is in such an unholy mess that the Government's policies have failed and the time has come for the rats to get off the ship before it sinks?

§ Sir Geoffrey Howe
The Chancellor of the Exchequer has resigned for the reasons plainly set out in his letter. Equally plainly, he has made it clear that he will continue his support for Government, as will all my right hon. and hon. Friends.

§ Mr. Nigel Spearing (Newham, South)
The House has been reminded that the Prime Minister is the First Lord of the Treasury. What reasons did she give the deputy Prime Minister for not coming along to face her responsibilities this evening?

§ Sir Geoffrey Howe
There is no question of giving any reason for that. The House has business before it. I tabled a timetable motion, on which the House has just voted. There is business still to be done as a result of that motion, and I have fulfilled a commitment given to the House by my right hon. and learned Friend the former Chief Whip that I would make a statement as soon as possible. I have done so, and that is right.

§ Mr. Ron Leighton (Newham, North-East)
rose——

§ Mr. Michael Colvin (Romsey and Waterside)
On a point of order, Mr. Speaker. That question has already 1126 been asked by three other hon. Members. This is becoming a ritual performance by Labour Members. Can we not get on with the business of the House?

§ Mr. Speaker
We have a heavy evening ahead of us. I propose to allow questions to run for no longer than 10 minutes more and then we must get on, because the first guillotine falls at 9.50.

§ Mr. Leighton
Is not the real issue the way that the absent Prime Minister runs her Government and her Cabinet, and the arrogant, authoritarian and dictatorial way that she behaves, which has lost her the right hon. Members for Henley (Mr. Heseltine) and for Blaby (Mr. Lawson)? If the deputy Prime Minister had any guts, considering the way in which he has been treated as a door mat, he would resign as well.

§ Sir Geoffrey Howe
The question now before us is whether we can get on with the business before the House.

§ Mr. David Winnick (Walsall, North)
Does the Leader of the House recognise how discourteous the Prime Minister has been in not coming here, in view of the disarray of her Government and the crisis with which we are now faced? Bearing in mind the fact that the real deputy Prime Minister is Mr. Bernard Ingham, and that Mr. Powell is also a senior adviser to her, is it not a fact that, like most dictators, the Prime Minister wants a court Cabinet and takes more notice of those people than she does of her real Cabinet?

§ Sir Geoffrey Howe
My right hon. Friend the Prime Minister conducts her Government in accordance with the normal constitutional proprieties, and has, during the time since my right hon. Friend the Chancellor of the Exchequer resigned some two and a quarter hours ago, appointed three senior, experienced and immensely worthwhile colleagues to new offices. The House may have confidence in them.

§ Mr. Bob Cryer (Bradford, South)
Does the Leader of the House accept that the nation is tired of the incompetence and arrogance of the Prime Minister, which have been demonstrated so forcibly by today's startling events? How will the squabble between the former Chancellor of the Exchequer and the Prime Minister, which has been made transparent today, help hard-pressed mortgage payers, who are now wondering every week how they will meet their repayments? How will it help us repay and recover from the biggest balance of trade deficit in the nation's history?

§ Sir Geoffrey Howe
Along the lines frequently stated by my right hon. Friend the Prime Minister and every other member of the Administration, on the basis that our policies are correctly designed to sustain the health and strength of the economy.

§ Mrs. Maria Fyfe (Glasgow, Maryhill)
Considering that the former Chancellor of the Exchequer resigned because his job was incompatible with the Prime Minister having the ear of Sir Alan Walters or vice versa, and as Sir Alan has resigned as well, has it not been possible for the Prime Minister to invite the former Chancellor of the Exchequer back, and if not, why not?

§ Sir Geoffrey Howe
The sequence of events has unfolded as it has unfolded.

§ Mr. D. N. Campbell-Savours (Workington)
Does the Leader of the House accept that tonight the Government should be preoccupied with the national interest to ensure stability in the foreign exchange markets tomorrow and to ensure again that the pound does not slide too far? Is that the Government's conviction tonight? Will every statement from Downing street be made with that objective in mind?

§ Sir Geoffrey Howe
The conviction of the Government will be to sustain the totality of the Government's economic policies, and one part of that is the continuation of the business of the House.

§ Mr. Peter Shore (Bethnal Green and Stepney)
The Leader of the House has referred to the totality of the Government's economic policies and their continuity. Surely it is for the right hon. and learned Gentleman to inform the House and the nation exactly what the policies are that are to be continued. Are they the policies advocated in respect of the European monetary system by the former Chancellor of the Exchequer and by the right hon. and learned Gentleman, or are they the policies that have been advocated by Sir Alan Walters and the Prime Minister?

§ Sir Geoffrey Howe
As I have already told the House, they are the policies that were enunciated following the Madrid summit of the European Council, as rehearsed by my right hon. Friend the Prime Minister and the former Chancellor of the Exchequer only a few days ago and as rehearsed by me. The policies remain as there stated and remain unchanged.

§ Mr. Merlyn Rees (Morley and Leeds, South)
But, following the point that the Leader of the House has just made, if it is as easy as that that the Government are following the policies laid down at Madrid, why did the former Chancellor of the Exchequer resign?

§ Sir Geoffrey Howe
For the reasons stated in my right hon. Friend's letter, which do not in any sense call in question the policies to which the Government remain committed.

§ Mr. Brian Sedgemore (Hackney, South and Shoreditch)
With apologies to Shakespeare, does the Leader of the House really believe that the Prime Minister's wimpled, whingeing, purblind, wayward boy is fit to be the Chancellor of the Exchequer? When the pound sinks tomorrow, what does the boy intend to do, or has not the Prime Minister told him?

