Clarke’s faults as Chancellor
December 13th, 1996
Letter to the Editor of the Daily Telegraph which was published on 13th December 1996.
As calls mount in the Conservative Party for the dismissal of the Chancellor of the Exchequer for his implied preference for abolishing the pound in favour of a foreign currency, there is an underlying assumption that it’s a pity because he is a rather good chancellor who has “delivered” growth with low inflation.
But much the most worrying feature of Mr Clarke is his inability to understand the economic system entrusted to his care. Interviewed by John Humphrys on the “Today” programme (11 December) the lawyer Mr Clarke opined in his sweeping undergraduate way that “a currency is just a means of exchange”.
Just as he famously boasted that he hadn’t read the Maastricht Treaty, so the enormously complex system of “rights to buy” which money in its various forms represents – cash, deposits, bonds, overdrafts, etc – is airily dismissed by Mr Clarke rather as someone would dismiss the whole structure of our Law as “just a means of paying fines”.
Mr Clarke clearly actually believes that substituting the euro for the pound sterling is really just like having a different design of parking ticket.
Both he, and Mr Blair, need to have their attention drawn for example to Article 30 of the Maastricht Treaty Protocol establishing the European Central Bank (ECB) which will be responsible for the euro.
They can then explain to the British people when and how, should they get their way and abolish the pound, they propose physically to transfer to the ECB around £8,000 Million worth of gold and dollar assets, being Britain’s initial “contribution” to the new Bank’s foreign reserves.
They can also explain how, under Article 30.4, they propose stopping the ECB, should it be so minded, from stripping Britain of the remainder of its gold and dollar assets using the Qualified Majority Voting procedure laid down in Article 42. And in case they are wondering, none of this is open to negotiation; it was all settled four years ago.