............................................................................... ON THE RECORD RECORDED FROM TRANSMISSION: BBC-1 DATE: 04.10.92 ............................................................................... JONATHAN DIMBLEBY: Good afternoon and welcome to On The Record. Well it had been intended as a week of celebration. Instead the party conference at Brighton will seem like the Last Chance Saloon as a battered Prime Minister struggles to restore the credibility of a government that's under devastating assault from every quarter. In this programme, Kenneth Clarke goes on the record to answer the widespread charge that the administration of which he is a leading member has proved itself incompetent and rudderless - and is now discredited at home and abroad. This week the Prime Minister is facing a most severe test of political leadership, his party at war with itself, his Chancellor in the dock, his government condemned and ridiculed by friend as well as foe, his own standing in the country sharply diminished. How does John Major now convince his critics at home and abroad that his administration is not a busted flush? After the humiliating turmoil of the last ten days it will not be easy. JONATHAN DIMBLEBY: Home Secretary, it is an extraordinary spectacle, the Chancellor ridiculed everywhere, the pound in free fall, no economic policy, a party at its own throat, the list goes on and on. This is a government whose credibility is shot to pieces at home and abroad. KENNETH CLARKE MP: Well, I wouldn't expect you to play down the nature of the crisis and I certainly accept we're in rather a difficult crisis which I have to say I remember rather a lot since we came into power in 1979. We plainly had a disastrous setback when we were driven out of the Exchange Rate Mechanism on what everyone know calls Black Wednesday. I think we have to react as we've reacted to other crises since 1979 - with clarity, with consistency, showing we're a government of conviction. I think our aims are clear and we have the chance next week to set them out again and get back on course. DIMBLEBY: You talk about this disastrous setback, the government has been rowing with the Germans, unless the Germans are lying through their teeth there now seems to be every evidence that the government could have avoided that dreadful setback by realigning before Black Wednesday and the debacle that followed. CLARKE: Well, I don't accept that interpretation of the exchanges and I still incline to the view that people in charge of central banks should be cautious about what they say when there's uncertainty in the exchange markets. Leaving that on one side, I think the Anglo-German dispute has quite rightly been brought to an end. They're our best allies in Europe, they usually are more or less where we are on the great European issues. I always say that I find the Christian Democrats very comfortable colleagues. A man like Volker Ruehe, who's their Defence Minister, who I know, if he was British, he'd be a member of John Major's Cabinet and a very good one. So, I don't think we're at serious loggerheads with the Germans. DIMBLEBY: Well, let's not leave that row entirely aside, let's go back to the particular substance of that row and one particular part of it. The Bundesbank said, very clearly, that they asked the German government to initiate negotiations for realignment before Black Wednesday and they said that the government did that. Did that happen or did that not happen? CLARKE: I obviously was not directly involved closely with events but my belief is that no serious realignment was possible before the French referendum, the idea we could have got into negotiation about a realignment without causing further disturbance to the markets I think is highly unlikely, I think the French, for example, let alone ourselves, would not have negotiated a realignment before the French referendum....so the Bundesbank may have had that idea, I don't know, I don't know one way or the other but I don't think it was a serious and realistic option. DIMBLEBY: You said not so long ago, that you were in this, you were all in this together, I assume you must have known on such an issue of substance as this, the Federal government, says the Bundesbank, the Federal government complied with this request to open negotiations and it complied with the request, says the Bundesbank, by initiating negotiations. Now let me put it to you that for the Treasury and the Prime Minister to reply that there was no request from the German government for renegotiation, is to be extremely misleading unless the Bundesbank is lying. CLARKE: I think there was no prospect of a negotiated realignment taking place in the run up to the currency crisis. It requires all the countries in the mechanism - that's eleven of them actually - to agree. I do not believe that anybody would have got a consensus for a