§ Sir Geoffrey Howe
The question deserves to be dismissed with contempt.

§ Mr. Rhodri Morgan (Cardiff, West)
May I put it to the Leader of the House and deputy Prime Minister that his statement is seriously inadequate? The right hon. and learned Gentleman has told us who the new Foreign Secretary is, who the new Home Secretary is and who the new Chancellor of the Exchequer is. What he has not told us concerns the most important job of all: who will the Prime Minister appoint as her new economic adviser?

§ Sir Geoffrey Howe
That is not an office of continuity or an office under the Crown. It is an office that has often not existed. I dare say that that will be the position.

§ Dr. John Reid (Motherwell, North)
First, may I congratulate the deputy Prime Minister on having for the time being avoided reappointment to the Foreign Office? I am sure that another clipping is the last thing that he needs at the moment. Will he agree with me that to lose one economic adviser is bad enough and careless, but to lose two in the same afternoon and 6,000 miles apart takes tremendous incompetence?
Will the Leader of the House confirm that the Prime Minister, as my right hon. Friend the Member for Chesterfield (Mr. Benn) asked earlier, did know of the intention of the Chancellor of the Exchequer to resign when she responded to the questions of my right hon. Friend the Leader of the Opposition? Secondly, given the sequence of events, can he confirm that, as Sir Alan Walters resigned out of "shock" on hearing of the resignation of the Chancellor of the Exchequer, and despite the Chancellor of the Exchequer's threat of resignation and its effect on the pound, Sir Alan was never asked for his advice, consulted or informed before the Chancellor of the Exchequer was allowed to go? Does that not show the utter contempt in which the Chancellor of the Exchequer was held by the Prime Minister?

§ Sir Geoffrey Howe
I can do without the hon. Gentleman's sympathy and advice in respect of my own position. I cannot add anything to what appears in the statement that I have made or to the letter of my right hon. Friend the former Chancellor of the Exchequer as published.

§ Mr. Tony Banks (Newham, North-West)
May I congratulate the right hon. Member for Huntingdon (Mr. Major) on his new appointment? It seems that he has only to stand up to attract great offices of state. One trembles to think what he might be by this time next week. For how much longer are Ministers to accept the humiliations that are being heaped upon them by the Prime Minister? Is the Leader of the House not aware that a representative of Phillips and Drew said yesterday that the British economy was a banana economy? That was most apposite, given that we are led by a tinpot dictator.

§ Sir Geoffrey Howe
The hon. Gentleman's abuse does not add any strength to his case.

§ Mr. Dennis Skinner (Bolsover)
Is the Leader of the House aware that it will not have gone unnoticed that only two Tory Members were prepared tonight to defend the changes that have been made? Does the House understand that there has been continuing internecine warfare between the Prime Minister and the Chancellor of the Exchequer over more than 12 months, and that it was characterised by the attendance of Cabinet Ministers to listen to the Chancellor of the Exchequer participate in an important economic debate yesterday? Only two of them were prepared to turn up to hear him.
There is no doubt that the Prime Minister has been wanting the Chancellor of the Exchequer's job and that at the same time the Chancellor of the Exchequer wanted to get out from under because of the economic mess that he and others had created. The net result is that we have managed to get rid of both the Chancellor of the Exchequer and Sir Alan Walters and have shifted several of the top jobs. I should like to know the housing arrangements for all those who are engaged in this reshuffle.

§ Sir Geoffrey Howe
The hon. Gentleman's rhetoric and fantasy has exhausted itself as usual. My right hon. and hon. Friends are remaining silent because the House wants to get ahead with the business that is before it.

§ Mr. A. J. Beith (Berwick-upon-Tweed)
The question that the Chancellor of the Exchequer and the Leader of the House cannot dismiss is this: what is now the Government's exchange rate policy? Is it the one favoured by the former Chancellor of the Exchequer of supporting the exchange rate by interest rates or the one favoured by the Prime Minister, who believes that one cannot buck the market?

§ Sir Geoffrey Howe
There is no dichotomy of that sort. I repeat to the hon. Gentleman that, in the course of the past 10 days in the House, my right hon. Friends the Prime Minister and the former Chancellor of the Exchequer and I have each reiterated our support for the same central Government economic policy, built upon the foundations set out in the statement after the Madrid European summit.

§ Mr. Dave Nellist (Coventry, South-East)
As the Prime Minister's support earlier this afternoon for the former Chancellor of the Exchequer was obviously about as welcome as the rope to the hanged man, is not the real issue the fact that, unlike the former Chancellor of the Exchequer and Professor Sir Alan Walters, millions of ordinary people in this city cannot walk away from the consequences of high interest rates and the coming recession? As my hon. Friend the Member for Liverpool, Walton (Mr. Heifer) said, only rats can leave a sinking ship.

§ Sir Geoffrey Howe
Millions of ordinary people can rest a great deal more confident with the continuity of this Government's economic policy than with the prospect of any sort of economic policy that commends itself to the hon. Gentleman.

§ Mr. George Galloway (Glasgow, Hillhead)
Can we have an assurance that the right hon. Member for Huntingdon (Mr. Major) will bring to his individual office all the strength of character and independence of spirit that he displayed last week in Kuala Lumpur? Is not the major question this afternoon whether a poodle can stand tall enough to open the door of No. 11 Downing street?

§ Sir Geoffrey Howe
My right hon. Friend will bring to his office all those qualities that have so long commended him to my hon. Friends.