Norman Lamont

Norman Lamont
Norman Lamont
Born	Norman Stewart Hughson Lamont; May 8, 1942 (age 84); Lerwick, Shetland Islands, Scotland
Occupation(s)	Politician, Financial consultant
Years active	1972–present
Known for	Chancellor of the Exchequer (1990–1993), Eurosceptic advocate

Norman Stewart Hughson Lamont, Baron Lamont of Lerwick, born on 8 May 1942, is a British political figure and former Conservative MP representing Kingston-upon-Thames. He held the office of Chancellor of the Exchequer between 1990 and 1993 and was granted a life peerage in 1998. Lamont was an advocate for the Eurosceptic group Leave Means Leave.

Early life

Born in Lerwick, Shetland Islands, on 8 May 1942, Norman Stewart Hughson Lamont is the son of Daniel Lamont OBE, who served as the islands' surgeon. The family relocated to Grimsby, Lincolnshire, in 1953 when his father accepted a role at Scartho Road Infirmary. Lamont received private education at Loretto School, located in Musselburgh, Scotland. He pursued economics at Fitzwilliam College, Cambridge, where he held leadership positions as Chairman of the Cambridge University Conservative Association and President of the Cambridge Union Society in 1964.

Corporate career

Prior to his parliamentary tenure, Lamont was employed by N M Rothschild & Sons, eventually rising to director at Rothschild Asset Management.

At present, he acts as a director and consultant for multiple companies within the financial industry. His roles include directorships at hedge fund RAB Capital and commodities trader Balli Group plc, alongside advisory duties for Rotch Property Group. Lamont also serves on boards of various investment funds. In December 2008, he was appointed to the board of Phorm, a company specializing in online behavioural advertising. Furthermore, he holds the position of Honorary President of the British Romanian Chamber of Commerce and chairs the British Iranian Chamber of Commerce.

Member of Parliament

Lamont's initial parliamentary candidacy was in the June 1970 general election for Kingston upon Hull East, where he was defeated by John Prescott, who later became Deputy Prime Minister under Tony Blair. On 4 May 1972, he secured a by-election victory to become MP for Kingston-upon-Thames.

Junior Minister

Over a span of fourteen years, Lamont served under both Margaret Thatcher and John Major within the Departments of Energy, Industry, Defence, and Treasury. He was appointed Financial Secretary to the Treasury in 1986 and advanced to Chief Secretary to the Treasury in July 1989, succeeding John Major. Despite efforts to prevent Chancellor Nigel Lawson’s resignation in October 1989, Lamont remained as Chief Secretary under Major’s administration.

Lamont endorsed Major’s unilateral decision to enter the European Exchange Rate Mechanism (ERM) at a central rate of 2.95 Deutschmarks per Pound, a move made without prior Cabinet approval. The ERM entry was announced on 5 October 1990 shortly before the Conservative party conference. Subsequently, Lamont effectively led Major’s campaign to succeed Thatcher as party leader and Prime Minister. Thatcher had listed Lamont among seven Cabinet members regarded as potential successors.

During this leadership contest, Lamont had a confrontation with Lawson—who supported Michael Heseltine—resulting in a tense telephone exchange later followed by an apology from Lamont.

On 16 May 1991, Lamont declared in Parliament that "Rising unemployment and the recession have been the price that we have had to pay to get inflation down," a statement frequently referenced in economic discourse. Inflation had reached a peak of 10.9% seven months prior but had declined to 6.4% by May 1991 and continued decreasing to 1.3% by 1994. Although economic contraction persisted until late 1991, growth resumed afterward with GDP exceeding pre-recession levels by mid-1993.

Chancellor of the Exchequer

Lamont took over from Major as Chancellor, inheriting the exchange rate strategy linked to the UK's participation in the ERM. In his memoirs, Lamont recounted a Treasury official describing Britain's ERM entry as driven by "politics," a rationale he privately questioned due to the sacrifice of exchange rate flexibility. Publicly, however, he defended ERM membership as integral to the government's anti-inflation approach, contending that while floating exchange rates might temporarily boost output, they ultimately caused persistent inflation.