realignment. I think it is a complete red herring to go back and say some quite alternative scenario might have unfolded the week before. DIMBLEBY: It may be that you don't think it would have been possible or wise. My question to you is - given the debacle that happened, whether or not it was discussed. Was it on the table or not? The Prime Minister seems to suggest that it was not even on the table. The Bundesbank says unambiguously, endorsed by the Federal Government, that it was on the table. CLARKE: All I can say is I, personally, knew nothing whatever of any suggestions of a realignment. I heard nothing about any suggestions of a realignment. Never reached the stage where a Cabinet Minister like myself knew that such a thing was being contemplated. If I'd been asked what I thought about it I'd have assumed that it was completely unrealistic you couldn't get such a realignment and that we really couldn't - no point in contemplating one until the French Referendum was behind. Of course, in the wisdom of hindsight, we might have preferred a realignment to what actually happened, when currency movement, speculation, took us out of the ERM, but I don't think anybody foresaw that until the last twenty four hours. DIMBLEBY: In politics the wisdom of hindsight is generally thought to be rather important. If there was an almighty cock-up by the Government which led to the fruitless attempt by spending billions of dollars to rescue our position in the ERM, then the benefit of hindsight is not something that you can just throw away to one side as an interesting observation, is it? CLARKE: Well, I would have liked to see a realignment if we could have had one, but what I'm saying to you - which I think corroborates the Prime Minister's version of what occurred and the Chancellor's version of what occurred - is I heard nothing about this supposed realignment and this offer of a realignment until well after the events of Black Wednesday had taken place, and I really do think these exchanges with the Germans being analysed in this way somewhat miss the point. Our relationships with the Germans are good, have to be good, must remain good. (BOTH TALKING AT SAME TIME) DIMBLEBY: ....the Chancellor and others started slagging them off, weren't they? CLARKE: I think you're entitled to say - if he hadn't said it other people would have said that it's unusual for the President of a Central Bank to allow himself to be quoted, apparently speculating, about the value of other currencies in the mechanism of which his Bank is, as it were, a member. But, having said that, we said that, otherwise people are trying to stir up anti-German sentiment and the whole thing has boiled over into some of the Euro-sceptics talking about jack boots and carrying on about the V-2. This is nonsense. Today's Germans are our allies. Today's German Government is very close to our own and that's how we should stay. DIMBLEBY: We had the Chairman of the 1922 Committee - a significant figure in the Party, one's led to believe - saying that we've come to doubt whether the Germans have changed. CLARKE: Well, if Marcus said that.. DIMBLEBY: He did. CLARKE: ... and I suspect he said it in the heat of the moment, and if you had a serious discussion with him he wouldn't agree with that. We are at the moment, as you say, in a serious political situation. I can assure you the Government of this country is not going to be pursued on the basis of extraordinary remarks about whether the Second World War...the fact is today's Germans are our allies and what we both have to deal with is how to keep the Community, Exchange Rate management, economic policy on the rails, so that Europe as a whole can come out of recession. DIMBLEBY: Well, because, as you acknowledge with the benefit of hindsight, a realignment did not occur, we are where we are now. Let me put it to you that when I say the Government is without credibility now it's because it's thrashing around in the water in search of an economic policy and we're told maybe the pilot will come back in two or three weeks and tell us what the policy is. That's hardly credible posture for a Government in a crisis? CLARKE: Well, the policy is extremely clear. The first priority is that Britain must come out of this recession strong, when the world comes out of this recession - that includes the Germans who are having their own problems as well as the Japanese and the Americans, and our policy is sound money, our policy is low inflation, our policy is to create the climate in which the best of our industry can thrive. That remains clear. DIMBLEBY: That's being in favour of motherhood and apple pie, with great respect, isn't it? CLARKE: Well, in fact, sound money, low inflation are achievements that this Government which nobody else has followed, and most of our critics when you listen to them appear to have forgotten everything that we learnt in the seventies and the early nineteen-eighties and that there was in the aftermath of our leaving the ERM a ludicrous feeling about that "happy days were here again", the currency could just go into free-fall, we could lower our interest rates to whatever level we chose, and somehow that would take Britain out of a recession which the rest of the world is in - I don't believe any of that, and our policy is clear. DIMBELBY: Your policy. Well, we'll have a look to see whether it's clear. Your policy at the moment is to allow the pound apparently to be in free-fall. You can't have sound money with the pound going on down like this, can