Richard North, 01/01/2006  

It is ironic that our first substantive post of the new year is about none other than the wunderkind himself, the Boy King, who has invested the Conservative Party's hard-earned money in a full-page advert in the Sunday Telegraph.

There, we find in conveniently large print - no doubt for the visually as well as the politically challenged - a declaration of his six principles that he hopes will guide the Party to victory.

For the Telegraph, this is a "dramatic" move – a bold statement from a failed newspaper about a failed party - with political editor Patrick Hennessy citing an unnamed shadow cabinet member who suggests that, "There may be a few of the disillusioned old colonels who throw their toys out of the pram but most people will go for it."

As I write, my colleague will be winging her way to the United States and I have never taken her for a "disillusioned old colonel", but I do hope – for the sake of her fellow passengers - that she has not bought a copy of the Telegraph. Such would be the smouldering incandescence that her part of the cabin would be uninhabitable.

Of the more egregious statements in the "declaration" comes the claim that, by 2010, our national debt will be £617 billion, "risking higher interest rates", followed by the assertion that "Ensuring economic stability is the first duty of any government". To that, though, is appended the most amazing rider: "We've learnt the lessons of the ERM".

Far be it for me to rehearse the events that led up to "Black Wednesday" but, as I recall it, the linkage of sterling to the exchange rate mechanism – the precursor to the single currency – was sold as an instrument of economic stability, ironing out the fluctuations in the exchange rates between the basket of European currencies.

As it turned out, it was this attempt to secure "stability" which led to the fiasco which destroyed the Conservatives' reputation for sound economic management and it was only the forced decision to quit the ERM and surrender to the inherent instability of market forces that restored the UK to economic health.

Not least of the lessons of the ERM, therefore, is that the pursuit of economic stability by governments leads to precisely the opposite – that it is no part of governments' tasks to "ensure" stability, and neither is it within their capability so to do. More simply, their responsibility is to respond to the inherent instability in the markets and to reduce the adverse effects, while capitalising on the advantages.

Through his beguilingly simple comment does the Boy King demonstrate that he, at least, "has not learnt the lessons of the ERM". As the implications of the vacuity of his statement sink in, I suspect it will not only be "disillusioned old colonels" – and my colleague – who throw their toys out of the pram.


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