Lamont fuels Tory doubts over Major's leadership

NORMAN LAMONT piled up Tory doubt over John Major's future as Prime Minister yesterday when, in a barbed attack, he told the Commons: 'We give the impression of being in office, but not in power.'

Policy was being dictated by presentation, rather than the other way round, and the former Chancellor said that if that was not reversed, 'the Government would not survive and will not deserve to survive'.

Mr Major replied that while history would look favourably on Mr Lamont's economic and financial skills, 'a strong government needs political skills as well when leading a democratic society and, in particular, handling a lively House of Commons with a small majority'.

Upstaging an entire Opposition attack on the Government's 'betrayal of election promises' on taxes and public spending, Mr Lamont sprang his unexpected 'resignation' statement on No 10 and Parliament - giving his friend the Prime Minister no direct warning of his decision to deliver it.

The sheer dignity and force of Mr Lamont's 20-minute statement added to the overall impact of John Smith's uproarious onslaught - and left the Prime Minister wrong- footed and defensive.

Paddy Ashdown, the Liberal Democrat leader, summed up the mood when he said that if Mr Major had turned round to his own backbenches during his speech, he would have 'seen his fate indelibly written on the faces of the Members behind him'.

Tory talk of Mr Major having 12 months to make good was a commonplace last night. But some MPs understood too well that 'a lame duck is a dead duck in this game'; the odds on a November leadership challenge must have been shortened.

While Mr Lamont enthralled the House, Mr Smith had everyone - including cabinet ministers - appreciatively laughing at his cracks.

He said at one point that Mr Major had the non-Midas touch, adding for good measure: 'No wonder we live in a country where the Grand National doesn't start, and the hotels fall into the sea.'

After that rip-roaring performance from the Labour leader, Mr Major replied with a fierce attack on unscrupulous Labour 'scaremongering' - in a speech that reduced some of his own backbenchers to a glazed silence, while others maintained desultory conversation. Although some cheered his peroration, many Tory MPs did not even make a show of applause. Instead, they made a dash for the doors.

Kenneth Clarke, the new Chancellor, later highlighted the lack of Mr Major's debating punch with a forceful wind-up speech that rallied Tory morale. He told the House that last year's election manifesto pledges would be maintained - as distinct from campaign promises that value-added tax would not be extended to items such as household fuel and power bills.

But the day was marked by Mr Lamont's statement. He began by distancing himself from responsibility for the recession, saying: 'A large part of the fall in output occurred in late 1990 and early 1991 . . . No, this recession has its origins in the boom of 1988 and 1989. That boom made the recession inevitable.'

Mr Major was Chief Secretary to the Treasury, 1987-89, and Chancellor in the year before he became Prime Minister at the end of 1990.

Noting that he was the second Chancellor (after Selwyn Lloyd in the 1960s) to have reduced inflation below 2 per cent - and be sacked - Mr Lamont said Mr Clarke should reap the benefits of the enouraging trends he had bequeathed him.

However, faced with repeated statements from Mr Clarke earlier in the day that further tax increases could not be ruled out to curb the pounds 50bn public sector borrowing requirement, Mr Lamont warned his successor: 'We don't want more tax increases. We need tight control of public spending.'

He also followed the example of Nigel Lawson, in his October 1989 resignation speech, revealing that he, too, had urged the Prime Minister to free the Bank of England from political control. 'Interest rate changes should never be used to offset some unfavourable political event. To do so undermines the credibility of policy and the credibility of the Chancellor,' he said.

However, the two most pungent elements of Mr Lamont's speech were directed at the timing and manner of his sacking. He said that when he had left the Government 10 days before, many had said he should have resigned after sterling left the exchange rate mechanism last September.

Mr Lamont provoked gasps of astonishment when he revealed that he had not resigned because the Prime Minister had asked him not to. On 16 September, he said, Mr Major 'made it clear to me in writing that he had no intention of resigning himself and that I should not do so either. Of course, I discussed the question further with the Prime Minister subsequently.

'In all those discussions, he emphasised that he regarded the attacks on me as coded attacks on himself.' Out of 'duty and loyalty' he had decided to stay to protect Mr Major's back.

The reward for that devotion came last month. Recalling that he had acted as Mr Major's campaign manager for the 1990 leadership contest, Mr Lamont suggested he had no regrets about that. However, he did want to say something that went 'to the heart of the way this government conducts itself.'

Lending credibility to reports that he had been ousted at the request of Sir Norman Fowler, the party chairman, and Richard Ryder, the Chief Whip, Mr Lamont said: 'There is something wrong with the way we make our decisions.

'The Government listens too much to the pollsters and the party managers. The trouble is that they're not even very good at politics and they are entering too much into policy decisions. As a result, there is too much short- termism, too much reacting to events, not enough shaping of events.'

Mr Clarke told Channel Four News last night that he did not recognise Mr Lamont's description of the Government. As for Mr Lamont's sacking, the Chancellor said that had been made necessary by 'the clamour of political critics, City critics and the press'.

(Photograph omitted)