you? CLARKE: You would certainly have to take a view of the Exchange Rate and we cannot allow the pound just to devalue. We are floating. And I prefer managed Exchange Rates in a single market - of the kind that Conservatives have been constructing - to floating Exchange Rates. Circumstances make us float. But you can't just allow the currency to devalue. DIMBLEBY: OK. You say you can't allow the currency to devalue. The essence of the floating pound as it is at the moment is it's a sinking pound. As you going to say the Government has to intervene at some point - and we don't know when it might be - to say to the market "Sorry - we're not going to allow you to go on running the pound down like this"? CLARKE: Well, when you have a floating Exchange Rate it becomes your duty - it particularly becomes your duty - to have a monetary and a fiscal policy that gives your traders some stability, that stops the pound sinking in such a way as to create inflation in a year or two's time. It becomes important that we stick to the policies which actually before we were sticking to because - to use the jargon - we were aiming at the convergence targets of the ERM. We were quite happy to set our sights at fiscal deficit, three per cent of GDP; quite happy to set ourselves at the other convergence targets of the ERM. We weren't committed to the timetable which the others - I think rather foolishly - thought you could set out, which were set out in your piece, that now, now we have a floating Exchange Rate we must rapidly restore, in the present uncertainty, stability. I mean businessmen want to know where they are and they want stability in the Exchange Rate. DIMBLEBY: And they're saying that with great ferocity to you. The pound so far has devalued by seventeen per cent from the point at which it entered the ERM. You say we mustn't let it go down. Has it reached its bottom for you, or are you prepared to see it letting go a bit further down until you decide what's low enough? CLARKE: Well, obviously, when you go into the markets, unwillingly as we did, having been forced out of the ERM, you've got to achieve stability at a level which is sustainable in the markets. DIMBLEBY: Where's that level? CLARKE: ...We're still in the stage of seeing it steady down. We probably won't know clearly for a week or two's time, but it must be the aim of the Government to get stability at a reasonable level which will minimise the de-inflationary consequences of this devaluation. That means that we're back in the business of monetary targets, fiscal targets. The Chancellor quite rightly has talked about not just going back to the old days of M-3 and M-Zero, but actually chosing some other targets by which we can stabilise our Exchange Rate. DIMBLEBY: Right. You say that the floating pound cannot be just left to the market, as some people say it ought to be because then interest rates could then come tumbling all the way down. You say that has inflationary consequences - sorry. CLARKE: Well, it is in the market. I mean obviously at the moment we are in a floating situation - we're in the market, ...a Government must take a view of what its Exchange Rate ought to be in that market....... (BOTH TALKING AT THE SAME TIME) DIMBLEBY: You can't tell me what the view is? CLARKE: The view is that we need to have - as you're bound to have after a devaluation - a very stern monetary policy, very stern fiscal policy, to make sure that we don't get inflationary consequences from whatever level the pound's stable as...at the market. DIMBLEBY: That, that, that is, um, with respect, not an answer to the question which was, as I think you understood, have we reached the bottom now or not, in your judgement, of the pound's value? CLARKE: Well, the great thing about free markets is I am not going to sit here and take a view on what I think the currency would stabilise at. But what I do know is the Government should take a view and its economic policy should be such as to achieve stability in the new situation as rapidly as possible. We certainly can't just ignore devaluation; we certainly don't want a great deal more devaluation which will be very damaging to our position indeed. DIMBLEBY: Will it be credible if this Government having inside the ERM raised interest rates to fifteen per cent, outside the ERM drop them down to nine per cent, has to raise them again to stop the pound sinking below the level that you think is proper? CLARKE: Well, of course, in totally floating markets your interest rates do go up and down. I mean, I think I've throughout been clear that I didn't want us to leave the ERM - I accept we were driven out. Once you're outside, we're back in the situation where before we went in interest rates were fifteen per cent. People can recall occasions when we were in a floating Exchange Rate, when interest rates went up four per cent in a fortnight. Everybody wants to see interest rates down, but your interest rates, your fiscal deficit, your monetary policy, have to be set in a way that achieves the maximum stability in the Exchange Rate. DIMBLEBY: Now, if you are going to use fiscal policy, are you seriously saying that this Government will be credible with the electorate if you say we now