Fiscal policy

Following Lamont’s appointment, controlling inflation remained a key priority for the Conservative administration, consistent with Thatcher’s 1979 manifesto commitments. Inflation had reached a peak of 21.9% in 1980 but dropped to 3.3% by early 1988. Attempts to target domestic money supply proved challenging, prompting a shift toward using exchange rate targeting as an external stabilizing mechanism. Inflation began climbing again from 1988, hitting 10.9% in October 1990. Interest rates rose sharply from 7.4% in June 1988 to 15% in October 1988 before being slightly reduced to 14% upon joining the ERM—levels that Lamont inherited.

Under these conditions, the economy decelerated, shrinking by 1.1% in the third quarter and 0.7% in the fourth quarter of 1990, marking Lamont’s entry into office amid high inflation and recessionary pressures. At his initial testimony before the Treasury Select Committee, Lamont cautiously suggested that the recession might be "short-lived and relatively shallow," reflecting Major’s optimistic stance.

By October 1991, referencing business surveys, Lamont spoke of renewed optimism and "green shoots" of economic recovery—a phrase initially met with skepticism but later regarded as insightful by economists such as Goldman Sachs’ Gavyn Davies. GDP figures confirm the recession bottomed out in late 1991, with sustained growth resuming by the third quarter of 1992.

Negotiating the Maastricht Treaty

Following Thatcher’s departure, Major’s government confronted critical choices regarding European Economic and monetary union (EMU), culminating in the Maastricht Treaty. Like Thatcher, Lamont opposed both EMU and the introduction of a single currency. In his memoirs, he described feeling "horrified" by Britain’s acceptance of the Werner Plan for monetary union in 1972. As Chancellor, Lamont supported Major’s efforts to secure an opt-out from adopting the single currency for Britain. Negotiations commenced in late 1990 with monthly meetings among finance ministers. At a December 1990 Intergovernmental Conference in Rome, Lamont expressed doubts about the advantages of a single currency.

In January 1991, Lamont set out three primary negotiation objectives: to prevent British entry into the single currency, to obtain a legally binding opt-out clause, and to avoid any pre-currency commitments that would restrict future policy options. He successfully resisted opposition from Prime Minister Major and Foreign Secretary Douglas Hurd, insisting that Britain would not accept ERM membership as a treaty obligation—resulting in its removal from treaty provisions.

To formalize these exemptions, Lamont proposed a protocol enumerating Britain’s opt-outs. When Dutch Finance Minister Wim Kok advocated for detailed scrutiny of this opt-out clause line-by-line, Lamont declared the text non-negotiable and exited negotiations; subsequently, the protocol was approved without amendments.

Withdrawal from the Exchange Rate Mechanism

During 1991, under the limitations imposed by the ERM, interest rates on sterling were reduced seven times, descending from 14% to 10.5%. Inflation rates were cut in half, dropping from 9% to 4.5%, resulting in only a slight decrease in real interest rates. Inflation trends varied internationally; for example, German inflation climbed from 2.7% to 5.1% by 1992, which led the Bundesbank to implement substantial interest rate hikes, destabilizing the ERM.

Although the Conservative Party secured victory in the April 1992 election, maintaining ERM policies became untenable and ultimately collapsed on Black Wednesday. Chancellor Lamont withdrew sterling from the mechanism despite previous commitments to maintain membership. He endured severe criticism for what was perceived as complacency throughout this financial turmoil. Shortly after, during a press briefing in Washington, Lamont’s casual remarks were widely reported by the media as indicative of his attitude toward the ERM exit.

Following Black Wednesday, Lamont contested John Major’s memoir assertions that Major had distanced himself from accountability; Major had contemplated resignation but directed Lamont to remain in office.

Major later characterized the ERM experience as difficult yet effective in curbing inflation. Bank of England Governor Robin Leigh-Pemberton endorsed Britain’s ERM-related choices as appropriate responses under prevailing conditions. Reflecting on the episode, Lamont acknowledged that ERM membership enforced essential inflation discipline and that its dissolution signified the conclusion of its practical utility. Treasury Chief Economic Adviser Sir Alan Budd regarded participation in the ERM as an economic achievement despite its political consequences.

