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By Root 3158 0

the stir which Alan Walters’s comments, dragged out of the past and often torn out of context, created. Moreover, since the timing was quite unpredictable — it depended on how quickly journalists tracked down and republished past comments — there was very little my staff or Alan could do about it. The Financial Times published on 18 October an article in which Alan was quoted, among other things, as describing the ERM as ‘half-baked’. This article was based on an essay to be published in the American Economist. But what the FT did not say was that the latter was written by Alan in 1988, long before he returned as my economic adviser. I felt that he had nothing to apologize for and minuted:

As the article was written well before Madrid (in which Alan also advised), I don’t see the difficulty. Moreover, advisers ADVISE, ministers decide policy.

At 4.30 in the morning on Wednesday 25 October the VC10 which brought me back from the Commonwealth Conference at Kuala Lumpur arrived at Heathrow. Back at No. 10 I sorted out my personal belongings, discussed my diary with Amanda Ponsonby (my indispensable diary secretary), had lunch in the flat and then saw Nigel Lawson for one of our regular bilaterals. He was exercised about Alan Walters, having been repeatedly questioned in interviews about whether Alan should be sacked. But there were many other things we had to think about. In particular, we had to agree the line which Nigel would take at the forthcoming meeting of European Community Finance ministers on EMU. Nigel had devised an ingenious alternative approach, based on Friedrich Hayek’s idea of competing currencies, in which the market rather than governments would provide the momentum for monetary union. (Unfortunately, this proposal did not in fact get very far, not least because it was not at all in the statist, centralist model which our European Community partners preferred.) After seeing Nigel, I held a wider discussion of EMU which also included John Major (Foreign Secretary) and Nick Ridley (Trade and Industry Secretary) at which we endorsed Nigel’s proposed approach in his paper, while accepting that its purpose was mainly tactical in order to slow down discussion of EMU within the Community.

The next day, Thursday, was bound to hold its difficulties. But I did not know at this stage how many. Not only were there Prime Minister’s Questions: I also had to make a statement and answer questions on the outcome of the Kuala Lumpur CHOGM and, inevitably, on South Africa. I was under the hairdryer shortly after 8 o’clock in the morning when I received a message from my Private Office via Crawfie that Nigel Lawson wanted to see me at 8.50, that is just before I began my regular briefing session for Parliamentary Questions. Crawfie said something to me about it all being quite serious and that Nigel might be going to resign. But I said: ‘Oh no dear, you’ve got it all wrong. He’s going to Germany this afternoon for a meeting and I expect he wants to see me about that.’ So when I came downstairs to see Nigel in my study I was quite unprepared for what he had to say. He told me that either Alan Walters must go or he — Nigel — would resign. He wanted me to agree there and then to his demand.

At first I could hardly take him seriously. I told him not to be ridiculous. He was holder of a great office of state. He was demeaning himself even by talking in such terms. As for Alan, he was a devoted and loyal member of my staff who had given me frank and good advice but had always acted within the proprieties. If others, including the media, had attempted to exploit and exaggerate legitimate differences of opinion, that was no responsibility of his. There was no question of my sacking him. The meeting ended inconclusively. I asked Nigel to think again. I thought he accepted this advice. But there was little time to talk since I had to discuss the briefing for Parliamentary Questions and my statement at a meeting due to begin at 9.00 a.m.

An hour later Nigel came into a meeting with other ministers on the future of the Atomic Weapons