have to cut public spending in order to prevent inflation spiralling upwards again? CLARKE: We said we were going to cut public spending or restrain public spending within the already published forecast for next year - which we haven't done for a long time - in July of last year. Now I do think that going out of the ERM that makes that doubly important. DIMBLEBY: Say that again. That's a very important thing you say. CLARKE: I think having come out of the Exchange Rate Mechanism it makes what we said in July even more important. DIMBLEBY: Bigger cuts that means. CLARKE: Well, the cuts we (if you call them cuts) - in fact the first year they were merely sticking to what we published, but sticking to what we published against expectations in the general world - "Ah well, they never really mean that. We can always lobby for some more" - this year we've got to stick at what we said. It is particularly important now that we do that because we've left the Exchange Rate Mechanism, we've got to carry some credibility in the floating market. DIMBLEBY: And to do that - this floating market which you personally abhor, but which you find yourself in... CLARKE: Well, I prefer the managed one. DIMBLEBY: You're going to have to go to the electorate with unemployment rising towards three million, with companies going down the tubes all over the place, and say - "Sorry, our way of getting out of the recession now is maybe to hike up interest rates if the pound goes too low; maybe to cut public spending more severely than we had to" - Are you going to add to that and maybe put taxes up as well? CLARKE: Well, firstly, let's make it clear we're all talking about the jobless, and we're all talking about industry. I think as all the politicians and commentators argue about Maastricht and the ERM, what matters is what's in the interests of industry and jobs. Now I would say to people in British industry, getting the climate right for you does not involve the public, um, the Government allowing public spending to increase so that Government gets heavily in debt. It does not involve allowing the Exchange Rate to sink further and further down so that everything we import becomes so much more valuable, everything we export becomes worth less. That, I would defend, what I've been saying throughout, in terms of the long-term interests of British industry and the desperate need to get the number of unemployed down. I don't think our policy has caused unemployment. I think our policy now is designed to get it down. DIMBLEBY: Now, given that this is what your policy is, but to keep inflation down as well in the way that you've just described, do you or do you not rule out, which Michael Heseltine was talking about, the prospect of tax increases? CLARKE: Well the government has placed itself against tax increases which is why we have to look to public spending to get the fiscal deficit down to an acceptable level. Now payment can't go into debt, you can't spend a very great deal more than you're raising by way of revenue, you're bound to spend some more because we're in recession, you have unemployed, social benefits and so on, but within the constraints we have to make sure that we hit the targets which we set in July, and cuts in public spending are the Conservative approach, not tax increases. DIMBLEBY: You are pledging that the government will not go back on its pledge on taxation. There will be no tax hikes is that your commitment? CLARKE: The Conservative policy is a low tax economy, which is a low tax economy which we set as our aim. No responsible government I think could ever say that you never put up taxation, but our success has been that we've always controlled the public finances so that we've got taxation down, therefore our policy now, our aim now which I think we'll
deliver, is to get public expenditure under control so there's no need for tax increases. Listen to our rivals, and I mean all our rivals, Euro-sceptics as well as socialists would put taxation up. It's obvious from what they say. DIMBLEBY: Alright. I want to move on. You described an economic policy which you hope will be regarded as credible. Let me ask you about the ERM and the credibility of the government in this respect. Is it seriously credible to say "We will go back into the ERM but only if they get rid of fault-lines which we won't define, but they say don't exist and at any rate you aren't going to get anywhere"? CLARKE: Well, I think it's obviously sensible to say we're not going back to have a repeat of Black Wednesday. I mean as if you do anything, if you go running across a surface and you fall over an obstacle you go back and find what it was you fell over. You don't just carry on doing the same thing again. Our aim remains the Exchange Rate Mechanism. I think we're all clear that we didn't anticipate what happened on Black Wednesday and we're not going to go back again until we feel some reasonable confidence that that will not re-occur. DIMBLEBY: What was it that you tripped over. What is the fault-lines to which, what are the fault-lines to which the Prime Minister refers? CLARKE: Well, firstly there was the huge sums of - absolutely vast sums of money moving about which I think people can fairly say we should have known, we did know that such sums of money are available at international exchange markets. We were surprised at the judgements that the speculators were making when we had achieved such success in getting our interests rates down to German levels, our inflation down. I think in the past that would have had more effect on the markets than it seemed to have, the French referendum and other doubts that..