Towards the end of 1992, Lamont faced several largely baseless media allegations concerning his personal expenses and behavior—claims which were subsequently disproven or clarified—including accusations about misuse of public funds connected to a tenant dispute and exaggerated reports of late-night shopping.

Chancellorship after Leaving the ERM

Following Britain’s departure from the ERM, Lamont concentrated on establishing a replacement monetary policy framework and managing the escalation in government borrowing triggered by recessionary pressures and declining inflation. In October 1992, he implemented an inflation-targeting regime with a goal range of 1–4% (excluding mortgage interest payments) and introduced targets for monitoring money supply growth. Decisions regarding interest rates also took into account asset prices and exchange rate movements. This approach enhanced transparency through monthly monetary policy reports and quarterly Bank of England inflation updates, laying the foundation for central bank independence realized in 1997 under Blair, when the Bank’s Monetary Policy Committee assumed accountability for inflation targets.

This framework facilitated a reduction in interest rates from 10% during ERM membership to 6% by January 1993. Shortly after Lamont’s departure from office, inflation reached its lowest monthly level since 1964. Treasury Chief Economic Adviser Alan Budd credited Lamont with creating a system that achieved both low and stable inflation alongside successful central bank autonomy.

Lamont’s other major focus was curbing government borrowing, which had surged due to diminished tax revenues caused by reduced economic output and increased public expenditure related to rising unemployment. The fall in inflation also raised real costs of public spending. The March 1993 budget projected a Public Sector Borrowing Requirement of £50 billion (8% of GDP) for 1993–94, with an actual deficit of 6.9%, marking the highest level since 1975–76 but substantially below subsequent peaks.

To rebuild market confidence without undermining economic recovery, the budget introduced gradual tax increases amounting to £10.3 billion over three years. Although initially met with criticism, this budget's reputation improved over time; The Sunday Times later credited it with restoring public finances and enabling prosperity throughout the 1990s. Tony Blair’s economic adviser Derek Scott commended Lamont for designing the post-ERM monetary framework and making difficult fiscal choices that set public finances on a sustainable path. Economist Sir Alan Walters also recognized Lamont as the most effective and courageous Chancellor since World War II due to these initiatives.

Resignation

In the May 1993 Newbury by-election, Lamont was questioned on whether he regretted more his remark about seeing "the green shoots of recovery" or his comment about "singing in his bath." He replied with a reference to Édith Piaf's "Non, je ne regrette rien," delivering a terse answer that did not translate well on television. On Newsnight, former Labour MP Woodrow Wyatt defended Lamont, which sparked further amusement when Wyatt claimed Lamont could mimic a Scops owl—a sound Lamont described as resembling a "tennis ball emitter."

Following the government's significant defeat in the by-election, Lamont resigned from his government post on 27 May 1993 after refusing a demotion to Secretary of State for the Environment. He reportedly discarded Major's letter of regret unopened and delivered a resignation speech in the House of Commons on 9 June, expressing feelings of mistreatment and asserting that the government "gives the impression of being in office but not in power." Party Chairman Norman Fowler dismissed this speech as "dud, nasty, ludicrous and silly." Both Major and Lamont concur that Lamont tendered his resignation immediately after Black Wednesday, with Major persuading him to remain; Lamont later interpreted this as Major using him as a scapegoat for criticism surrounding ERM policy.

Post-chancellorship

In the years following his tenure, Lamont emerged as an outspoken critic of the Major administration and established himself as a committed euro-sceptic. In March 1995, he sided with Labour on European issues and subsequently authored Sovereign Britain, advocating for the UK's withdrawal from the European Union. Although considered a potential contender for party leadership against John Major, he ultimately supported John Redwood's bid, which was managed by David Evans MP. Presently, Lamont holds the position of vice president at the euro-sceptic Bruges Group.

Despite his contentious departure, Lamont continues to defend his record on budgets. The 1991 budget, which restricted mortgage interest tax relief to the basic income tax rate and reduced corporation tax by two percentage points, received favorable attention from The Economist, which labeled him a "Nimble Novice." His 1992 budget proposed moving toward a 20% basic income tax rate through a narrow band while cutting taxes on deposit interest and reducing allowances—a plan initially praised for combining populist appeal with progressive elements but later criticized as tactically unsound. His final budget in 1993 garnered more positive specialist evaluations than those presented earlier by John Major or Kenneth Clarke. Lamont attributes the significant fiscal deficits during this era to the severity of the recession exacerbated by delayed interest rate reductions under ERM constraints.

