Political Commentary: Major runs out of Chancellors

CHURCHILL once recalled that, when asked by Baldwin if he would take the Chancellorship in 1924, he wanted to answer 'Will the bloody duck swim?' Recognising the formality of the occasion, however, he conveyed his excitement in more measured terms: 'I shall be proud to serve you in this splendid office.'

The equivalent conversation between John Major and Norman Lamont after the Tory Party leadership contest in November 1990 was, though more prosaic, also significant. The Churchill exchange illustrates an enduring truth: that the Chancellorship is not a job anyone refuses or, as Mr Lamont has amply demonstrated over the past few weeks, easily gives up. Ignore, therefore, chatter about one or other of Mr Lamont's senior colleagues being inclined to turn the job down if offered it in a January reshuffle. The question is whether the post is going to be on offer in the first place.

Those who castigate the Opposition for not being vigorous enough should consider the presence of mind shown last Monday by Gordon Brown, the Shadow Chancellor. Mr Brown, who never considered that the question of whether Mr Lamont bought champagne on Monday or wine on Sunday was the stuff of grown- up politics, left the subject well alone. But then it was disclosed at the weekend that pounds 4,700 of Mr Lamont's legal fees - incurred after last year's revelation that he had unwittingly let his flat to a 'sex therapist' - had been paid out of public funds. Mr Brown judged that this was a much more serious matter.

By Monday morning he had written to Mr Lamont with a batch of questions. He was told that the Treasury's accounts for 1991-92 'together with the Comptroller and Auditor General's audit certificate were laid before Parliament in the usual way'. This sounded impressive, except that the payment was simply a small and publicly undisclosed part of an unitemised category of miscellaneous expenditure worth some pounds 50m. Mr Brown then telephoned the Auditor General, Sir John Bourn, asking whether he had indeed known of the payment. Four hours later Sir John's office rang back to say that he knew nothing whatever about it and proposed to investigate the payment forthwith. There are some signs that Sir John, who is no pushover, was pretty cross about being invoked by the Treasury in this way. Game and set, if not match, to Mr Brown.

Sir John may well find that the payment was made in accordance with the arcane, and up to last week, undisclosed Whitehall rules governing such matters. It is a crucial part of Mr Lamont's defence that he was so advised by the then Permanent Secretary, Sir Peter Middleton. Sir John may also argue that it is not for him but for the politicians to decide whether these rules are too lax. More importantly for the Chancellor, however, he may also find that the practice of paying your personal lawyers out of public funds is not Lamont-specific. The two ministerial precedents cited last weekend concerned Nigel Lawson, who consulted lawyers over remarks he had made about Johnson Matthey, and Lord Young of Graffham, who required assistance over allegations of bias in the handling of House of Fraser. But in both cases the difficulties were generated directly by the politicians' public duties.

However, it is now claimed authoritatively that there have been other cases in which ministers have used public funds to prevent allegations being made about their private lives. The incidents have not been made public, it is said, because to do so would have entailed repeating the libel. At least one case is believed to involve a serving Cabinet minister.

In other words, Mr Lamont may well survive Sir John's inquiry as he has survived so much else. The tactical case against Mr Lamont remaining at No 11 is that his continued presence weakens the standing of the Government. Ostensibly, the case for Mr Lamont staying rests on three points. First, Mr Major does not want the press (the Sun was back in the fray yesterday with an excoriating attack on the Chancellor) to bring down another minister. Second, the Autumn Statement went down well with backbenchers. Third, Mr Lamont, for all his - and the Prime Minister's - over-optimistic economic forecasts, has been an innovative Chancellor with two politically successful budgets behind him - the second, pre-election one, much more so than it seemed at the time.

But the Chancellor may owe his survival more to low politics than to anything else. He and Mr Major are not, as it happens, close chums. They do not dine out together with their wives. By Mr Lamont's own account he was not the first choice as Mr Major's campaign manager in the leadership election. There has even been the odd spat. But their destinies since the winter of 1990 have been intricately linked. Here, we return to the conversation between the two men on Mr Lamont's appointment as Chancellor. Was he, Mr Major asked, a Euro-sceptic? This shows, first, that they were not on sufficiently intimate terms for Mr Major to be quite sure. It shows, secondly and more importantly, that Mr Major needed to know. He wanted a senior Euro-sceptic to execute and sell to the party two distinctly Europhile policies: closer European union and British membership of the European exchange rate mechanism.

One of these policies has now collapsed. In pursuing the other, Mr Major may calculate that he still benefits from the advocacy of Mr Lamont, one of the principal authors of the monetary treaty agreed at Maastricht - especially if the alternative is a disgruntled former chancellor languishing on the backbenches who knows exactly where all the Black Wednesday bodies are buried. And especially since all the available candidates are so problematic.

Kenneth Clarke, the Home Secretary and probably Mr Major's preferred long-term choice for No 11, would upset the Conservative Europhobes. It would be much easier to install him once the Maastricht Bill is safely passed. But Michael Howard, the Environment Secretary, who has fought an almost lone battle within the Cabinet against future re-entry to ERM, would equally infuriate the pro-European wing.

The whips' choice for the Treasury is probably John MacGregor, the Secretary of State for Transport. He has the advantage that, unlike Mr Clarke or Mr Howard, he is not an obvious candidate for the succession should anybody think of overthrowing Mr Major.

One possibility would be to appoint Mr MacGregor, move Mr Lamont to the Leadership of the House, sacrifice Tony Newton, the present Leader, for no better reason than that he is a nice chap and won't make trouble, and bring John Redwood, the brightest of the right-wing Ministers of State, now responsible for local government, into Transport. Indeed, Mr Redwood could be an inspired choice to convince the Tory right that rail privatisation will not work. The trouble with this scheme is that Mr MacGregor is at least as committed to ERM as Mr Clarke, and the right might well be distinctly uneasy.

Mr Major has not made up his mind. But the difficulties of replacing Mr Lamont help to explain why, for all his troubles, the Chancellor is still in good heart. By all accounts he intends to humanise his image by discussing his personality, Access card problems and all, on television chat shows in the New Year. Don't bet on his staying the full Parliament. But there is every chance that he will deliver the next budget.