(INTERRUPTION).and then there was this, I don't think it should be the basis of an argument with the Germans, but there clearly needs to be an understanding between those who are in a European monetary system on the behaviour of the key players within that system and the fact that there was at vital moments uncertainty about whether the Germans should now be reducing interest rates, whether the Italians and ourselves should devalue - all that, that needs to be talked through very very carefully before anybody contemplates going back into it again. DIMBLEBY: Now this the first time, and you've been characteristically open, that a cabinet minister has defined the fault lines. One, it's the money moving around in the markets in ways that you couldn't have..didn't expected. CLARKE: Well, I mean you can't stop that. DIMBLEBY: But you can't do anything about that fault line. The other fault line is the wretched Germans....effectively what you're saying, self interest rather than European interest? CLARKE: Well, as I say....we all pursue self interest. As a British cabinet minister, all the way through to Black Wednesday and afterwards, I've been pursuing British interests which I think involve membership of the Exchange Rate Mechanism if we can. I'm not going to criticise a German minister and a German bank of pursuing German interests ..... DIMBLEBY: But no way.... CLARKE: But I think German interests, we have to discuss with them to get them to accommodate German interests which are stability and exchange rates, stability inside the single market, we have to discuss with them how you make necessary reflection in your policy of what is the wider interest as opposed to just an immediate one. The Bundesbank in my personal opinion, giving - recklessly giving advice to that great institution, cannot regard it as the sole German interest and they are behaving in the classic way as if they were never in the EMS and all that matters is the German money supply and German inflation. DIMBLEBY: But it would extraordinarily naive of any cabinet minister or government to suppose that the Bundesbank would ever, has ever behaved without that guiding precept. Are you seriously suggesting that you can go to the Germans and say as they would interpret it, "We want you to build in a little bit of inflation into your system so that you can accommodate a little bit of our inflation"? It's not on. CLARKE: Well, I certainly wouldn't put it that way and I certainly, given the....which think all this is impossible, that it is going to take some time before we get back to the Exchange Rate Mechanism, but it is - it should be as self-evident to them as it is to us that if we're agreed on the desirability of a monetary system, there has to be a clearer understanding betwen us all of how it works and the Germans, let me remind you, firstly carried out their legal obligations to us by intervening to support our currency rate as they did and they're protesting they did, but no-one's ever denied they did, they stepped in and worked with the French extremely closely to defend the value of the Franc. Personally I'm not indignant about that, I don't agree with them in the sense that their opinion appears to be that the value of sterling was not defensible, the value of the Franc was, they intervened and the Franc came through although it's come through into a system weakened, not least because we and the Italians are out of it, but that I think paves the way for our sitting down at some stage which won't be at Birmingham, but at some stage and saying, "Look, before we get back into this situation again we have to make sure there's a much better understanding, how we're going to avoid a repeat of Black Wednesday. DIMBLEY: Given what all of them have said I put it to you that the prospect of getting the change that you've just called for is to inhabit and I say it with respect, but on the basis of what the Germans have said, you inhabit cloud cuckoo land? CLARKE: Well, I've just said that I don't think it's going to happen in a hurry. I don't think it is cloud cuckoo land. If it is thought that you're going into a single market, if it's thought that Europe is going to become the trading block which everybody's agreed upon and is going to thrive in competition with the Americans and the Pacific rim, I think Germans, British, French have all got to agree on the rules by which that bloc operates and Black Wednesday may have shown that this is going to take quite a long time, and for all of us actually understand the basis on which we're going to keep in touch on monetary policy inside the single market. DIMBLEBY: You say it's critically important and that Britain can't go in without some such change to the structure as you've described it. I want to know because this is at the core, the heart of this whole ERM question, is if at core it is the Bundesbank not behaving...don't want to say it aggressively, but not behaving in the European interest, what exactly do you expect the Bundesbank and the Germans to do? CLARKE: Well, I haven't said it's all the Bundesbank, but I mean we're all agreed the Bundesbank played a key part. The only thing we're complaining about I think really is the stray remarks which we say they made and they say the didn't. Well, let's draw a line under all that. What we're ...