The day after his dismissal from the Treasury, Sir Samuel Brittan wrote in the Financial Times that history would likely rank Lamont among more successful Chancellors due to his structural tax reforms, focus on low inflation, and postponement of tax increases. He left behind an economy growing faster than other leading G7 nations while maintaining relatively low inflation. Ruth Lea later highlighted that Lamont implemented pioneering macroeconomic reforms—such as inflation targeting and moves toward an independent Bank of England—and initiated fiscal consolidation efforts that transformed public finances alongside earlier Thatcher-era policies.

Brexit

Following his departure from office, Lamont emerged as one of the earliest high-profile figures to propose that the United Kingdom consider exiting the European Union. Just before the 2016 UK referendum on EU membership, journalist Matthew d'Ancona observed that Lamont had revitalized the previously dormant concept of Brexit.

During a 1994 meeting of the Conservative Philosophy Group, Lamont advocated for seriously evaluating withdrawal from the EU. Later that year, at the Conservative Party conference held in Bournemouth, he spoke to the Selsdon Group, expressing his inability to see any distinct benefit for Britain within the EU framework. He rejected Foreign Secretary Douglas Hurd's assertion that the European debate was increasingly favorable to Britain, pointing out a lack of evidence supporting the UK’s position post-Maastricht.

Lamont disputed Prime Minister John Major’s claim that leaving the European Community was "unthinkable," labeling it an oversimplification. While he did not call for immediate departure, he cautioned that this issue could resurface politically. He suggested alternatives to full EU federal membership, such as participation in an outer tier or joining only the European Economic Area, leaving open the option of future withdrawal.

1997 election

The 1997 general election saw boundary adjustments that divided Lamont’s Kingston upon Thames seat. The northern section merged with Richmond and Barnes to create Richmond Park, while the southern area combined with Surbiton to form Kingston and Surbiton. Lamont lost the nomination for the newly formed seat to Richard Tracey, the sitting MP for Surbiton. Subsequently, he was selected as the Conservative candidate for Harrogate and Knaresborough in Yorkshire—a decision perceived by some as parachuting an outsider into the constituency. Facing widespread unpopularity and a robust tactical voting campaign, Lamont was defeated by Liberal Democrat Phil Willis. He was not included in John Major’s resignation honours list for a peerage but was later elevated to the House of Lords by William Hague in 1998 as Baron Lamont of Lerwick.

After Parliament

In 1998, Lamont joined Margaret Thatcher in defending Chile’s former dictator General Augusto Pinochet during his detention in the UK, describing him as a "good and brave and honourable soldier," a position that attracted considerable criticism.

Lamont attempted but failed to secure selection for the 1999 European Parliament elections. In 2005, allegations emerged claiming he and John Major had delayed releasing documents related to Black Wednesday under the Freedom of Information Act; both denied these accusations. The claims originated from Damian McBride, a Treasury civil servant who later served as a special adviser to Chancellor Gordon Brown before resigning amid scandal.

In 2006, Lamont publicly criticized Conservative leader David Cameron for lacking substantive policies. By late 2008, Cameron enlisted Lamont alongside former chancellors Geoffrey Howe, Nigel Lawson, and Kenneth Clarke to provide strategic counsel during Britain’s financial crisis.

From 2007 onwards, Lamont held the role of honorary patron of Oxford University History Society and chaired Le Cercle—a covert anti-Communist organization meeting twice yearly in Washington, DC—from 1996 until 2008. In 2008, he assumed presidency of the Economic Research Council, recognized as Britain’s longest-established economics think tank.

He stepped down as director of Phorm Corporation Limited, an internet personalisation technology company, in February 2015.

Yanis Varoufakis credited Lamont with offering "counsel" and "advice," referring to him as "a pillar of strength" throughout Varoufakis’s 2015 negotiations over Greek debt relief with the European troika.

Bibliography

(personal memoir)

External links

Official record of his House of Lords introduction House of Lords proceedings, 19 October 1998

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