(INTERRUPTION)... I quite agree with you, that's all water under the bridge, so there's much more interesting stuff than that, bit of blood mixed with it perhaps, but we now have to make sure that when we go back into the Exchange Rate Mechanism, when and if we do, and I hope very much we do, we all of us, the partners in that system have a much clearer idea what we're going to do so we don't have crises again, that take one or two of the partners away. That seems to me as basic obvious commonsense and if it sounds too platitudinous I have been touching on a bit more detail a few moments ago. DIMBLEBY: You have touched on detail and that's why I want to pursue it a bit more with you because it's obviously extremely important. Let me put back to you what the Dutch, the Belgians and Kohl all agreed at their Christian Democrat meeting at the beginning of the week, out came the former Belgian Prime Minister on their behalf Mr Martins (phon.) and he said this. "The EMS is not deficient, you have to accept the logic of the system. Sometimes a realignment is necessary". A pointed observation. To go back to what we were first talking about, a pointed observation about the British, they are not persuaded that because we couldn't hold our place that therefore the rules of the game have to change and the goalposts have to move are they? CLARKE: Well, you go on from what they said. I don't think the European monetary system is deficient. We joined the monetary system about five years ago. We joined the ERM two years ago. The disciplines are important, I mean we talk about the Bundesbank being against inflation, so is the British government, that's why the disciplines, the convergence criteria we don't mind. You may have the quote in front of you - I don't. I don't think they could all have been saying actually everything in the garden's lovely and we're quite happy with the Exchange Rate Mechanism with the British having gone out, the Italians having gone out and the Spanish reintroduced exchange controls, the Irish introduced exchange controls, that the Greeks not even joined and the French just having beaten off a great run on the Franc. I think if you get us all together you will find there's quite a lot to talk about about how a European monetary system might work and we're in favour of it working if it can be made to work, because it gets stability in the single market on which we've always been keen. DIMBLEBY: You've always been keen. It would not be credible would it to say that we are at the heart of Europe if we were indefinitely inside the ERM? CLARKE: I personally see Europe working on the basis of a European monetary system so I would trust that as that system evolves we're part of it, it's just part of a far bigger policy of making sure that as we trade in the single market and our political base in the world depends on the community, we influence the rules in that community, that's where we should be. DIMBLEBY: Do you accept that signing the Maastricht Treaty, ratifying the Maastricht treaty is up for the ERM. CLARKE: It's to sign up for a process which we're happy to do. It remains our intention to go into the Exchange Rate Mechanism when conditions allow. The Greeks have ratified - they're not members of the Exchange Rate Mechanism. You set out in your piece quite clearly the stages which the Treaty of Maastricht contemplates but that's a timetable we never accepted. It was signed on the basis that all twelve countries wouldn't make that timetable. There are plenty of people in the Government who don't think any of them will make that timetable as it's set out. That is a direction in which policy should go - we're heading in that direction. We're saying we'll join the Exchange Rate Mechanism when conditions allow, puts us in a perfectly
straight forward position to ratify Maastricht just as the Greeks have done. DIMBLEBY: So those Euro-sceptics or doubters in your Party who may be running away with the idea, well, we'll be dragooned into the lobbies on Maastricht but we'll never get the ERM, should not have any illusion about that; they will be getting the ERM; it's only the timetable that's in question. CLARKE: They'll get the policy we've declared which they like. I would say to any Euro-sceptic doubting Maastricht because somehow imagines we'll be forced into the narrow band in 1994 - "Don't worry, I mean, that's not your misunderstanding". It is true that if we ratify Maastricht we'll be committing ourselves to that aim. I've described a managed currency system, a European monetary system but actually I don't think half the countries will be in the narrow band by 1994. Our aim, our own behaviour when we ratified Maastricht will be consistent with what I'm saying. We would like to join the Exchange Rate Mechanism; we will join it if conditions allow; we will only join it when British interests actually are served by our joining the Exchange Rate Mechanism. DIMBLEBY: If this process is as difficult as you describe, do you not feel that the Government is at great risk of its credibility being, in European terms, even more undermined by the prospect of the inner-core countries, as they're called, leaping over Maastricht and going directly straight into a single currency? CLARKE: Well, it was always contemplated in the Maastricht Treaty that there would be some who hit the timetable, some who wouldn't. I actually don't think all this stuff about a two-speed Europe is likely to happen in the way that people are fearing in the last week or two, not least because the Germans - I'm quite sure and quite a lot of the other member states - want nothing of the kind. DIMBLEBY: If it did happen - we never know what happens, we didn't know we were going to come out of the ERM - if it did happen, would you personally with your commitment to Europe, regard it as a massive haemorrhage of British influence and authority if we weren't inside that inner group? CLARKE: I never want to see us in a position that the Scandanavians and the Swiss have been for the last twenty years of having all their lives dominated by what's going on in the community but not being at the heart of decision making there. I actually think Europe works best when Germany, France, Britain and their allies, are all involved, when there's no particular one or two countries dominating and that's where we'll get back. DIMBLEBY: Can we move to the figure who is the architect of the economic strategy that this Government has been pursuing. Assuming that he is an honourable and decent man, and no-one is calling that into question, is it credible to have the man who negotiated us onto the rocks of Black September, to remain in power telling us that he was singing in his bath afterwards? CLARKE: Well, I don't think any colleague who's an honourable and decent man can start criticising the Chancellor when what he has done is exactly what he discussed with his colleagues and we all agreed he should do. And so I actually think that it would be extremely distasteful if any one of his colleagues suddenly said that Norman somehow should be made,
jettisoned as if somehow we're now changing our policy. We're not even changing our policy aims, therefore, we have same the Chancellor. I'm delighted to hear he sings in his bath, this is a resilient Government. DIMBLEBY: Well, you may be delighted to hear that he sings in his bath, a lot of people are very cross about it. CLARKE: I'd rather not listen to it. DIMBLEBY: You don't have to, I trust. Reported it is that the Chancellors of Europe, the City, even indeed, parts of Whitehall, believe he has no longer credibility and that, therefore, the economy and the pound are being damaged regardless of his individual virtues. Under those circumstances does he not have to consider his position? CLARKE: Well, I think credibility depends on the economic policy you pursue and the skill in which you pursue it and I do not believe that any other Chancellor of the Exchequer, of any Party as it happens, could have avoided Black Wednesday and I...you and I were talking earlier on about the line which Norman now has to chart. Plainly it's is going to take him so time to spell that out in detail. I think his credibility generally, his policy, it's just an inevitable political reaction to a crisis that somebody's got to have their head lopped off and I don't think it should be Norman. DIMBLEBY: Well, let me put it...there are a lot of people in the constituency saying he ought to have his head lopped off as you doubtless heard but that's not my question, the question is this: Is it credible that the man who sings in his bath after getting out of the ERM, is the man to take us straight back in again when it's possible? CLARKE: Well, I don't think any of us think we're going straight back in again as you and I have discussed a few moments ago. I think Norman's a Chancellor who's not going to say the day after Black Wednesday that everything's now off, we've lost our sense of direction. He was the Chancellor we had before, he's the Chancellor who's going to help us stay to that sense of direction, carry out mapping out the course of Britain we intended in the middle of an extremely difficult recession where we must ensure that Britain does not get into worse difficulties than any of our trading partners. DIMBLEBY: Home Secretary, is it as credible to hear protestations of ministerial support for the Chancellor as it was to hear such protestations in the case of David Mellor? CLARKE: Well, I particularly regret David Mellor being driven out in the way he was. I mean, that was all part of the silly and rather nastier side of British politics. I think this is a political issue that Norman's been challenged on - it's one where the Government's been consistent and I don't think the Government could remotely contemplate him going on that basis. DIMBLEBY: Home Secretary, thank you very much. ...oooOooo...